Coalition calculations on Labor RET cost all wrong, says CEC

Australia’s Clean Energy Council has dismissed claims published in The Australian on Friday that Labor’s 50 per cent renewable energy target by 2030 will cost as much as $85 billion – a number the newspaper says is based on analysis from the Abbott government’s Department of the Environment – saying the calculations ignore several key factors, including the plummeting price of renewables.

The story in The Australian – Shorten bill for RET proving a tall order at $85bn (subscription) – reports that the Labor Party faces a renewed Coalition attack over higher electricity prices from its 50 per cent renewable energy goal, after Environment Department analysis found achieving it by 2030 would cost a “ballpark’’ $85 billion.

In an emailed statement, the CEC said the calculations made by Greg Hunt’s department seemed to assume that the cost of renewable energy in 2030 would be the same as it is today.

“It’s very strange that the calculations did not factor in the rapidly falling cost of renewable energy, which all credible analysis predicts will be substantially cheaper during the next decade than it is right now,” said CEC chief Kane Thornton. “At the same time, fossil fuels such as gas are expected to rise substantially in price.”

“The numbers also do not include the comparative costs of providing additional generation to meet the substantially increased power projections expected out to 2030 from other types of power generation,” Thornton said.

The CEC also said questioned why the calculations had ignored the update to the federal government’s Australian Energy Technology Assessment last year, which projected that onshore wind and solar would be among the cheapest of any type of energy in about a decade.

“It unclear why is this highly credible analysis was not factored in to the calculations,” it said.

The CEC said that while the Environment Department had forecast a 50 per cent jump in electricity use, it had left out any comparative costs of meeting this huge increase with other types of new power plants, or of the cost of replacing or retiring old coal-fired power plants that would close in the meantime.

“It is completely misleading to claim that the cost of capital associated with building renewable energy will be completely borne by consumers. The analysis for the Federal Government’s own Warburton Review of the Renewable Energy Target showed that higher amounts of renewable energy in the system actually led to power prices for consumers in the future,” said Thornton.

“The cost of wind energy is less than new-build gas power today, and will be even cheaper in comparison in the future as gas prices rise even further (gas is already more than double what it was at the start of the decade),” he said.

The CEC also pointed out that no new coal-fired power stations could be built without carbon capture and storage (or a carbon price indemnity), and that this would be more expensive than either wind or solar generation.

“Even without this, the risk of building a coal-fired power station has made this technology increasingly unappealing to banks and other lenders,” the CEC said.

“The suggestion that the total capital cost of buliding new infrastructure equates to the direct and full consumer cost is false and misleading. This was clearly shown by the analysis for the Federal Government’s own Warburton Review of the Renewable Energy Target, which showed that higher levels of renewable energy would lead to lower power prices for consumers over the long term.

“Based on these trends, the cost of meeting increased electricity use from renewables and better energy efficiency and demand management is likely to be cheaper than other alternatives. If the government is confident in the quality of its analysis, it should immediately release it for further scrutiny.”