Cutting Renewable Energy target would make customers pay more
Cut to renewable target would cost power consumers http://www.businessspectator.com.au/news/2013/8/9/renewable-energy/cut-renewable-target-would-cost-power-consumers By a staff reporter 9 Aug, Bloomberg New Energy Finance has released a study finding that cutting the Large-scale Renewable Energy Target to levels recommended by some energy retailers would increase costs to consumers by $1.3 billion.
The study analyses the effects of reducing the target from the current legislation of 41,000GWh down to 27,000GWh, which Origin Energy and Energy Australia have advocated would be consistent with 20% of Australia’s like electricity demand in 2020.
It finds that while there would be savings from retailers having to buy less renewable energy certificates, this is outweighed by an increase across all electricity sold in the wholesale market of $5 per megawatt-hour. This is because extra renewable energy supply tends to depress the overall electricity market price because of its low operating costs.
In addition Bloomberg believe that if the government were to cut the target this would heighten financiers perceptions of investment risk leading to a finance premium of 0.75%. This would increase the cost of the remaining renewable energy projects required to meet the reduced the target.
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