WALKAWAY, Australia (Reuters) - Australia switched on its first utility-scale solar farm on Wednesday, bringing the country a small step closer to achieving ambitious renewable energy use targets that traditional coal and gas power producers are now fighting to soften.
The Greenough River Solar project, just outside the small town of Walkaway in Western Australia state, is a joint-venture between Western Australian state-owned Verve Energy and U.S. conglomerate General Electric. It is expected to generate 10 megawatts, enough to power 3,000 homes.
"The Greenough River Solar Farm demonstrates that renewable technologies can contribute to meeting Australia's future energy needs on a sustainable, cost-competitive basis," Jason Waters, chief executive of Verve Energy said on Wednesday.
Australia has committed to getting 20 percent of its power from renewables by 2020 but big coal and gas-based utilities are arguing for generation targets to be cut.
The plant is General Electric's first investment in Australian renewable energy, and plans are already underway to eventually expand it to 40 megawatts.
The electricity generated by the plant will be purchased by Western Australia Water Corporation to power a nearby desalination plant.
Australia is one of the world's most ideal places for solar projects. It has the highest average solar radiation per square meter of any continent in the world, according to government, and a population the size of New Delhi spread over an area the size of the contiguous United States.
Australia currently gets about 10 percent of its electricity supply from renewable energy, about two-thirds of which comes from hydro power.
But the plant opens as the future of renewables is clouded by a campaign by some utilities and energy companies to cut Australia's mandatory renewable energy targets.
The renewable energy targets (RET) are currently undergoing a routine review by Australia's Climate Change Authority which will be wrapped up by the end of the year.
Champions of renewable energy say a cut in the targets, which would require Australia to produce 41,000 gigawatt-hours of its energy requirements by 2020, or 20 percent of its total energy requirement from renewables, would devastate the fledgling industry.
"If the RET was to be reduced or, in fact, to be removed then essentially the business case for renewable energy just would not stack up and the industry would fall off a cliff. It would stop dead in its tracks," Kane Thornton, Director of Strategy, Clean Energy Council.
AGL Energy, one of the few utilities that has called for the RET to remain the same, arguing the investment certainty is key for the more than the several billion dollars worth of solar and wind projects it has underway.
"Amendments of the renewable energy target would certainly not be well received by investors who've got potential new projects that they'd be looking to develop," Tim Nelson, head of economics and policy for AGL in Sydney, said.
But critics of the targets say that the 41,000 GWh goal by 2020 will amount to around a quarter of Australia's total electricity supply by then, due to slower than expected growth in electrify demand, more than the intended 20 percent.
Origin Energy, Australia's largest energy retailer and an investor in renewables, said the RET target should be re-evaluated.
Another leading utility, TRUenergy, which recently rebranded itself as EnergyAustralia, said adjusting the targets to take account of lower energy use projections could save $25 billion or $840 for each electricity customer.
The Australian Coal Association has argued that the RET should be abolished completely because it unfairly picks winners in the electricity market.
Proponents of leaving the RET unchanged, however, hold that those who advocate changes in the RET, including getting rid of it, are those who stand to profit from an energy mix with fewer renewables.
Editing by Lincoln Feast and Michael Perry