Energy report reveals Labor knew about renewables cost

Consumers will have to pay higher electricity bills and taxpayers fork out at least $1 billion extra if the NT is to meet Labor’s ambitious green energy target.

NT Chief Minister Michael Gunner. Picture: Che Chorley

Consumers will have to pay higher electricity bills and taxpayers will have to fork out at least $1bn extra if the Northern Territory is to meet Labor’s ambitious green energy target, according to modelling that contradicts politicians’ claims the target will cost nothing.

The modelling was produced by the public utility Territory Generation and warns that reaching 50 per cent renewable power by 2030 will likely push up system costs by 20 to 30 per cent and leave about $1.9bn worth of prepurchased gas “stranded”.

“Reaching the 50 per cent renewable target by 2030 will require a total investment of $1.1bn to $1.3bn — $600 to $700m in new generation, $300m to $350m to augment the network … and $200m to $250m in battery storage, even assuming technology costs decline over time,” a summary of the modelling says.

“Capital costs will replace fuel costs as the key driver for electricity prices … if real retail electricity prices are maintained at the current level, the value of this ­investment … would be borne by the government through ­incremental CSO (subsidy) ­payments.”

The summary was produced in June 2017, shortly before Chief Minister Michael Gunner released his government’s Roadmap Renewables report. It raises questions about whether he misled voters by claiming the 50 per cent target would be cost-neutral.

“We see this very much as about substitution rather than additional costs … the cost of renewables is coming down, and so this provides a much smarter, better way of providing reliable and affordable electricity for Territorians,” Mr Gunner said that November when asked to guarantee that the policy would not cost a dollar more.

“The advice we’re getting from the renewables committee is that an investment in renewables will actually put downward pressure on household prices.”

The Securing the NT’s Energy Future report The Australian has obtained represents the first public airing of the government’s ­internal cost estimates.

The material is understood to have been circulated to ministers, and the government is believed to have several other reports also showing transitioning to 50 per cent green power will not be free.

 

Labor has fought hard to hide the true costs of its climate change mitigation plans.

The Territory Generation document endorses the government’s green energy push but warns it will inevitably be expensive and could also cause blackouts if mismanaged.

“Depending on the approach that the NT government takes, a poorly co-ordinated transition to renewables might not reach the renewables target, or in the worst case could lead to significantly higher costs and system security issues,” it says.

The government’s solar tsar, Alan Langworthy, warned in March that lousy preparation was already putting the electricity network at risk. After an outage last month, he said the system was “running on luck”.

The Territory has only one source of renewable power, solar. Increasing its penetration means duplicating generation capacity to cope with cloudy days and night-time.

“Under the business-as-usual approach, uncoordinated small investments in solar generation will continue to contribute to overcapacity, negatively impact reliability and security … and put upward pressure on overall system costs,” the report says.

“The current supply contracts between TGEN and retailers have led to distorted incentives for retailers to underwrite renewables investment that will actually increase total energy cost, strand TGEN assets and blur the traditional boundaries between generation and retail.”

A spokesman for Mr Gunner said: “This report was produced three years ago prior to the Roadmap to Renewables Report and is outdated.

“It predates the Suncable project and doesn’t reflect modern technology developed since then.

“We are constantly finding new uses and customers for the Territory’s gas. The territory will not have any stranded gas.”

Territory Generation did not respond to requests for comment on Thursday.