The RET Review Panel’s interim report is expected within the next few weeks and we hear there is no joy in it for the wind industry and its parasites. The big end of town have made some walloping submissions – all targeting the mandatory RET as the costly and ineffective market distortion that it is. Here’s The Australian’s take on the position taken by the Business Council of Australia.

RET no longer relevant, says BCA
The Australian
Barry Fitzgerald
13 June 2014

THE nation’s peak business lobby has called for the controversial renewable energy target to be amended ahead of the scheme being brought to an end in 2030.

In a submission to the Abbott government’s expert panel reviewing the RET, the Business Council of Australia said the scheme in its current form was no longer relevant to Australia’s circumstances.

It said the RET was a poor climate change mitigation measure as it reduced greenhouse gas emissions at a high cost of abatement relative to other measures. Without changes, it said, the RET would continue the “wealth transfer from households and business electricity consumers and baseload generators to the renewable energy industry because it increases electricity prices to pay for renewable energy’’.

It said the RET should be amended and suggested “smoothly transitioning out of the RET by amending the target and ending the scheme in 2030”.

It noted when the RET was established under the Howard government, Australia’s electricity demand was expected to grow in perpetuity, and was forecast to reach 300,000 gigawatt hours by 2020. It is now forecast to reach only 230,000GWh due to a decline in demand.

“This means the legislated (20 per cent) target is now forecast to see renewable energy represent at least 27 per cent of Australia’s electricity generation,” the submission said.

“In an electricity market that is already oversupplied, there is no economic justification for electricity consumers to pay for additional generation capacity that is not required.”

The BCA also argued since the cost of “some” renewable energy has declined since the scheme was established, in some cases, it does not require a subsidy to be commercially deployed. It wants the RET amended to a “true” target of 20 per cent by 2020, and the government not to extend the target once all obligations have been met in 2030.

“Any amendments considered as part of the review of the RET should not adversely affect investments that have already been made and should be mindful of their impact on investments currently being planned or already subject to approval,” the BCA said.

The submission repeated previous BCA statements that the RET as its stands distorts electricity markets.
The Australian

The BCA seem to be taking the “Goldilocks” approach – avoiding the “too hot” and “too cold” extremes of the policy spectrum. From what STT hears, it’s not the approach the Federal Coalition are going to take – nor is it the approach of the Queensland State government (see below).

The Federal Coalition have received Parliamentary advice that the recent wind industry tosh about scrapping the RET creating “sovereign risk” is just that (see our post here). And, ditto, concerning wind industry threats about being entitled to compensation from the Commonwealth for “losses” they will suffer when the RET is wound back or scrapped (see our post here).

The advice has stiffened the resolve of a few who were momentarily spooked that scrapping the RET could cost the Commonwealth a small fortune in claims from wind power outfits. Realising the “sovereign risk/compensation” story was nothing more than the deluded and panicked pleading of an industry on the ropes, these boys are now keener than ever to put the RET to the sword.

And the Queensland State government’s submission to the Panel pulls no punches and calls for the RET to be scrapped. So does Aloca (an aluminium processor) and the Australian Industry Greenhouse Network (representing miners and manufacturers).

Here’s The Australian again.

Rooftop solar should go, RET told
The Australian
Annabel Hepworth
12 June 2014

A LANDMARK review should consider closing the federal scheme promoting the installation of rooftop solar panels and wind farms to new projects, the Queensland government says.

It argues that reducing the Renewable Energy Target will help alleviate bills.

In a submission to the RET review panel chairman Dick Warburton, obtained by The Australian, Queensland Energy Minister Mark McArdle warns that the RET would add about $60 to a typical residential customer’s bill in 2014-15.

“Given the impact it is now having on household bills it is timely that the review panel has an opportunity to propose amendments to the RET ensuring it is appropriately aligned with other objectives such as addressing cost-of-living expenses,” the submission says.

Solar prices have fallen for residential systems, with the prices on the larger-sized 5kW systems dropping by more than 32 per cent between August 2012 and last April.

Even though Queensland has slashed its feed-in tariff — which pays households to generate electricity from the panels — there are still about 3000 new PV systems being installed each month.

And when further cuts kick in on June 30, a significant fall in uptake of solar panels is not expected, the submission says.

“The phasing-out of support is an appropriate approach for maturing or established technologies,” it says.

It comes as some of the nation’s biggest emitters have also called for the RET to be wound back, a move that is being resisted by the clean energy industry.

