20/08/2008 - 22:00

Industry warns on cost of renewable energy target

20/08/2008 - 22:00

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Western Australia will need to make significant investments upgrading electricity infrastructure to meet the federal government's mandatory renewable energy target, as the true cost of the scheme begins to emerge.

Industry warns on cost of renewable energy target

Western Australia will need to make significant investments upgrading electricity infrastructure to meet the federal government's mandatory renewable energy target, as the true cost of the scheme begins to emerge.

The state's energy sector has expressed concern at the cost of meeting the target, and that not all of costs have been properly accounted for.

Speaking at the Eighth Energy in WA conference last week, Synergy chief executive Jim Mitchell said that while the government had considered higher capital expenditure and generation costs of renewable projects, it hadn't take into consideration the additional costs of network support.

He said it was difficult to quantify these additional costs because no economic modelling had been done on what associated network upgrades would cost.

"The government only has one-third of the story, the other two-thirds is difficult to make out," Mr Mitchell said.

"At some point, the cost to investment in renewables is not the most cost effective way of achieving CO2 reductions."

He believes demand-side measures, including smart metering and in-home price displays of electricity prices at different times of the day, would send a strong price signal to change consumer behaviour.

Western Power managing director Doug Aberle agreed that MRET should be seen as part of a complementary set of measures that also included energy efficiency, demand side management and cost-reflective tariffs.

Mr Aberle said any increase in the connection of intermittent electricity generation facilities to the SWIS would have significant effects on the management of the network.

"It is vital that these impacts are recognised and understood in the context of Western Power's commitment to the growth and development of Australia's renewable energy industry," Mr Aberle told WA Business News.

Upping the amount of renewables on the grid could have significant implications for the network, mostly because of the intermittent nature of its supply and the fact that the preferred locations for renewable facilities are typically in areas with constrained transmission capacity.

Western Power has called on the Office of Energy carry out specific economic modelling on the impact to the network of the MRET.

In its submission to the office's proposed renewable energy target design, Western Power said that unless substantial system upgrades were made, the scope to increase the level of renewables on the network was limited.

In some cases, the cost of capacity upgrades could be a major barrier, possibly delaying projects or in some cases even making projects unviable.

WA Sustainable Energy Association chief executive Dr Ray Wills said while there would be infrastructure expenditure over and above the MRET target, the investment would be part of the transition to a new energy system.

"We're putting lines in where we haven't been before, we're starting to generate energy in new places and putting it on the grid, so there's obviously network costs," he said.

The government is currently working through the design of a national MRET, with a target of 20 per cent renewables by 2020.

The MRET is considered a complementary measure to the Carbon Pollution Reduction Scheme as a way of reducing greenhouse gas emissions.

Conflicting figures show the investment required to meet the national target ranging from $25 billion to $35 billion, up to $60 billion.

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