Low prices put 20pc RET at risk: RepuTex

Under current pricing, says RepuTex, Australia will fail to meet the RET

Low wholesale electricity pricing, coupled with the low pricing of Renewable Energy Credits (RECs) places Australia at risk of missing the country’s renewable energy target, according to carbon analytics research firm, RepuTex.
Australia’s renewable energy target calls for 20 percent of the country’s electricity to be generated from renewable sources by the year 2020, however RepuTex forecasts that the actual figure is likely to be between 16 and 17 percent.
“Our analysis points to the reality that a number of currently slated projects will be delayed as a result of subdued prices within the Australian renewable energy market”, said RepuTex’s Executive Director, Hugh Grossman.
“Wholesale electricity prices and renewable incentives are presently too low to facilitate the level of investment in the sector needed for Australia to meet the 20 percent target.”
RepuTex projects pricing will remain at similarly subdued levels over the short to medium term, even allowing for the introduction of carbon pricing.
Currently just under 10 percent of Australia’s electricity demand is met from renewable sources, predominantly wind and hydroelectric generators, although the vast majority of future growth is expected to come from the wind sector.
“With the sluggish domestic economy and cooler summer along the eastern seaboard, electricity demand has remained subdued. Consequently wind generators have had difficulty in signing Power Purchase Agreements (PPAs) with counterparties.”
“We have recently seen one wind generator sign a PPA as low as $45 per megawatt hour (MWh), well below the $100 per MWh that wind generators need to remain profitable”, said Mr. Grossman.
Wind generators create Renewable Energy Credits (RECs) to encourage generation from the sector, but the Office of the Renewable Energy Regulator is forecasting an average 2012 price for RECs of just $35.24 per MWh, significantly lower than in recent years.