Page 5686 - Week 14 - Tuesday, 6 December 2011
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to the instantaneous load connection point and schemes do not significantly disadvantage a retailer relative to its competitors. Conversely, retailers may not be willing to purchase electricity from large-scale facilities as the output of the generator is many times larger than micro generators, creating substantial commercial imposts associated with the provision of subsidy support payments and/or the output of large facilities is not easily assigned to retailers in proportion to their share of supply, creating substantial commercial risks associated with the retailer’s participation in wholesale spot markets and contract markets.
In response to these issues and the unique circumstances of the ACT, a first of its kind feed-in tariff has been developed to deliver large-scale renewable energy generation to the ACT while minimising these risks. Under the legislation a fixed feed-in tariff granted to the generator is constituted by two variable components: the value obtained by the generator through selling this electricity on the national market, and a price support payment paid by the distributor topping up this value to an agreed maximum level.
The legislation does not prescribe the terms of sale or interfere with the commercial or technical operation of the generation or otherwise interfere with the usual energy market operation. As a result we have a piece of legislation which provides a high degree of certainty.
I want to address a number of the other critiques made by the Liberal Party. First of all we heard from the Liberal Party that a large-scale feed-in tariff may see development occur outside the territory. In fact this is not the case and indeed in relation to the first tranche auction it is very clear that the terms of the tender, the terms of the auction, require that the first 40 megawatts be developed explicitly within the ACT. It is, however, sensible to make provision potentially for some development to occur outside the ACT at some future time if there is a paucity of sites in the ACT suitable for large-scale facilities. We are a geographically confined jurisdiction and we do have some limitations on available land. But we do not envisage this being an issue for the first auction; indeed the first auction will explicitly require that development occur in the ACT.
It is also worth making the point, conscious of the claims of those opposite, that the large-scale feed-in will be additional to other emissions reduction activities through the surrender of renewable energy certificates. That means we get real environmental benefit. We get abatement over and above other emission reduction activities. The auction process will establish costs under value for money criteria. The government is not obliged to accept any price if significant benefits to the territory are not proven.
The other point that is worth making about this is that, as electricity prices continue to rise as a result of carbon pricing and as a result of demand, the generation of renewable energy through solar power plants will become more and more cost efficient. The government, through this reverse auction process, is developing a mechanism to ensure that as the wholesale price of electricity rises the feed-in tariff falls as the wholesale price grows, because the return by the electricity generator reduces.
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