Power prices will be lower with RET, says study

ROAM Consulting has conducted a study on Australia’s Renewable Energy Target (RET), said to be the most extensive modelling conducted on the scheme to date. The study was commissioned by the Clean Energy Council (CEC) to look at the impact of the RET under 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% of Australia’s electricity from renewable sources of power such as solar, wind, bioenergy and hydro by the end of the decade. The report estimates that the RET’s current policy settings will keep it on track, with renewable energy delivering 22.6% of Australia’s electricity in 2020.

Furthermore, the report has found that future power prices will be lower with RET in place than they would be if it was removed. The report finds that 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.

“This means the average household would pay approximately $50 extra per year for their power bills by 2020 … and up to $140 per year more beyond then,” said CEC Chief Executive David Green. He explained, “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 NSW reinforce estimates that gas will increase dramatically in price this decade, as Australia enters the international gas market … [but] 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.”

The policy is also forecast to generate approximately 18,400 new jobs by 2020 and to drive $14.5 billion of investment in large-scale renewable energy, in addition to the $20 billion of investment already generated. Green said the removal of the RET would put these jobs and investments at risk.

“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.”

The report can be viewed here.