The cost of the Australian Capital Territory’s 100 per cent renewable scheme has gone negative again. The recently announced results for the June quarter this year are the fourth time that quarterly costs have gone negative.
Not only has the scheme dramatically reduced electricity emissions, it also protects ACT consumers from high electricity prices.
The cost of the scheme cost goes negative whenever wholesale electricity prices are high, acting as an effective hedge against volatile electricty prices. This was particularly pronounced during 2022, when international gas & electricity prices spiked due to the war in Ukraine.
The Ukraine war saw residential electricity prices across most of Australia spike 20%-30%. The rise was just 4% in the ACT thanks to its renewable contracts, as Renew Economy reported at the time.
The ACT Government has contracts with 9 wind and 4 solar farms. The contracts guarantee each project a certain return per megawatt hour (MWh) of generation. The guaranteed return is shown in the CfD (contract for difference) price column below. The volume weighted CfD price is around $78/MWh (inclusive of LGCs).
Each project sells their generation on the spot market. If they sell it for less than the CfD price, then ACT consumers top it up. If they sell it for more, then the difference is refunded to ACT consumers.
Since the scheme started in 2014, ACT consumers have topped up the revenue of the renewable projects by an average of $25/MWh. Since the scheme involves the ACT getting the LGCs, then $25 can be thought of as the average LGC price.
It is near impossible to build a wind or solar farm without a guaranteed price for the generation. Thus the ACT Government scheme played a key role in enabling the construction of around 840 MW of wind & solar farms, generating around 2.5 terawatt hours (TWh) a year and reducing carbon emissions by around 2.3 million tonnes a year.
In summary, the ACT 100% renewable target has:
1. enabled the construction of 840 MW of wind & solar farms & reduced carbon emissions by ~2.3MT/y
2. shielded ACT consumers from high electricity prices
3. obtained LGCs at a much cheaper price than via the spot market
If you want to know more about the ACT 100% renewable target, read the following: Deep dive into the ACT’s 100 per cent renewable energy target. It also explains that the ACT could theoretically have obtained around 80 per cent of its electricity direct from the wind and solar farms without the need to pass through storage.
