The ACT government has reaped further benefits from its landmark decision to switch to net 100 per cent renewable, reaping another $32 million windfall in the last quarter as the rest of the country suffered from soaring electricity prices.
The ACT has sourced the equivalent of all of its annual electricity consumption from a dozen wind and solar farms since 2020, and has locked in fixed prices for a 20 year period, giving consumers protection against the sort of fossil fuel price spikes that has afflicted the rest of the country, and much of the world.
New data released by the ACT shows that the eight wind farms contracted by the government under its 100 per cent net renewables program returned $32 million of super profits in the September quarter.
That follows an even bigger bonus of $58 million in the June quarter. In effect, the ACT has been paid $90 million over the last six months as a result of their decision to use renewables rather than fossil fuels. The rest of the country is stewing in the inflated cost of coal and gas.
The reason for this is the nature of the contracts that the ACT government has struck with the wind and solar farms, known as contracts for difference, of CfDs.
The wind and solar farms sell their output into the open market. If the market price is greater than the contracted price with the ACT, then the excess is returned to the government and then to local consumers.
It’s the perfect hedge for the government and its residents, and a dramatic contrast to the fossil fuel industry, which has kept the super profits to itself, and its shareholders, while shafting consumers.
All of the eight wind farms contracted by the ACT returned significant amounts of excess profits – a total of $32.8 million – as their contracted prices with the ACT were in some cases less than half the wholesale market prices in NSW through the quarter.
The Crookwell wind farm in NSW returned $8.3 million to the ACT in the latest quarter, because it received $189 for every megawatt hour produced and sold into the open market, more than double its contracted price of $90.40/MWh. It returned $99/MWh to the ACT.
Another wind farm, the Sapphire facility in northern NSW, returned $7.4 million during the quarter – or the equivalent of around $115 for every megawatt hour produced.
That’s because the average it received for its output was more than $200/MWh, so it returned the money it earned above the $89/MWh negotiated with the ACT government.
This is a significant benefit for the ACT, because while the rest of the country has experienced a sharp jump in electricity bills in the last year, and could face rises of more than 56 per cent by next year, ACT consumers are actually enjoying a reduction in their electricity bills.
Th situation makes a nonsense of the complaints that renewables are always heavily subsidised. In this case, it is the renewable installations that are in effect subsidising the consumers.
Even though the ACT paid a relatively high price for the contracts they signed – largely because they were an early mover in the market, they have pricing certainty and what now appears to be a relatively low price.
And, it should be noted, the large scale generation certificates generated by those wind farms under those contracted are extinguished by the ACT government. No payment is received. That ensures that the ACT initiatives are additional to the federal renewable energy target.
Of the facilities contracted by the ACT government, only the solar farms have needed a top up in the latest quarter. That’s because those contracts for a handful of very small solar farms were struck at a very high price – they were among the first to be built in the country.
But their output, and costs to the ACT, is quite small and amounted to only $800,000 in the last quarter. Interestingly, the solar farms received significantly less than the wind farms during the quarter because of depressed prices during the day.
The ACT government has commissioned even more renewable contracts, to match the extra electricity demand needs that will emerge this decade as it electrifies road transport – electric vehicles – and homes and businesses. It is rolling out the first of its new gas-free suburbs.
These initiatives will also involve two large scale batteries, the first of which has already been complete, and a series of “community” or “neighbourhood” batteries to soak up rooftop solar output and store it for peak demand and evening consumption.
Another thing to note is the fact that the ACT government is the only one in Australia with absolute clarity about the nature of its contracts with wind and solar farms and battery providers. And for that it should be congratulated.
And, to those, who think that the ACT 100% renewable electricity target is fake because the wind and solar farms aren’t necessarily generating at the same time as it’s being used, wind engineer David Osmond points out that they might be surprised by how well it does match.
See his commentary:Â Deep dive into the ACT’s 100% renewable energy target
