On 16 September 2010, the Ministerial Council on Energy (MCE) requested advice from the Commission on the impact of the enhanced Renewable Energy Target (RET) on energy markets. Advice was requested on the impact of the enhanced RET on:
- The price of electricity for retail customers;
- The level of emissions; and
- The security and reliability of the electricity supply.
On 25 November 2011, the AEMC provided an updated Interim Report and a Final Report to the MCE. These reports and supporting consultant reports have now been published.
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Assessment of the impact of the enhanced Renewable Energy Target on energy markets
On 16 September 2010, the MCE requested advice from the AEMC on the impact of the enhanced Renewable Energy Target (RET) on energy markets. Advice was requested on the impact of the enhanced RET on:
- The price of electricity for retail customers;
- The level of emissions; and
- The security and reliability of the electricity supply.
On 25 November 2011, the AEMC provided an updated Interim Report and a Final Report to the MCE. The Interim Report includes modelled outcomes out to 2020 for both components of the enhanced RET - the Large Scale Renewable Energy Target and the Small Scale Renewable Energy Scheme. Outcomes were modelled across three main scenarios:
- A reference case scenario, which models the impact of the enhanced RET without a carbon emissions price. Under this scenario, it was assumed that no new coal plant would be installed beyond committed plant to reflect policy uncertainty about the pricing of carbon emissions.
- A carbon emissions price scenario, which models the impact of the enhanced RET with the introduction of a carbon price in July 2012.
- A counterfactual scenario, which models a scenario which assumes there is no RET or price on carbon emissions. Committed levels of renewable plant are capped as at late June 2011, however jurisdictional feed in tariff schemes are assumed to continue.
The Final Report includes two additional modelling sensitivities to assess the impact of changes in assumptions to the outcomes modelled in the Interim Report. These additional sensitivities include:
- The impact of a lower level of demand; and
- The impact of allowing new coal plant to be installed in Western Australia.
The Final Report also includes further detail on the outcomes from the modelled carbon emissions price scenario, following the recently legislated ‘Clean Energy Future' package.
The consultant reports that we used in the development of our advice can also be found below, and provide additional detail on the modelled outcomes for each scenario and the methodology that was used.
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