New analysis released by the Australian Industry Group says major projects being built under Australia’s Renewable Energy Target (RET) are already helping to reduce bills for energy users across the country.
Of course it’s not all good news for Australian industry, which has been doing it tough this decade. Gas prices in some cases are triple what they used to be for big energy users. This dynamic is reflected in the title of the Ai Group report Worse to Bad.
Clean Energy Council Chief Executive Kane Thornton said the RET had created unprecedented investment in new wind and solar projects and, according to the Ai Group report, this has already begun to lower power prices.
“Ai Group has confirmed what other analysis has shown recently – dozens of new clean energy projects are creating greater competition in the energy market and that’s good for energy users. Because this affects forward contracts, some of the positive effects have already started to flow through to businesses,” Mr Thornton said.
“New renewable energy such as wind and solar power is now cheaper than new coal or new gas plants. The report says solar, wind and energy storage will gradually replace gas power and this will help to push prices down further.”
Ai Group Chief Executive Innes Willox said three big barriers need to be overcome to improve electricity prices and supply:
- gas hurts power prices
- we are lagging on flexible supply beyond gas
- uncertainty cruels investment.
The report says gas use needs to shrink, more flexible generation is needed – including energy storage and upgrades to coal plants – and long-term climate policy is required to overcome uncertainty.
Several other recent reports have also noted that the extra renewable energy entering the system will help to reduce prices for everyone. Analysis by Frontier Economics for the Federal Government found that the additional renewables being built under the RET will reduce the average power bill by hundreds of dollars a year.
Major businesses in the US and in Australia have already begun to purchase renewable energy directly to cut costs, either by themselves in the case of large corporations such as Apple, Google and Telstra, or in a collective like the Melbourne Renewable Energy Project. And some smaller businesses and agricultural operations have been installing their own renewables for years.
The Ai Group report Worse to Bad is available for download on the organisation’s website.