Green power in the red

POSTED June 26, 2012

WITH electricity prices rising, the carbon tax looming and the world turning away from expensive deep-green ambitions in Rio and beyond, the race is on to reshape Australia's renewable energy landscape into a more coherent national strategy.

The Renewable Energy Target, which forces electricity suppliers to buy a percentage of electricity from renewable sources and pass the additional cost to consumers, is back in the spotlight.

There is fierce debate about what impact the RET schemes, for large and small-scale projects, are having on electricity prices today and into the future.

The NSW Independent Pricing and Regulatory Tribunal has called for a review of all green schemes, including the RET, following the introduction of the carbon tax.

Energy giant Origin wants the RET scaled back to take account of falling electricity demand.

The renewable industry wants certainty, not more reviews.

In contrast to the carbon tax, the RET continues to enjoy bipartisan support from the federal government and the opposition.

But as Climate Change Minister Greg Combet lashes state governments over power price increases, opposition environment spokesman Greg Hunt has been negotiating with his Coalition state colleagues to centralise green schemes under a single federal umbrella in exchange for giving states control over federal environment approvals.

Meanwhile, this week federal Energy Minister Martin Ferguson announced commonwealth funding for a study into how the national energy market might achieve cuts in carbon emissions most cheaply while increasing the use of renewable energy.

Australia is not alone in questioning the political cost and economic value of a decade-long rush towards green power.

As the financial crisis continues in Europe it would be easy to conclude the developed world's infatuation with heavily subsidising renewable energy had peaked.

Last month the compliance committee of the UN Economic Commission for Europe issued a draft ruling against the EU's renewable energy target, saying it was introduced without proper consultation.

Wind energy companies are abandoning Spain after the government killed off generous subsidy schemes that had spawned a modern-day gold rush in renewables. Spanish spending of $US69 billion ($68bn) in power capacity from 2004 to last year was three times the per-capita rate of the US and created an electricity network that could supply almost three times peak demand. Wind investment in Spain is forecast to plunge to $US244 million in 2014 from $US2bn this year. Spanish investment in solar photovoltaic is expected to drop to $US107m next year from $US1.5bn last year.

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Graham Lloyd (The Australian, 23 June 2012)