Oversupply to impact RET shake-up

overCHANGES to delivery of the Renewable Energy Target (RET) must recognise a massive oversupply in the country’s energy market, Federal Industry minister Ian Macfarlane said.

The Federal Government is expected to release its response to the Expert Panel Review of the RET, which recommended scaling back the target and slashing support for large renewable projects, in coming weeks.

In a speech to an economic conference this month, Mr Macfarlane reaffirmed the government’s support for an RET, but warned Australia was facing an ongoing energy surplus.

“Let me be clear…the Government is not suggesting the RET should be scrapped; no one is advocating the end of renewable energy in Australia,” he said.

“While it is essential that Australia weighs up questions relating to long-term energy security and supply, for the foreseeable future Australia has excess energy supplies.

“We need to be sure that the RET is delivered in a way that fits in with this new market dynamic, and is not adding undue cost to households and making industries uncompetitive.”

The minister cited the Australian Energy Market Operator’s 2014 Electricity Statement of Opportunities, released last month, which found no new generation would be needed in the national electricity market until after 2023-2024.

Mr Macfarlane said there could be as much as 8950 megawatts of surplus capacity – the equivalent of nine big power stations – this year, as a result of energy efficiency measures, a decline in energy-intensive industries and a growth in rooftop solar.

He said the government would pursue policies that maintained a diversity of supply. “We want to ensure that renewable energy continues to make a contribution to Australia’s energy mix, but just as we wouldn’t advocate investing exclusively in coal-fired electricity or exclusively in gas, to pour all of our energy investments into renewable energy would be equally as counterproductive for energy security,” he said.

“Australia’s greatest energy strength comes from the diversity of our supply.”