The Clean Energy Council is an industry group promoting renewables. Not surprisingly it defines “success” as being the amount of money it has diverted from other causes into the coffers of its members. Good for them. They are free to lobby. But the RET or “renewable energy target” was set up by the government. They dictated rules to generate a false market in a product that few sane investors would invest in (remember how the same government keeps talking about how we need a “free market”?).
You and I might define success in terms of more peaceful, healthier and longer lives. Or lives where we get to spend more time with our kids and less time in a rat race. Ultimately, this is $18 billion in investments that could have been used to build houses, hospitals, medical research centres and schools. A visionary government could have made it easier for markets in Australia to develop safer, more effective vaccines, or better and earlier cancer detection, or crops with better yields, and higher essential vitamins and minerals. Total NHMRC (National Health and Medical Research Funding in Australia) is in the order of $800 million per year. $18 billion could have doubled our research budget for a decade. We missed the chance to lead the world in medical research, instead we might reduce world temperature by 0.00C.
Somewhere during the next decade good people will languish in hospitals who could have been treated. They might wait for an organ donation that may or may not come in time, while an expert researcher waits for funding to follow up an idea for regenerating that same tissue from stem cells. Who knows. The patients might not be in Australia. That’s the thing about medical discoveries. When you can reduce pain and suffering, there’s a market all over the world for your exports.
AUSTRALIA’S renewable energy target (RET) has driven $18.5 billion of investment in clean power and eroded wholesale energy prices since it was introduced a decade ago, a new report suggests.
In the black-is-white, up-is-down world of spin where being forced to use more expensive sources makes it cheaper to buy electricity.
The Clean Energy Council analysis released on Thursday finds wholesale prices are as much as $10 per megawatt hour lower as a result of the RET being in place since 2001.
The Clean Energy Council explains how spending more can be called a “reduction in prices”. Note the details. They “found” the RET reduced prices, but in the reasoning, the word is not “did” but “could”, the calculations come from models, and they are not sure why it would have reduced prices, but they can scratch together a few possible reasons. Of course, there is no mention I can see of total money paid by householders for electricity including taxes needed to pump the RET. It’s a 112 page report. The only tax it discusses is the tax benefits for investors in the government subsidized scheme.
Impact on electricity markets
Analysis shows that to date the RET scheme has had an impact on wholesale prices in most
regions. Without the RET, most regions would have experienced higher wholesale energy prices
than have been experienced with the RET. This is most evident in South Australia where a greater
proportion of renewable energy has been deployed. Modelling indicates that an average reduction in
wholesale prices of $4/MWh, with a maximum price reduction exceeding $10/MWh, could have
occurred on the wholesale market in South Australia as a result of the RET scheme.
Retail prices have decreased slightly as a result of the RET with the average change since inception estimated to be -$0.63/MWh to -$4.41/MWh. The costs of purchasing certificates have averaged around $0.06/MWh in 2001 to $3.13/MWh in 2012. These costs partly outweigh the decreases in
wholesale price, but overall a slight reduction in prices has occurred.
It is difficult to isolate a single driver for the reduction in wholesale prices with it likely to be attributable to a combination of factors. These could include:
- Reducing electricity demand – The uptake of solar water heaters and small scale roof top PV systems contributes to the reduction in electricity demand by displacing the need for grid based electricity.
- Reduced gas demand – to the extent that large scale renewable energy generation has reduced gas-fired generation (typically the last plant dispatched in the system). Uptake of solar water heaters may have also reduced the demand for gas for residential use.
- Spreading the location of generation to a greater range of regions, in some cases improving the efficiency of use of transmission systems and reducing system losses.
If Australia wants to be the clever country and not a quarry, we need the cost benefit study before the policy.