What you can do to help save the Renewable Energy Target

12 Feb, 2014

Anyone who reads the paper knows that the Renewable Energy Target is currently the subject of an inordinate attack. However, when you look at the facts it’s clear that this is completely unwarranted.

The question was put to me “Can you suggest how we in small business can best educate the decision makers about the benefits of the RET? It all seems a bit remote from the man in the street, but the decision will affect us all.”

This statement is right on the money; if you have solar, if work in solar or if you want solar, any change to the RET will affect you. If we add up how many Australians live in homes with solar, work in solar and the general (positive) attitude to solar, it means this decision affects Millions of Australians. I don’t know that our decision makers quite understand this fact. Yet.

Before I get to what to do lets start by understanding what is driving the focus on the RET, by considering it in the broader context of Australia’s most important and current issues.

The Big Issues

To get a sense of the big issues that underlie consumer behaviour and thus political focus, I took a look at Roy Morgan’s latest consumer polls, a recent interview with Commsec’s Chief Economist and interviews with a diverse group of politicians by Fairfax. Together, they form a pretty reasonable snapshot of where consumers and politicians heads are currently at. As is so often the case, the things that we all talk about at BBQ’s and intuitively have a sense of, are also the issues that are top of mind in these samples and its interesting to consider how they all interrelate with each other.

The global and local economy was sluggish last year and consumer index polls prove this year has started strongly, but the US/AUD exchange rate looks likely to remain volatile. This has pro’s and con’s depending on what your perspective is, but a common view is that 2014′s crippling election behind us we’ll all get back to spending. Protecting our relatively healthy employment rate and improving underlying productivity is on the front page every day and converting this into new growth and export potential is in people’s minds too. The resource investment boom has arguably peaked and although exports of these commodities are hugely important for the economy some are already asking whats next?.

The risk of overzealous budget cuts and conservative fiscal management, which is amplified at the beginning of any political cycle is obvious too. It’s all too predictable that a highly conservative and ideologically driven Prime Minister will be brutal while ever he has time before the next election to make good. And right in the middle of the mix is electricity and carbon. On the one hand, the economy needs reliable and affordable energy whether you are doing the washing or smelting aluminium. Deregulation and electricity industry reform come up and impact on many of the other issues. On the other hand, the vast majority of Australians are very concerned about climate change and just a little under half would be ok with the carbon tax remaining in place according to polls.

Fairfax’s interviewer also asked politicians what the “sleeper” issues were likely to be this year. Most cited the same issues in slightly different contexts; the need for industrial relations reform balanced against employment, balancing the size, capacity and trust in Government against tightening budgets as some examples. Underneath these issues, we also heard concerns about underlying social issues such as the enormous damage that gambling and mental health care cuts are having.

So, how do these relate to the current focus on the RET?

Here’s how the recipe goes in my humble opinion:

Logically (any) unpopular cuts will be made early in a political cycle so that’s a key driver politically.  Keeping employment, growth and productivity rolling requires low input costs so focusing on energy costs are a logical leap. Now, add a dash of high electricity prices, the enormous size and corporate importance of the electricity industry and a healthy splash of Government ownership. Be careful here not to turn the gas oven up too high because those high price could burn you, although of course the energy sector will tell you its clean, linking back to the carbon issue. Considering the wider social issues, the promise of lower energy costs will be good across the board and could potentially free up consumer and Government on other areas that need attention.

So what’s a Prime Minister to do?

Easy. Keep your single largest promise and try to earn trust by cutting the carbon  price, irrespective of whether it really makes sense. Then, pick the next softest target you can, that will sell well and look like it might also reduce electricity prices – the RET; again irrespective of whether cutting it is effective or not. The good news is that electricity prices are so complex, no-one will really understand anyway. And the Prime Minister has a golden egg that was handed to him on a platter, which he will no doubt leverage too. The simple fact of the matter is that electricity investment goes through cycles and we have (mostly) peaked in that cycle for now, so price rises were set to ease without him doing a single bloody thing.

Kaching.

Importantly, the Government cannot change the RET substantially without changing legislation and that means its going to take time. Nothing is inevitable and YOU CAN make a difference to the outcome. We need to enter the battle now in this war that will take up to twelve months.

