Queensland Productivity Commission report ignores benefits, emphasises costs of QRET

A new study from the Queensland Productivity Commission has estimated the state’s renewable energy target of 50 per cent by 2050 will cost $10.8 billion in subsidies, and has advised the state government to proceed with caution on its delivery.

The estimated QRET cost was released by the QPC as part of a draft report into the state’s electricity prices, which studiously ignores the benefits of solar and wind energy, and completely ignores large-scale solar.

The study into the QRET (Queensland Renewable Energy Target) – and its conclusion that this was a bad idea for the state – was based on a report by ACIL Allen.

The ACIL Allen report assumes that the QRET will be met with an additional 6,100MW of wind energy – and no additional large-scale solar. This is despite the likes of Bloomberg New Energy Finance identifying Queensland as the most prospective market for large-scale solar, and likely to account for most of the RET across Australia.
The estimate of a $10.8 billion subsidy comprises $8.6 billion for an estimated 6,300MW of additional large-scale investment (almost exclusively wind), and $2.2 billion for small-scale investment.

The subsidy includes payment to those rooftop PV installations that are already expected to occur in the base case between 2018 and 2030, as well as the additional 300MW expected to come forward in the QRET case.

It uses this number to suggest that the marginal cost of subsidy for each additional megawatt of renewable capacity is around $1.47 million for large-scale renewables, and $7 million for small-scale generation.

Despite this, the ACIL Allen modelling projects that the additional generation capacity brought on by a QRET would decrease wholesale electricity prices compared to the base case, and quite significantly.

On average, wholesale electricity prices are projected to fall by about $10 or 15 per cent between 2016–17 and 2034–35. The wholesale prices in other NEM regions are also projected to be lower under a QRET relative to the base case.

The report even admits that that the QRET will not affect retail prices – pushing them up just 0.5 per cent for retail users. This compares to the 87 per cent increase experienced in just the last 10 years – almost exclusively from network costs. But still the QPC argues against it.

© 2016 Solar Choice Pty Ltd

Giles Parkinson