Where did Julia Gillard go on her vacation? Since her return, she has been determined to try and take the wind from the Coalition’s sails by implementing the very policies that the Abbott’s team would presumably implement should they get to power, trying to respond to Abbott’s “No” campaign with her own multi-pronged “yes” initiative.
First was the network operators (the Coalition governments in NSW and Queensland had already flagged their intention to scale back network expansions), and then came the Pacific Solution Mark II. Now it seems, the government is seeking to realign the carbon pricing mechanism in much the way it is assumed that Abbott would do (forget the bit about the repeal).
According to the highly regarded AFR reporter Marcus Priest, the government now realises its proposed floor price is all but impossible to introduce if Australian companies are to be allowed to buy international carbon credits. So the latest thinking is to drop the floor price, restrict the purchase of international credits, and link the Australian scheme to the European one, which is current trading at less than half Australia’s fixed price.
This is all very well, and might cheer up industrial groups who have been arguing that Australia’s carbon price is out of line with the price in Europe, and who presume that the European price will always be cheaper. And it may even encourage the Greens, who note that if the rest of Europe may finally succeed in tightening up its scheme and returning the price to where it once was – somewhere north of $30.
Domestic abatement, policy exports
Bloomberg New Energy Finance said if Australia ultimately decides to link its market with the EU ETS, scrap its domestic price floor, and tighten its CER import limit, it will fundamentally change the economics of its carbon market. “Businesses in Australia would then see a very different carbon price trajectory than previously thought, with ramifications for long-term planning and more immediate compliance activities and carbon price risk management,” it said.
But if this does happens, Australia will effectively be exporting the decision making on its price on carbon to Europe, or more particularly to Poland, which has held hostage to all attempts to reform the carbon price in recent years, despite an aggressive push by the likes of Germany, France, the UK and Scandinavian countries. European reform is usually pushed by those countries that hold the presidency of the EU council – and in the next three years that will be those giants of the green economy Cyprus, Ireland, Lithuania, Greece, Italy, and Latvia, with Luxembourg holding the keys to power when Australia’s fixed price carbon regime ends in 2015. We suggest Mitch Hooke and other representatives of Australian industry groups buy themselves a Eurail pass.
The solar boom continues
Australia’s solar boom continues unabated, with some 111MW of PV registered across Australia in June, according to the latest data produced by consulting company SunWiz. According to its data, Victoria is “running hot”, probably due to the rush to take advantage of the higher tariff before the 75MW cap is met – if it hasn’t been already met. The other notable statistic was that in Queensland, more than one quarter of rooftop solar PV systems were sized at a hefty 5kW, suggesting that customers were also taking advantage of the state government’s net tariff before it was reduced.
Despite the sudden political and media focus on networks, and their contribution to retail prices, the only real option for consumers to reduce their bills is through installing solar PV. Efficiency measures can deliver some reductions, but as the graph below shows, nothing compared to what is available through a rooftop system. Little wonder that in South Australia one in five houses already have panels on the roof, and in one local newspaper article forwarded to us today, towns such as Victor Harbour have penetration rates of 40 per cent.
What we also know is that the network operators are resisting the deployment of distributed generation – there are examples of this in WA, Queensland and NSW. The question is, what policy decision will the politicians make? And can the solar public, as it were, unite in a single voice to defend their right to produce their own cheaper power?
Why the energy business model is dead
The debate around poles and wires and the realisation that distributed energy and solar PV offer the solutions to the future means a fundamental reassessment of the energy business model. Mike sandiford makes that point in this article, and we highlighted it in this report on how Hawaii’s electric utility sees itself as under threat, and in the remarks made by the new head of German energy giant RWE.
Here’s another take published in Forbes this week. Its written by Peter Kelly-Detwiler, a senior manager at US utility Constellation Energy. “The escalating controversy over recent bankruptcies at solar start-up companies like Solyndra and Abound Solar has become a distraction from the real story about the solar power industry. It is not only here to stay, but poised for rapid and relentless growth over the next 20 years. Make no mistake about it: the future of widespread solar power is now inevitable. The same can be said about electric vehicles, energy storage and fuel cells, but perhaps the most underappreciated change coming down the pike is the advent of market-aware energy consuming assets.”
Kelly-Detwiler underline five reasons why this should be so: the rapid pace of technological advancement; the ageing grid, soaring retail electricity prices; the pricing of carbon; and the demands of economic growth. “We can expect to see deployment of these technologies in four distinct areas: 1) where subsidies and regulatory decisions provide early safe havens; 2) where high avoided costs improve the economics; 3) where volatility is most pronounced; and 4) where distributed technologies can add the highest value in terms of what and when avoided resources are displaced. His piece “Electricity forecast: Disruptive, more decentralised with a strong chance of profits” is worth a read.
Which way the wind blows
Carbon pricing may be a long way from the political debate in the US Presidential campaign, but clean energy is front and centre. Barack Obama has been spending a heap of time in the key swing state of Iowa, which apart from being a litmus test for the polls, also happens to be the centre of the wind manufacturing industry in the US. The continuation of a key tax credit – and its impact on 75,000 jobs in that and other states – promises to be a key issue in the campaign. So while Republican candidate Mitt Romney, who wants to junk this and just about any other clean energy incentive, campaigned in coal mines this week, Obama sang the praises of the wind industry and released these info-graphics about the state of wind in the US.
