For clarity, a consequence of this is that, if the modelling period is shorter than the life of the credible option, the RIT–T proponent would incorporate the operating and maintenance costs (if any) for the remaining years of the credible option into the terminal value. [...] Penalised externality Continuing from above, assume that a regulatory body allows development of the credible option contingent on the developer of the generator paying for landscaping to conceal the generator and reduce the harm to the visual amenity of the hotel’s guests. [...] The purpose of the RIT–T is to identify the credible option that maximises the present value of the net economic benefit to all those who produce, consume and transport electricity in the market. [...] Using the RET as an example, in a state of the world where the RET is not met, the amount of renewable energy short of the target will be valued at the capped price and contribute to the resource costs incurred in that state of the world. [...] Assume the following occurs in the base case: • The price of RECs is $50/MWh (that is, the price of RECs is set at the grossed-up penalty price) and the market ‘chooses’ to pay the penalty price of $35/MWh and not meet the renewable target.
- Pages
- 135
- Published in
- Australia
