While Prime Minister Tony Abbott says renewable energy significantly increase electricity bills, a new study finds wind energy actually forced down wholesale power prices by more than $3.2 billion over six years - but that little of the savings flowed through to consumers.
Mr Abbott on Tuesday said the renewable energy target, which has largely driven investment in wind farms, was ”very significantly driving up power prices”.
”It’s precisely the opposite,” John Foster, one of the authors of the study that has been submitted to a review of the target, said. “The [target] – and the stimulation of wind – has increased supply and flattened out the expensive peaks.”
For instance, modelling of 30 minutes of heavy demand for electricity in Victoria on January 31, 2011 showed the wholesale price of $1.4 million would have ballooned to $45.6 million had only coal and gas-fired power plants had been able to respond.
Mr Abbott’s statement has been interpreted as signalling his government may weaken or scrap the target requiring at least 20 per cent of power from renewable sources once a review into the scheme is complete.
Lynette Molyneaux, a researcher at the university’s Energy Economics and Management Group, said competition has increased ”phenomenally” with the introduction of wind farms and the rapid spread of rooftop solar photovoltaic panels.
Large fossil-fuel generators in the past ”got away with some fantastic events, particularly when demand peaked on a summer’s day”, Ms Molyneaux said.
Once other costs including the purchase of renewable energy certificates were taken out, the target delivered a net benefit of $870 million from 2007 to 2012, the study found.
Little of that benefit reached consumers, though, with a lack of transparency masking just how much retailers snagged of the gains, Ms Molyneaux said. “We don’t see evidence of consumer prices going down.”
Debate over the target is expected to intensify with coal baron Clive Palmer saying last week his party will use its balance of power in the new Senate to preserve the existing target – now set at 41,000 gigawatt-hours of renewable energy by 2020 – until at least 2016, whatever the recommendations of the government’s hand-picked review panel.
Environment Minister Greg Hunt, meanwhile, on Wednesday dubbed a plea by 25 Coalition backbenchers for exemptions from the target for aluminium producers as a ”very constructive solution”.
“We are all working towards a common ground of making sure that we are protecting jobs and investment on the one hand, reducing emissions on the other, and finally doing our best to take the pressure off electricity prices,” Mr Hunt said.
The aluminium industry already receives exemptions from the target of about 90 per cent.
Among the states, Victoria was the biggest beneficiary, snaring $2.37 billion of the $3.2 billion in wholesale savings. It hosts the second-largest wind turbine capacity of the states and can tap the largest – in South Australia – because of good transmission connections, the researchers said.
NSW lagged with only $136 million in wholesale savings because of its modest wind farm presence, while wind farm-free Queensland had barely any savings at all.
By 2012, wind farms were also responsible for reducing carbon emissions at the rate of 4 million tonnes a year, the study said.
Separately, the latest Cedex report by energy consultants Pitt & Sherry found carbon emissions from the National Electricity Market fell 10.4 per cent, or 18 million tonnes, in the two years of the carbon tax.
A fall in electricity demand contributed part of the drop, as did a switch to more wind and hydro electricity. Coal supplied 73 per cent of the power to the National Electricity Market – which serves eastern Australia – a year to the end of June, almost certainly a record low, according to Hugh Saddler, principal consultant with Pitt & Sherry. Gas supplied 12.7 per cent, hydro 9.6 per cent and wind 4.7 per cent.
Windy conditions over the past week saw wind farms supply 14.5 per cent of the generation in NSW, South Australia, Tasmania and Victoria from Monday to Saturday.
At 4.25am on Friday, South Australia’s wind generation exceeded demand in the state for the first time, according to Infigen Energy, a wind farm operator.
”The greatest significance of these figures is probably the demonstration that the [market] is sufficiently robust to be able to accommodate such large shares of wind generation, with no effect on the supply of electricity to consumers,” the report said.
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