The Climate Change Authority released it’s final report on the Renewable Energy Target (RET) Scheme at 10am on Wednesday 19 December 2012. The recommendations made in the report will require legislative change if they are to take affect and, will be fiercely debated within Parliament. The key debates affecting the solar industry will be the recommendation that the RET target remain unchanged and that the threshold for the Small-scale Energy Scheme be reduce to 10kW.
The first significant recommendation is that the Renewable Energy Target for 2020 should remain unchanged at 41,000 GWh, the Authority stated that:
“adjusting the target (in either direction) would entail significant risks. In particular, lowering the target would risk undermining investor confidence and increasing risk premiums for prospective renewable energy projects. More generally, it could exacerbate existing uncertainty surrounding climate change policy, and potentially reduce the likelihood of meeting any given renewable energy target.”
The Authority’s analysis suggested that increases in energy prices caused by the RET would be ‘relatively modest’, the figures suggest that the current scheme would add between $12 and $64 to the average household bill, changing the RET to 20% would result in around a $17 saving. The affect on Australia’s carbon emissions targets would be an additional 47 million tonnes of greenhouse gas emissions between now and 2020-21, as well as an estimated 13,000 GWh less renewable energy installations. The financial implications of the emissions and lower installation rate for Australia was not included in this report.
The second significant announcement related to Small-scale Renewable Energy Scheme (SRES). The original SRES set up was found to contributing to a disproportionately high share of the overall RET costs, but that the actions taken by State Governments to reduce the cost of the small scale scheme should see the impact on consumers drop from $36 annually in 2012-13 to $10 in 2020-21.
Although current measures will reduce the impact on energy bills in the future the Authority made a number of recommendations for containing the SRES in the future. The most significant suggestion for the solar industry was the anticipated reduction in SRES eligibility threshold from 100kW to 10kW. The Authority states that this measure is to reduce a surge in solar PV installations on commercial properties driving up the cost of the RET and advised the Australian Federal Government consult with stakeholders as to what an acceptable threshold should be. If this recommendation is adopted projects above the lowered threshold will included in the capped large-scale scheme.
The Authority also recommends that the Minister for Climate Change and energy Efficiency retain the power to reduce the SRES price cap (currently set at $40) should electricity prices soar as they have in recent years, this cap will effectively act as an ’emergency brake’ on rising energy costs.
Timetable for potential adoption of recommendations
The final report has been provided to the Minister for Climate Change and Energy Efficiency, as a result of this the Report must be tabled in Parliament within the next 15 sitting days. As the sitting days for 2012 have finished and the the first sitting day for 2013 is 5 February, it is unlikely that the report will be tabled until some time after this.
The Australian Government have 6 months after the report is presented to respond to the finding and recommendations. The Climate Change and Energy Efficiency Minister, Greg Combet, said that the government recognised ‘the importance of stability in the nation’s climate change policies in delivering clean energy investment and opportunities’ and as a result the Government would respond the Authority’s recommendations early in 2013.
© 2012 Solar Choice Pty Ltd
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