Business groups are calling for a review of the Renewable Energy Target (RET) policies, which continue to push electricity prices up.
New research, commissioned by business groups the Australian Chamber of Commerce and Industry, Business Council of Australia and Minerals Council of Australia and conducted by Deloitte Access Economics, warns of the cost pressures that confront the Australian economy if the RET is to continue in its current form.
Deloitte Access Economics modelling shows the RET penalises electricity consumers by underwriting expensive renewable generation – a gross “wealth transfer” of $17 billion to 2030.
The intended target of the RET scheme was to deliver 20 percent renewable energy by 2020. Lower demand for electricity has meant that, if allowed to continue on its current trajectory, the RET will deliver at least 28 percent renewable energy by 2020 at a large cost to Australia.
The flow-on effects to the rest of the economy of this mandated wealth transfer from consumers to producers is large, costing the economy up to $28 billion.
“Even more concerning is the human cost, estimated at over 5,000 jobs,” the business groups said in a joint statement.
The Deloitte Access Modelling also exposes the RET as a very expensive way to reducing greenhouse gas emissions.
Deloitte estimate the cost of abatement under the scheme at $103 per tonne of CO2. This is in the order of four times more than the $25.40 per tonne carbon tax.
The report confirms the RET will see consumer and business electricity prices rise for the rest of the decade – adding an average of $49 a household per annum across the forecast period.
The research challenges the optimism of the government-commissioned modelling, which suggested that future retail electricity prices will decline after 2021. Deloitte's research shows that despite a decrease in wholesale prices across the National Electricity Market, retail electricity prices (the actual price on a consumer's electricity bill) will increase for the duration of the RET out to 2030.
More realistic assumptions about the cost of technology, fuels and generator bidding behaviour matched with the fivefold increase in the current build rate of wind energy needed to meet the existing target, reveal a more concerning picture for electricity consumers and the economy as a whole.
“What is clear is that the burden of the RET is real and will only serve to undermine Australia’s competitiveness if not changed,” the statement adds.