Individual submission to the RET Review panel
This submission contains NO material supplied in confidence and can be placed on the
panel's web site.
-------------The Renewable Energy Target (RET) review is currently asking for submissions. Rather than
write directly about whether it should stay the way it is, be adjusted or eliminated, I thought I
would approach it from a different perspective. How could we reduce our electricity costs?
Because this is much of the context that the RET is being reviewed.
Maintaining, and reducing electricity costs is very important. Low electricity costs can keep
jobs in Australia, boost exports, and also assist households with cost of living pressures. So
here is how I would do it:
Encourage Solar PV
When businesses and households install Solar PV, they reduce the amount of electricity they
consume from the grid. This sees an excess supply of electricity available in the grid, and
makes generator have to compete with lower prices. We have already seen this where
wholesale electricity prices are at their lowest point in decades, and this portion of our bills
has come down 20-40%.
If we really invested heavily in Solar PV, we could create a new off-peak period, in the
middle of the day. Households and businesses would be paying the same low off-peak
overnight rates, in the middle of the day, leaving mornings and late afternoon and evenings as
the times of high prices. This would be great for businesses from large manufacturing to
small cafes, encouraging a shift of electricity use to the middle of the day as well as
overnight.
Encourage Energy Efficiency
The premise of energy efficiency is to place greater value on the effort made to provide us
energy in the first place. Its saying that each gigajoule of gas and each kilogram of coal is
very valuable, and takes a lot of effort to extract, transport and be converted into electricity.
By switching to LED lights, more efficient heating and cooling, and other energy efficiency
initiatives, households and businesses save money, and again decrease demand on the grid,
bringing down prices.
Install Wind Power
Once built, wind power costs $0 to generate electricity. In marginal cost terms at least. This
sees other forms of electricity generation, providing the electricity for the grid, ramp down or
switch off their generation. Luckily, it is the more expensive generators that switch off,
bringing down the cost of wholesale electricity.
Provide cheap finance to renewable energy projects
Renewable energy projects like Solar PV and Wind have low operating and maintenance
costs, and no ongoing fuel input costs. The cost of the energy sold from renewable power is
primarily driven by the cost of finance.
In simple terms, a $100 million wind farm with cost of capital of 5% can produce energy at
half the cost of a wind farm with cost of capital 10%. Cheaper finance and create very cheap
electricity.
It’s feasible that a country’s government could convert all its electricity production to
renewable and have free or cheap energy (production) for its citizens.
Spread the Generation
Coal generation is inflexible as it generates at a constant rate, rather than matching demand.
While renewables can be limited in that they are also not dispatchable, we are lucky that
Solar PV generates at times of high consumption. But this is limited somewhat to when the
sun shines.
The more we spread generation geographically, the more reliable, consistent and predictable
cheap renewable electricity will be. If the suns not shining in Adelaide, it may well be in
Bathurst. While reaching 3pm in Brisbane with Solar PV output dropping, it is hitting peak in
Perth at noon (Yes, this also means connecting the SWIS and the NEM). When it is not
windy around Melbourne (have never known this to happen), it may be windy in
Rockhampton.
Spreading the generation will reduce the cost of energy, and have the additional benefit of
promoting regional development.
Conclusion
While much of the debate on climate is about sacrificing lifestyle and economic growth for
the environment, renewable energy can bridge this and allow both (growth and environmental
protection).
We now have a lot of the solutions available to bring down energy costs using cheap
renewable energy. Huge intervention is not required by the government, just some policy and
direction. If the goal is to reduce energy costs for households and businesses, the RET could
be part of a suite of initiatives to make this happen.
Please not this is my second submission. Please use this one.
-------------- end message
From: Jonathan E Prendergast
State: NSW