Meeting renewable energy targets is forecast to add 10 per cent to steeply rising electricity prices in the coming decade, after an estimated $12 billion in subsidies went to the sector in the past 10 years.
The Energy Users Association of Australia called yesterday for government policies and subsidies to be aimed at those sources of renewable energy which were most efficient in reducing carbon emissions. It comes against a backdrop of power prices rising due to the carbon tax and heavy network spending.
A study, by Carbon Market Economics, found that each tonne of carbon dioxide emissions cut out through the use of renewable energy plants commissioned by the end of last year cost $76 in subsidies. This is more than three times the proposed carbon price of $23 a tonne.
It found the high cost was a result of inefficient technologies attracting a disproportionate share of the subsidy since an estimated 30 per cent of the subsidy flowed to photo voltaics, even though solar will generate just 5 per cent of renewable energy.
”This misallocation of subsidies has also crowded out the development of more efficient renewable generation,” the report found.
The association’s executive director, Roman Domanski, said: ”Renewables have already been significantly subsidised by energy users, but policies have failed to deliver good outcomes. If energy users are asked to bear the costs … it is reasonable for them to ask governments to ensure that the subsidies are designed so as to maximise efficiency.”
Supporters of renewable energy policies said the cost of solar electricity, in particular, had fallen to about half what it was when the report was finalised. The report found renewable energy added 2 per cent to electricity bills last year and was costing households a few cents a week all up, the Clean Energy Council chief executive, Matthew Warren, said.
”The cost of dealing with climate change is going to be more than business as usual, but so far renewable energy has been a pretty good deal for a clean and safe future,” he said. “Renewable energy is necessary if we are going to avoid using technologies such as nuclear power.”
An estimated 10,000 megawatts of additional capacity will need to be installed by 2020 at a cost of $30 billion if renewable energy forecasts are to be met, the study found. This is four times the total investment in new generation in the national electricity market over the past decade.
