Origin says renewables not supposed to displace fossil fuels

Origin Energy, Australia’s biggest utility, has claimed that the renewable energy target was not supposed to displace fossil fuels, and wants future deployment of wind and solar to be cut in half to protect incumbent coal and gas fired generators.

Origin Energy, which has been one of the leading opponents of the current fixed target of 41,000GWh – at least since it appeared that electricity demand would be lower than predicted – has repeated its call to turn the RET into a “true” 20 per cent target.

It says that when 41,000GWh was fixed – at the insistence of the major retailers such as Origin, it should be noted – it was assumed that demand would be much higher than current expectations.

“The RET was expected to fill part of the required new generation needed to meet this demand and was not expected to crowd out any existing generation,” Origin writes in its submission to the RET Review panel.

It includes this chart to illustrate what it sees as a major problem – mothballed capacity, unused fossil fuel generation, brown and black coal as well as gas.

origin ret submission

“The RET distorts the wholesale market by forcing additional genertion hat is no required into the system,” Origin Energy says. This would force fossil fuel capacity to be withdrawn, and black coal and gas generation is likely to be most affected (due to their higher costs over brown coal and the removal of the carbon price).

Origin Energy owns black coal power stations, such as Eraring, which last year operated at a capacity factor of just 38 per cent, lower than many wind farms, and gas generation, including the recently built Darling Downs base-load gas generator that has been forced to act as a peaking plant due to changes in the market.

It says capacity is likely to be withdrawn from the market because of the decline in demand exacerbated by the RET.

To address this issue, 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.

Origin ret sub 2

 

 

Comments

10 responses to “Origin says renewables not supposed to displace fossil fuels”

  1. Michael Avatar
    Michael

    One of the three objects of the Renewable Energy (Electricity) Act 2000 is:

    “to reduce emissions of greenhouse gases in the electricity sector”

    Of course the intention of the RET is to displace fossil fuels, otherwise how to do satisfy that objective?. Just because Origin had an expectation that this wouldn’t be the case isn’t a basis for changing the target.

    Renewable energy companies had an expectation that the RET would remain at 41,000 GWh until 2030…

    1. Chris Fraser Avatar
      Chris Fraser

      Clearly the small matter of definition has spoiled their party. Of course RET was meant to replace fossil fuels. 20% of them to be approximate. And not less than 20% either. The projected 26% replacement fits into the existing legislation very nicely …

  2. Robert Johnston Avatar
    Robert Johnston

    Origin stuffing up their market modelling explains why Origin have overvalued fossil fuel generation assets relative to their competitors (Wellington peaker, Eraring etc) when buying and have built others (eg Mortlake) when others have not been… the fact is these guys have been heavily investing in gas and coal when they should not have been in the current regulatory environment – and now they want to change the rules to compensate them for their own mistakes. It makes sense, why wouldn’t they do what they are!

  3. patb2009 Avatar
    patb2009

    sounds like Origins is badly understanding the disruption coming their way.

    1. RobS Avatar
      RobS

      Sounds like they understand it quite well, hence their vocal and increasingly desperate protests.

  4. RobS Avatar
    RobS

    It’s like a small boy throwing a tantrum about their sister stealing their toys, and by toys of course I mean their license to print money “but mommy, mommy, solar stole my Tonka truck and then when I got on the trampoline she got on too, waah, waah” pathetic. Of coura the RET was designed to displace fossil fuels, we had over 80% fossil fuel generation and the RET specifically sought to displace some of that so at least 20% was renewable, it has ended up well ahead of target partly because renewable cost reductions are years or even decades ahead of expectations but ironically mainly because the utilities have priced themselves out of the market.

    1. Chris Fraser Avatar
      Chris Fraser

      It’s just a shame for these ineffectual vertically-integrated market ‘leaders’. They had the same market opportunity as households did to create rooftop PV and benefit by STCs to offset their legal liabilities. But then they lost their nerve.

  5. John Silvester Avatar
    John Silvester

    I see from the graph it appears they expect rising demand to resume, as they have for each of the last four years. Apparently residential and commercial customers will stop replacing older less efficient appliances with higher efficient appliances. And energy intensive industries will come flooding back now we have record high prices for electricity. Customers who made a conscious decision to reduce their electricity use as a result of electricity prices doubling in the last five years will forget and start using electricity as they did before the price rise.

  6. Alan Baird Avatar
    Alan Baird

    Ah the poor things. So unfair. We need to respect their need to burn something. It’s the Australian way. I’m sure the Liberal-Murdoch-Macquarie Axis has something to say along these lines.

  7. david_fta Avatar
    david_fta

    “Origin says renewables not supposed to displace fossil fuels”? Err, you mean Origin wants to lock us in to continue adding to atmospheric CO2 from fossil carbon?

    Sounds like they want global warming to continue indefinitely.

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