Disgraceful new renewable energy target proposal to destroy future of renewable energy in Australia and drive up power bills. A new proposal by federal senator David Leyonhjelm would destroy the future of renewable energy in Australia while driving up power prices, the Clean Energy Council said today. Clean Energy Council Acting Chief Executive Kane Thornton said the cynical and dangerous proposal showed a fundamental disrespect for the livelihoods of 21,000 workers in the renewable energy industry – as well as the 80 per cent of Australians that want more renewable energy.
“The proposal seeks to reward all existing hydro generation through the Renewable Energy Target (RET) at the expense of investment in newer types of renewable generation such as large-scale solar, marine and geothermal power,” Mr Thornton said.
“This proposal would lead to a wealth transfer of more than $900 million a year, or $13.5 billion between now and 2030, paid to existing hydro power at the expense of much of the planned $14.5 billion of investment in new large-scale renewable energy.
“As well as reducing new investment, this wealth transfer would lead to higher power bills for consumers in the future. Less competition in the energy market and greater reliance on gas for electricity would increase power bills, something that has been shown by multiple studies this year.
“While clearly hydro power is an important part of Australia's energy mix and continues to be the major source of zero emission renewable electricity in Australia, this proposal is at odds with the fundamental intent of the RET to attract additional investment in renewable energy,” he said.
A summary of the flaws in this proposal includes:
Supporting existing hydro at the expense of new renewable energy. This proposal would provide additional support to existing hydro generation, reducing the amount of new renewable energy generation needed by over 60 per cent, from 25,000 Gigawatt-hours (GWh) to just over 9,000 GWh. This scale of reduction would have a devastating impact on existing market participants, while the flaws in this approach would likely undermine any new investment.
Transfer of $13.5 billion to existing hydro operations. It would lead to a massive wealth transfer to existing hydro generation, at the expense of new renewable energy, worth more than $900 million per year, or $13.5 billion between now and 2030 when the policy ends. Almost 60 per cent of this would flow directly to Tasmania.
Loss of broader economic benefits. The benefits of investment in new large-scale renewable energy would be lost. This includes the $14.5 billion of expected investment and thousands of new jobs in rural and regional parts of Australia.
Loss of carbon abatement benefits. The new investment delivered by the current RET is expected to deliver carbon reductions of 194 megatonnes of carbon by 2030. If the policy was altered as proposed, taxpayers would need to fund additional measures through the Direct Action policy to replace this abatement.
Higher power prices for consumers. A reduction in new electricity supply and competition in the wholesale electricity market would lead to higher power prices for consumers. The benefit of new renewable energy investment on power prices was demonstrated by the ACIL Allen modelling for the recent Warburton Review, which showed that any scenario which led to less renewable energy also led to higher power prices.
Hydro power is already supported by the RET. Hydro is already eligible under the RET, where it generates above a pre-determined baseline. This provides an incentive for the maintenance and upgrade of existing hydro generation, and has provided revenue to Australia’s existing hydro power generators over the life of the policy.