This month Prime Minister Tony Abbott finally pulled the trigger, announcing the long anticipated Renewable Energy Target (RET) review. Abbott is seeking to address issues in the energy markets which, he believes, are unfairly inflating the cost of energy generation from fossil fuels. Abbott has signaled his intention to revise the Renewable Energy Targets (RET) which guarantee the role of renewable sources of energy in the nation’s fuel provisions.
How this will affect consumers of renewable energy has not yet final, but it seems, with increasing certainty, that any change to the targets will see a devaluation of the renewable energy certificates which currently pass the financial benefits of solar arrays on to the customer.
At present, almost 5 per cent of the nation’s energy is supplied from renewable sources, but prime minister Abbott has listened to warnings from the fossil fuel industry that renewable targets will result in more expensive fuel for customers, if the industry is to remain financially viable.
Any state intervention in the market would inevitably see a lowering of the current renewable targets. This, in turn, would allow fossil fuel generators to increase their output without having to enter the renewable energy certificate market to balance their emissions. Currently, any fossil fuel generator can exceed their output limits, as long as they purchase sufficient renewable energy certificates (REC) to balance their deficit.
Any fall in activity within the REC market would inevitably be accompanied by a fall in value for the individual certificates, which are commonly issued to solar energy customers as a means of discounting the installation costs of a solar array. It is therefore likely that renewable customers would end up being the ones to foot the bill for any changes in the renewable energy targets.
In real terms, this could leave solar customers as much as $3,000 out of pocket, as they are faced with diminishing returns on any certificate which their systems may earn them in the future. However, this is also perhaps the strongest argument for potential customers to complete their new installation in the near future: while the value of renewable certificates retain their current rates, the discount deducted against the cost of the install will remain an attractive return on the initial investment.
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Photo: Andrew Meares