In its 2017 Residential Electricity Price Trend report, AEMC has found that average residential electricity prices will fall over the next two years, and more solar and wind capacity is plugged into Australia’s grids. In a cautionary note, however, AEMC has warned that policy uncertainty is undermining investor confidence in the power sector, likely pushing up prices over the medium-term.
On the back of this price development and warning, the Australian Greens have again called for the Renewable Energy Target (RET) to be extended and increased.
The energy rule-maker today said Renewable Energy Target is bringing down power bills and cutting pollution. But only the Greens want to increase & extend it: Libs & ALP cut it, Libs want to scrap it from 2020 & Labor won’t commit to keeping it either. pic.twitter.com/U9YS0J35ZP
— Adam Bandt 🏳️🌈 (@AdamBandt) December 18, 2017
“We need to bring on more generation and a plan to bring on more generation so that when the next coal fired power station closes we have more renewables and that will bring down the price,” the Greens MP for Melbourne Adam Bandt told Sky News. Bandt, the party’s Climate Change and Energy spokesperson said that AEMC had “belled the cat” and that the driver of future cost reductions will be the RET.
“The Coalition wants to get rid of that [the RET], Labor doesn’t want to increase or extend it, the Greens are pushing to increase and extend it, and it is the only thing bringing down electricity prices in Australia at the moment,” said Bandt.
He noted that he is concerned that the Federal Government’s National Energy Guarantee policy mechanism, which it favours over the RET, will “lock in” the coal generators and “unreliable fossil fuels” that have caused past price increases.
In its annual report on power prices, AEMC noted that while falling wholesale electricity prices will bring some relief for consumers, it will likely trigger further closures at coal-fired generators, and therefore a policy mechanism to promote investment is required.
“Without investment in replacement dispatchable capacity, wholesale prices will go up again and remain volatile,” said AEMC Chairman John Pierce. “And the rollercoaster will be repeated.”
“We have a window right now for the COAG Energy Council to continue its work on mechanisms that can work in the long term interests of consumers and keep the lights on as the energy sector continues to restructure,” Pierce added.
Interestingly, AEMC’s 2017 report noted that for the first time wholesale electricity prices was the driver of incrconsumeases in the retail price, rather than network upgrades. AEMC found that network costs account for 50% of residential power bills and environmental policies 5-15%, with the latter set to increase by around 19% over the next two years.