Mandatory RET Threatens Jobs & Australian Energy Security

In an exclusive interview with The Australian yesterday, Alinta Energy chief executive Jeff Dimery said current energy policy lacked vision and called for existing investments made under the RET to be grandfathered and further subsidies scrapped.

“Coal areas will be put under extreme duress if the RET isn’t changed, with loss of real jobs as opposed to the invisible, promised jobs that RET advocates point to,” Mr Dimery said.

Alinta Energy owns 14 gas and coal power stations around Australia and provides electricity and gas to some 700,000 households and businesses in South Australia, Western Australia and Victoria.

“Quite frankly, Australia has a real opportunity to reap the benefit from the overspend of capital in the energy sector,” he said, arguing building more and more wind farms was adding to supply when demand has been falling.

The RET requires energy retailers to purchase a rising amount of energy from “renewable energy” suppliers, which typically means wind farms because they are the most cost-­effective source.

“If we keep spending, though, you won’t get the benefit because investors will want to get a return on their capital,” he said, citing Europe as an example of how clean energy policies had damaged economic growth.

“Building wind farms for 25 years is solving yesterday’s problem with yesterday’s solution,” he added, noting 1.3 million households had already installed rooftop solar panels and the trend to leave national grids would continue.

Mr Dimery said if governments insisted on “picking winners” they should instead focus on battery manufacture: “Build the batteries that will go into households that will take people off grid.”

His comments come only weeks before the government’s inquiry into the RET — chaired by Dick Warburton — is due to make recommendations that are expected to scale back the RET’s requirements.

A week after the clean energy investors Acciona and IFM Investment told The Australian changing the RET threatened $15 billion of investment and Australia’s reputation, Mr Dimery said concerns about creating sovereign risk could be dealt with by quarantining projects that had been commercialised.

He dismissed recent modelling provided to the government’s RET review that showed electricity prices would be cheaper if the RET were maintained, and asked: “How could it possibly be cheaper for me to spend $40 billion of unrequired capital and then tell you it’s going to be cheaper as a consumer?”

“Of course if you put too much capacity into a market you will crash the wholesale price.”

Referring to his own farm, he pointed out that connection to the grid alone costs around $25,000 compared to a $17,000 set-up cost for solar and back-up diesel power with almost no ensuing power bill.

“Consumers don’t want electricity prices indexed to oil prices which are subject to what’s happening overseas,” he said.

He said the terms of the government’s Emissions Reduction Fund were still not clear but ­Alinta had every intention of applying for funds to abate carbon at its power stations if it could.

“This country would be much better off with a well-designed ETS than with a carbon tax or a RET — to have both is unworkable,” he said.

Mr Dimery was also puzzled by advocates of state ownership of electricity distribution networks given the projected slump in demand.
The Australian