So, what can you do?

Being clear about the context described above is Step 1. It’s big and complex and solar is just a cog.  You can’t walk in to a back-bencher’s office and expect to get any traction bleating about your political persuasion or beliefs, but knowing what is driving them helps you wear their shoes for a minute. So now we can come to where the RET fits in their world, in their context.

Frankly, I reckon all the collective efforts of our  industry groups are on the right track if a little biased by their own agenda’s but that’s ok;  it gives us a healthy level of diversity and a range of bows with which to fire our arrows. So Step 2 is to pick your favourite advocacy group (or solar industry consultant!) , support the crap out of them and follow their game plan. Work together.

Step 3 is to focus on the staggering array of facts that demonstrate why at a political and emotional level, the RET is not the problem. Perhaps most specifically, summarise them down in short, succinct snippets but have the detail and references behind them ready, if they want it.  Some key facts which (along with others) we’ll keep building on, is below. FWIW, much of the cost and effort in this campaign is about the time to collect, analyse and summarise this information so don’t forget to support the analysts!

Step 4 is to use these facts to educate politicians. Perhaps surprisingly, there is an incredible lack of understanding and knowledge (or denial) about the facts about the RET amongst politicians so your efforts can reap enormous dividends here. A classic example is the grossly misleading statements made by Victorian Member Kelly O’Dwyer yesterday, which I felt compelled to respond to in an email and on her Facebook page and on Twitter. If every one of the more than 4000 solar companies sent one staff member for a 1 hour meeting  they would be inundated. Is it worth a 1 hour investment to your business and livelihood?

Step 5 is to leverage your customer databases. By the end of 2013 more than 1.2 million homes had PV installed, representing more than 3.3Million voters, and the vast majority really, really love their solar systems.  That means that solar voters represent at least 22% of the entire voting population and it will more than likely grow to almost 30% by the end of 2014. If every solar company emailed every customer and asked them to get vocal and express their support, politicians would be inundated. Use your best marketing panache to motivate and incentivize them to do something.

Step 6 is about talking to your local media outlets, newspapers regional radio stations. This is as important and powerful as talking to your local member. They want stories, you want coverage, so pick up the phone.

Step 7 is all about using social media, which is enormously and increasingly powerful and in almost everyone’s life. Make sure your leverage every opportunity you can to keep plugging the facts and messages out through Facebook, Twitter, LinkedIn, Instagram and Google+

Step 8 is to repeatedly focus on this one, simple, crucial fact courtesy of the AEMC:

The SRES is virtually the only scheme that supports PV and in 2013/2014 adds around $0.005 to the average cost of electricity (assuming $0.27kWh ave) and is already declining.  Therefore, removing or changing the SRES will have absolutely no meaningful impact on the price of electricity but will have an enormous impact on one of the fastest growth industries in the country.

Educate politicians.

Motivate consumers.

Support your advocates.

The RET and SRES Fact Pack:

I have compiled all the great facts that many people and organisations have put together below and would like to acknowledge the great work that these groups are doing on your behalf. The RAA, ASC, CEC, Solar Citizens, the APVI, SEA and many more are working tirelessly behind the scenes for you.

IMPORTANTLY: These facts are based on a wide variety of sources (which I’ll reference in a future update). IT IS CRUCIAL to understand that many of us present the same data in different ways to get different points across so BE VERY CLEAR when you are quoting facts – its easy to get them mixed up.

An example is the cost of the SRES. It can be described as a % of average annual or quarterly electricity costs, a $ value in the average cost /kWh of electricity or a $ value per day.  Generally, the cost is talked about EXCLUDING the benefits and values (eg lowered wholesale electricity costs), but in some cases it is quoted including estimates of the extra value as a more true representation of its real cost.

 

Feel free to pick and choose facts that are most relevant to the people you are talking to.

