Global investment bank UBS approves Labor’s proposed 50 per cent renewable energy target
Australia’s Energiewende: UBS on why 50% renewable target is good, REneweconomy, By Giles Parkinson on 14 September 2015 Global investment bank UBS has conducted the first in-depth analysis of Labor’s proposed 50 per cent renewable energy target for Australia by 2030, concluding that it will require around $80 billion in investment, but much of this would need to be spent anyway.
In various scenarios outlined in the report, UBS says that up to 20GW of wind energy will need to be built by 2030, and 26GW of solar (both rooftop and large-scale), along with around $10 billion in grid costs. Around $4.8 billion is expected to be spent on battery storage by networks, and nearly $3 billion by households.
But it says this much of this will come from private investment, mostly from listed companies. And much of it needs to be factored in because it would be spent anyway to replace ageing coal and gas plants. And, UBS notes, all polls point to the popularity of renewable energy.
“A big part of the above cost will be incurred in one way or another as most of the thermal fleet in Australia is old and will need replacing.”
The intervention of UBS comes at a critical time, with the Canning by-election ……….
UBS says that the current target aims for around 7GW of wind and 6GW of solar, but it is not working anyway, because the policy certainty is not there – an issue we explore in this story, If wind energy is this cheap, why aren’t wind farms being built?………
Indeed, UBS suggests that a reverse auction process might be the best way to meet a Labor 50 per cent target – the same system adopted with great success in the ACT, and now by Germany and Texas and elsewhere (South Africa, UAE and Brazil also come to mind).
“Renewable energy suppliers and financiers want revenue certainty,” UBS analyst David Leitch writes.
“Thermal suppliers want to be able to plan their future with confidence. We think capacity auctions meet both of these goals.”
How would this work?
Leitch says legislation could set a quantity of renewable capacity to be added to each year. For instance, a 50 per cent by 2030 target requires around 70TWh of new renewables to be delivered over the 13 years from 2018 to 2030. That’s around 5TWh per year…………http://reneweconomy.com.au/2015/australias-energiewende-ubs-on-why-50-renewable-target-is-good-76557
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