Ceramic Fuel Cells, a Melbourne-based CSIRO spin-off company is moving its business to Germany in response to the better incentives which are on offer there. The company produces a small renewable energy generator which it says can cut electricity bills by up to 50 per cent for households and small businesses.
Lack of opportunities in Australia
The Australian company says it was forced to move its business operations to Germany because there is a lack of opportunities in Australia. The company is moving its operations in order to benefit from generous German government subsidies which are not offered in Australia, says the company's Germany-based managing director, Frank Obertnitz. “We are at an early stage. We need to commercialise the product and the incentives in Europe are much better for that.
Power production from renewables (mostly from wind and solar) has tripled in Germany within the past decade. Last year, renewables accounted for 24% of the country’s electricity. The German government introduced generous subsidies to kick-start the sector, amounting to €16 billion in 2013 and the government claims that its energy programme, Energiewende, has already saved billions in fuel costs for the once heavily import-reliant country.
Ecologic Institute analyst Andreas Kraemer says that the country has, as a result of the energy programme, created new businesses worth €40 billion per year and employment for up to 400,000 people who all pay taxes and social security charges.
Residential consumers pay around €0.29 cents per kilowatt hour and much of this goes towards a renewable energy surcharge.
Big industrial users are exempt from the surcharge and pay just 3.5 cents per kilowatt hour. Most of the subsidies are spent on first-generation solar and wind parks that are locked in high feed-in tariffs of over 40 cents per kilowatt hour for the next two decades.
While there are calls to phase these surcharges out, the government realises that emerging technologies still require support mechanisms, explains policy analyst Annika Hedberg.
Exposure to a strong renewables market
The German energy market already reflects the new changes, with hundreds of companies and cooperatives being formed in a decentralised industry. While banks, industry, and project developers own 40% of renewable installations, farmers and private investors own half.
A number of new investment vehicles have formed to take advantage of the new industry. For instance, Crowd funding start up Bettervest has financed 14 projects since its inception a year ago. Company spokesman Julien Schroder-Gianoncelli said investors are attracted by the projects and the returns. "We are offering 5-10 per cent in interest, which is pretty good at the moment," he said.
Market uncertainty in Australia
It comes as no surprise that Australian renewables companies would be tempted to leave Australia’s shores since there is a great deal of uncertainty around the country’s renewables goal. [Engerati – Australia’s Government Unsettles Renewable Energy Developers.]
The Australian government has announced that it wants to slash the renewables 2020 target of 41,000GWh to 16,000GWh after it received a review from businessman and self-professed climate sceptic Dick Warburton.
Following fierce resistance from the industry, the federal cabinet asked the environment minister, Greg Hunt, and the industry minister, Ian Macfarlane, to reach a bipartisan agreement about the future of the programme that would allow continued investment without fear of policy change. The two have written to Labor setting out a “commonsense” plan as the “basis to our negotiation” which includes a target representing a 20% of the current energy market –around 26,000GWh - with no change to the subsidies for household rooftop solar panels and a full exemption from the scheme for all energy intensive industries, like aluminium, copper, zinc and cement.
Clean Energy Council’s acting chief executive, Kane Thornton, says that this move would leave many projects and companies financially stressed, billions of dollars in lost investment and thousands of jobs foregone. “We are already about 40% of the way to meeting the legislated 41,000GWh of large-scale generation. If we were to reduce this target to a ‘real’ 20%, it would actually mean a cut of almost two thirds of the additional large-scale renewable energy required to be built.”
Suzlon Energy is already reconsidering its investment in the A$1.5 billion (US$1.4 billion). Ceres wind farm and Vestas Wind Systems’ Chief Executive Officer Anders Runevad doesn’t expect to see much activity in the country until the situation has been clarified.
Macfarlane said any deal reached with Labour could not be legislated until next year and would not begin until 2015.
It won’t be long before other Australian companies like Ceramic Fuel Cells view Germany's regulations, incentives and market as making it the place to be.