Terminating Australia’s carbon price scheme wasn’t enough for the Abbott government. Now the Renewable Energy Target is in its sights. [29 July 2014 | Peter Boyer]
“Network costs” – the upgrading of poles and wires – are the principal driver of higher power prices. PHOTO ORIGIN ENERGY
In a few weeks’ time a Hobart suburban household, a heavy energy user, will part company with the National Electricity Market and go it alone.
Seventy-two rooftop solar panels will produce 18 kilowatts of power, a lot for a normal household but not if it includes an electric welding business, as this one does. Besides driving the welders, the power will have to serve home electrical needs for 24 hours every day. Energy will be stored in computer-controlled, sealed lead-acid batteries: older technology than lithium-ion units but cheaper, and perfectly acceptable when weight isn’t an issue.
The off-grid system will end the household’s $10,000 annual power bills. It will take quite a few years to pay for itself, but neither Goanna Energy’s principal consultant Marc White nor Rob Manson of I Want Energy, which is installing the system, doubts that it’s value for money.
Last week my own winter power bill arrived – an unhappy experience that unfortunately I can’t blame on the carbon tax, or its absence. It’s up from last winter simply because with an extra body in the house we used more electricity. But coming at the end of a long period of steadily-rising power charges, only a small part of which can be blamed on the carbon tax, it brought to mind the kind of sentiment that’s driving growing numbers of Australian households and businesses to radical action.
The main driver of higher power prices is the huge investment over the past few years by Australian electricity utilities, estimated to be as high as $45 billion, on distribution and delivery networks. It prompted economist Ross Garnaut to accuse electricity suppliers of “gold plating” poles and wires.
With network costs keeping electricity prices high, going off-grid is beginning to look attractive for the consumer. The basic technology is in place, and the financial risk is decreasing with economies of scale now coming into play for both solar panels and battery systems.
But it’s certainly not attractive for the power utilities, already facing falling demand for grid power with the rise of rooftop solar. Whether state-owned as in Tasmania, NSW and Queensland, or private as in other states, they’re all businesses relying on a steady revenue stream.
This is why they’ve leaned on governments across Australia to make drastic cuts to feed-in tariffs payable to households producing electricity. It’s why coal-power producers wanted the carbon tax gone, and why they now want to see an end to the venerable Renewable Energy Target (RET).
No-one can claim the government broke an election promise in abolishing the carbon tax. But it’s fair to say the government allowed voters to think it would keep a strong RET.
I can already hear environment minister Greg Hunt’s response that he pledged during last year’s campaign that an Abbott government was committed to keeping the “20 per cent by 2020” target, and he’s confident this will still happen. No dispute there.
But as is often the case in such matters, it’s what he and his leader, Tony Abbott, have carefully avoided saying that’s important. Since the Howard government set it up in 2001 the legislated target has always been a specific energy output, not a percentage. We heard nothing of this during the campaign.
The RET was always intended to push limits. In 2001 its aim of doubling the amount of renewable energy in the country seemed ambitious. Then in 2009, with energy usage rising, the Rudd government increased the target nearly five-fold. In both cases, support was bipartisan.
In 2010, the RET scheme was split. The small-scale target covered home systems, which it was envisaged would contribute 4000 gigawatt-hours of power to the 2020 total. The large-scale target for hydro, wind, and other big installations was to contribute 41,000 gigawatt-hours by 2020.
Five years ago Australian electricity consumption was expected to rise to 300,000 gigawatt-hours by 2020. Based on this, in 2010 Greg Hunt strongly supported the fixed large-scale target, even adding that by 2020 it would need to be over 40 per cent higher.
But power consumption in 2020 is now expected to be around 250,000 gigawatt-hours — 15 per cent lower than was expected back then. If demand for energy from the grid remains static or falls, by 2020 large-scale renewables will take up 25 per cent or more of total energy used.
This is surely very good news, a real win for sustainable energy which would have to be welcomed by everyone.
Well no, not everyone. Power utilities and coal generators are pressuring the Abbott government’s advisory panel reviewing the RET to recommend weakening or abolishing it. The panel’s chair, climate sceptic Dick Warburton, is due to hand his report to the government any day now.
Last week Australia’s Chamber of Commerce and Industry, Business Council and Minerals Council quoted a Deloitte-Access Economics study they’d commissioned to argue that the RET is four times more expensive than the carbon price as an emissions reduction tool.
Another way of saying this would be that the carbon price was four times cheaper than the RET, which if true would have been handy to know when determining the pricing scheme’s future. But the report appeared a week after parliament axed the tax. Funny, that.
But the Deloitte findings about the RET are challenged by two other reports, an ACIL-Allen study for the Abbott government and a ROAM Consulting analysis for the Clean Energy Council, both of which conclude that the RET will eventually cause household power prices to drop.
But that’s in the future. Right now, Tony Abbott has said repeatedly, the RET is too expensive.
As if killing Australia’s working carbon price scheme wasn’t enough, now the government now wants to disable the best long-term abatement tool we have left.
• The cause of public health suffered a big loss with the death on Saturday, 26 July, of Dr Erica Bell, deputy director of the University of Tasmania’s Department of Rural Health. Besides a long list of scholarly and other publications and presentations across health and education, she was a strong voice for effective action to reduce human impact on climate and the environment and to prepare public health services for future challenges. She will be sorely missed by her colleagues in the medical and public health communities and in the wider public.