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Who is the greenest energy retailer in Australia?

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(Note: This has been updated to include Alinta Energy).

Over the past few weeks, RenewEconomy had been inundated with requests and questions on how energy retailers are responding to the review of the Renewable Energy Target.

australia green“Who is the greenest” of them all, is the most common request. And it is fast becoming a major consumer issue, given that that Greenpeace and GetUp are launching major campaigns that target the big three retailers in particular.

To help address that question, we have taken the trouble to go through the submissions of the retailers to the renewable energy target. Are they really as green as their advertising says they are?

The position of the Big 3 is pretty consistent: They want the large scale target scaled back significantly and the small scale target removed altogether.

The smaller retailers, ironically owned by bigger companies that are already nearly 100 per cent green, are  more nuanced. They argue that reaching the target is possible, although the NSW government owned Red Energy falls in line with the political decision to call for the target to be significantly diluted.

Here are the summaries. We will let you decide.

Origin Energy

Origin Energy wants the RET changed from the current target to a real 20 per cent target, and the large and small scale schemes rolled into one.

It says this would effectively mean cutting the target from 41,000GWh (plus uncapped rooftop solar), to 23,000GWh (including rooftop solar).

That would mean cutting the planned construction of wind farms from 3,800MW to 1,500MW, and the anticipated deployment of solar PV from 7,000MW to 3,000MW.

It wants the small scale solar scheme (SRES) removed, and upfront payments for rooftop solar stopped. Or, it says, the small scale scheme should be reduced to systems of just 5kW or below. It notes that the average size of  household solar systems currently deployed in Australia is 4kW.

AGL Energy

Once the greenest of Australia’s biggest retailers, AGL Energy has changed its priorities since taking advantage of knock down prices to buy the Loy yang A brown coal generator in Victoria (Australia’s largest emitter), and seeking to buy the 4.6GW Macquarie black coal generators in NSW.

AGL now says that the large scale target of 41,000GWh will be impossible to meet – a claim rejected by renewable developers and big international equipment providers such as GE and Vestas – although it does not say by how much the target should be diluted.

AGL Energy, however, does call for the removal of the rooftop solar component of the RET. “Household solar PV now no longer requires subsidies to be an attractive proposition for households.”

EnergyAustralia

EnergyAustralia, owned by Hong Kong-listed CLP Group, agrees with the other big retailers in saying that the large-scale renewable energy target of 41,000GWh  is “virtually impossible” to meet. It cites that rapid pace of construction required and the difficulty of financing projects in the current oversupplied electricity market.

Like AGL Energy, it argues that retaining the RET policy is therefore “unsustainable” and wants the target scaled back, but not scrapped. (None of the retailers want this as it would harm the value of the renewable energy projects they have already invested in). It says Australia is already between 17 and 19 per cent renewables and maintaining current target would deliver nearly 30 per cent.

So EnergyAustralia argues for a “real” 20 per cent target for 2020. It does not specify what this means, but it’s earlier numbers suggest not much built between now and 2020, although it says the adjusted target should be “front loaded” to soak up excess certificates. It differs from other major retailers in calling for the small scale component, which includes rooftop solar, to be “capped and phased out” over a responsible time frame, rather than dumped or absorbed into the large scale scheme.

“Ultimately technology production costs will stimulate the deployment of small-scale embedded generation at the appropriate, market determined rate,” it says.

Smaller retailers

Alinta Energy

In its submission to the RET Review panel, Alinta credits the scheme with expanding Australia’s renewable generation portfolio, but says this has come at “significant cost to consumers and presents a material risk to security of supply.” It also argues that the current costs of the RET go beyond its projected future benefits. Following this line of logic, it is Alinta’s belief that “no new renewable energy should be supported under the RET and all new renewable energy projects, whether small or large scale, should be required to compete in the market without subsidy.”

