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Author: Peter Hannam
Date: 27 August, 2013

Renewable energy such as wind, solar and hydro power could supply electricity at prices comparable to fossil fuels by 2030, according to a study commissioned by the federal government.

Modelling by the Australian Energy Market Operator shows that 100 per cent of power from clean energy would be technically viable by 2030 – although with a price tag ranging from $219 billion to $252 billion.

But a Community Summary of the report published this month without fanfare by the government has rekindled debate by stating that 100 per cent renewable power may cost no more than fossil fuels.

Based on the operator’s study and other modelling by Treasury, the CSIRO and the University of New South Wales, the summary concluded: ”Indicative wholesale electricity prices generally fall within a reasonably narrow range of around $100-$130 per megawatt-hour in 2030, and around $110-$150 per MWh in 2050.”

Consumers, who have seen electricity prices rise about 70 per cent over the past four years, may find the price trajectory – whether based on renewable energy or not – surprising. NSW and Victoria now have wholesale power prices of just under $60 per MWh. Still, the findings have cheered clean energy advocates, not least because curbing carbon emissions from the power sector – accounting for about 35 per cent of Australia’s total – would make big inroads in meeting climate change goals.

”It’s kind of incredible that we haven’t modelled (a 100 per cent goal) before now, given that the costs are basically the same,” said Jenny Riesz, a research associate at the UNSW’s centre for energy and environmental markets.

Dr Riesz is part of a UNSW team now examining the potential for additional benefits from a transition to much more renewable energy.

”We’re exposed to rising carbon prices, we’re exposed to rising gas prices,” Dr Riesz said. ”What this is saying is, that for around the same price you can build 100 per cent renewable energy and completely protect yourselves from all of those risks.”

Australia now has a target of supplying 41,000 gigawatt-hours of renewable energy a year by 2020 from large generators.

Greens leader Christine Milne described it as ”astonishing” that the government appeared to bury both the ”stunning” study and its summary findings.

”It puts a wrecking ball through claims by the Coalition and Labor that we can’t go a lot harder and set a 90 per cent target by 2030,” Senator Milne said. The operator should expand its study and release the modelling. ”Further work is required to factor in some costs and the many benefits of renewable energy that this first study ignored,” Senator Milne said.

The Coalition’s climate spokesman, Greg Hunt, said the government hid the summary because it clearly showed that the cost of moving to full renewables would drive up electricity prices.

”The Coalition supports renewable energy and the (Renewable Energy Target). However, we are mindful that it needs to be done in a balanced way so we do not inflict massive price rises on families and put Australian manufacturing out of business,” he said.

A planned energy targets review might consider longer-term renewable targets, he said.

Climate Change Minister Mark Butler said the government accepted the Climate Change Authority’s advice that it would be premature to consider renewable targets beyond 2020 at this stage, but the issue ”would be considered” in the 2016 review.

”The greatest threat to renewable energy in Australia is Tony Abbott, who would cut key programs like the Clean Energy Finance Corporation, emissions trading scheme and reduce or scrap the Renewable Energy Target,” he said.