Modelling from government advisor shows high RET may be cheapest option

Modelling from the federal government’s preferred energy market advisor reveals that a high renewable energy target offers the cheapest avenue for consumers to reach the country’s modest emissions reduction targets for 2030.

The latest modelling from Frontier Economics, a long-time critic of the RET, are based on a cost of large-scale solar plants that assumes them to be barely different in 2040 to what the industry says are attainable now.

Frontier assumes that large-scale solar will fall to around $80/MWh in 2040. Even in its low-cost scenario, it predicts 2040 costs of $72/MWh. Many in the industry say that those estimate are not far off what can be achieved now.

The modelling also assumes a solar cost reductions of just 1 per cent a year, and that under most of its scenarios, very little large-scale solar is built over the next 15 years.

Even in the “high RET” scenario, it assumes virtually no added large-scale solar plants until the mid 2020s.

But the report from Frontier Economics appears to completely ignore the rooftop solar and battery storage market, and the impact that would have on the assumptions.

The AEMC makes it clear what its preferred scenario is: renewables make a small share of total generation by 2030; coal remains at 60 per cent; and gas is a healthy 18 per cent.

The AEMC says maintaining this high level of fossil fuels (80 per cent) more than a decade from now is good because it means more synchronous generation and inertia – again ignoring the technology alternatives identified in the Finkel report.

In the high RET scenario, gas is reduced to just 2 per cent – hence, perhaps, their push for the EIS scenario.

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Image Via: reupa/flickr, CC BY-NC

© 2016 Solar Choice Pty Ltd

Giles Parkinson