In writing a response to a letter from NSW Energy Minister Don Harwin, Michael Crawford illustrates the demise of the electricity industry’s efficiency with this graph.
Dr Crawford continues
“The National Electricity Market (NEM) was established at the end of 1998. Being a politician you will understand it was promoted to the public on the grounds that it was going to reduce electricity prices.
“As the graph clearly shows, real electricity prices have doubled since the turn of the century, with almost all the increase occurring since 2005, and with that increase highly correlated with the increasing proportion of intermittent power generation (i.e. wind and solar), which has also brought us massive threats to our power supply since they don’t work when the sun is not shining and the wind not blowing (or blowing too strongly, as South Australia discovered).”
The Minister’s support for the Finkel “blueprint” to restore cheap and reliable power
“This is a plan to plan (by various bureaucratic bodies):
- which proposes a 42% “renewable energy” target (most of it from intermittent power supplies);
- whose author had such a grip on the reality of our electricity system he failed to forecast anything like the 20% increase in consumer prices announced within a month of the report’s release;
- which relied on cost and price forecasts from a body whose previous forecasts to the Australian Government had proved woefully wrong; and
- Dr Finkel’s forecasts relied on assumptions about adding power generation backup or storage facilities in order to try to counteract the insecurity due to intermittent power generators, but neglected to include those in the costs of the system for which industry and consumers will have to pay.
”The Finkel report is a recipe for even more disaster for the NSW electricity consumers. But aside from the “Finkel Blueprint” you want us to be reassured because there are multiple bureaucratic activities by or related to the:
- COAG Energy Council;
- Australian Energy Market Operator (AEMO);
- Australian Energy Market Commission (AEMC); • Australian Consumer and Competition Commission (ACCC);
- NSW Energy Security Taskforce;
- NSW Renewable Energy Action Plan; and
- NSW Climate Change Fund Strategic Plan.
“These are precisely the agencies which presided over the 100% increase in real consumer power prices over the last decade, and have brought our electricity system to the brink of failure. When NSW Governments almost halved the real consumer price of electricity from the mid 50s to the 80s, they did it without the phalanx of bureaucrats writing endless papers and reports and holding meetings which preside over failure.”
The Magic Pudding Electricity Supply policy
According to the Minister NSW is ‘well positioned for reliable supply’, particularly because “NSW can also draw on supply through connections with Victoria and Queensland”.
Dr Crawford continues,
“But when it is high summer in NSW it also is high summer in Victoria and Queensland and all are seeking support from each other. The linchpin in this system of mutual dependence was the Hazelwood power station which was shut through a combination of wilful destructiveness on the part of the current Victorian Government and dithering by the Federal Government.
“In the event that the Magic Pudding doesn’t work as you hope, you offer a backup plan, attributed to the Energy Security Taskforce led by the State’s Chief Scientist, which is ‘get some people to turn off their power’. That policy is in fact a blatant admission of failure by the gaggle of incompetent officials to whom you have ceded your responsibility to ensure the lights stay on.
“According to (Minister Harwin’s) letter ‘Private sector investment in new generation, like wind power, is important to ensure our system security’. (Yet) our electricity insecurity has been caused precisely because of the inclusion of highly subsidised intermittent electricity generators (wind and solar), which have also caused our high prices for electricity.
“(The Minister’s letter) includes the dishonest claim that we are undergoing ‘an industry-led transition to a lower emissions generation mix’. The rush to install intermittent electricity generators is not ‘industry-led’. It is government-driven via two mechanisms.
“The first is the Federal Government’s, Large-Scale Generation Certificates (LGC), mandated under the RET, which enforces a direct subsidy for all intermittent power, which electricity consumers in NSW and other states are forced to pay.
“The second is the practice of the NSW Government’s planning agencies to approve intermittent power generation applications without any consideration of the impact that will have on NSW electricity security and NSW prices.
“Were the Federal Government not forcing all electricity consumers to subsidise intermittent electricity production, and were (State) government not approving connection to the electricity grid of generators whose supply is both intermittent and unpredictable, the disaster would not be happening.”
Dr Crawford goes on to criticise the NSW mitigatory plan to spend $400 million on emission reduction and energy efficiency and to get households to use less energy. He comments that the minister’s claim that the ‘Renewable Energy Target will deliver thousands of jobs across the State’ fails to mention the tens of thousands of jobs lost in other industries as a consequence of the higher prices and reduced reliability, adding, perhaps optimistically, that “there are junior economists in Treasury who can explain to you the fallacy you are promoting”.