Australia's largest solar farm opens amid renewable target debate

* Australia's first utility scale solar farm comes online

* About $10 bln in renewables investment in Australia

* Australia renewable targets under review

* Cut in renewable goals may risk clean energy investments

By Rebekah Kebede

WALKAWAY, Australia, Oct 10 (Reuters) - Australia switchedon its first utility-scale solar farm on Wednesday, bringing thecountry a small step closer to achieving ambitious renewableenergy use targets that traditional coal and gas power producersare now fighting to soften.

The Greenough River Solar project, just outside the smalltown of Walkaway in Western Australia state, is a joint-venturebetween Western Australian state-owned Verve Energy and U.S.conglomerate General Electric . It is expected to generate10 megawatts, enough to power 3,000 homes.

"The Greenough River Solar Farm demonstrates that renewabletechnologies can contribute to meeting Australia's future energyneeds on a sustainable, cost-competitive basis," J a son Waters,chief executive of Verve Energy said on Wednesday.

Australia has committed to getting 20 percent of its powerfrom renewables by 2020 but big coal and gas-based utilities arearguing for generation targets to be cut.

The plant is General Electric's first investment inAustralian renewable energy, and plans are already underway toeventually expand it to 40 megawatts.

The electricity generated by the plant will be purchased byWestern Australia Water Corporation to power a nearbydesalination plant.

Australia is one of the world's most ideal places for solarprojects. It has the highest average solar radiation per squaremetre of any continent in the world, according to government,and a population the size of New Delhi spread over an area thesize of the contiguous United States.

Australia currently gets about 10 percent of its electricitysupply from renewable energy, about two-thirds of which comesfrom hydro power.


But the plant opens as the future of renewables is cloudedby a campaign by some utilities and energy companies to cutAustralia's mandatory renewable energy targets.

The renewable energy targets (RET) are currently undergoinga routine review by Australia's Climate Change Authority whichwill 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-hoursof its energy requirements by 2020, or 20 percent of its totalenergy requirement from renewables, would devastate thefledgling industry.

"If the RET was to be reduced or, in fact, to be removedthen essentially the business case for renewable energy justwould not stack up and the industry would fall off a cliff. Itwould stop dead in its tracks," Kane Thornton, Director ofStrategy, Clean Energy Council.

AGL Energy , one of the few utilities that hascalled for the RET to remain the same, arguing the investmentcertainty is key for the more than the several billion dollarsworth of solar and wind projects it has underway.

"Amendments of the renewable energy target would certainlynot be well received by investors who've got potential newprojects that they'd be looking to develop," Tim Nelson, head ofeconomics and policy for AGL in Sydney, said.


But critics of the targets say that the 41,000 GWh goal by2020 will amount to around a quarter of Australia's totalelectricity supply by then, due to slower than expected growthin electrify demand, more than the intended 20 percent.

Origin Energy , Australia's largest energy retailerand an investor in renewables, said the RET target should bere-evaluated.

Another leading utility, TRUenergy, which recently rebrandeditself as EnergyAustralia, said adjusting the targets to takeaccount of lower energy use projections could save $25 billionor $840 for each electricity customer.

The Australian Coal Association has argued that the RETshould be abolished completely because it unfairly picks winnersin the electricity market.

Proponents of leaving the RET unchanged, however, hold thatthose who advocate changes in the RET, including getting rid ofit, are those who stand to profit from an energy mix with fewerrenewables.

(Editing by Lincoln Feast and Michael Perry)

((rebekah.kebede@thomsonreuters.com)(+61 402 974 273)(ReutersMessaging: rebekah.kebede.thomsonreuters.com@reuters.net))