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Increase in power bill, warns retailer

AUSTRALIA is likely to overshoot its ''20 per cent by 2020'' renewable energy target by about 6 per cent according to Origin Energy, potentially adding to rising electricity costs.

Origin, Australia's largest electricity retailer, says the trend of falling electricity demand and increasing penetration of rooftop solar and solar hot-water systems means Australia is likely to require only 250 terawatt-hours of electricity in 2020, rather than the fixed volume of 300TWh anticipated in the renewable energy target legislation.

The target, which will be reviewed this year by the Climate Change Authority, allows for an estimated 15TWh of renewable energy supply from existing power stations (mainly wind and hydro) and requires an additional 41TWh of renewable electricity from new large-scale developments by 2020. But according to Origin, this will mean about 26 per cent of Australia's energy will come from renewable sources by 2020, once the uncapped amount of power to come from small-scale systems is factored in.

In a presentation yesterday, Origin called for a target based on 20 per cent of ''actual'' 2020 demand, or enough new large-scale renewables projects to generate 27TWh of electricity.

Such a target would reduce costs passed on to consumers, the company said, including ''reduced requirements for expensive renewable generation, reduced network costs, and reduced requirements for peaking generation [required due to wind energy intermittency]''.

But Russell Marsh, policy director for the Clean Energy Council, said the renewable energy industry had planned around the existing 41TWh target and switching to something more flexible would not give the certainty needed to drive investment. He said the level of demand for 2020 was unknown.

Mr Marsh said in both NSW and Victoria the target accounted for about 5 per cent to 6 per cent of the cost of householders' electricity bills and that proportion would reduce in coming years as support for small-scale renewables was wound back.

The Greens leader, Christine Milne, said renewable energy technologies were bringing average electricity prices down because, ''although their upfront costs are high, their running costs are virtually zero''.