Campbell Newman’s war on green energy

It looks like the clean energy industry is going to have to go back to basics when dealing with the new conservative government in Queensland – just as it has had to do in Victoria, with that state’s Coalition government. Tomorrow, when the NSW Coalition government releases its renewable energy plan, it will learn if it will have to do the same there.

In Queensland, however, the industry is right back at first base. Not that it ever really left it: it is the one state that has hardly any large-scale renewable generation, apart from a series of biomass plants from sugar cane plantations and a single 12MW wind farm.

Premier Campbell Newman signalled his approach to renewables early in his term when he decided he didn’t want to put any state money into the Solar Dawn consortium, or any other renewable energy project  for that matter, and announced he would disband the state’s climate change and renewables program. His approach was that the if federal government had a carbon tax and a renewable energy target, then Canberra should pay for it. It wasn’t the state’s business.

That might sound fine on the stump, or in a sound bite on radio talkback, but it’s actually self-defeating. The law states that each electricity retailer must provide a certain amount of renewable energy to its customers, paid for by renewable energy certificates, and that includes Queensland utilities.

If they don’t build renewable energy in their own state, then that money will simply be spent on projects being built by the southerners – be it in NSW, Victoria or South Australia. This is one aspect that hopefully the NSW paper has seized upon, and why it was happy to put in funds to ensure a major solar project, the investment and the jobs, stayed in its state.

But Newman’s antipathy to green energy runs deep. It’s sung from that same old song-book – it’s expensive, it’s intermittent, and it doesn’t cut emissions.

This week, the government upped its rhetoric against renewables – issuing a press release from energy minister Mark McArdle’s office that said Queenslanders were facing an “enormous” cost from the renewable energy target – one that would reach $408 a year for each household by 2020.

How did it get to that figure?

Well, it starts with the Queensland Competition Authority, which estimates the cost of the large-scale renewable target on Queensland households in 2012/13 to be around $30 a year, or 60c a week. Then it adds the cost of the small-scale target – essentially the multipliers that accompanied rooftop solar – which grew to $60 a year, or $1.20 a week, because of the uncontrolled blowout in that scheme. And then it added in another $15 a year to account for losses in transmission of green energy, the retailers’ profit margin on these schemes and “headroom” – which allows retailers to either make even more profits or have a margin to “compete” with.

McArdle’s office gets to $408 per year per households by simply multiplying that estimate by four. But that’s wrong on a couple of fronts. The multiplier is done on the basis that the renewable energy target stands only at 5 per cent – but it is actually already at more than 10 per cent. And while the $102 figure is made up mostly of the cost of the national SRES scheme (the multiplier for rooftop solar), it’s 2020 forecast  does not take into account that the SRES scheme has effectively been wound down – the multiplier has been dropped from 5 to 2, and with no multiplier next year – and its costs will drop considerably.

The Clean Energy Council noted this week that – apart from supporting the state’s sugar mills, which use cane waste to produce renewable energy and generate an extra source of revenue – the cost of the renewable energy target has peaked and will likely fall to under $60 a year per household in 2020, not the $408 cited by McArdle’s team

But apart from getting the costs wrong, what is even more concerning for the industry is the observations made by McArdle’s office about the (hidden) costs of renewable energy. It states that the deployment of solar PV is adding “significant” additions to network costs.

When RenewEconomy inquired further, it was told that:

– The investment in infrastructure required to underpin the domestic solar PV program would add billions of dollars to the cost of RET schemes.

– There is no such thing as avoided infrastructure costs involved in green schemes, because they have required government subsidies that hide the real costs of such projects.

– And was cited an article published in The Australian last week, quoting a noted anti-wind activist who claimed that wind energy had achieved virtually no emissions reductions in Australia. “There are no benefits from wind,” the office told us.

The state government claims that “most” green energy sources cost “three to ten” times that of “traditional” energy sources. Apart from the fact that wholesale prices make up only around a third of the consumer bill, this was an estimate based on 2009 data – just like the draft energy white paper. Brisbane should get itself an update from the Bureau of Resource Economics, and on what the future holds in terms of costs, and how wind and solar will soon be cheaper than coal and gas – and then cross reference that with those of the IEA.

McArdle has also asked the QCA to investigate the cost of building infrastructure to support green schemes. He says the QCA is expected to report back in the next few weeks.  Hopefully, the QCA will look at the avoided costs on network infrastructure that rooftop solar can also provide, but McArdle’s office is not yet aware exists. The CEC says all that solar power that has been installed in the state – more than 500MW – is actually helping to push back major investment in big power stations, and is saving people money.

Whatever the cost of “green” infrastructure is, it is likely to be far less than the $7,000 it is estimated that is added to the cost of transmission infrastructure for every $1,500 air conditioner installed in houses. And the ones sharing in that cost burden are the ones that can least afford it.