As the authors state, this will be initiated by the fossil fuel generators, who will not only have limited competition, but also they will have full control over the prices at which they cell their electricity.
The report came as an answer to complains submitted by electricity producing facilities in Australia. Two utilities in particular, Origin Energy and Energy Australia, stood up against the 41,000GWh renewable energy target of the country, and even managed to persuade the federal Coalition in Australia to review the current RET.
But there is no wonder all these gas and coal burning facilities oppose the governmental targets. After all, once wind and solar farms are built, they practically operate at a zero cost. Yes, it is likely that the cost of renewable energy certificates might drop if the targets are reduced, but the direct consumers will not benefit from it, even the opposite.
The BNEF Australia head Kobad Bhavnagri commented on the findings of the report, stating that the savings from the reduced targets will be outweighed by the cost, putting a huge pressure on retail electricity prices.
As part of the report, the BNEF provide a detailed breakdown of targets and prices. They showed that if the current RET is brought down to 27,000GWh, the number these two energy utilities are hoping for, the investments towards renewables will drop by at least a half.
The report urges the government not to go ahead with yet another change in established polices. Reducing the targets will result in the construction of much fewer wind and solar farms, which will ultimately result in higher wholesale electricity prices and will offset the dynamics of the global energy markets.