The clean energy industry in Australia enjoyed one of its most successful years in 2010, but it’s not entirely clear that it has that much to celebrate. Not quite yet.

The annual review published by the Clean Energy Council today points to two clearly buoyant numbers — in the 2009-10 fiscal year, private investment in renewable projects (not including small-scale) nearly tripled, to just short of $1.8 billion. And it was, of course, a boom year for rooftop solar photovoltaics, with 310MW of capacity installed across Australia — the equivalent of a gas-fired peaking power station.

But it was not the breakthrough year that many had expected. The private investment data reflects a five-fold increase in the wind industry alone, and funds flowing to emerging technologies — particularly those where Australia should have a natural advantage, such as large-scale solar, geothermal and wave — declined sharply.

According to the CEC report, only $38 million in new investment was put into the geothermal, wave and large scale solar industries in fiscal 2009-10. These are not the sort of sums that will drive investment in technologies crucial for a low emissions future. Geothermal spending slumped by 75%, large-scale solar fell by more than 50%, and wave was down by 40%.

Banks have continue to display a deep aversion to technology risk and the developers of such technologies have greener pastures to play in — be it Europe or Asia — and it is not clear how Australian projects will ever get the tens of millions of dollars they need to get going.

And there are other roadblocks ahead. The price of renewable energy certificates is still floundering below $30 — nowhere near enough to bridge the cost gap with cheap, but emissions-intensive coal, which means developers find it nearly impossible to get power purchase agreements (PPAs), and therefore finance. The price may not be resolved until several months into the new year when the amount of surplus RECs from the boom in rooftop solar is finalised.

Even then, the sale of the NSW energy retailers means that there are effectively only three companies to deal with, and renewable energy developers will have to beg the indulgence of the CEOs of TruEnergy, Origin and AGL. Their only hope for near term PPAs is that the NSW retailers are so short on renewable energy certificates that the surpluses built up by Origin and TruEnergy are quickly made redundant.

Another, even greater, challenge for the industry is the sudden attack of short-termism that has afflicted the public debate surrounding the introduction of clean energy sources. It is as though, having accepted BHP Billiton’s call for a carbon price as inevitable, industry and heavy emitters have set about with the singular goal of reducing a carbon price to the lowest possible level and do away with any complimentary measures.

The call by the Australian Industry Group’s Heather Ridout for the review of the renewable energy target — which she claims is economically inefficient — might represent the nadir of such debate, but she does face stiff competition.

And when the nation’s only financial daily publishes a lengthy news feature by a senior journalist lambasting the cost of renewable energy, comparing its abatement cost with the that of the EU emissions trading scheme, ignoring the fact that most EU countries have either feed-in tariffs (FiTs), renewable energy targets, loan guarantees and government grants, or all of the above, then you know the standard of debate is not high.

Yes, a carbon price might, in theory, make complementary measures redundant. But, as Professor Ross Garnaut points out, it would need to be $50-$100 a tonne to make it so. A low carbon price will encourage a  transition from coal to gas — the very minimum that Australia needs to achieve to meet its 2020 targets — but the idea of properly constructed RETs, FiTs, and loan guarantees, is to give the extra impetus to new technologies that need economies of scale to drive costs down, so that they can compete with current technologies and properly costed emissions, and then enable the country to meet its more ambitious long-term targets, whatever they may turn out to be.

And to further stress the importance of renewables, the International Energy Agency says that in order to meet the 450 parts per million scenario, the use of renewables would need to account for about 45% of the world’s electricity sources by 2035, even after taking into account the potential of carbon capture and storage and nuclear.

“Renewable energy sources will have to play a central role in moving the world onto a more secure, reliable and sustainable energy path,” the IEA said in its annual energy outlook. “The potential is unquestionably large, but how quickly their contribution to meeting the world’s energy needs grows hinges critically on the strength of government support to make renewables cost-competitive with other energy sources and technologies, and to stimulate technological advances.”

The CEC report suggests that the clean energy sector could generate some 55,000 jobs over the next decade, much of it in regional areas. “It’s not a boutique industry,” says CEC chief Matthew Warren, noting the increasing engagement of mainstream companies worldwide and in Australia.

And he has an interesting take on the take-up of solar PV, noting that it was broader than just NSW (which had an overly generous scheme) and was not, contrary to some reports, installed by only the wealthy — the NSW data points to a much higher take-up in the mortgage belt and country areas.

“It reflects a deeper change in the market,” he says. “It’s deeper than just early adopters, it’s now in a less green and more pragmatic section of the market, people who are interested in a hedge against future energy price increases.” That, he says, fits with the broader narrative, and the apparent decline in “green power” schemes: it’s not just about climate change action, but about protection against rising prices.

*This first appeared on Climate Spectator.