BNEF Ausra, solar Australia, solar thermal

Published on May 30th, 2014 | by Joshua S Hill

7

Scrapping Australian Renewable Energy Target Bad For Consumers, Great For Utilities

May 30th, 2014 by  

Scrapping the Australian Renewable Energy Target could have catastrophic ramifications for the renewable energy industry in the country, as well as consumers and employment, all the while delivering huge profits to power companies, according to new analysis from research firm Bloomberg New Energy Finance.

The recently elected Tony Abbott/Liberal Government is reviewing the current Renewable Energy Target — a target of producing at least 20% of all electricity from renewable energy sources by 2020 — in line with the party’s absurd take on clean energy. Earlier this year, Treasurer Joe Hockey was reported as saying that the wind turbines he drives past on his way to work are “utterly offensive” but that he is powerless to close them down. Hopefully there are few — if any — budget decisions based on whether or not Joe Hockey’s view is obstructed.

According to Bloomberg New Energy Finance (BNEF), the current Renewable Energy Target is expected to drive $35 billion (AUD) of investment in clean energy, employ 25,000 workers each year in construction and operations, reduce greenhouse gas emissions from power generation by 5%, and prevent future surgest in power prices by supplying electricity for 20-25 years without ongoing fuel costs.

The catch? It will oversupply the electricity market and could place pressure on the profitability of existing electricity generators.

Heavens no! A changing market affecting the entrenched behemoths? How on Earth could we have ever seen this coming?

Compare those benefits with the changes that would follow if the Renewable Energy Target is reduced in line with the hopes of some power company proposals: a drop of $12 billion AUD in investment; a drop of 6,600 jobs; 3% higher greenhouse gas emissions; and the kicker — power prices that increase by 1% in the year 2020 for the average household, a price that will increase a further 3% by 2030.

Needless to say, if the Target is cut altogether, the figures get even worse.

“Cutting or reducing the Renewable Energy Target is likely to result in less competition among fossil-fuel power generators and strong future increases in the price of electricity,” said Kobad Bhavnagri, Bloomberg New Energy Finance’s head of Australia. “This helps to explain why many of Australia’s largest power companies are now pushing for a reduction in the target.”

The White Paper compiled by BNEF is available here, but one thing is for sure, there will need to be a tonne of pressure placed on Tony Abbott, Joe Hockey, and the Australian Liberal Government if Australia is to prevent itself falling even further behind industrialised nations in a world of changing climates — both environmental and economic.

 
 
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About the Author

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.



  • mds

    All really good comments. It’s nice to see there are people who understand so clearly how ridiculous the Abbott government is being in Australia. I can’t see how this isn’t going to completely backfire on them by the next election. What must they be thinking? I plan to become a naturalized Australian citizen before the next election cycle. I plan to run my Labrador Retriever against Abbott’s party on a renewable energy platform. Our slogan will be “A solar panel on every roof. A storage battery in every building.” I have $500 to spend on advertising and will use the internet a lot. If there is no other green party entry then we should win easily.

    My hat is off to the Abbott government for one thing they are doing. They’re pissing off a lot of Australians with solar panels and making the economics for going off-grid way better. This is going to create an excellent market for low-cost residential and business power storage, integrated with solar. Sunpower is already moving to take advantage of this market opening. Others will as well. This will ultimately drive down the cost of power storage …dramatically …and increase the penetration of Solar PV …dramatically. (Sorry the Aussies have to endure the financial pain of getting there the hard way. Jealous they’re already doing this before we are in the US.) Thank you Tony! You’re an idiot!

  • spec9

    “Earlier this year, Treasurer Joe Hockey was reported as saying that the wind turbines he drives past on his way to work are “utterly offensive” but that he is powerless to close them down.”

    Yes, so offensive. Those funky modern-art looking things creating nice clean power. But I guess those big ugly coal pits and pollution spewing coal plants are so much better. I guess the fact that you can’t see the mercury, arsenic, cadmium, and other toxic things from that coal plant means that it OK.

    • Matt

      He doesn’t have to see the Coal mines or power plants on the way to work. All he sees is the big check he gets from them when he gets to the office. 🙂

  • spec9

    The utilities over-built and now are losing money. Sorry utilities, that was your mistake, you don’t get to take it out on everyone else.

  • LookingForward

    Weither they change, remove or keep the target the same, it doesn’t matter.
    Decentralised renewables will kick utillities *sses.
    And when storage is at grid parity there will be a massive transition to off grid, if electricity prices increase and people don’t get payed for overproduction.

  • JamesWimberley

    It will be interesting to see how this works out. The math for the utilities is as described. On the other side, Australia has lots of sun, high retail electricity prices (stemming from an overbuilt grid and excess fossil capacity), very straightforward solar permitting, and a negligible FIT. There are 3m solar householders the utility power grab will offend, and their non-solar neighbours will get the message quickly. Australia is the first country in the world where going off-grid may make financial sense.

  • dango-man

    Yeah it seems to be. While I know absolutely nothing about Australia electrical grid and I am using the picture below mostly.
    http://www.genifoundation.org.au/images/Energy_Grid_Aust_2009_April_m.jpg
    It seems to me that regions of Australia are poorly interconnected with a transmission network and the population is spread far apart. So I’m guessing that a utility company owns each region and has monopoly on supplying power to the population in the region.
    So since there is poor existing interconnection unlike most European countries, little completion in supply and there’s unlikely ever to more competition with the existing power stations due the large cost of setting transmission lines up. Isn’t renewable actually the ONLY long term generation source since it allows local small power companies to compete more without the need for new expensive transmission lines. It seems to be the Australian government actually doesn’t have choice compared to European countries and local renewable power companies will be able to compete with or without government support due to the price difference. Only if they taxed renewable heavily or announce coal is free would they stop renewables.

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