The $10 billion clean energy finance corporation will not deliver additional clean energy by 2020 but will just shuffle renewable energy investment from wind power to solar, new modelling says.
But the modelling found the "green bank" could deliver "bang for its buck" if the government expanded the renewable energy target to apply to the projects it funded.
Two sets of modelling for the WWF and the Australian Solar Council found that, as it is proposed, the green bank's proposed $2 billion a year in investments would drive no additional renewable energy investment by 2020.
But expanding the renewable energy target - which requires electricity providers to source 45,000 gigawatt hours of power from renewable sources by 2020 - could see Australia generate an additional 3 per cent of its electricity from renewables (26 per cent rather than 23 per cent) without any change to government spending and without hitting electricity prices.
The green bank is intended to provide both commercial and subsidised loans to big clean energy projects, but from its inception green groups argued that while the carbon price was still relatively low the projects would also need the additional "leg up" from the ongoing effective subsidy of being included in the government's renewable energy target (RET).
The modelling shows that, if the RET was expanded, both wind and solar photovoltaics would get a boost, substantially reducing emissions.
And it argues that because renewables, especially solar, reduce peak demand and lower wholesale prices, this would offset a slight increase in retail prices from the move - resulting in no net increase for household power bills.
"There is an opportunity for the CEFC to have a greater benefit..at potentially no additional cost to the public," said WWF climate change manager Kellie Caught.
Chief executive of the Australian Solar Council John Grimes said even though solar would be the winner under current policy settings, it made sense to boost renewables overall.
The modelling will be provided to the Climate Change Authority which is reviewing the RET, with many industry groups and state governments arguing that it should be wound back rather than expanded.
The new modelling came as proponents confirmed the demise of the $1.2 billion Solar Dawn project, which was to begin construction of a 250 megawatt solar thermal power plant near Chinchilla in 2013, after the decision by the new Queensland Government earlier this year to cancel promised state funding.