Bloomberg New Energy Finance (BNEF) lobbies hard for renewable subsidies and estimates global “clean energy” investment at $333 billion. This excludes hydro-electricity other than Politically Correct “small hydro”. Some 85 per cent of expenditure is in wind or solar with the rest including biomass, electric vehicles and waste-to-energy.
In a press release of 16 January, BNEF includes the following graphic of Australian renewable investment trends.
To recap, in Australia electricity from subsidised renewable energy – and wind is the cheapest of those sources – costs three times as much as energy from coal. It is viable only because the government requires increasing proportions of energy it designates as renewable to be incorporated in our supply and therefore in our bills.
This results in a subsidy, which at present is $85 per MWh for wind and large scale solar, and $40 for rooftop solar. Those sums are on top of the market price all energy receives. That market price used to be around $40 per MWh but, as a result of closures caused by subsidised wind forcing increased costs on coal and gas generators, it is now around $90 per MWh; research conducted by the Minerals Council puts new build for coal at under $50 per MWh, costs that are consistent with those estimated for the thousand plus coal generators being built, mainly in Asia.
The upshot is a double whammy – we replace low cost highly reliable electricity with supplies that are three times as expensive and which are highly unreliable – and we call that progress!! The $9 billion of subsidy-induced malinvestment in renewables last year alone would have been sufficient to finance over 4,000 MW of new coal plant – more than double the capacity of the now closed Hazelwood station, even if it is in fashionable but high cost low emissions plant. That would have returned prices to their 2015 level, half those now prevailing, and given us the reliability that is now a wistful nostalgia.
At present one of the man energy regulators, the AEMC, estimates renewable subsidies increase electricity prices by 10 per cent directly (p.10). That would be increased by another 20 per cent due to the subsidies boosting the overall generation cost and perhaps more due to them requiring increased transmission investment.
The lobby industry has taken to interviewing itself to raise the ante for new subsidies. BNEF in response to Reneweconomy notes that the capacity of renewables driven by existing schemes, which focus on the Paris Agreement’s 26-28 per cent reduction in emissions by 2030, will soon be met. Hence they are calling for further expansion of subsidies (existing ones, unless terminated, will live on for decades). BNEF argues “So what’s required is a more ambitious emissions reduction target under the National Energy Guarantee (NEG), or for state governments to continue to develop policy to ramp up investment.” And the hope of the industry is that Mr Turnbull will exercise his influence and “States should be throwing their weight around the COAG table and only signing up to a NEG if it ups ambition on a pathway to net zero emissions by 2050”.
The industry also claims renewable energy is already competitive, pointing to recent contracts struck by AGL and Origin Energy for renewable power at around $60 per MWh. But public information of these contracts’ details is missing, including about what happens to the subsidy (which on forward markets remains above $50 per MWh). It is difficult to square claims made by many lobbyists on the back of such contracts that renewables are now competitive with coal especially since the same lobbyists say investment will dry up without more subsidies.
Meanwhile we have politicians swallowing the propaganda of the renewable industry or too timid or committed to renewable energy to stand up and tell it as it is.
Only a couple of minor players in Europe and the great Donald are resisting the madness. The USA is benefitting immensely from Trump’s energy policies with waves of new investment – including from Australia – announced almost weekly.
In time the success of Trump’s policies will surely remove the blinkers from the eyes of politicians but in the interim we can expect to lose considerable wealth, energy-dependent investment and face trying times in the reliability of the electricity supply system.