ED­I­TO­RIAL

RET sub­si­dies are driv­ing the switch from coal to so­lar

The Australian - - FRONT PAGE -

Pro­po­nents of re­new­able en­ergy, from the In­ter­na­tional En­ergy Agency to green groups and in­vestors in the sec­tor, like to claim that so­lar and wind power are be­com­ing so ef­fi­cient they can “stand on their own two feet’’. If only. In­vest­ments in the sec­tor stack up only be­cause they are heav­ily as­sisted by gov­ern­ment pol­icy and largesse.

The eco­nomic re­al­ity, as David Crowe reports today, is that tax­pay­ers and con­sumers are sub­si­dis­ing en­ergy com­pany AGL’s gi­ant so­lar en­ergy projects at Nyn­gan and Bro­ken Hill in western NSW by hun­dreds of mil­lions of dol­lars. This in­cludes di­rect state and fed­eral grants, and re­new­able en­ergy cer­tifi­cates.

At the same time, AGL is de­ter­mined to close its age­ing coal-fired Lid­dell power station in the Hunter Val­ley by 2022 be­cause, its chief ex­ec­u­tive Andy Ve­sey said last week, “keep­ing old coal power plants open won’t de­liver the re­li­able, af­ford­able en­ergy our cus­tomers need”. At a time when the Aus­tralian En­ergy Mar­ket Op­er­a­tor has warned that Aus­tralians face ma­jor en­ergy short­ages from next year, Mal­colm Turn­bull and En­ergy Min­is­ter Josh Fry­den­berg are ne­go­ti­at­ing with AGL about keep­ing Lid­dell in op­er­a­tion un­til at least 2027 to help main­tain baseload power sup­ply. As the Prime Min­is­ter said last week: “We can’t get into the sit­u­a­tion where we have done be­fore, where we have large amounts of baseload or dis­patch­able power go­ing out of the sys­tem and then you get a short­age of power and then you get a rapid in­crease in prices.’’

Avoid­ing such sit­u­a­tions over the medium term, how­ever, would re­quire scrap­ping or re­work­ing the RET, which is mak­ing the rush to re­new­able en­ergy so at­trac­tive for AGL and other busi­nesses. While the long-stand­ing sub­si­dies for the Nyn­gan and Bro­ken Hill en­ergy plants, agreed in 2015 un­der the Ab­bott gov­ern­ment, will stand, the RET, which the Coali­tion has backed out of po­lit­i­cal con­ve­nience, is the core of the prob­lem. It should be re­placed with a prag­matic, ef­fec­tive pol­icy if the Turn­bull gov­ern­ment is to dif­fer­en­ti­ate it­self from La­bor and help guar­an­tee re­li­able sup­ply and cheaper prices.

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