General Facts

  • The Renewable Energy Target is a mechanism that has demonstrated it works and works well
  • The Abbott Government went to the election with a very clear commitment to maintaining the Renewable Energy Targe
  • The RET was comprehensively reviewed in December 2012.
  • It has encouraged millions of Australians to invest in new energy infrastructure worth billions of dollars
  • The SRES scheme is elegant and self-adjusting. If demand goes too high, SRES prices fall and the market slows down.
  • the SRES’ impact on electricity bills declined last year and is set to continue to decline
  • The most recent Roy Morgan Polls show that 86% of Australians and very concerned about climate change. Numerous surveys over several years have shown that Australians want more renewable energy
  • The RET is already a functioning program which is very low-cost to consumers and on track to deliver on promised emissions reduction targets. However, if investor confidence is eroded by changing the RET we will be far less likely to meet the targets

Jobs

  • With the economy in transition, it is the right time to think about the jobs of the future. The Renewable Energy Target has already helped create 25,000 jobs (up to 18,000 in the solar industry) and we are only half way to meeting the target.
  • Our leading trading partners – the US, China, Japan, South Korea – are all investing heavily in solar and renewable energy. Last year, China installed more solar than any other country in history. The trend line is clear, and that represents the jobs of the future.
  • Axing the Renewable Energy Target would have a diabolical impact on Australia’s solar industry – almost 7,000 jobs lost or foregone in just four years. Not only would people lose their jobs, but future jobs would not be created. These jobs will primarily be in outer metropolitan areas and in regional Australia, because that is where most solar is installed.
  • The impact would be felt immediately – 2,000 jobs lost in the short-term.
  • Cutting the Renewable Energy Target would also be disastrous – 600 jobs lost next year alone.
  • Jobs would be lost right around the country, but particularly in the outer suburbs of our cities and in regional Australia, because that’s where most people are installing solar.
  • If we retain the RET in its current form, we will see job growth – 8,000 jobs created over the next four years.
  • The Renewable Energy Target has helped 5 million Australians cut their power bills by investing in solar PV and SHW.
  • In 2013, 18,000 Australians worked in the solar industry through 4,500 businesses.
  • The real cost of the Small-scale Renewable Energy Target – which helps families invest in solar – is just $1.90 out of an average $500 quarterly power bill.
  • Solar has shown its great strength during the recent heat waves. If we didn’t have solar, we would have seen black outs.
  • Do I fear for my job? Yes I do, but more importantly, I fear for my employees, for my colleagues, for my friends and I despair that some Australians may not get to invest in solar.

Costs

  • The Prime Minister has talked a lot about the cost of the Renewable Energy Target, but the RET is a very small contributor to the cost of electricity.
  • In 2013/2014 the SRES adds around $0.005 to the average cost of electricity (assuming $0.27kWh ave) and is already declining
  • The Small-scale Renewable Energy Scheme contributes just 1.3% to a power bill ($6.50 out of an average $500 quarterly bill). If you factor in solar’s contribution to the reduction in the wholesale cost of electricity, the cost is just 0.38%. That’s $1.90 out of a $500 power bill.
  • The RET has zero cost to the Federal Budget.

Subsidies

  • Many are arguing that solar should not get subsidies because it is unfair. The fossil fuel industry in Australia gets subsidies worth more than $10Billion per annum.
  • Old energy companies protecting their own interests are attacking the Renewable Energy Target because they’re scared of the competition posed by clean energy.
  • Owners of traditional power stations are complete hypocrites for complaining about support for renewable energy when you consider the subsidies their facilities have received in the past and in some cases continue to receive

RET Review

  • There is a view that the Government has launched an inquiry into the Renewable Energy Target because it is concerned about the cost of the RET. The truth is the Government must, under legislation, review the RET this year.
  • If the RET was halved to 10%, as the NSW Premier has reportedly suggested, that would be the same as abolishing the RET as we have already reached the 10% target.
  • The RET is not a 20% target. The target has always been a fixed gigawatt hour and the previous Government made it clear the target was “at least” 20%. This target was supported by the Coalition in Opposition.

 

Post expires at 9:02am on Thursday February 12th, 2015

About the author

Nigel Morris
Nigel Morris

Nigel is the Director of SolarBusinessServices. After almost 20 years working for other companies SbS Director Nigel Morris, established the company in 2009 with a view to providing other organisations with the benefits of his wide experience in the renewable energy industry.

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