Iron ore price, page-2239

Fortescue adds it voice to growing list of RET industry critics





Andrew Forrest’s Fortescue Metals Group has added its voice to the growing industry call for the scrapping of the renewable energy target, warning a policy fixation with renewable energy was coming at a high cost to consumers.

Fortescue chief executive Nev Power told The Australian the RET was incentivising the development of renewables without due consideration to the impact of the intermittent supply on the broader power grid, leaving households to foot the bill for costly and inefficient sources of back-up power.

“I think (the RET) has outlived its usefulness and I don’t think it’s the way to go forward,” Mr Power said. “We should look for something that tries to create balance rather than simply incentivising one form of energy generation in a form that is not reliable and that doesn’t take into account the full cost of providing 24/7 power generation. Ultimately, who pays for this is the electricity consumer and this can have significant impacts on household incomes.”

Glencore, Australia’s biggest coalminer, on Wednesday called for the abolition of the RET and suggested Australia pull out of the Paris climate accord. Glencore’s senior Australian executive, Peter Freyberg, said the measures would bring relief to Australian industry struggling under the weight of rising power costs.

While Glencore’s Australian mines produce the coal that feeds into the nation’s coal-fired power station, iron ore miner Fortescue is only exposed to the electricity market as a customer.

The company is phasing out diesel generated electricity across its Pilbara operations and has long been an exponent of gas as a means of efficiently reducing Australia’s energy footprint.

The government’s renewable energy target, in place with bipartisan support, aims to double the amount of electricity from renewable sources to 23.5 per cent by 2020. But its effectiveness has come under question amid rising energy prices in eastern Australia and blackouts in South Australia.

Mr Power said it was crucial that energy policy considered the knock-on costs from the intermittency of renewable energy sources such as solar and wind or risk seeing the market develop a “massive imbalance”. “The RET-type schemes strongly incentivise generators without recognition that maybe the grid is not capable of having that level of intermittent supply, and particularly South Australia and perhaps Victoria are in that category,” Mr Power said.

“Continuing to connect intermittent supplies into those (states) is going to lead to greater and greater instability and ultimately higher cost power and less reliable power for Australian households.”

He said developing gas in tandem with renewables would help smooth the transition for consumer and industry while also reducing emissions. “We want to make sure our communities can enjoy low-cost energy, and if there’s anywhere in the world that should enjoy low cost reliable energy it’s Australia,” Mr Power said.