The Diminishing of Renewable Energy Target Will Drastically Alter Australias Energy Landscape
Renewable energy is Australia is currently in a very unfortunate position. What was once a blossoming industry has now effectively come to a screeching halt. As the various parties wait for the result of Dick Warburton’s review, many are examining what the future of Australia’s energy industry may look like if the RET is reduced or scrapped altogether.
According to a model released by the Jacobs Group, the reduction of the RET would transfer approximately $10 billion over the next 15 years to big coal and gas companies. It also predicted that consumers would see an increase in energy prices during this period.
The two biggest companies who would benefit most, EnergyAustralia and Origin Energy, have been some of the most prominent voices in the call to cut the RET. If the RET is cut to 20 percent of its current state, each would gain $1.9 and $1.5 billion, respectively, over the 15 year period. This money would come from an increase in energy pricing, from the $35 currently paid by households in New South Wales for 6.5 MWh of energy to a whopping $80.
Also, there would be tangible effects to the environment, as burning more fossil fuels would increase Australia’s carbon emissions by 154 million tons by 2030.
At the same time, the Australia Solar Council warned the Australian solar industry could face declines of 40 to 50 percent if the RET is scrapped. According to the Australian Financial Review, the scrapping of the RET is the most likely course of action, as a source claimed the Abbot government has requested modeling of the industry with a scrapped RET. The Australian Solar Council has warned against even the reduction of the RET, saying it could gut the industry.
“Under instructions from the Prime Minister, the Warburton [RET] Review did a hasty back track and is now recommending the axing of the RET,” John Grimes, Australian Solar Council’s CEO said. “So far the Prime Minister is refusing to release the Warburton Review Report. This is a line in the sand moment for the solar industry. If the Government goes ahead with its plans to axe the RET, demand for solar will fall 40-50% straight away. Thousands of Australians will lose their jobs. Hundreds, if not thousands, of small businesses will shut up shop.”
The Jacobs modeling found that Australia could miss out on $8 billion worth of renewable energy investments if the RET is scrapped.
While there are those who cite the oversupply of energy as a reason to scrap the RET, proponents believe they’re missing the point. Miles George, managing director for Infigen Energy, said any reduction of the RET would have devastating effects and would turn investors away.
“Infigen’s shareholder base of over 20,000 investors has invested in renewable energy in Australia on the basis of a fixed target of 41,000 GWh by 2020,’’ George told Australian Financial Review. “This is no different to investors in private public partnerships acquiring a toll road concession, or a port lease. If the Government pulls the rug from under institutional investors in renewable energy we shouldn’t expect those investors to come back to buy other infrastructure assets here, including the electricity networks and generation assets that the governments of NSW and Queensland are proposing to sell or lease.”
The results of the RET review are expected out soon.
Drax advances biomass strategy with Pinnacle acquisition
The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022, which will rise to 3.4 million tonnes in 2027.
The £424 million acquisition of the Canadian biomass pellet producer supports Drax' ambition to be carbon negative by 2030, using bioenergy with carbon capture and storage (BECCS) and will make a "significant contribution" in the UK cutting emissions by 78% by 2035 (click here).
This summer Drax will undertake maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.
In March, Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for delivery October 2024-September 2025.
The limitations on BECCS are not technology but supply, with every gigatonne of CO2 stored per year requiring approximately 30-40 million hectares of BECCS feedstock, according to the Global CCS Institute. Nonetheless, BECCS should be seen as an essential complement to the required, wide-scale deployment of CCS to meet climate change targets, it concludes.