The company, which retails in South Australia and Victoria, calls for the RET to be capped at current capacity. Failing this outcome, it recommends the RET be closed and existing capacity eligible for subsidy be brought under an alternate mechanism for the purposes of run-off; or (worst case scenario) the baseline be a ‘real’ 20% target and include all renewable generation, with the end-date of the scheme extended to 2030 and technology not requiring subsidy be removed from the RET.

Red Energy

Owned by the Snowy Hydro, the company has fallen in line with the position of its ultimate owners,the NSW state government. This essentially means changing the fixed 41,000GWh target to a “real” 20 per cent target, which is similar to origin energy’s position.

However, Red Energy suggests while the 2020 target could be “moderated”‘ the end date could be extended beyond 2030. It does not want the large scale and small scale targets to be combined because small scale solar, and commercial solar, could “crowd out” large scale investments.

Red Energy also recommends increasing the “fixed cost” component of electricity bills to offset what it sees as the impact of rooftop solar on reducing demand from the grid. critics say this will reduce the incentive of energy efficiency and penalise lower income and lower volume users.

Red Energy also argues against “banding” – a mechanism reserving capacity to certain technologies such as geothermal or wave which may be favoured by some Senate independents – and argues in favour of “exit payments” to encourage coal generators to leave the market permanently, rather than just being mothballed.

Momentum Energy

Momentum is a subsidiary of Hydro Tasmania, the biggest renewable energy producer in the country. It says the RET is a key policy for the transitioning of the country’s energy sector, and should be maintained, and expanded beyond 2020.

It says the current 41,000GWh target for large scale renewable is technically feasible, but concedes it could be argued to extend the target, but it also wants the end date pushed out beyond 2030, and future targets for 2030 and 2040 that could only consider increases in the target,rather than decreases.

“If the RET was repealed or effectively ended, it would almost certainly terminate any further investment in large-scale renewable energy projects, and put at risk the long-term viability of existing renewable energy assets,” it says. Hydro Tasmania strongly supports both the architecture and objectives of the current RET, including the aim to achieve at least 20% renewable energy by 2020.

Momentum says the large and small scale targets should not be combined, it opposes banding, and suggests incentives for rooftop solar such as the deeming measure (upfront payments) could be phased down more rapidly than currently legislated.

Powershop

Powershop, owned by New Zealand renewable energy giant Meridian Energy, says the RET has helped to reduce costs for consumers, and to hedge against rising gas prices and a potential future energy crisis. It is the only retailer to call unequivocally for the current target to be retained.

“The LRET should be retained in its current form, to deliver value for consumers and support regional development. Calls to dilute the policy are driven by powerful incumbents (Origin, AGL and Energy Australia – the Big Three) who seek to maximise revenues from coal & gas, conjuring up fears as to affordability and achievability of the policy.”

PowerShop says it is “simply untrue” to suggest the 41,000GWh target cannot be met by 2020, but suggests that a self correcting market system that resets future year targets could be implemented if the build out fails to meet expectations,rather than allowing big retailers to pass on penalty prices to consumers.

It does not favour recombining large and small scale schemes, but days it does not have sufficient expertise to comment on level of rooftop solar incentives.

Energy Retailers Association of Australia

As the organisaion representing Australia’s electricity and gas retailers, the ERAA’s submission “refer(s) to the individual submissions of our members on the overall efficacy of the RET scheme and its targets.”

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  • patrickg

    Powershop it is, thanks Giles this is great!

  • MrMauricio

    Diamond Energy is the greenest!

    • Matthew Wright

      Not so – Powershop is a 100% renewable energy company with heaps of old hydro and new wind farms plus a development pipeline of wind farms.

  • http://au.linkedin.com/in/paulmcardle/ Paul McArdle

    An interesting start, Giles – but there are loads more energy retailers that exist in Australia.

