Here’s and extract from a piece in Quadrant today dealing with tomorrow’s COAG energy ministers meeting.
With Australian electricity prices now approaching world-beating highs, tomorrow we have another meeting of the Council of Australian Government (CoAG) energy ministers who have created the current energy catastrophe.
They are to examine the Finkel report into electricity. Among the many counter-productive recommendations this report offered was an increase in the electricity market’s “governance”. This is a demand for even more of the political tinkering which, in the space of just 15 years, transformed the Australian electricity industry from the cheapest in the world to one of the dearest. Distortionary subsidies to renewable energy, which have also undermined reliability, are paramount in this.
Finkel decided that renewables are inevitable (which is why Malcolm Turnbull appointed him) and commissioned economic research to demonstrate that this would bring lower prices from the substitution of wind/solar for lower cost coal.
First, it assumed coal will run at a loss against a subsidised rival then close down in an ‘orderly’ manner.
This is the bridge to forecast cost reductions of wind and solar.
But if the coal stations hit major expenditure needs at an inconvenient time, they will be forced to close down. This was the case with Hazelwood, which was operating in the face of Worksafe notices and requiring perhaps a billion dollars for new boilers. Finkel’s solution (adopted by politicians) of requiring three years notice of closure is absurd and unworkable.
Moreover, the fabled and imminent onset of cheap renewables will not occur, just as it has not occurred through the past 30 years of similar erroneous predictions. And batteries won’t save the day they are simply a costly way of smoothing renewables’ intermittency.
Energy ministers, with the partial exception of Frydenberg, continue to demonstrate their utter ignorance of markets in general and electricity in particular by rising to support and intensify the on-going market poisoning by government regulatory controls.