Businesses divided on energy target shift

www.smh.com.au
25 Sep 2012

The debate over Australia's renewable energy target of 20% by 2020 has intensified, with the Business Council of Australia joining calls to adjust the target amid fears it will unreasonably drive up power prices. But the council, one of the nation's main business lobby groups, has abandoned its long-held view that the target should be scrapped altogether, citing concerns that this could undermine investment in solar and wind farms.

In its submission to a government review of the target-the key measure to support the clean energy industry-the BCA has backed some power companies' concerns that the falling electricity demand in coming years means Australia will actually overshoot the 20% target. Its call to adjust the scheme deepens the divide within the business community on the issue. Another peak body, the Australian Industry Group, warned in its submission against changes to the target, saying this would create ''intense uncertainty'' for energy investors.

Big power firms are also divided, with Origin Energy and TRUEnergy backing an adjustment but AGL Energy arguing against any change. Origin Energy has estimated that the overshot target would add about $25 billion to the national energy costs through to 2030. But the BCA's decision to ditch its total opposition to the scheme reflects the importance of the target to the industry. Solar and wind firms are strongly reliant on the target because it delivers them a guaranteed income by forcing electricity retailers to source a portion of the power they sell from renewable projects.

''We are,.. conscious of the substantial investments that have been made or planned for, given the existence of the RET,'' the BCA submission states. The council says that about 26% of electricity will end up coming from renewable sources by 2020 because the target is set as a raw total of 41,000 GWs per year.

This would have equalled 20% on old electricity forecasts. But with demand now projected to fall because of high prices and the proliferation of rooftop solar panels, the target will be overshot, the council argues. ''We believe that the current level of the target is materially out of line with the stated objective,'' it says. ''This substantial increase in the target imposes additional costs on electricity users.''

Meanwhile consumer group CHOICE has called for greater powers to be given to the energy market regulator to ensure ''unjustifiable'' rises in power prices over the past five years don't happen again. CHOICE has made 14 recommendations to a Senate committee inquiry into electricity prices ahead of a hearing in Sydney today. ''Australian household electricity consumers have experienced rapid electricity price rises over recent years,'' it said in a submission to the inquiry. ''CHOICE believes these increases have been to a significant extent avoidable and unjustifiable.''

The group yesterday issued the results of a survey showing that 55% of respondents were very concerned about electricity prices and 30% were quite concerned.