Leave the RET alone

According to Australia's leading renewable energy market analyst, Ric Brazzale, meeting the Renewable Energy Target should not be a problem, so calls for major changes to the scheme should fall on deaf ears.

In the second part of our two part interview with Ric Brazzale, CEO of Green Energy Markets and Green Energy Trading, Ric talks about:

-- What he’s hoping will come out of the upcoming review of the Renewable Energy Target,

-- What he thinks needs to be done to address spiraling electricity network expenditure and peak demand, and

-- The establishment of a new association to uphold standards for agents involved in creating and monetizing small scale Renewable Energy Certificates or STCs.

The interview is summarized below, but you can also read the transcript in full here.

The first part of the interview transcript is available here.

Leave the RET alone

There is no need for major change to the Renewable Energy Target scheme. Brazzale argues that while there haven’t been that many new large renewable energy projects committed in recent times, this will change very shortly.

His view is the large overhang of Renewable Energy Certificates (RECs) is insufficient for requirements within a couple of years and the price for Large Scale RECs or LGCs will inevitably rise to make new projects viable. Also, there is a large enough pipeline of projects in advanced stages of development that there should be no problem meeting the target.

Provide a market for reductions in peak demand

To address the large growth in peak demand and rein in the excessive $40 billion in costs on networks, Australia needs a market-based scheme, similar to the RET, targeted specifically at reducing peak demand.

Ric spent a large part of the 1990s and early 2000s arguing for a range of reforms to the way networks were regulated and priced to remove distortions against distributed generation and demand management. During that time he managed to get favourable rulings from the likes of the ACCC and the Parer Review, only to see electricity authorities stonewall and successfully defend dominant incumbents (see the article Electricity market reform – don’t hold your breath for further detail of how reform has been stonewalled). He can’t see widespread time of use pricing occurring in the residential sector, nor does he see it as a satisfactory response.

His view is that across most sectors of the economy, energy consumers are poorly equipped to manage and reduce their energy bills. Therefore they aren’t capable of effectively responding to price signals directed at them.  Instead, Ric believes you need to provide an incentive for energy equipment suppliers and energy service companies to emerge that will help consumers reduce peak demand. Ric’s view is that a certificate trading scheme is likely to be the most effective model for providing such an incentive.

Maintaining standards in the Renewable Energy industry

The failure last year of REC agent, Well Being Green, was ruthlessly exploited by the Liberal-National opposition to try to create the false impression that the Renewable Energy Target was somehow racked by similar problems to the insulation rebate scheme.  While this was in fact simply a case of poor commercial practices that are no less common across the rest of the economy, Ric and a number of other REC agents recognised the need for a proactive approach. To minimise the chances of similar problems occurring in the future, some of the major REC agents have formed an industry association. This association aims to develop a code of conduct and accreditation process for REC agents to maintain good standards of commercial practice.