Originally posted at Eco-Business. View the original post here.
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.