A handful of small electricity retailers have failed to meet their large-scale renewable energy targets for the 2015 year, meaning that $4.5 million in “penalty charges” will be paid by consumers to the government, rather than supporting the renewable energy industry.
The table below was compiled by the Clean Energy Regulator, which administers the large-scale renewable energy target.
The RET aims for 33,00GWh of large-scale renewable energy by 2020, but it has stepping stone targets each year. Each retailer is obliged to meet their share of the target.
If they don’t, then a penalty of $65/MWh net, (or $92/MWh pre tax) is applied. That money is not actually paid by the retailer, but by the customer. The money goes to government revenue, rather than to any renewable energy development.
It is suggested that these small retailers, including the struggling GoEnergy, may have chosen to pay the shortfall penalty of $65/MWh because they do not pay tax. That makes it cheaper to pay the penalty rather than the current market price of $80/MWh.
Those retailers who make profits, and pay tax, face an effective penalty of $92.60. Again, because the penalty is transferred to the customer, and paid to the government, there is no actual penalty on the retailer itself.
“This money is lost to the renewable energy industry,” says Ric Brazzale, from Green Energy Markets. UBS analysts also noted that because of this, the financial incentive for even big retailers to meet their commitments is not strong.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.