According to modelling by the energy analysts RepuTex Australia meeting state renewable energy targets means the country is on track to achieve 50 per cent renewable energy by 2030 even without new federal energy policies.
The analysis, released today, suggests that a surge in renewable energy driven by state government schemes and rooftop solar installations will reduce wholesale prices from $85 a megawatt hour (MWh( to $70 over the next three years.
Lower prices will make power fuelled by gas and coal less competitive, even without a market mechanism to make fossil fuels reflect the cost of pollution or a direct constraint on emissions, although a lack of federal policy could lead to longer-term price rises, RepuTex found.
During the recent federal election campaign, the conservative Liberal-National coalition attacked the opposition Labor Party for its 50 per cent renewable energy target, as well as its 45 per cent emissions reduction target, claiming they would harm energy-intensive industries and cost jobs.
However, after the Liberal-Nationals won on May 18, the Liberal Senator Arthur Sinodinos urged the government to use the changing energy mix to bolster its environmental credentials, and treasurer Josh Frydenberg declared that the “inevitable” transition to low-emissions sources created an opportunity for the country.
With the federal renewable energy target set to expire in 2020, RepuTex noted that state policy was now the dominant signal for new investment in the national energy market.
RepuTex projected that current policies, including renewable energy targets in Queensland and Victoria, were likely to drive about 13GW of new renewable energy capacity by 2030, in addition to 6.0GW of renewable capacity currently committed for development.
The Guardian online reports the head of research at RepuTex, Bret Harper, said the 6.0GW of renewable capacity to be installed by the end of 2020 “should begin to reduce the role of marginal gas-fired generation in the market, leading to lower wholesale prices”.
“The competitive pressure of new low-cost supply is modelled to significantly limit demand for coal-fired energy, even without a direct emission constraint,” he said.
“As a result, fossil fuel generation is modelled to be more broadly on the decline, displaced by a large volume of solar, wind and pumped hydro.”
RepuTex noted that the absence of a federal energy policy framework could force wholesale prices back up to $100 per MWh in the long term as ageing coal-fired generators were forced to close, reducing supply.
“The low price environment over the medium term is good for consumers, but not so good for inflexible generators, which will be at risk of being pushed out of the market by cheaper, more flexible technologies like wind and solar with pumped hydro,” Mr Harper said.
“Without a plan to prepare for the exit of fossil fuel generation we forecast a return to a boom-bust investment cycle, with elevated wholesale prices and increased volatility, rather than a more orderly transition.”
Guardian Online reports the Liberal-National government’s strong results in Queensland have emboldened conservatives who before the election demanded Prime Minister Scott Morrison examine whether a new coal-fired plant was needed in north Queensland.
They also want him to sign off on a shortlist for the electricity underwriting scheme that includes “one very small” coal project in New South Wales proposed by major coal investor and LNP donor Trevor St Baker.
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