    Perhaps you need a copy of our “Power Trading Schematic” to be able to work systematically through the list?
    http://www.marketmaps.info/2014-pts.htm

  • Peter D

    Really no massive green choice in South Australia it seems. I’m with AGL, originally switched from Origin as AGL at the time was a supporter of the current RET. Even though I have solar PV and hot water, you can still choose to purchase 100% Accredited Green Power which I do (for me that’s sacrificing around two pub meals a quarter for the extra cost which is not too bad).

  • Gary Phillips

    What about Diamond Energy – my understanding was that they were the greenest and support renewables?

  • Beat Odermatt

    “Exit Payments” to close coal fired
    power stations are totally unworkable. The cost to rehabilitate col
    mines, coal transport infrastructure and coal fired power stations
    will be massive and may well exceed 50 Billion Dollars. The challenge
    is how the tax payer and consumer can escape the massive liability. I
    suggest that profits from coal fired power stations and coal mines
    are paid into a rehabilitation fund to provide some money for
    eventual rehabilitation.

    • Matthew Wright

      This would mean those businesses are insolvent if they can’t cover their future liabilities.

      • Beat Odermatt

        In the end we all have to pay a lot of money for these future liabilities. I am sure our Governments have a policy of playing ostrich with this issue.

  • Jonathan Prendergast

    For me, it is a tough choice between Momentum, Red, Diamond and Power Shop. All are green and cheap!

    • Matthew Wright

      Red owns gas plants and lobbies against the RET. Momentum owns fossil fuels plants including gas and doesn’t pay solar customers the full 6-8c/kWh retailer FiT that almost everyone else pays.

      Diamond – read the fine print, sounds good until you see the bills.

      Powershop is the best -but if they want to be fully transparent they’d offer an online calculator to plug in and compare competitor plans to what you’re paying inside their web interface.

      • Malcolm Scott

        Mathew, what is the evidence that Momentum does not pay the full FIT as per Victorian legislation? My Momentum invoice is definitely 8c FIT.
        I’d like to support Hydro Tasmania with substantial renewable energy projects to export electricity and generate new wealth and jobs for Tasmanians so we don’t have to subsidise that state through GST and other federal grants and programs. I hope that others can do the same for targeted green goodness

        • Matthew Wright

          Well, it’s difficult to get evidence. When I through my address into their online quotation machine it said, you’ve got solar so give us a call. They do not disclose what they pay to PFIT customers 60C and TFIT Customers 25cents
          while other retailers such as Red and Powershop pay 68c and 33cents

      • Jonathan Prendergast

        Interesting Matthew. My parents are with Momentum and have Solar PV. I thought it was 8c/kWh. I will check their bills.
        Do you have further info (links) on Red and Momentum’s Fossil Fuel assets?

        • Matthew Wright

          http://www.hydro.com.au/energy/our-power-stations/gas-generation

          “The Tamar Valley Power Station was commissioned in 2009 by then owners,
          Aurora Energy. Hydro Tasmania acquired the station in June 2013.”

          They also try to pass off “Smile power” which is old hydro as renewable energy when it was built into the cost of the coal fired power system and paid off many years ago. Only new renewable energy which is easily accredited as Greenpower should be marketed as renewable energy.

          If you’re parents are post the PFIT and TFIT then they should be getting the 8cents. It’s only the PFIT and TFIT customers that Momentum chooses to short change and not give a retailer contribution to. I still recommend Powershop until Momentum stops their dodgee marketing practices.

          • conscience

            This is a fantastic discussion for someone who has been itching to leave Origin due to their anit-renewable energy stance. I am a resident of NSW so it looks like Powershop isn’t available to me. Do you think that it is still worth switching to Momentum even though I will be locked in for 24 months or should I hang tight until Powershop or another green option becomes available in NSW?

          • Matthew Wright

            Hi conscience,

            I think the exit on the contract from Momentum isn’t too bad. Powershop will be at least 12 months before they get to NSW. My understanding is that they’re considering expanding to South Australia next and they haven’t made it that far yet. But you could ring them and ask.

