A new report from Bloomberg New Energy Finance (BNEF) evaluates some of the changes to Australia's 45 TWh renewable energy target (RET) that the government may be considering in its current review of the policy.
BNEF estimates that Australia's current RET scheme is expected to drive AUD 35 billion of investment in 14.2 GW of new renewable capacity by 2020. This will come at an average nationwide cost to consumers of AUD 500 million per year from 2015 to 2020, with 24,800 workers employed each year in construction and operations, BNEF says. The RET is expected to reduce power sector emissions by 5% in 2020, compared with 2013 levels.
According to the BNEF report, the RET will save end-consumers on average AUD 2 billion per year after 2015 through 2030 because the costs of the policy are outweighed by the reductions to wholesale electricity prices it achieves. However, the scheme could run into trouble if the 10-year tail end of the current design proves too short for projects to obtain financing, the report concludes.
The Australian government is expected to make a decision on RET revisions in the middle of this year.
‘In particular, the review will consider the contribution of the RET in reducing emissions, its impact on electricity prices and energy markets, as well as its costs and benefits for the renewable energy sector, the manufacturing sector and Australian households,’ says a joint statement from the Australian ministries of industry and environment. ‘Australia's diversity of energy sources is one of our greatest national strengths. Renewable energy has contributed to the energy mix, but we must ensure that the program is operating effectively.’
If the RET is abolished, BNEF says, renewables investment will fall by 59%, and 63% less capacity will be installed by 2020 than under the current plan. Small-scale PV would become the only viable clean energy industry. The cost to consumers between 2015 and 2020 will be 22% higher at AUD 600 million annually, the report calculates, because no savings would come from wholesale power prices and legacy assets would continue to be compensated. Power sector emissions will be 5% higher, and 11,100 fewer people will be employed, BNEF says.