The Morrison government has vetoed public funding of a windfarm and battery project in northern Queensland, with a cabinet minister declaring it was inconsistent with its goals and policies.
The Northern Australian Infrastructure Facility (Naif), a government agency, in January approved up to $280m funding for the Kaban green energy hub 80km south-west of Cairns. The proponents, Neoen Australia, estimated the development could reduce electricity prices for Queensland consumers by $461m over the life of the project.
Keith Pitt, the minister for resources, water and northern Australia, blocked the loan in March. In a letter to the head of the agency, Pitt said the development would not provide “dispatchable” generation into the national electricity market and he was “not convinced” it would lower power prices.
The blocked funding would have helped build a 157-megawatt windfarm and 100MW battery. The project also includes a 320km transmission line upgrade. Neoen says the hub would create 247 jobs during construction and five ongoing positions.
In a written explanation of his reasons for the veto, Pitt said the government’s technology investment roadmap policy had identified that the widespread deployment of mature technologies including wind and solar energy would be mainly driven by the private sector unless there was a clear market failure.
He said the government’s policy was to support dispatchable generation, which refers to electricity capacity that can be called on when required to support variable solar and wind energy.
“I am satisfied that providing Naif support for the project would be inconsistent with the objectives and policies of the commonwealth government. Because of this, I am giving a rejection notice,” Pitt wrote.
Labor’s spokesman on northern Australian, Murray Watt, said the letter showed the government had an “ideological obsession” against renewable energy that was costing jobs and lower power prices.
The opposition’s climate change and energy spokesman, Chris Bowen, said north Queensland should be getting 250 new energy jobs and reduced electricity bills “but they’ve been hung out to dry”.
“Queensland has the resources and the workers to continue to power the country and the world, but a government that is leaving them behind,” he said.
In response to questions from Guardian Australia, Pitt said his statement of reasons for the decision would be tabled in parliament as required under Naif legislation. “The company is free to put its case to other suppliers of finance, including the Queensland government,” he said.
Neoen Australia told the Courier Mail the company was disappointed by the government’s decision, but remained committed to the project. Its website says Kaban has a wind profile different to most windfarms in the national grid, and it would be able to help provide stronger supply during periods of peak electricity use.
The company has signed a power purchase agreement with the Queensland government-owned agency CleanCo under which it would provide energy to contribute to reaching the state target of 50% renewable energy by 2030.