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.

“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 This would force fossil fuel capacity to be withdrawn, and black coal and gas generation is likely to be most affected (due to their higher costs over brown coal and the removal of the carbon price).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It says capacity is likely to be withdrawn from the market because of the decline in demand exacerbated by the RET.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.