Herald Sun
Thursday 30/4/2009 Page: 51
IT WAS anything but full steam ahead for Australian geothermal pioneer GeoDynamics this past week as it contemplated the implications of the accident that closed down its first renewable energy demonstration plant at Innamincka. The pint-sized 1MW geothermal electricity generator was to be commissioned this week, with an official opening next month.
It would have been a timely event, coinciding with expectations that today's Council of Australian Governments meeting in Hobart will finally give its blessings to the long awaited renewable energy target. The target will force the electricity sector to produce 20% of its power from renewables by 2020 or face penalties.
There have been reports this week that Prime Minister Kevin Rudd would urge COAG premiers and ministers to strengthen incentives for zero emissions power generation in the renewable energy target legislation. While government sources could not confirm those reports yesterday, they could confirm that the target will be on the COAG agenda. And here is something else that can be confirmed for the benefit of all those organisations who oppose the target: unless electricity retailers decide to rip customers off, the target will help to reduce - that's right, reduce - the cost of power.
What a clever policy. . . it assists carbon pollution reduction by displacing power from fossil fuels, incentivises new investment and jobs in the clean energy sector and avoids the use of peaking plants, which are the real drivers of higher electricity costs. It is incomprehensible that vocal lobbyists for polluters and energy intensive industries are not embracing the target. Instead they are whingeing that when "the inevitable" power price hikes flow from the target, they will want more hand-outs. Get this: the price hikes are not inevitable.
Get these: a CRA International study for the National Generators Forum last year, plus reports from ACIL Tasman and ROAM Consulting, all showing through their modelling and expertise in energy markets that wholesale electricity prices will fall sharply when the target is introduced.
You read it first in this column in February, and in case you missed it, it goes like this: loading the grid with extra power from wind and solar generators will remove the need to fire up gas plants when demand peaks and existing electricity supply cannot keep up. It is when peaking gas plants swing into action to top up supply that wholesale electricity prices go through the roof. Such episodes account for about a third of the total yearly wholesale take.
Displace the need for these extraordinary pricing episodes and the wholesale price settles down to a more comfortable average. Instead of bemoaning the onset of the target, energy customers ought to be calling for stronger targets like those in other parts of the world. According to a REN21 report, Austria's is 78% by 2010; Sweden's 60% by 2010; Portugal's 45% by 2010; Spain's 29% by 2010; and Denmark's 29% by 2010.
In these countries, they are predominantly relying on solar, wind, tidal and geothermal energy to meet their targets - and note that those targets are 10 years ahead of Australia's. In this country, we have the greatest combined resources of solar, wind, tidal and geothermal energy. There is no decent excuse for not developing these as sources of electricity. But until the Federal Government strengthens incentives for developing a strong renewable energy industry, investors will not underwrite the necessary infrastructure.
The absence of major submissions from renewable energy companies - and there are hundreds of them around the world - to the government's draft renewable energy target legislation speaks volumes. Nations where power companies are building renewable energy generation, some with storage to allow for overnight electricity demand, offer many different incentives that have created millions of green jobs.
If the Government truly wants to see more renewable energy deployed here, it needs to make its incentives more internationally competitive. Otherwise, clean energy companies will continue to steer clear of Australia.
Olga Galacho
ogalacho@heraldsun.com.au
Phone: 9292 1775
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