Renewables will reduce electricity costs – if we have a carbon price

● By Prof. Kylie Catchpole, Australian National University ● Kevin Rudd’s move to cut the carbon price and move to an emissions trading scheme is meant to ease the cost of living. Meanwhile the Coalition would like us to drop carbon pricing and trading altogether. But new modelling suggests cutting the carbon price might actually increase electricity costs for households. The connection between the price on carbon and our hip pockets has been endlessly discussed. A new report from Reputex released this week suggests scrapping the carbon price may increase the price of electricity. How does this work? Carbon pricing and renewable energy Cutting carbon pricing could raise electricity prices through its effect on renewable energy. The main policy mechanism encouraging the development of renewables is the renewable energy target, which aims for 20% of electricity to be generated by renewable sources, such as wind and solar, by 2020. The Reputex report says that if the carbon price is removed, the renewable energy target on its own won’t provide enough incentive for companies to invest in wind farms. The same conclusion was reached in a report to the Climate Change Authority last year by consultants Sinclair Knight Merz (SKM). The reason is that the combination of the carbon price and renewable energy target provides the investment signal to encourage development of wind farms. From renewables to electricity prices Consumers often associate renewable energy with higher bills, so many are happy to rely on coal-powered energy if it means saving dollars. Somewhat counter-intuitively however, we might get higher electricity prices if we don’t meet the renewable energy target. The report from Reputex and a recent report from Bloomberg New Energy Finance say that if the renewable energy target is met the result will be a reduction in the cost to consumers. This is thanks to reduced wholesale electricity prices ...Zum vollständigen Artikel

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