- combustion of fossil fuels releases CO2 to the atmosphere, which acts to trap heat in the atmosphere, thereby warming the planet;
- the warming planet involves melting of glaciers and ice, expansion of the oceans, sea-level rise, and unpredictable changes of climate with implications for food and health security;
- these changes to the planet are likely to be extremely disruptive and economically challenging;
- it is commercial and political impediments, not technological impediments, that prevent a far greater role of renewable electricity generation in our society.
These commercial risks for our future economic strength should be taken into account by IPART and the NSW Government.
Electricity generated by PV panels does not involve release of CO2, other than in the manufacturing phase. The costs of CO2 emissions have been documented in the international literature, for example by Epstein et al. (2011, Table 4) who found monetised costs of between 1 (low estimate) and 10 (high estimate) US (2008) cents per kWhe. When other social costs such as public health burden and emission of pollutants were added, the total cost of coal mining was estimated to be between 9 and 27 US (2008) cents per kWhe.
Summary so far
In view of the comments above, I argue that it is desirable for the NSW Government to implement policies that support the growth of renewables in the electricity grid. Feed-in tariffs for PV are an effective agent for change, particularly since the populace is supportive of PV panels. Whatever tariff regime that is implemented should give certainty to the marketplace and be done with constancy of purpose.
- As a preamble to the IPART Report, the NSW government should make a statement recognising the importance of increasing the renewables in the electricity grid. This is required to mitigate the effects of climate change and commercial risks associated with our fossil fuel generators. The statement should acknowledge that fair payment for electricity exported to the grid has an important role to play in the transition to the grid of the future.
- A second statement by the NSW government is required to the effect that decisions taken by IPART reflect the best interests of the community. The decisions must not reflect commercial interests of the NSW government as owner of assets in the electricity system.
- The red-lettered NSW Government statement at the bottom of household electricity bills should be deleted.
- It should be mandatory for retailers to offer a feed-in tariff in the benchmark range set by IPART. (Here ‘feed-in tariff’ means a payment for electricity exported to the grid.)
- Whatever tariff regime that is implemented should give certainty to the marketplace and be implemented with constancy of purpose.
- In establishing the benchmark electricity export price, IPART should (a) continue to reflect the wholesale price of electricity and reasonable financial gain that retailers make from offering a feed-in tariff; (b) include a value for potential reductions in network costs; (c) include a value for other community benefits (social cost of emissions avoided, grid losses avoided, benefits due to pool price/shape, …); and (d) recognise the long-term benefits in increasing the role of renewables in the grid, and therefore adopt policies that encourage further installation of PV panels.