The firm retained to conduct the modelling for the Abbott government’s review of the Renewable Energy Target believes that the amount of wind farms and other large scale installations to be built by 2020 could be slashed by nearly half, and still be described as a 20 per cent target.
ACIL Tasman Consulting, whose analysis was used by the fossil fuel industry in its unsuccessful attempt to convince the Climate Change Authority to abandon or cut back the RET in the previous review in 2012, was last month appointed by the RET review panel to conduct modelling for its analysis.
There are fears in the renewable energy industry that the RET could either be dismantled altogether – review chief Cick Warburton has refused to rule that out – or severely curtailed.
The fossil fuel industry argues that on current forecasts, the 41,000GWh fixed target could over-run the minimum 20 per cent target that has been bipartisan policy since 2007, possibly as high as 30 per cent.
Some suggest that this could mean a reduction in the target to a figure of around 30,000GWh, with ranges between 27,000GWh and 33,000GWh, depending on how demand and the measurements of renewables are assessed.
However, ACIL Allen, in a presentation to the Energy Users Association of Australian conference last year, suggested a figure of 23,000GWh could still translate into a 20 per cent target.
This is based on the assumption of continued falling demand as Australian moves to a more service-orientated economy. (Capuccino machines clearly don’t use as much electricity per unit of GDP as steel manufacturing), and by changing other assumptions.
As ACIL Allen writes in its presentation notes, a ‘Real 20%’ 2020 target could be as low as 23,000GWh – depending on “how settings are interpreted”. This would mean including rooftop solar (currently uncapped and subtracting demand from the grid), and redefining the amount of “baselined” generation (pre-RET construction).
In short, it underlines the point that by slicing and dicing the figures, a 20 per cent target could be manipulated to fit any scenario. Depending on your pre-disposition to renewable energies – a 20 per cent target could be framed anywhere between the current level and the 23,000GWh mooted by ACIL Allen – which it notes, would be little changed from the fixed target at the end of 2013. In other words, little if any new large scale generation would be needed between now and 2020.
This would devastate the renewables industry, including current investments because it would cause the price of renewable energy certificates to plunge. IES, in a bleak report issued in March, said that even a 26,400GWh target would cause loss of $10 billion in investment, thousands of jobs, and would ultimately destabilise the grid because of the loss of investment certainty. More recent studies by Schneider Electric and the Clean Energy Council suggest reducing the fixed target would add costs to consumers, rather than reduce them.
John Grimes, the CEO of the Australian Solar Council, said it was becoming increasingly clear that the government was committed to a “sham” 20 per cent target.
He said the move against renewables was “ideological” and was being supported at the highest levels of government.
“This particular government has gone beyond the pale,” he told ABC Radio National. “Their answer to too much electricity generation is to cut out solar, instead of retiring the least efficient, most polluting coal-fired power stations. This is poor public policy.”
Grimes also said the industry expected the support mechanism for small scale solar to be removed, the one million solar roofs program to be dumped before it is started, and for up to $1.5 billion in funding to be slashed from the Australian Renewable Energy Agency.
The ACIL Allen scenario would, of course, suit the fossil fuel industry well, particularly the coal generators. As ACIL Tasman notes, the dismantling of Labor’s Clean Energy Future (essentially the carbon price, the RET, and any other institution or initiative with the words “clean” or “climate”), would result in a major rebound in the amount of coal-fired generation.
This would be good for state owned fossil fuel generators such as Stanwell and CS Energy, which could not return a profit for the Queensland government owners in 2012/13 because of the impact of renewables and falling demand. (Queensland Premier Campbell Newman, who is likely to try and sell the generators, wants the RET dismantled).
Still, ACIL Tasman notes that the amount of gas fired generation is likely to shrink dramatically in its forecasts for 2020 (even with a reduced renewables target). This graph to the right show a big increase in black coal generation between 2013 and 2020 under its favoured scenario, with gas shrinking from 12 per cent of generation to just 3.8 per cent.
It suggests that rising gas prices – and the absence of a carbon price -means that major base load gas generators will be either mothballed or converted into peaking plants – developments that have taken place since its presentation. Hydro and wind together account for 16.1 per cent, with solar accounting for just 0.2 per cent.
ACIL Allen’s presentation appears dismissive of rooftop solar. It notes that solar has “taken off”, but says this has been driven by subsidies and “pricing inconsistencies” within retail tariffs. It notes that storage and “dispatch able solar” will make consumers even more active in the future, to the detriment of existing generators.
However, its 20 per cent scenario also assumes that rooftop solar installations will nearly treble between now and 2020 to around 8GW – which means that Australian households will continue to lead the de-carbonisation of the electricity grid, while virtually nothing occurs in large scale investments.
The emergence of the ACIL Allen presentation has further riled the solar industry in particular, which has accused the RET Review panel led by Warburton – a climate science skeptic and pro-nuclear advocate – of being a “stitch-up”. It has also questioned the independence of ACIL Allen, given its past links with fossil fuel interests.
The author of the presentation is Owen Kelp, who has been appointed “project manager” and lead modeller for the RET Review. His criticism of the RET is very clear, saying that the incumbent industry has “suffered from continual indirect policy interference”, including the various renewable energy policies in place since 2001.