Abolishing Renewable Energy Target will increase cost of electricity, company profits: report
AM
By
David Mark and staff
Posted 16 minutes agoMon 18 Aug 2014, 2:00pm
PHOTO: Abolishing the Renewable Energy Target will increase electricity prices, according to a new report.(ABC: Lucy Barbour, file photo)
RELATED STORY: RET to increase power prices and cost jobs, business warns
MAP: Australia
A report commissioned by green groups has found that abolishing the Renewable Energy Target (RET) will increase profits to electricity companies by more than $10 billion.
The Federal Government has commissioned its own review of the RET, which is expected to recommend the target be reduced or abolished altogether.
The environmental groups' modelling also says household electricity prices would rise if the RET is scrapped or reduced.
AUDIO: Abolishing RET will increase profits for generators: report (AM)
Australian Conservation Foundation chief economist Dugald Murray says companies that own coal-fired power stations stand to increase profits by $9 billion between 2015 and 2030 if the RET is abolished.
The calculations are essentially based on increased market share with the wholesale price going up because companies are not competing as much with the renewable energy generators who can operate at a lower cost.
"What we're seeing is renewables are actually becoming very competitive, and they're taking market share away from fossil fuel [generators]," Mr Murray said.
"This drop in market share has caused many of the fossil fuel generators to call for the RET to be abolished or to be reduced, and they often claim that reducing the RET would reduce costs to customers."
But Mr Murray says he does not believe this will be the case.
The real winners are not households, but the companies that own the fossil fuel generators.
Dugald Murray
"The real winners are not households, but the companies that own the fossil fuel generators. They stand to reap ... [additional] profit if the RET is reduced and even more if it's abolished," he said.
"Over the long-term – and this is out to 2020 and beyond – the modelling shows that we're not going to see a reduction in household power bills. In fact, we're going to see a slight rise of around $35.
"That's because renewables, once they're constructed, they're free to operate the fuel that they use – sun or wind is free, compared to the fossil fuel generators, which have to pay for coal and gas."
Mr Murray says the call by the electricity companies to abolish the RET is all about protecting their profits.
"In fact, if the Government is interested in providing ... an additional $10 billion profit to companies like Origin, EnergyAustralia and AGL, it's a catalyst. If it wants to keep our renewable energy industry growing, lower carbon pollution and keep power bills in check, it won't make any changes," he said.
No decision yet on RET: Cormann
Finance Minister Mathias Cormann insists the Government has not yet made any decision to abolish the RET.
However, Fairfax reports businessman Dick Warburton, who is reviewing the initiative, has been asked by the Prime Minister to do more work on terminating the target.
Mr Cormann says the Government will wait to see Mr Warburton's report before making any decisions on the RET.
"The Government remains committed to the Renewable Energy Target – that is our policy," Mr Cormann said.
"We are currently waiting for the results of a review which is underway. Obviously we'll make decisions once that review is received in an orderly and methodical fashion."
Greens leader Christine Milne says the RET has been a major contributor to bringing down greenhouse gas emissions and making power cheaper for households.
"It gives the community not only that good feeling of helping in the task of addressing global warming, but it gives them a sense of ownership of their own," she said.
"You have to ask why would Tony Abbott want to destroy investment? Why would he want to destroy jobs? Why would he want to make power more expensive for households? There's one very clear answer.
"It's because his mates at the big end of town, in the coal industry in particular, can't cope with the competition from renewable energy."
The RET was initially set up by the Howard government to encourage investment in electricity produced from renewables like solar and wind.
The Rudd government expanded the scheme to mandate 20 per cent of all electricity would come from renewable by 2020.
The Energy Supply Association, which represents electricity companies, and Environment Minister Greg Hunt did not respond to AM for comment.
http://www.abc.net.au/news/2014-08-...arget-will-increase-electricity-costs/5677972
