If the Commonwealth closes off the renewable energy scheme to rooftop solar, Canberra would consider introducing its own, ACT Environment Minister Simon Corbell said on Friday, condemning the Warburton report as "dangerously radical and extremist".
If the Commonwealth closed the scheme, "all bets are off", Mr Corbell said. The ACT would not bring back a scheme as generous as the one it has had previously, but there might be grounds for a "more modest" feed-in scheme for rooftop solar offering the same level of support it gets under the present federal system.
Mr Corbell said an end to renewable energy certificates for rooftop solar would increase the upfront cost of rooftop, with a massive effect on the solar industry nationally, an industry that employed many more people than large-scale renewables and included many more "mum and dad businesses".
Bids for the ACT government's wind auction, which close on Wednesday, would be the first test of whether uncertainty in the national renewable energy market would hit the ACT, resulting in fewer players bidding for a share of the action in Canberra. Less competition in the Canberra market could push up bid prices.
Mr Corbell is putting up 200MW of wind energy for auction, and will offer the winning bidders a guaranteed price for 20 years for the wind energy they feed into the grid. He has said previously that at least two wind farms would be signed up for the scheme, which would generate 24 per cent of the city's electricity consumption by 2020.
He said on Friday that while the Palmer United Party looked set to block changes to the renewable energy target and certificate scheme in the Senate, the Warburton report and the federal government's stance was creating such uncertainty that companies might be unwilling to invest in Australia.
Already, Pacific Hydro has pulled out of the market. Pacific Hydro was building a large-scale solar plant in Moree with Fotowatio, the company developing Canberra's first solar farm, expected to go live next week.
"The results of the first wind auction will tell us how the market is viewing some of these risks because of the volatility in the federal policy-making area," Mr Corbell said, suggesting the "great tragedy" of the current highly volatile situation in Australia was that renewable energy companies would look for safer bets elsewhere in the world.
"These companies don't operate in Australia just because there's an ACT scheme. They see a long-term pipeline of potential projects across the economy of which the ACT is just a part, and if they see uncertainty in the Australian market, if they see no clear pipeline of projects potentially available to them ... they will redeploy ... to other markets," he said.
But he nevertheless expected significant interest in the ACT auction and said he was aware of a number of companies preparing bids.
If the national system of renewable energy certificates is closed and no new certificates issued, the ACT government will have to come up with its own system to account for greenhouse gas abatements through its renewable energy projects.
The ACT has an ambitious target of reducing carbon emissions across the city by 40 per cent by 2020 (on 1990 levels), and reaching carbon neutrality by 2060.
Dick Warburton's review for the federal government recommended Australia's renewable energy target be closed to new investment, or be set at 20 per cent of electricity generation, recommendations that have been greeted with dismay among renewable energy companies.