Consumers want answers after energy providers have announced a price increase of up to 41 per cent for their green energy contribution to coincide with the new year.
In the days leading up to Christmas, Origin Energy customers were notified that "a rise in the market price of renewable energy" meant GreenPower electricity charges would increase from 3.61¢ per kilowatt hour (excluding GST) to 5.10¢ per kilowatt hour from January 1, 2016.
The increase was so steep, northern NSW resident Russell Mills was sure there had been a mistake.
"I did the maths very quickly and it came up as a 41 per cent increase. I thought that's substantial, am I missing something?" he said.
"There was nothing in the letter explaining the rationale for it, so I rang them and I spoke to three different people who could tell me no more, just that it was due to changes in renewable energy prices."
In Mr Mills' case, the 41 per cent increase would equate to an extra $77 each year…..
Mr Mills lives with his wife and two children in a three-bedroom home in Clunes, where they spend between $450 and $550 per quarter on electricity.
For the past year, he has contributed to renewable energy through the 100 per cent GreenPower product. However, after being hit with the 41 per cent increase, he has made a "hip-pocket decision" to reduce his 100 per cent contribution to 50 per cent.
"There's a huge disincentive here for average consumers to actually choose renewable energy. I'm not laying blame totally on Origin, I'm still with them, I just feel it's a bit depressing really," he said.
"We need more renewable energy and there's not really any incentive for us to choose it."
Significant price jumps in GreenPower charges can be linked to the large-scale generation certificates used for the product, which have experienced a steady increase of about $40 to upwards of $75 in the past six months.
All GreenPower providers have changed their prices to reflect the underlying cost increase.
So who is the real culprit in all this?
The fault apparently lies with the Coalition Federal Government and its attempt to dismantle the Renewable Energy Target (RET) scheme.
The protracted negotiations surrounding the review of the Renewable Energy Target (RET) scheme and the reduced energy target has had a significant effect on the price movement and volatility of Large-scale Generation Certificates (LGCs) throughout the third quarter of 2015.
The negotiated changes to the RET can be summarised as follows:
* Reduction of the Large scale Renewable Energy Target from 41,000GWh to 33,000GWh
*Eligibility of the burning of native wood waste as a certificate generator
* Creation of a ‘wind commissioner’ to hear complaints surrounding wind developments.
Following the passing of the RET legislation by the Senate on 23 June 2015, LGC prices have increased to seven year highs, maintaining prices above $70 per certificate….
This unprecedented price movement has come on the back of significant trades in the spot market, as the market is concerned about the number of committed projects over the next 12 months. The protracted negotiations surrounding the revised RET target did effectively put any investment in large-scale renewable projects on hold, leading now to a short to medium term shortage of LGC certificates.
Future price movements will depend on the quantity of approved large-scale renewable projects in the coming years. Policy certainty, combined with the high LGC price should serve to encourage increased levels investment in new projects and ultimately put downward pressure on the current high certificate prices.
