Electricity customers could save around $840 each if the Federal Government modifies the Renewable Energy Target (RET) scheme to reflect decreasing energy demand forecasts, a leading energy company has advised today.
New modelling, commissioned by TRUenergy and conducted by economic analysts ACIL Tasman, shows that redesigning the current RET would reduce the cost of the scheme by $25 billion to 2030 while still delivering 20% renewable energy.
Under the Federal Government scheme, generators must source 20% of their electricity from renewable sources by 2020. Based on current lower energy demand forecasts this legislated 60,000GWh target would actually lead to around 25% of energy coming from renewable sources and would involve a subsidy of $53.3 billion to 2030 resulting in unnecessary increased costs to households.
ACIL Tasman considered two scenarios:
- The current scheme; and
- A “real 20%” renewable target which keeps large scale renewable technologies, such as wind, separate from small scale renewables such as rooftop solar PV and solar hot water
Even under the “real 20%” scenario, ACIL Tasman found that based on current electricity demand forecasts, the cost of the subsidy would be reduced to $28.1 billion – down from $53.3 billion – which would almost halve the total cost of the scheme in 2020 for an average customer.
TRUenergy’s Managing Director, Richard McIndoe, said that TRUenergy is supportive of a 20% RET, but the unexpected fall in energy demand recently illustrated the need to build greater flexibility into the scheme.
“While policy stability is very important, we need to balance this with a scheme design that can adjust to fluctuations in demand and not impose unnecessary costs on the economy and our customers,” Mr McIndoe said.
“We are committed to increasing the amount of electricity produced from renewable sources, but the scheme needs to take into account the overall cost to consumers.
“The current target was set when demand for energy was increasing at record levels.
“Those forecasts have now decreased significantly. Policy makers did not anticipate demand falling in this way when the scheme was designed. Neither did we. But the change in demand is significant and warrants a revision of the Renewable Energy Target to achieve the original aim whilst ensuring that it is done in the most cost effective way.
“Consumers will pay more than necessary, at a time when they are facing significant cost-of-living pressures, unless modifications are made to the target.”
TRUenergy will now consider the modelling before making a submission to the Climate Change Authority’s Renewable Energy Target review.
Earlier this week TRUenergy announced that it had entered into power purchase agreements with two wind farm projects in New South Wales with a total installed capacity of almost 215MW. These agreements mean that TRUenergy will buy 100% of the energy generated and their large scale generation certificates.
TRUenergy’s generation portfolio also includes the 111MW Waterloo and 66MW Cathedral Rocks wind farms in South Australia and it is seeking to develop a number of projects including the $300 million Stony Gap (123MW) wind farm in South Australia to further expand its renewable generation.