Tony Abbott walking a solar tightrope

 

Tony Abbott walking a solar tightrope

By on 17 January 2014
Print Friendly

In 2012 I attended the annual general meeting of the Clean Energy Council, a room full of heavy hitters, the heaviest strangely belonging to gas and coal generators.

The newly settled CEO David Green offered an optimistic, albeit challenging, view of his new post and went to great lengths to point out the need to have allies in the government and opposition, the most significant issue on the day was the then recent decision of Greg Combet to slash the STC multiplier, ultimately pulling two years out of the life of the program.

To this end Green referred to our guest speaker, Ian Macfarlane, at that time holding an opposition position as shadow minister for energy and resources. What we heard from Macfarlane took many of us by complete surprise. Essentially he told us that the early closure of the STC multiplier was contrived and delivered via a bi-partisan deal between he and his Labor opposites, Greg Combet, Martin Ferguson and Mark Dreyfus, the justification for this was to ensure that the RET retained its integrity.

We, who sat there rather surprised, listened on to learn that whilst it may have upset the solar incumbents, it was imperative for the future of the RET. It was a convincing argument. He then continued to go into detail about the RET and the threats made to alter the legislation on which it was based.

The issues were these. Firstly, those who oppose the RET were insisting that the RET legislation, currently dictating 41,000 GWh (gigawatt hours) of renewable generation by 2020, be changed to reflect an actual twenty percent figure at 2020. Macfarlane went on to say that the forecast electricity demand at 2020 was set to be much lower than even 1997 levels and 41,000 GWh would actually take the renewables contribution to more than 25%.

Wouldn’t that be great! The other interesting note was that it would only take one more aluminum smelter to shut down to shoot this figure to around 35 per cent!

It should be noted at the time that the market indicators showed a sharp decline in energy consumption going forward. Current forecast data shows the figure to be reasonably stable at 200-250,000GWh by 2020, a perfect fit for the RET as is.

Prime Minister Tony Abbott is insisting that in getting to this milestone, Australians will be pillaged when it comes to energy costs, but it is important to why he is taking this stance. The runaway success of renewables in Australia, helped along by six years of Labor has taken all of the incumbent generators by complete surprise, and they are calling foul.

Somehow they seem to have managed to convince Abbott that the economy depends on burning coal to produce electricity, because it’s cheap. The problem with this assertion is that it is no longer cheap. Thanks to falling component prices and the initial government assistance renewables can now compete with new build coal fired power.

It goes without saying that the RET is critical to investment in renewables. A project we have explored recently is a 60MW project for the Gold Coast flood plain. We have been able to demonstrate that a combination of solar and storage can enable us to achieve N-2, possibly N-1 reliability and because of storage, earn $80 per megawatt hour minimum.

This is because we can exclude Powerlink transmission inputs from our dispatch costs. Ex RET this achieves a  7% return on investment, with the RET it’s more viable at 11 per cent. Used as a peaking plant, the RET gets us into no brainer territory of around 15 per cent ROI.

To derail this type of investment when it is just gaining momentum just doesn’t make sense. The reality is that removing the RET will provide minimal and short term relief only, whilst paralyzing the development of a cost competitive energy solution for Australia, not to mention a clean solution.

All of the experts have a handle on this phenomena, why doesn’t the prime minister?

Greg Hunt and Ian Macfarlane, purely as result of their collective inertia from years in opposition, appear to have become the only voices making sense in the current government. All we can do is hope for our last remaining allies in government prevail over Abbott’s haphazard agenda, right now it’s totally messed up.

Share this:

Leave a Reply