Published on March 11, 2014
THE RENEWABLE ENERGY TARGET Russell Marsh Director of Policy WA Power & Gas Conference 11th March 2014
KEY MESSAGES The RET works • Since it was introduced in 2001, it has been very effective in driving the roll out of renewable energy, and changing Australia’s energy mix. • The RET has delivered $18 billion of investment in large and small scale renewable energy - bioenergy, hydro, solar and wind. • Australians of all political persuasions want more renewable energy The cost of the RET is small • Current cost of just 3-5 per cent of average electricity bill, • Small price to protect Australia from rising gas prices. Reducing the RET does not reduce electricity prices • Reducing the target increases our reliance on gas • Creates enormous sovereign risk and strands $10 billion worth of large scale investments • Australia could miss out on another $18 billion of investment and 10,000’s jobs over the next decade
HISTORY • 2001 - Mandatory Renewable Energy Target (MRET) introduced by Howard Government. • Objective to deliver 9500 GWh of additional renewable energy generation by 2010 (2 per cent increase). • 2009 – RET was expanded to deliver additional 45,000 GWh by 2020 with support of Coalition • 2010 – scheme was split (a change again supported by all major parties) into: • Large-scale Renewable Energy Target (LRET) • Small-scale Renewable Energy Scheme (SRES) • 2012 – Comprehensive review of the scheme. Key conclusions: • Scheme was working and mechanism should be largely left alone • Reducing the RET would not reduce electricity prices • Two-yearly reviews driving uncertainty and should be removed
RET ACHIEVEMENTS • Since 2001 the RET has delivered: • Over 6000 MW of additional renewable energy capacity that diversified our energy mix. • $18.5 billion investment in renewable energy technologies • Wholesale energy prices as much as $10/MWh lower • Emissions are 22.5 Mt CO2e lower as a result of the RET. Without the RET Australia would not have met its emission reduction target under Kyoto. • More than 2 million small-scale installations - solar panels and hot water • If left unchanged the RET is expected to deliver: • An additional $18.7 billion of investment in energy infrastructure between now and 2020 • Wholesale energy prices are expected to be up to $9/MWh lower • 1000 MW less gas fired generation capacity
CURRENT RENEWABLE ENERGY GENERATION
CURRENT RENEWABLE ENERGY GENERATION
CURRENT RENEWABLE ENERGY CAPACITY
COST TO CONSUMERS AEMC estimates that the RET is around 4 per cent of the current unit cost of electricity Source: AEMC Residential Electricity Price Trends, December 2013
COST OF GAS IS RISING Source: Dart Energy and Innovative Energy Consulting “East coast gas prices will rise, potentially to as much as triple the current $3-$4 per gigajoule; this increase would be several times larger than the costs related to carbon pricing”. Australian Industry Group, 2013.
COST OF RENEWABLE ENERGY IS FALLING Source: Bureau of Resources and Energy Economics, Australian Energy Technology Assessment 2013
MORE RENEWABLE ENERGY MEANS LESS FOSSIL-FUELLED GENERATION As South Australia’s use of wind energy has increased from about 5 per cent in 2005 to approximately 24 per cent of annual demand by 2011, its use of coal- and gas-fired electricity has reduced.
REDUCING THE RET HAS NO BENEFIT • Reducing the target will: • Increase exposure to higher-cost gas • Damage $10 billion worth of large-scale investment made over the past decade • Increase risk premiums in the Australian energy sector. • Analysis by SKM MMA has shown that if the RET target was reduced, wholesale electricity prices would be $10/MWh higher than they would otherwise be. • Uncertainty about carbon policy, plus closure of CEFC and reduction in ARENA funding will already slow renewable energy development. • Only beneficiaries of lower RET are coal and gas generators, not consumers. Reducing the RET will not deliver lower retail electricity prices
AUSTRALIANS SUPPORT RENEWABLES 118 Countries around the world now have some form of renewable energy scheme.
THE RENEWABLE ENERGY TARGET March 2014 Russell March Director of Policy E: RMarsh@cleanenergycouncil.org.au
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