AUDITOR GENERAL FOR WESTERN AUSTRALIA
AUDITOR GENERAL’S REPORT Performance Examination
Renewable Energy: Knowing What We Are Getting
Serving the Public Interest Report 12 – November 2007 AUDITOR GENERAL FOR WESTERN AUSTRALIA
THE PRESIDENT THE SPEAKER LEGISLATIVE COUNCIL LEGISLATIVE ASSEMBLY
PERFORMANCE EXAMINATION – RENEWABLE ENERGY: KNOWING WHAT WE ARE GETTING
This report has been prepared for submission to Parliament under the provisions of section 25 of the Auditor General Act 2006.
Performance Examinations are an integral part of the overall Performance Auditing program and seek to provide Parliament with assessments of the effectiveness and effi ciency of public sector programs and activities thereby identifying opportunities for improved performance.
The information provided through this approach will, I am sure, assist Parliament in better evaluating agency performance and enhance Parliamentary decision-making to the benefi t of all Western Australians.
COLIN MURPHY AUDITOR GENERAL 28 November 2007
AUDITOR GENERAL FOR WESTERN AUSTRALIA 2 RENEWABLE ENERGY: KNOWING WHAT WE ARE GETTING Contents
Auditor General’s Overview 4
Executive Summary 5 Key Findings 6 Recommendation 7 Responses from Agencies to the Report 8
Introduction and Background 10 Electricity generation in Western Australia 10 Structure of the electricity industry 11 Western Australia participates in two programs for increasing the amount of electricity generated from renewable energy sources 12 The focus and approach for this examination 14
Western Australians can be confi dent that buying certifi ed renewable energy causes renewable energy to be generated 16 How the Mandatory Renewable Energy Target program works 16 How the GreenPower program works 16 Western Australians can be confi dent that when retailers sell certifi ed renewable energy products a corresponding amount of renewable energy is generated 18 Horizon Power buys all of its Certifi cates, and Synergy a majority, from Western Australian sources 19 Everyone pays for certifi ed renewable energy used to meet the mandatory targets 20 Electricity consumers may also use individual contracts to buy electricity equivalent to the output of a particular generator 20
Western Australia is behind other states in GreenPower sales 23 GreenPower sales have contributed to new renewable energy generation 23 GreenPower sales in Western Australia are disproportionately lower than in other states 24 Low sales in Western Australia may be due to consumers’ lack of awareness and confusion about GreenPower products 27 Western Australia is likely to be able to produce enough GreenPower in 2010 to meet the Government’s intention to purchase 20 per cent of its requirements from renewable energy sources 28
The Government is likely to meet its Renewable Energy Targets for the South West Grid 29 Electricity generated from renewable sources on the South West Grid has increased from one per cent to fi ve per cent over the past fi ve years 29 The six per cent renewable energy target for the South West Grid is likely to be achieved 30 There are suffi cient renewable energy projects in development to meet the 15 per cent renewable energy target for the South West Grid 31 Achieving the 20 per cent target for 2025 is less certain 32 The renewable energy targets for the South West Grid would be measurable and auditable if the Offi ce of Energy establishes its proposed scheme for implementing the targets 35
AUDITOR GENERAL FOR WESTERN AUSTRALIA RENEWABLE ENERGY: KNOWING WHAT WE ARE GETTING 3 Auditor General’s Overview
Renewable energy is a prominent feature of Australia’s response to climate change.
The role played by renewable energy in this response is still being debated at the national and international levels. In Australia, the jury is still out regarding the appropriate mix of policies and strategies, including the development of a carbon credits system, rebates and incentives for more effi cient energy use, and targets for cleaner fossil-fuel energy. Nevertheless, there is general acceptance that greater use of renewable energy is an important part of the mix.
Research into the marketing of renewable energy tells us that consumer confi dence in ‘getting what you pay for’ and trust in providers of renewable energy are important factors in its growth and acceptance.
This report aims to give clarity and assurance to Western Australians about the renewable energy bought and sold by government agencies and businesses, so that they will have a better understanding about it and can ‘know what they are getting’ and what they are not getting.
AUDITOR GENERAL FOR WESTERN AUSTRALIA 4 RENEWABLE ENERGY: KNOWING WHAT WE ARE GETTING Executive Summary
The electricity on the main South West Grid in Western Australia supplies the electricity needs of 90 per cent of Western Australians. This electricity comes from coal, gas, and renewable energy sources. Currently, electricity from renewable sources makes up a relatively small proportion (around fi ve per cent) of the total electricity generated on the South West Grid.
As part of its Climate Change Action Statement, the Western Australian Government has made a commitment to increase this amount to 15 per cent by 2020 and 20 per cent by 2025. It has also committed to buying 20 per cent of the electricity requirements of its own agencies from renewable energy sources by 2010.
The State Government’s commitments build on two existing schemes whose purpose is to stimulate the growth of renewable energy generation Australia-wide: