Guest essay by Eric Worrall
h/t JoNova – “The Australian” newspaper reports that a rise in costs, climate “fatigue”, and a rise in green tokenism has caused a collapse in demand for an Aussie green energy scheme.
Climate change fatigue, cost hits renewable GreenPower scheme
GreenPower, a scheme run by state governments in which people and businesses pay more for their power to buy non-fossil-fuel electricity, has been hit by up to a 40 per cent increase in cost as retailers pass on the rising price of large-scale renewable energy certificates.
Even before the price jump, the willingness of customers to pay more for renewable energy has ebbed in line with the political debate over climate change policies.
The scheme has gone from more than 900,000 customers in 2008 who bought about 1 per cent of total generation to just over 500,000 who bought just 0.6 per cent of all the electricity generated in 2013.
Since, sales have dropped a further 21 per cent.
A report by UTS’s Institute of Sustainable Futures for the NSW Department of Resources and Energy — which administers the scheme on behalf of all the states — said the rise in roof- top solar panels had contributed to the demise of GreenPower. “It seems that once customers have ‘done their bit’ by paying for solar PV, they no longer see the need to pay extra for GreenPower.”
So why is the price of green power rising?
According to the Sydney Morning Herald;
“Retailers are making it more expensive than it needs to be for the consumer,” said Richie Farrell, group manager of investor relations and strategy at Infigen Energy.
“The consumer is entering into a contract with them to buy renewable energy and they are not taking action to enter into a contract with renewable energy providers to supply the electricity, they are just entering into short-term agreements on the spot market to meet the liability the customer has imposed on them through purchasing their product.”
Mr Farrell said it all comes down to supply and demand.
“For a long time the renewable energy certificate market was oversupplied. Everyone knew there was going to be an upcoming shortfall and to avoid that shortfall retailers were required to enter into long-term contracts with people like ourselves to ensure that more renewable supply came into the market.”
Unfortunately for consumers, he said, retailers have so far refused to do that.
“They have sat on their hands and not entered into these new contracts. Basically, by our projections, by 2017-18 we will have more demand than supply for renewable energy, and as such prices increase in that scenario.”
You can hardly blame energy retailers for being hesitant to commit to long term contracts. There simply isn’t an upside, to taking financial risks, to try to revive the already aneamic green energy market.
If the global economic slowdown worsens, Aussie government debt could very rapidly balloon to dangerous levels. In other countries, a public debt crisis was the trigger for retroactive, uncompensated cuts to green subsidies.
When individuals, businesses and governments tighten their belts, unnecessary luxuries like expensive green energy are often top of the list of costs to be cut.