Power bills would drop significantly if a clean energy target (CET) is supported by the government.
In Australia’s chief scientist Alan Finkel’s Final Report of the Independent Review into the Future Security of the National Electricity Market, handed down on June 9, a CET was recommended as the most effective mechanism to fix the country’s energy crisis.
Of the 50 recommendations in the review, all but the clean energy target has been accepted by the federal government.
According to the latest analysis by RepuTex, a CET is likely to reduce wholesale electricity prices from around $100MWh to between $40-60MWh in the next decade.
“Lower wholesale electricity prices are driven by higher volumes of renewable energy supply, which is forecast to increase competition and decrease the influence of high gas prices in the NEM,” the report, titled ‘It’s the economics, stupid’, said.
“The economics of the NEM are fundamentally working against baseload generation.
“Even should a CET (or other climate policy) not be introduced, coal-fired facilities are projected to continue to be retired, despite rising electricity prices.
“This is due to falling daytime power demand and changing economics of the grid, which now favours flexible supply.”
Investments in baseload power, irrespective of the CET, are therefore too inflexible to compete in Australia’s future electricity system, according to the analysis said.
“We do not envisage any appetite for HELE coal or other ‘baseload only’ facilities, such as nuclear, unless there is a major government distortion in the market,” the findings reveal.
The analysis indicates renewable energy with storage, such as the 100MW battery to be built by Tesla at Neoen’s Hornsdale wind farm, continues to be the most economically favoured solution to generator availability.
“Modelling indicates that renewable energy – with storage – continues to be the cheapest source of reliable energy supply for peaking and load-following generation,” the report said.