Allen JonesDate / 2014-06-25 09:05:14
The federal government’s hand-picked economic modeller to evaluate the impact of the Renewable Energy Target, ACIL-Allen, has found that a wind-back of the scheme’s target would end up costing electricity consumers money, to the benefit largely of fossil fuel suppliers and generators.
This is even though the modeller was instructed by the government to attribute no monetary value whatsoever to carbon emissions.
Also, the modelling suggests that the renewable energy industry should be able to meet the current level of the target without a blowout in the cost of renewable energy certificates to the price cap.
This result is contrary to the intuition dominating the Coalition backbench but entirely consistent with the findings of several other major Australian energy market modelling analysts – including ROAM Consulting, Sinclair Knight Merz, Intelligent Energy Systems, Schneider Electric and Bloomberg New Energy Finance.
Each of these analysts have independently come to the same conclusion that while there is an extra cost to consumers to subsidise the roughly 20 per cent of their power coming from renewables (additional to levels in 1997), this is more than offset by the extra renewables supply squeezing down prices for the remaining 80 per cent of supply coming from conventional generators.
According to ACIL Allen’s draft findings – presented yesterday to stakeholders and tweeted by Michael Mazengarb (the government has refused to publicly release the presentation) – the nationally average wholesale price of electricity generation is suppressed by around $15 per megawatt-hour as a result of the RET, relative to no scheme at all.
Overall the results suggest that the higher the target the greater the savings to consumers across the period to 2030. Increasing the target such that renewables had 30 per cent share by 2030 (equates to 53,000 gigawatt-hours by 2030) works out the best for household consumers. Freezing the target at the current level of renewable energy supply would keep costs low in the short-term but leave consumers worse off over the longer term, because it means renewables would have little suppressive impact on wholesale electricity market prices.