When Bill Shorten announced an ambitious, but achievable target of at least 50 per cent renewables by 2030, the public reaction was extremely positive. But not in all quarters.
‘At least 50% renewables by 2030’ came under immediate attack from the Abbott government, who said this represented a massive cost burden that would cripple families and the economy.
So, who is right, and how much could it cost?
How you get to 50% renewables
The government says that the current Renewable Energy Target legislation will deliver 23 per cent of our electricity. Add to this existing hydro, and rooftop solar PV (both excluded from that 23 per cent figure), and utility analysts predict we will be at or near a real 30% figure by 2020.
So the 50 per cent target means we have to add 20 per cent additional renewable energy in a decade. Much of that will be delivered through the market without specific policy support.
The economics of solar PV and wind technology mean they are simply the rational economic choice for the lowest-cost electricity during that period.
Indeed the Bureau of Resource and Energy Economics has predicted solar and wind will be among the lowest cost of all types of electricity generation within 10 to 20 years.
Bloomberg New Energy Finance suggests rooftop solar and battery storage are on track right now to account for more than half of Australia’s electricity needs by 2040.
And investment bank UBS has said solar will be the cheapest form of ‘new build’ energy, globally, by 2020. In fact UBS expects large-scale solar plants to become the industry standard, displacing centralised generation such as coal-fired power plants.
Technically, the Australian Energy Market Operator (AEMO) has shown 100 per cent renewables is feasible with existing technology. The AEMO report also shows how the electricity grid can manage high levels of renewables with variability of supply.
So if getting to 50 per cent renewables is not an economic or technical problem, what does it require? To achieve the target it will need to be a policy priority across government, to ensure an orderly and cost-effective transition to renewable energy.
This mindset that renewables are just too expensive, and without government handouts cannot be deployed, is simply wrong.
The Prime Minister and his environment minister, Greg Hunt, are stuck in the past. Their imagination goes no further than thinking a 50 per cent target means putting the existing RET on steroids.
There are multiple policy levers that can be used to support a 50 per cent target.
This portfolio of policy measures may include emission standard laws (like they have in the US), reverse auctions to pull through specific large-scale renewable energy projects (like they have delivered in the ACT, and committed to in QLD) and a carbon price of some form.
Stronger energy efficiency measures, targeted collaboration with the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC), actions by State and Territory Governments, the rapid uptake of energy storage at residential, commercial and industrial scale, could all play a role.
The more shrill the Prime Minister and Minister Hunt are on this, the more they betray their ideological blindness to the opportunities.
So, what are others doing?
In 2014, 144 countries had renewable energy targets. The European Union is on course to generate 50 per cent of its electricity from renewables sources by 2030. Germany has a target of 40-45 per cent renewables by 2025.
California has a target of 50 per cent renewables by 2030 and 1.3GW of energy storage by 2020. Fifteen G20 nations have committed to targets representing a 70 per cent increase in renewable energy capacity by 2025.
Australia needs to commit to at least 50 per cent renewables by 2030 just to keep up with our major trading partners.
What’s more, 50 per cent renewables is enormously popular.
An Essential Poll in May 2015 showed 71 per cent of Australians think there needs to be more emphasis on solar and 62 per cent thought there should be more emphasis on wind.
A Lowy Institute Poll this year indicated 43 per cent of Australians expected solar to be our primary source of electricity 10 years from now, by far the highest-ranked option. Coal was selected by only 17 per cent.
It is a policy that will create jobs and investment. In 2014, around 21,000 Australians worked in the solar industry.
More than 93 per cent of these workers worked for small- and medium-sized enterprises (SMEs). In fact 96 per cent of Australia’s 3,800 solar businesses are SMEs.
In 2014, Australia dropped from 11th in the world in renewable energy investment to 39th in the world. At the same time, again in 2014 alone, global investment in clean energy grew 16 per cent on the previous year to $US310 billion.
New energy jobs from renewables will be the basis for industry assistance and transition training for displaced workers in the electricity and other industries.
The bottom line
In terms of costs, ClimateWorks’ deep decarbonisation analysis showed that with strong renewable energy, energy efficiency and transport efficiency measures, retail electricity prices would increase at an average rate of 0.9 per cent per year or around 40 per cent to 2050, but average household electricity use (excluding for electric vehicles) would fall by half, so that average household power bills would be reduced by 30 per cent.
Even ACIL Allen’s economic modeling for the 2014 Warburton Review concluded: “Regardless of direction, the impact on retail electricity prices is small, even when considered over the period to 2040.”
It’s time the government ended its scare campaign, and developed a positive plan for Australia’s renewable future.
The transition is going to happen anyway, but without leadership the change will be slow, inefficient and job and investment opportunities will be lost to Australia.
John Grimes is the chief executive officer of the Australian Solar Council
