RET Review Calls for “Significant Change”
Posted: 28 Aug 2014
The review into Australia’s Renewable Energy Target (RET) has concluded that the cost of the RET mechanism to the community “outweighs the benefit” and therefore significant change to the scheme is required. The government released the review today and it recommends that action should be taken to: “emphasize alternative, lower cost approaches to reducing emissions in the Australian economy.”
The review considered two RET mechanisms: the Large-scale Renewable Energy Target (LRET – which applies to wind farms and solar parks) and the Small-scale Renewable Energy Scheme (SRES). Not surprisingly, the RET review panel has recommended changes to both.
For the SRES, the one that provides the subsidy for people installing solar on their homes or small businesses, the RET review panel has recommended a significant change.
“The Panel considers that there is a strong case for winding back the SRES, through either closing the scheme immediately or accelerating the phase-out of the scheme,” the report states. The impact of this, according to the review panel itself, is that the rate of PV installations will drop significantly.
“Modelling indicates that repeal of the SRES would have an immediate effect of reducing the install rates of rooftop PV by at least 30% and the number of solar water heaters by around 16%. However, by the early 2020s, the rate of small-scale solar PV systems installed each year would recover to a rate similar to that if the SRES was left in place.”
A second option for the SRES, recommended by the panel if the government is “concerned about the immediate impacts of repeal”, is for it to be wound up by 2020, rather than 2030 – as originally planned.
Looking to the LRET, affecting big solar parks and wind farms, the RET review has also pulled no punches. It has recommended that it be closed to new entrants. This means that existing renewable energy installations will continue to generate certificates under the scheme, key income for them, however no new utility-scale solar arrays or wind farms can be developed under the scheme.
In a second option, the RET review panel has suggested the LRET could be modified on an annual basis to reflect growth in generation demand. In short, if more electricity is needed in the market, the LRET mechanism can kick in to encourage that 50% of it is provided of renewables participate in that generation capacity mix. “Importantly, this approach avoids the costs to the community associated with subsidising additional generation capacity that is not required to meet electricity demand,” the report’s authors write.
While this second LRET option seems reasonable, electricity demand has fallen dramatically in Australia in recent years, on the back of the decline of a number of energy intensive industries, the economic downturn on the back of the Global Financial Crisis, energy efficiency, and also the growth of rooftop solar – which has depressed demand from the grid as households, community buildings and businesses generate electricity on site. Because of this, it is unclear when electricity demand will increase.
These outcomes should come as no great surprise to supporters of renewable energy, who had claimed that the review panel was stacked with opponents to renewable energy.
Dick Warburton, who had previously argued against anthropomorphic climate change and was a former Caltex executive, headed the review. The modelling was provided by the consultants ACIL Allen, which had previously provided research used by the coal industry in its attempts to lobby against the RET. The other review panel members included the former head of WA’s largest coal generator Shirley In’t Veld and Brian Fisher, who the Australian Solar Council had accused of providing modelling that argued against the RET in the past.
The primary concerns the review panel with the RET in its entirety was the burden it was placing “on the community”. The committee set out this burden as being one that primarily affects energy intensive industries. It also argued that the $22 billion that would be invested in renewable energy under the current RET, through to 2020, could be “diverting resources from more productive uses elsewhere in the economy”. For consumers the ACIL Allen modelling showed that the RET has increased electricity bills by 4% however over time the affect is “modest”.
The report acknowledges that the RET has: “delivered a modest level of carbon dioxide equivalent emissions reductions.”
Image Source: Sydney Morning Herald
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