Senator Ron Boswell today predicted the Government would have to be back in the parliament quickly for a third remake of its Renewable Energy Target, labelling the second attempt in a year - “a bad bill to fix bad law based on bad policy.”

Labor’s first and belated attempt at establishing a legal framework for its 20% RET last year was dumped in February after coming into full effect only in January, leading to the series of remedial bills now before the parliament.

The Government was forced to revise its RET after the price of Renewable Energy Certificates collapsed late last year to less than half the level that would have made big wind farms, on which its success is heavily reliant, viable.

Senator Boswell said the fatal flaw in the first attempt was both blindingly obvious – and, curiously, totally deliberate.

The Government upped the price of non-compliance by big electricity users from $40 a REC to $65 to try and push the price to a level that would be attractive to wind farm proponents.

But at the same time it allowed a Howard government era $8000 rebate for household roof top solar power systems, capped at $150 million over five years, to turn into a $700 million “runaway bus” as part of its stimulus package.

The Government dumped the cash rebate in the middle of last year but replaced it with subsidies for solar systems that, combined with state concessions, were at least as generous. The subsidies continued to drive sky-rocketing demand - and the collapse of the REC price.

It barely and briefly reached $50, well below the modelled $70, and ultimately collapsed to $24.

The predictable collapse undermined the viability of wind projects, leading to the dumping of the scheme within weeks of it coming into effect.

Senator Boswell said the new program was also doomed as a promoter of wind, could be a big driver of power price increases, and could well develop into an administrative shambles like the home insulation scheme and the Building the Education Revolution programs – if it hadn’t already.

While RECs from roof-top solar systems created after the end of this year will be banned from playing any role in meeting the target as it is applied to big-end power users, there would still be up to 23 million eligible banked RECs sloshing around in the system.

Some industry players believe it could take up to three years for the banked RECs to flush through the system and generate any strong upward movement of the REC price.

Strong incentives for wind projects crucial to the Government’s target could therefore be years off.

Senator Boswell also told the Senate there were widely varying estimates of the impact the RET would have on power prices.

The Government maintains the impact will be minimal, but a range of industry projections suggest it could be a big factor in a doubling of power prices over the next decade.

“It is clear that the need to end the hiatus in construction of generating capacity brought about by uncertainty over a carbon price, and the serial neglect of state governments of transmission infrastructure will be the biggest price drivers,” Senator Boswell said.

“But it is equally clear that the need to balance the intermittency of wind will require extra capacity that will be expensive, and there will also have to be major investment in transmission lines to link up widely dispersed wind farms.

“If only 20% of the widely expected doubling of power prices over the next decade or so is atttributable directly to the RET, that’s vastly more than the 4% conceded by the government.”

Senator Boswell also expressed concern about industry evidence before a recent Senate committee examining the bills that sky-rocketing demand for roof-top solar power systems could create problems not unlike those experienced in the home insulation scheme.

Reputable and major industry participants warned of  the potential for poor installations of cheap product that could lead to efficiency and safety problems.

“The more you look at the Government’s performance in developing this policy framework, the more it looks like just more of the same serial incompetence that has marked so much of what it has touched,” Senator Boswell said.

ENDS