Queensland Renewable Energy Target Must Consider Market Impacts

The transformation of Australia’s energy system to a low carbon future needs to be driven by businesses investing behind national market-based policy mechanisms to achieve required reliability at the lowest cost, the energy industry said today.

Responding to Queensland’s renewable energy expert panel’s draft report, the Australian Energy Council’s Chief Executive, Matthew Warren, said that if governments want business to invest in new renewable generation, they must be careful not to destroy the value of existing investments.

Mr Warren noted that the report’s expectation that higher renewables can be approximately cost-neutral to Queensland consumers is based on the assumption that all existing coal and gas-fired plant will be willing to continue to operate at reduced margins, transferring the true cost onto Queensland taxpayers.

“Transforming the Queensland electricity system will require a multi-billion dollar investment over decades. It’s not magic. This will have to be paid for either by consumers or Queensland taxpayers,” Mr Warren said.

“If the Queensland government uses its control of two-thirds of generation capacity in Queensland to suppress wholesale prices as new capacity is built, this will only undermine the conditions needed to deliver this investment. It will also impair many businesses that will then be expected to invest in the new generation.

“The effect of changes proposed will dull price signals that operate in the electricity market which flag to owners and developers of thermal and renewable generation where and when to build new plant.

“Policies that directly intervene in commercial decisions risk undermining investor confidence and will not attract the necessary investment in new generation,” Mr Warren said.

“The Queensland report acknowledges the need for flexibility to accommodate any future developments in other jurisdictions and, like the expert panel, the Council supports Queensland working at a national level to develop and implement nationally integrated climate change and energy policies.”

About the Australian Energy Council

The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

Media contact             Carl Kitchen                0401 691 342