Alcoa has told the review that the costs involved in the small solar scheme are a “substantial and unwarranted impost on large electricity users” and that the “highly volatile” nature of the scheme “erodes business confidence and planning certainty”.

The Australian Industry Greenhouse Network — which represents big emitters in sectors such as mining and manufacturing — says that the scheme should be abolished as it would lead to “a reduction in the cost burden immediately without affecting existing assets or sovereign risk”.

But the Australian Solar Council argues the solar industry needs the scheme as it is in decline because of the close of state and territory feed-in tariffs, uncertainty created by the RET review and the phasing out of the solar credits multiplier.

Queensland says the RET “undermines the viability of generation assets which were built in response to market signals rather than a government mandated subsidy”.
The Australian

Queensland has seen a huge uptake of rooftop solar – but it hasn’t replicated the wind rush of Australia’s south-eastern states (NSW, Victoria, SA and Tasmania). Queensland has a cluster of 20 tiny 600kw fans (with a piddling 12 MW of installed capacity) at Windy Hill, west of Cairns – run by Thai-turbine terrorists, RATCH; and that’s it. There are a number of “pipe-dream” projects proposed, but none of them have PPA’s – so are going nowhere fast. Hence the Queensland government’s focus on the cost impact of solar panels installed as a result of the RET and feed-in tariffs.

The solar boys shouldn’t be so worried about their future when the RET goes.

With spiralling power costs – and falling panel costs – there is already a healthy market for rooftop solar PV among domestic users (albeit, perhaps, a smaller market in the short-term than if the RET rort continued unabated).

But the big future for solar is in rural and remote locations, where it is more economic for a home, farm or station to go “off-grid”.

Supplying power transmitted through networked grids costs serious money (think installation and maintenance over generations): doing so for a few remote farms or a sheep station – with transmission lines extending for dozens and sometimes hundreds of kilometres just to reach them all – is uneconomic; the returns in revenue from those few users represent a pittance by comparison with the enormous upfront costs of connection to the grid and ongoing maintenance of the connection, over time.

In one case in NSW, a transmission line was upgraded recently at a cost of just over $2million: the line in question services a total of 9 farms, which together pay less than $14,000 in annual network service fees. The revenue recovered will never repay even a fraction of the cost of the upgrade – in the result, that cost will effectively be borne by all power consumers, thus subsidising the few remote users involved. The example cited is not an isolated case.

In NSW, the State government has just announced plans to privatize parts of its electricity network. It also has serious plans to address the costs of supplying remote rural homes and towns on the rural part of the network (which it plans to retain) by way of “off-grid” solar solutions.

The plan is fairly simple. Instead of maintaining transmission lines to small, remote rural towns, remote homes, farms or sheep stations, a “stand-alone solar system” will be provided. Solar panels sufficient to provide for the town or customer’s needs will be installed; with battery storage; and a diesel generator for back up. The idea has been around for 20 years, but with increasing costs attached to maintaining remote transmission lines and falling solar PV costs the concept has come into its own (see this paper from 1995 here).

The forecast cost of providing such a stand-alone solar setup to a home, farm or station ranges from between $35,000 to $70,000 per unit – depending, obviously, on the capacity of the unit needed to supply the particular customer. The manner in which these systems can be consumer-financed is being explored at the moment (with a lease/buy-back option on the table). The units are likely to last at least 20 years and, even allowing for maintenance costs of the units, will be far more economic than maintaining thousands of kilometres of transmission line and network gear for the sake of a relative handful of remote customers.

Solar trumps wind in the scenario above simply because inland Australia has an abundance of sunny days – even in winter – thereby giving solar PV a reasonable degree of reliability; whereas, no-one in their right mind would rely on the vagaries wind for anything (see our posts here andhere).

Moreover, solar PV prices continue to fall and face downward pressure due to the scale of China’s investment in manufacturing capacity. The Americans and the Germans – who also piled into solar panel making – are currently crying foul over being under-cut by Chinese panel manufacturers, trying to prevent the Chinese from competing in Europe and the US.

STT understands that the smartest among the solar boys – aware of the plans above – are already sharpening their pencils ready to do some serious business. Stand-alone solar – taking users off-grid in remote locations – doesn’t require the “support” of the fat pile of power consumer subsidies currently generated by the mandatory RET and REC Tax: it just makes pure economic sense and, therefore, good business. We wish them well – for a happy, prosperous and unsubsidised future.