Australian news, and some related international items

Fossil fuel industries losing revenue with the success of the Renewable Energy Target.

Putting wind up generators BY: GILES PARKINSON  The Australian September 28, 2012 BERNIE Fraser built up an enviable record of responsible economic reform as head of Treasury, governor of the Reserve Bank, and as chairman of two prominent superannuation funds.   …

He is a shrewd analyst with a special interest in consumer equity. He is not likely to be easily fooled by the subtleties of the campaign against renewables when the Climate Change Authority, which he heads, sits down to its first major task working through the submissions to its review of the Renewable Energy Target.

First, Fraser will want to cut through the numbers, and in doing so may well wonder if there has ever been such a concerted campaign by big business to act in what they describe as the “public interest”, and to lobby so aggressively for a change in key public policy that they say will save householders 14c a day

….. the real number that concerns the incumbents [fossil fuel energy generators] is not the purported saving to consumers, it is the loss of revenue from the fall in wholesale energy prices.

It is not 1c or 14c a day, or $840 over 18 years, it is $2.7bn a year. That is the potential loss of revenue for the incumbent coal and gas-fired generators if the RET continues as a fixed target of 41,000GWh.

How do we get to that number? It’s a rough estimate of how wholesale
power prices will fall as wind and solar shunt coal and gas-fired
power stations out of the bidding stack in the National Electricity

It’s not an exact science, but it’s estimated that wind power (which
is now used more than coal in South Australia) has caused wholesale
prices to fall in that state by about 10 per cent.
If this were applied to the whole market in 2030, and total generation
of at least 270,000GWh, its impact would be $2.7bn.

The Australian Energy Market Commission last year said the impact
could be $10-$15/MWh, or $4bn a year at the top end. Even a fall of 5
per cent – or $1.35bn – is scary enough for some generators, who are
buried under so much debt that relatively minor changes in revenue
sends their accounts into the red.

Not many of the incumbent generators and the other interests came
clean about that in their submissions to the CCA.

Most were too busy shedding crocodile tears over the impact on the
poor consumer. Some did, however…….
Pacific Hydro, the country’s largest specialist renewable energy
company, had little sympathy for [the fossil fuel utilities’]  plight.

“We can already see the evidence of the positive effect the RET is
having on reshaping energy supply by the recent closure of the
Playford and Northern thermal power stations in South Australia,” it
wrote in its submission. “With the confluence of moderating demand and
increased generation from wind energy, the market has effectively
delivered what (the) contracts for closure program was designed to do.

That is, gradually close down the oldest and least efficient thermal
plant. The RET, if left in its current state, is likely to continue to
play this critical role of (effecting) an orderly transition.”

Pacific Hydro argues that this will deliver this transition in a far
more economically efficient way, and without the need to use
consolidated revenue, and free up more money for education and health.

This leads to the second major consideration for Fraser and his team –
the future. The clear intent of the carbon price and the renewable
energy target is, as the legislative package suggests, a Clean Energy
Future. The Renewable Energy Act is specific in saying that it should
seek “at least” 20 per cent renewables by 2020. So if the target looks
like overshooting, is that a reason for putting the legislation in

If Australia did, it would be unique in the world. This was a point
that GE, the global conglomerate that is also the world’s biggest
supplier of energy equipment, made in its submission. It specifically
pointed to the case of California, which upped its target to 33 per
cent when the state realised that 20 per cent would be easily reached.
It could have pointed to any number of instances where countries have
exceeded expectations of deployment. China has lifted its solar
target, for instance, three times in the past 12 months.
Of course, Australia has some form on this. The Howard government,
despite introducing a ground-breaking Mandatory Renewable Energy
Target in 2001, effectively closed the renewables industry after
finding that its target was met way ahead of expectation and bowing to
industry pressure not to extend it.

Victoria came to the rescue of the wind industry with a state-based
target, but this was also diluted under pressure from the Latrobe
Valley generators.


September 28, 2012 - Posted by | AUSTRALIA - NATIONAL, business, energy

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: