Publication type: Article in scientific journal
Type of review: Peer review (publication)
Title: Distributional effects of the Australian renewable energy target (RET) through wholesale and retail electricity price impacts
Authors: Cludius, Johanna
Forrest, Sam
MacGill, Iain
DOI: 10.1016/j.enpol.2014.04.008
Published in: Energy Policy
Volume(Issue): 71
Pages: 40
Pages to: 51
Issue Date: 2014
Publisher / Ed. Institution: Elsevier
ISSN: 0301-4215
Language: English
Subjects: Renewable energy; Electricity market; Distributional effects
Subject (DDC): 
Abstract: The Australian Renewable Energy Target (RET) has spurred significant investment in renewable electricity generation, notably wind power, over the past decade. This paper considers distributional implications of the RET for different energy users. Using time-series regression, we show that the increasing amount of wind energy has placed considerable downward pressure on wholesale electricity prices through the so-called merit order effect. On the other hand, RET costs are passed on to consumers in the form of retail electricity price premiums. Our findings highlight likely significant redistributive transfers between different energy user classes under current RET arrangements. In particular, some energy-intensive industries are benefiting from lower wholesale electricity prices whilst being largely exempted from contributing to the costs of the scheme. By contrast, many households are paying significant RET pass through costs whilst not necessarily benefiting from lower wholesale prices. A more equitable distribution of RET costs and benefits could be achieved by reviewing the scope and extent of industry exemptions and ensuring that methodologies to estimate wholesale price components in regulated electricity tariffs reflect more closely actual market conditions. More generally, these findings support the growing international appreciation that policy makers need to integrate distributional assessments into policy design and implementation.
Fulltext version: Published version
License (according to publishing contract): Licence according to publishing contract
Departement: School of Management and Law
Appears in collections:Publikationen School of Management and Law

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