RET Review; roadblock or opportunity?
22 Apr, 2014
Sometimes I wish I had decided to sell solar systems instead of research and advice.
From the outside, it often seem’s like you guys are all making the big money and I’m just fiddling round the edges, but then I look at the volatility and complexity that you face and think I made the right decision.
The RET review is a classic example. Politically motivated. Completely unwarranted. Driven by vested interests. An outcome (almost) predetermined by the panel and terms of reference, and so on.
I wan’t going to make a submission in this initial phase which calls for feedback on the modelling assumptions because I’m busy and it seemed like an exercise in futility, but I couldn’t help myself.
The success of the RET in achieving its intended objectives is obvious to anyone who looks at what it has achieved, in my view. Tens of billions of dollars investments in energy infrastructure, thousands of direct jobs and tens of thousands of indirect employment have resulted and no matter how you skin the cat, almost 4GW of PV does reduce emissions, which was the point of the thing. Its elegant and it works.
As I was writing my submission one thing became very clear to me; you can either take a glass is half full or half empty view on the process. Call me naive, but I think there is hidden, massive opportunity which become the thrust of my submission.
In simple terms, the review should, if it’s doing its job right, take the opportunity to look at what new circumstances exist to evaluate the costs and benefits of the RET in its current an/or revised form. In other words, the review panel needs to open its’s eyes and look at not only what it has achieved, but also what it could achieve if the latest data and examples were taken into account. To fail to do so would not only be a travesty but would recognize the opportunity that the review presents, for every single Australian.
The rationale behind the review is that “market conditions have changed” and I couldn’t agree more.
One example is around the issue of how the value of PV is calculated. Looking at it simplistically, we can calculate what the LCOE is and compare it the LCOE of conventional energy. However, this completely overlooks the wider benefits which provide value to the community. But we don’t have to re-invent the wheel because models exist which we could be using here to calculate a true value.
Another example is the issue of whether PV needs support. One the one hand we are condemned for being an expensive form of generation and on the other, we are condemned because we are so cheap we are undermining the very survival of existing electricity assets. The reality is that PV cost rises and falls dramatically and how competitive we are varies by geography; and both change over time. What is needed is a measured, dynamic mechanism that offers consistent and reasonable support and both recognises and extracts maximum value for the community.
If I could sum up my wishlist for this first phase of the RET review (they have asked for feedback on the data assumptions) in a single statement it would look like this “Almost every historic PV policy has been flawed because they failed to predict how fast change would occur. If the RET review must take place, then it has the opportunity to avoid this mistake by building in dynamic adjustment mechanisms, as many other countries have done. If uptake slows, more incentive is added or programs are extended. Conversely, if the market starts to overheat, incentives can be reduced. A planned calendar and range of potential adjustments could be set to provide a degree of predictability, whilst allowing organic growth to rise and fall with a myriad of factors that cannot reliably be predicted.”
In a nutshell, the input data assumptions have to be recognised for what they truly are – a snapshot in time. If the RET Review Panel were really genuine, they would acknowledge this and create a more sophisticated model going forward which avoids the mistakes of the past.
Maybe we need a Haynes manual?
Post expires at 6:13pm on Friday April 17th, 2015