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Danger in target for renewable energy

A proposal by the government’s key climate change committee to move towards 100 per cent renewable energy threatens to add tens of billions of dollars a year to the costs of meeting Australia’s electricity needs.

The multi-party climate change committee deal on the carbon tax calls for “further consideration” to be given to the “implications of moving towards 100 per cent renewable energy”, with the Australian Energy Market Operator to research the matter.

Greens deputy leader Christine Milne said the party had “advocated this strongly” as the electricity grid would need to be extended to maximise the use of the technology.

The office of Climate Change Minister Greg Combet said the government had a target of 20 per cent renewables by 2020 and Treasury modelling found there would be about $100 billion of new investment in renewable energy to 2050, so work would have to be done to integrate this into the grid.

An analysis by Frontier Economics, conducted for The Australian, estimates that by 2030, to generate 100 per cent of electricity from solar farms at their current costs could cost up to $64bn, compared with $16bn if all electricity were generated from coal.

Frontier Economics head of climate change Matt Harris stressed that costs would fall as renewable technologies become more developed, but he noted that quantifying the costs of moving to 100 per cent renewables was “highly uncertain”, even with detailed modelling.

The findings highlight concerns about the costs of renewable energy.

The Greens want governments to shift to 100 per cent renewable energy over the long term, despite warnings from the Productivity Commission that subsidies for wind and solar farms and other renewable projects are an inefficient way to slash emissions.

Clean Energy Council director Kane Thornton said the cost of generating solar power had been coming down “a lot quicker than most people anticipated” as there were improvements in the technology and larger-scale manufacturing.

“As you ramp this up, the costs do come down,” Mr Thornton said.

Mr Harris said it was taxpayers and consumers who would carry the cost if this did not happen as quickly.

St Vincent de Paul Society manger of policy and research Gavin Dufty said renewable energy schemes increased utility bills but often left people on low incomes unable to afford their power bills.

“That’s what seems to have been forgotten in all this,” Mr Dufty said. “We are talking about essential services. At the end of the day, they don’t care if it’s coal or solar or wind, they just want it to be affordable.”

The Frontier Economics analysis was based on the likely costs of generating thermal electricity from the two solar farms that will receive funding under the $1.5bn Solar Flagships Program, the $923 million Moree solar farm in NSW and a $1.2bn project at Chinchilla, in Queensland.