Updated October 11, 2017 11:19:17
The head of Australia’s biggest energy retailer has urged the Federal Government to immediately implement a clean energy target if it wants energy prices to fall.
Origin Energy chief executive Frank Calabria told ABC’s The Business that investment in renewable energy would continue to grow even without a target but that investment would be haphazard.
“The real purpose [of the clean energy target] is not to subsidise renewables but to make a timely investment in new generation,” he said.
A clean energy target (CET) was a centrepiece of the Federal Government’s Finkel Inquiry, a proposal which galvanised the support of energy generators and retailers.
While renewable energy was the lowest cost energy to build and produce, Mr Calabria said the constant policy switches — such as the introduction and then removal of a carbon price and changes to the Renewable Energy Target (RET) — had eroded industry confidence and reduced investment.
“In the absence of such a mechanism, I believe that investment will still occur … but I do believe it will be in a more disorderly way and I do believe that produces more volatile outcomes for prices to customers and that’s something we want to avoid,” he said.
Mr Calabria stressed that a bipartisan policy over a CET was essential to restore confidence to the industry and to ensure investment was available for new generation to replace the ageing fleet of coal fired generators as they were decommissioned.
“We’re building and committing to long term assets and we need to have that clear signal and we need to do that with confidence,” he said.
The Origin boss said the recent flurry of new investment was already chipping away on forward wholesale prices, and further investment would put greater downward pressure on prices.
But Mr Calabria warned that, without a policy beyond 2020, chaos again would descend over the sector.
“If in 2020 we hit a renewable target and don’t have in place a mechanism from which to proceed to 2030, there’s every risk that prices will rise as coal leaves the system,” he said.
“And that’s why it’s important to have that forward signal now.”
Mr Calabria said Origin and the entire industry had always supported market based systems such as an energy intensity scheme, an idea with which the government briefly flirted earlier this year before hosing it down.
While he would not be drawn on alternative proposals to a CET, he reiterated that leadership on the issue was required, and urgently.
“I think the industry is working hard to be part of a solution … but I think time is of the essence right now,” Mr Calabria said.
“I’d like to have seen a decision before today, quite honestly, but the longer we leave it the more I believe we’ll see higher costs and less predictable outcomes.
“And I think that’s what we all should be focused on because it is the homes and businesses of Australia that are actually hurting.”
First posted October 11, 2017 10:21:29