A new study on the impact of a diluted or axed Renewable Energy Target has been released.
Intelligent Energy Systems (IES), an Australian energy advisory and consulting company with a 30 year history, has undertaken electricity market modelling to assess some of the impacts that may occur if the LRET (large-scale) component is revised down to 20% of electricity demand or scrapped entirely from 2015.
The bottom line is it’s bad news – unless you’re particularly fond of coal.
Gen-tailers will step away from renewable energy projects to pursue lower-cost fossil fuel options, primarily coal – and there have already been signs of this occurring as Big Energy anticipates the outcome of the RET review.
IES sees the share of coal generation will likely increase by 6-9% due to rising gas prices, the removal of carbon prices and decreased LGC prices. This it says will create “some challenges for Australia to fulfil its 5% emissions reduction target under the Kyoto Protocol”.
Wind project development will reduce by 2,280 MW under a reduced LRET scenario and by 5,100 MW if the RET is axed altogether, resulting in the loss of investment opportunity of $4.5 billion and over $10 billion respectively.
IES says higher volatility in electricity prices could be experienced as there will be more opportunity for generators to flex their muscles.
It appears there will be no winners in a weakened or axed RET – aside of course from fossil fuel interests and Big Energy. Basically Australia would be running straight back into the polluting, greedy clutches of the players it was seeking to distance itself from through the pursuit of renewable energy – and the promise of cheaper power, after perhaps some initial and fleeting minor relief, will likely turn out to be an empty one.
The IES report can be viewed here (PDF).
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