Australia retains renewable energy target

21. March 2013 | Markets & Trends, Financial & Legal Affairs | By:  Jonathan Gifford

Despite efforts by some Australian utility companies and industry groups to see Australia’s Renewable Energy Targets (RET) wound back, the government has decided to maintain them. Utilities are having an impact elsewhere, with fixed electricity prices set to increase to ensure solar households pay "their share" of electricity infrastructure costs.

Energy policy in Australia has been an increasingly controversial topic of late, with rising electricity costs driving debate. In the face of a campaign to see the fixed target of 41,000 GWh of renewable energy to be added to the country’s electricity grids by 2020 watered down, the Australian Federal Government stood firm this week, and endorsed the Climate Change Authority’s recommendation that it be maintained.

In announcing the decision, Climate Change Minister Greg Combet accused the Opposition of being "all over the place" in terms of renewable energy. "This is a Government very committed to renewable energy," Combet told reporters. "We are going to remain committed to it and it is in stark contrast to the Opposition."

Arguments to dilute the RET was based on the fact that electricity demand in Australia is falling, due to a number of factors including high and rising electricity prices, the installation of around 2 GW of photovoltaics and enhanced insulation and energy efficiency.

While this decision could be seen as being a win for renewable energy and photovoltaics in Australia, elsewhere in the country state government measures are looking to restructure electricity costs, at the bidding of utilities. In Western Australia, local media has reported that the recently re-elected State Government is considering increasing fixed charges for all households, to compensate for falling revenues from variable charges. These revenues are falling as more households add photovoltaic systems.

Late last year, the head of utility Western Power Paul Italiano had said that households with solar panels are able to avoid paying "their share" of infrastructure costs, due to reducing their electricity usage and therefore bills.

The Sustainable Energy Association’s Kirsten Rose told pv magazine that she understands the utility head’s concerns that solar households should contribute to upkeep the 'poles and wires.' "It's also important to recognize the real benefit to the grid that solar PV has delivered, which has been widely acknowledged, in the form of a reduction in peak demand and therefore spot pricing," added Rose.

The sustainable business chamber head continued that all tariffs should be reviewed as electricity markets transition to becoming more "contestable," with electricity customers increasingly becoming producers. "We also believe that it's reasonable to look at what a fair fixed charge is to all customers, but in the context of looking at all the charges to customers, including lower-income customers who are less likely to have solar panels."

With high electricity prices and abundant sunshine, residential grid parity has arrived in Australia and households are taking up solar in large numbers. Last month, Bloomberg New Energy Finance went one step further and predicted that large scale photovoltaics will be cheaper than coal and gas power plants, at the generation level, by 2020.


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