            Matt

      • Joseph Walton

        Momentum don’t own any fossil fuel plants. Where did you hear this?

  • Jill

    Powershop by far. A shame they didn’t ask about their policies on burning forest ‘waste’ to power our toasters though.

    • Matthew Wright

      We need to get Powershop to confirm that they will never buy RECs generated from forest residuals (which props up the very damaging logging industry).

  • Neville Bott

    “AGL now says that the large scale target of 41,000GWh will be impossible to meet….”

    And this inconvenient truth is now where we are, not just here in Aus but globally. Even drastic action now is unlikely to save us from 2 deg rise by 2050. This 2 deg rise which nearly everyone has become comfortable with is likely to be far more disruptive than any of you would imagine. Those that post here dreaming of somehow making a difference need to think about this entire situation.

    Which retailer is the greenest is completely irrelevant the only worthwhile questions are when do we take this seriously and how do we plan for the changes that are already most likely.

    • Matthew Wright

      AGL are making that up to serve their own interests as the owner of the biggest source of CO2e in the country the Loy Yang A Brown Coal powerstation, they also spent years promoting the new build of gas powerplants and building a gas supply chain with Coal Seam Gas. They hate renewables and a blip in their corporate history had them building wind farms.

      • Jonathan Prendergast

        I remember AGL (the chairman I think) saying at a lunch function a few years ago (2008) that trying to meet 20% by 2020 would be impossible as it would be a wind turbine per week from then to 2020. We now see we could reach it in a few years with the amount developed projects waiting for PPA’s.

        • Matthew Wright

          It will be impossible because they’ll use their lobby dollars to stop it from happening. As you said there are easily enough projects in the pipeline ready to progress if there was stability in the renewable energy regulatory /political environment.

  • Neil_Copeland

    In South Australia I have just changed from Origin to Lumo Energy. Believe it or not they pay more for the solar feed in tariff than mandated in this state. Retailers have to pay a minimum of 7.6c. Lumo pays 9.8c plus their rates are less than Origins and they give a 15% discount including on the daily fixed charge.

  • Bret

    Their argument that the large scale target of 41,000 GWh will be impossible presumes the currently carbon pricing mechanism is repealed. I think it’s worth noting
    that if we kept all carbon and renewable policies the way they are currently
    legislated, the target is achievable – http://www.reputex.com/publications/market-update-renewable-generation-powering-down/

  • Craig Allen

    Diamond Energy has to be among the greenest surely. They pay a generous feed-in tarrif and at night balance load with sewerage derived generation (electrons by day, pootrons by night as we say in my household).

  • Matthew Wright

    Powershop are the greenest. Powershop are a 100% renewable energy company with wind and hydro assets. They have a development pipeline of new wind projects and have been lobbying in support of the RET.

    Diamond have tricky contracts that trip you up including high feed-in-tariff for a very small portion of your monthly feed-in then they charge you high service fees etc. Definitely not as cheap as Powerhsop.

    Lumo are terrible -try haggling with them to get your solar cheque out of them.

    But all of those are heaps better than AGL, Origin or Energy Australia (formerly TRU)

  • Erik Olbrei

    Since Powershop sources all its energy from renewables, is this the way that consumers can divest from the big 3? Could be a great way to vote for renewables and send a strong signal to the incumbents. Sounds like Powershop should hurry up and spread out beyond Victoria so that we can vote with our feet.

  • Spiro

    Great discussion, unfortunately in short there is no clean retailer option for residents of NSW. Sounds like fertile grounds.

  • Shana
  • http://www.eastgippsland.net.au/ Jill

    Powershop seems the most Dinky Di. But we’re still waiting for it to make a public statement on their website that they won’t ever go near power generated from burning forests – no matter what Abbott et al decide to term it as.

  • http://www.eastgippsland.net.au/ Jill

    Don’t use their homes to power ours.

  • Meredith Luke

    Trying to find out if there are any true green power providers in my area – Sunshine Coast, QLD.