Eco Investor May 2015

Pre-Dividend Securities

Infigen Benefits From RET Talk

Infigen Energy's shares touched a three year high of 34 cents on 4 May. There was little company news so a likely cause may have been media talk that many of the participants in the debate over the large scale Renewable Energy Target would be happy to compromise at a target of 33,000 GWh. The government appears to be the only party not yet ready to compromise at this level, although a Liberal member in Victoria came out on TV in support of the compromise so it would assist with job creation in his electorate.

A resolution would assist Infigen as it would help it to further its pipeline of wind energy projects.

Infigen strongly supported Federal Labor's recent move towards restoring certainty to the large-scale renewable energy industry.

Managing director Miles George said "Labor now joins the Business Council of Australia, the Australian Industry Group, the Energy Users Association of Australia, State Governments and peak industry bodies representing the aluminium, cement and forestry industries calling for a speedy resolution of the policy instability that has frozen investment in renewable energy since the Warburton Review commenced 14 months ago."

"These groups all agree that the Clean Energy Council's ‘split the difference' compromise proposal for a 2020 large scale RET target of 33,500GWh represents a significant compromise for all parties, providing a strong basis for a speedy negotiated outcome."

"A prompt restoration of the RET policy stability that existed before the Warburton Review has also been supported by the State Governments of Tasmania, Victoria, South Australia and New South Wales," he said.

The main finding of the Warburton review was that the RET scheme helps to reduce pressure on power bills in the medium to long term, as the "fuel" is free. That benefit more than offsets the cost to electricity retailers of buying renewable energy certificates under the scheme. The net result in a properly functioning competitive market is that prices will be lower for electricity consumers.

Bloomberg recently reported that investment in the large scale element of the RET scheme has dropped by nearly 90 per cent from over $2 billion per annum in the years 2011 to 2013 to only $240 million in 2014. About $1 billion per annum was being directed into Australian goods and services and jobs in regional areas, but that investment and the job opportunities have halted since the Warburton Review commenced. (ASX: IFN)

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