In its latest report, Building the bridge: a practical plan for a low-cost, low-emissions energy future, Grattan Institute Energy Program Director Tony Wood proposes that a reverse auction system for clean energy project contracts would be more effective than a Renewable Energy Target (RET) or other existing policies such as capital grant schemes or feed-in tariffs.
“Governments would award contracts through a series of six-monthly auctions, held over 10 years,” Mr Wood states in the report.
“Competition to win contracts delivers the lowest price for low-emission power, and developers can invest knowing the contracts will be honoured irrespective of government policy on the carbon price.”
A key benefit of this proposal, according to the Grattan Institute, is that it is designed to work with both the Federal Government’s Clean Energy Future Plan and the Federal Opposition’s Direct Action Plan.Article continues below…
Pacific Hydro General Manager for Australia Lane Crockett has written in Renew Economy that the proposal would see significantly less clean energy deployed than under the current RET system, and that in Pacific Hydro’s experience, an auction system would favour large incumbent players at the expense of independents and new entrants.
Climate Spectator Editor Tristan Edis has commented that a more realistic approach to establishing such a scheme would be to use it to supplement the RET to support a greater range of technologies, as the auction scheme would not work at all for types of clean energy (particularly small-scale photovoltaic solar).