The story so far
- The Renewable Energy Target has had bipartisan support since its introduction by the Howard government in 2001.
- Since 2001 it has delivered $18 billion of investment and tens of thousands of jobs, many of these in regional Australia.
- Greenhouse emissions are 22.5 million tonnes lower because of the RET
- Around 13% of Australia's electricity is now generated from renewable sources and we are on track to achieve our 2020 targets.
For regional economies, new wind energy projects provide economic diversification and much-needed jobs and investment. For example, Waubra Wind Farm increased Gross Regional Product for Central Highlands by $346m, or 6.0%, over 10 years and provided an extra 1680 FTE jobs, or 2.7% over that time.
Cost of uncertainty
- The RET is most efficient at building new infrastructure when it provides certainty. The political uncertainty perpetuated by ongoing biennial reviews works against this goal. Cutting back the RET target level would exacerbate this uncertainty still further.
- The RET has just had a systematic and extensive review by the Climate Change Authority. It found a fixed 41,000 GWh target and four year reviews are the appropriate way to provide certainty to industry.
Effect on power prices
- An increase in cheap, renewable energy is one of the factors keeping wholesale power prices down (p20), which cancels out part of the RET’s cost. Between 2001 & 2012, the RET lowered wholesale energy prices by as much as $10/MWh.
- Lowering the RET target from 41,000 gigawatt hours would save very little from an average power bill. One estimate is that cutting the RET entirely would save only $10 - $15 per year.
- New wind power is already cheaper than new gas-fired power (Bureau of Resource and Energy Economics) as gas prices rise to export parity.
- The greatest driver of power price rises has been the 'gold-plating' of networks with $45 billion of investment over the last five years.
Case Study of a Victorian power bill
We support lower power prices so we encourage the government to pursue cost savings in the most expensive components of the bill. For instance, modest reductions in gold-plated network costs would achieve far more to lower power prices for all consumers than cuts to the RET.
Source: Australian Energy Market Commission, 2013 Residential Electricity Price Trends
National residential electricity prices (p12), applied to 'medium' household consumption in Victoria (4645 kWh per annum)