State plans renewable targets

Electricity prices for trade-exposed and energy intensive customers could reduce under plans for a mandated renewable energy target of 15 per cent by 2020.

A discussion paper and economic modelling, released by Energy Minister Fran Logan this week, revealed electricity prices for households would rise by just under $9 a year, or less than 2 per cent, if the 15 per cent target was adopted.

For businesses, the models forecast a rise in electricity expenditure of between $31 and $46 a year for small businesses, and between $22,000 and $33,000 for large businesses.

Under the proposed scheme, retailers and large wholesale purchasers of electricity would be required to source an increasing share of their electricity from renewable generation.

The target will only apply to electricity consumption on the South West Interconnected System, which currently sources about 5 per cent of its electricity from renewable sources.

The scheme is proposed to start from January 1 2011.

Allowances would be made for energy intensive and trade-exposed industries, with those industries meeting certain criteria granted an exemption from liability.

Despite the expected drop in the wholesale price of electricity under a renewable energy target over the long-term, the increased cost at the retail end would cover the cost of acquiring renewable energy certificates for the retailers.

According to the models, certificates could cost between $17 and $24, depending on the carbon price adopted.

While the scheme would require renewable energy technologies to meet a certain proportion of electricity sales, the choice and type of technology and price will be determined by the market.

A mix of wind and biomass generation is likely to be the least cost option to meet the targets, according to the report.

Mr Logan said in a statement that a mandatory target would deliver significant benefits to WA’s economy, in addition to lower greenhouse gas emissions.

The 15 per cent target by 2020 translates into a target level of new renewable energy generation of between 2,100 and 2,400 GWh, which would require an investment of about $1.1 billion.

WA Sustainable Energy Association chair, Dr Ray Wills, said he was pleased the government has set a firm, mandated target, giving the market certainty to make long-term investment decisions.

“People know they can build and sell power to the grid,” he said.

Dr Wills said a raft of renewable technologies was available now and was confident the target would be easily met, even calling for the target to be increased.

“We believe a 25 per cent target by 2020 is quite achievable,” he told WA Business News.

A 15 per cent target would reduce greenhouse gas emissions from WA electricity generation by more than 27 million tonnes over the life of the scheme.

The government’s longer-term aim is for a 60 per cent reduction in greenhouse gas emissions by 2050.