CEC Media Release: New study shows power prices will be lower with Renewable Energy Target
23 April 2014
A new study released today shows future power prices will be lower with Australia’s Renewable Energy Target in place than they would be if it was removed, the Clean Energy Council said.
Clean Energy Council Chief Executive David Green said removing the Renewable Energy Target means households would pay more than half a billion dollars a year extra for electricity in 2020, and up to $1.4 billion more each year beyond that.
“This means the average household would pay approximately $50 extra per year for their power bills by 2020 if the Renewable Energy Target was scrapped – and up to $140 per year more beyond then,” Mr Green said.
“This study shows that the Renewable Energy Target is holding electricity prices lower over the long term by minimising the use of increasingly costly gas for electricity generation.
“Recent price rises in Queensland and New South Wales reinforce estimates that gas will increase dramatically in price this decade, as Australia enters the international gas market.
“While the Renewable Energy Target remains a critical policy to support Australian projects, the good news is that renewable energy is coming down in cost. The Renewable Energy Target will help to protect consumers from the power price pain of rising gas prices, while delivering billions of dollars in investment and thousands of jobs for regional areas of the country,” he said.
The report, by leading energy market experts ROAM Consulting, was commissioned by the Clean Energy Council to look at the impact of the Renewable Energy Target under several different scenarios – an increased target, business as usual and a scenario where the policy was removed.
The Renewable Energy Target is designed to deliver at least 20 per cent of Australia’s electricity from renewable sources of power such as solar, wind, bioenergy and hydro by the end of the decade. The policy is currently under review, a process which is creating uncertainty for investors.
Mr Green said the study showed that removing the Renewable Energy Target would not only lead to higher power bills, it would also put $14.5 billion of investment in the Australian economy at risk – as well as 18,400 jobs that would be created by the policy.
“Removing the target would also increase its reliance on increasingly expensive gas and ageing coal-fired power, inevitably leading to less diversity and competition in the energy market,” he said.
“That’s ultimately bad news for consumers, given it is a move that would cost households as much as $1.4 billion a year beyond 2020.”
The highlights of the report were as follows:
- Each Australian household will pay over $50 more for electricity in 2020 if the Renewable Energy Target is dispensed with. The total cost would be half a billion dollars extra for electricity in 2020 and up to $1.4 billion extra each year beyond then if the policy is removed
- The policy will generate approximately 18,400 new jobs by 2020 if retained in its current form. This is made up of 9700 jobs in large-scale technologies such as wind power and bioenergy and 8700 in household systems such as solar power and solar hot water
- In addition to the $20 billion of investment already generated, the Renewable Energy Target will drive a further $14.5 billion of investment in large-scale renewable energy out to 2020, as well as many billions more in household renewable energy such as solar power. If the policy is removed, most of this simply won’t happen
- Removing the Renewable Energy Target means more of Australia’s electricity will come from coal and increasingly expensive gas-fired power, forcing up both power prices and emissions. For the Federal Government to meet its target of reducing emissions by 5 per cent it would need to find an extra 34.7 million tonnes of emissions abatement from other sectors without the Renewable Energy Target
- Due to reduced demand for electricity, the report estimates that renewable energy will deliver 22.6 per cent of the electricity consumed in Australia in 2020 as a result of the Renewable Energy Target’s current policy settings.