Renewable energy target costs will fall, says CEC

The Clean Energy Council has kicked off what is expected to be a last-minute rush of submissions to the critical review of the 20 per cent Renewable Energy Target, challenging notions that the scheme is expensive.

The CEC says in its submission that meeting the cost of the RET – the fixed goal of 41,000GWh – will result in around $13 billion of new investment, but will add as little as 1 per cent to household electricity bill.

The submission seeks to counter a lot of the recent media play, pushed by gas and coal generators and their owners, including large utilities and conservative state governments, that the LRET is expensive, should be scaled down, or even that it is not required given the carbon price.

In contrast to TRUenergy, which produced a report from ACIL Tasman last week that suggests the RET will cost $53 billion, and could be halved if the target was made a floating one rather than a fixed one, the CEC says the cost of the scheme contributes just 7 per cent to the average Australian electricity bill, and this is forecast to reduce to just 4 per cent by 2020.

It  says the cost of the large scale component is anticipated to be between 1 and 3 per cent of household bills by 2020, and the cost of the “small scale scheme”, which provided certificates to encourage smaller technologies such as rooftop solar, would also fall dramatically over time.

“The cost of RET is small and getting smaller, especially when combined with action on energy efficiency,” the CEC says in its submission. It notes that the RET has helped reduce the cost of renewable technologies in Australia, particularly in rooftop PV, had helped reduce demand, and had helped lower wholesale energy prices.

“Massive amounts of investment have already been made on the basis of the current policy settings. These investments, and Australia’s credibility in attracting global capital for energy infrastructure, will be damaged if the RET is changed.” It says $18.7 billion has already been invested, another $3.7 billion is in the process of being invested, and another $13.8 billion could be anticipated in the coming eight years.

Stripping the RET, and relying only on a carbon pricem would likely see just $2.1 billion of renewables investment in coming years. Others have suggested that adjusting the RET to a “real 20 per cent” that reflects actual demand rather than a fixed target – as utilities such as Origin Energy and TRUenergy have proposed – could cut anticipated investment in half.

Indeed, the CEC described the two yearly review (although the first to be undertaken by the newly created Climate Change Authority) as the “single largest barrier” to delivering the 20 per cent target by 2020.

The CEC also warned against capping the small scale scheme, known as the SRES, saying it would create yet another cycle of boom/bust installations. “Once the cap was reached demand would plummet until the cap was reset the following year,” it said. It said the uncapped scheme had provideda relatively stable platform for industry, notwithstanding the instability from changes to state-based Feed-in Tariffs,

The CEC also noted that renewable energy technologies would soon become cost competitive with traditional fossil fuel based generation – the main fuel sources of those opposed to the RET.

And, in an apparent dig at both Origin Energy and TRUenergy, which have extensive gas-fired geneation either deployed, or wanting to be deployed, the CEC said domestic gas prices are likely to rise further as they move toward parity with international markets. “Reliance on these commodities for our own low cost energy supply is becoming an increasingly high risk energy policy.”

This came as The Climate Institute (TCI) released a report suggesting that not only is gas not very cheap, it may not be very clean.

Gas-fired generation is usually cited as the key “bridging technology” between coal and renewables. But the report from TCI said while conventional gas emits around half the emissions of coal, not enough information is known about the  vast coal seam gas reserves in Australia which will underpin the country’ future gas reserves.

“Concerns about the emissions from CSG production have led some to claim that the gas is as bad if not worse than coal,” it writes, noting that the critical argument centres around the degree of leakage from methane, a particularly potent greenhouse gas.

The problem is that the methods for measuring the emissions are either outdated and inappropriate, or inadequate. It says claims that CSG is more polluting than coal are probably exaggerated, but significant questions remain about whether the emissions from the production process are being properly accounted for.

“If the gas industry wants to be part of the clean energy future it needs to earn its place. Supporting a more rigorously evidence-based emissions regime would be a start,” it says.