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Wave boss calls for RET clarity

Carnegie chief executive Michael Ottaviano. Picture: Danella Bevis/The West Australian.

The boss of Carnegie Wave Energy has called for an end to the dead-lock over the renewable energy target, saying it should be scaled back as part of a compromise.

Michael Ottaviano, who is one of the most respected figures in Australia's renewable energy industry, said divisions over the fate of the target were deterring investment and the uncertainty had to end.

The comments came as Federal Environment Minister Greg Hunt gave the strongest indication yet that a breakthrough in negotiations over the target could be reached soon.

Speaking on radio, Mr Hunt the Coalition was making "real and significant and important progress" in its discussions with Labor and the renewable energy industry.

Under the target introduced by the Howard government and widened by Kevin Rudd, 20 per cent of Australia's power was mandated to come from renewable sources by 2020.

However, falling electricity demand over the past five years has meant the fixed nature target - of 41,000 gigawatt hours of green electricity by 2020 - will represent significantly more than 20 per cent of Australia's power needs by its deadline.

The Government and industry are pushing for the target to be wound back to a "real 20 per cent" of about 27,000GW/h but Labor says it will not accept anything lower than a figure in the high 30,000s.

After officially unveiling the world's first wave energy project off Garden Island last week, Carnegie chief executive Mr Ottaviano said it was high time the major parties made a breakthrough in negotiations.

He advocated a compromise "somewhere between" the Coalition's proposal and the current target, while also calling for a guarantee any new deal would be secure and tied to a 2030 timeframe.

"There is probably a very rational case to say that the… should be adjusted to take into account that shortfall in forecast consumption but to ratchet it right back to this 'real 20 per cent' forecast is simply too dramatic and too much of a change," Mr Ottaviano said.

"It really brings into play the issue of sovereign risk."

Electricity Supply Association head Matthew Warren said it didn't matter whether the target was kept or changed because no banks would lend to renewable energy projects while demand for electricity stayed subdued.

Mr Warren said policy makers needed to think more "strategically" about the evolution of the energy market rather than simply "picking winners".

"You're effectively with a RET trying to force new generation into a market that is already chronically oversupplied and it's very difficult to see how that's going to work," he said.

"Large scale generation of virtually any type in Australia is unbankable at the moment.

"My concern is that there is this expectation if we broker a deal there will be an outbreak of investment and my fear is that that doesn't seem like it's going to be the case."

Clean Energy Council chief executive Kane Thornton agreed there needed to be a resolution over the fate of the target to end the uncertainty for industry.

Mr Thornton said the council had put forward a proposal for compromise which included granting exemptions to energy-intensive but trade-exposed industries such as the aluminium sector as well as "some level of reduction" in the target.

However, he said the council could not accept cuts to the target as deep as the Coalition wanted, saying such a measure would be unfair and too severe.

Mr Thornton cited the Federal Government-commissioned review into the target last year by businessman Dick Warburton, who found it was leading to lower prices for consumers by fuelling competition among generators.

"There has been a review done and it's essentially given the RET a clean bill of health," Mr Thornton said.