RET review revealed, demand response momentum dwindles

The Renewable Energy Target should be scaled back or wound down, recommends the Warburton Review. Meanwhile, there is only tepid interest in a demand side response to electricity peaks in a new COAG discussion paper.

Richard Collins

The Australian Financial Review reports the panel chaired by businessman Dick Warburton has recommended winding up the scheme by 2030 but grandfathering existing projects, or reducing the target to “a real 20%” rather than the fixed 41,000 gigawatt hours. That would require 26,000 GWh of renewable energy.

The hype last week about PM Tony Abbott reportedly pushing the panel to consider axing the scheme in one hit has apparently come to nothing, though of course the government is yet to announce its response to the highly charged review, which has drastic implications for the $20 billion renewable energy sector. The report is expected to be released this week.

Meanwhile, a discussion paper on how to structure a cost-benefit analysis of a demand response measure (DRM) suggests weakening interest from ministers.

A DRM is intended to facilitate large energy users to participate in the wholesale market as though they were non-scheduled generators, and receive reimbursement for reducing energy demand in response to high price events where the grid is under pressure.

The COAG Energy Council in January 2013 directed the Australian Energy Market Operator (AEMO) to develop a rule change proposal on a DRM for consideration by the Australian Energy Market Commission. However, it may be dead in the water. In December 2013 the council asked AEMO to defer the rule change proposal and undertake further work, including a cost benefit study.

The discussion paper released on Monday says declining energy demand means “there is a lower projected need for capital investments in additional energy infrastructure, which may in turn reduce the potential benefits of the DRM”. It does not go any further than this, but is a sign the measure may struggle to stack up on a cost-benefit basis.

Submissions are due by September 12.