The Abbott government's directive against investment in small and medium-scale solar threatens commercial rooftop projects in Canberra, ACT Environment Minister Simon Corbell said on Monday.
Mr Corbell attacked Prime Minister Tony Abbott as "public enemy No 1" on renewable energy.
"He's putting jobs at risk, he's putting investment at risk and he's putting the industry at risk, an industry that will need to grow considerably over the next decade if Australia is to meet its international greenhouse gas reduction commitments," Mr Corbell said.
He was responding to news of a draft directive from the Abbott government to the Clean Energy Finance Corporation not to invest in small and medium-scale solar projects. The corporation was also ordered not to invest in new wind projects.
Mr Corbell said there was potential for major growth in solar on office blocks, shopping centres and warehouses, but it needed the certainty provided by the corporation's backing.
While he could not point to specific projects in Canberra, he said the corporation had been working with investors on rooftop projects in Canberra as well as elsewhere but they were now under threat.
"There's enormous potential for growth in this sector but it's still difficult to secure finance through the traditional mechanisms, and the reason for that is that banks are very conservative. The CEFC is there to demonstrate to the traditional finance sector that there is a sound business case and that you can make money from investing in these projects. That's what they're been doing - and now that this directive has been issued all of that is at risk."
The decision was a "kick in the guts" for the sector and highlighted the need for other states to follow Canberra's lead in funding projects themselves.
"We need a government that supports renewable energy not one that kicks it in the stomach every time it gets the opportunity, and we need to stop relying on national policy alone to make sure that renewables flourish," Mr Corbell said.
"We need state-based action. We need more states and territories following the ACT's lead enacting state-based feed in tariff laws that drive the uptake of renewable energy.
"We cannot afford to keep putting all our eggs in one basket because we can see how quickly and how destructively federal politics can undermine certainty for the renewable energy sector."
The ACT government has signed 20-year contracts with three wind farms and three solar farms, with a guaranteed price for the energy they produce over 20 years, as part of its ambitious target of meeting 90 per cent of the city's electricity needs from renewables by 2020. One of the solar farms is operational to date. Still to come is funding for "next-generation" solar, and more wind projects.
Mr Corbell said the ACT's large-scale projects were not threatened by the decision, with the ACT government's funding providing the certainty that companies and financiers needed.
Queensland, South Australia and Victoria were already looking at the ACT's model, he said.