Over the past decade, we have spent $70 billion on wind and solar. Here are some statistics from BNEF, not uncoincidentally, the venue where Bill Shorten and Mark Butler yesterday launched an outline of the ALP energy and climate policy.
That $70 billion is enough for 12 new coal generators that would give us electricity with a wholesale cost of one third that of the current level.
Instead we have been closing down the more economical coal fired power stations because renewables, two thirds of the costs of which are covered by subsidies, are making them uneconomical.
Not one cent of the $70 billion spent on wind and solar would have occurred had it not been for the subsidies. Those subsidies – renewable energy schemes, the Green Energy Bank, direct support from the Commonwealth and state support measures – are running at $5 billion a year.
The outcome of this experiment has been electricity costs which have skyrocketed to become among the highest in the world. A corollary, in addition to the obvious costs to households, is the loss of some of our most productive industries energy intensive including aluminium smelting.
Now, the ALP wants to double the share of subsidised renewables which, even at 20 per cent of supply, have poisoned our electricity sector.
To do this, they want to spend an additional $10 billion in funding the green energy bank. And they want to spend $5 billion on new interconnectors to allow unreliable and high cost wind to be transferred from state to state and to build new connections to windmills located in remote areas.
They also have a crazy idea to enable the surplus energy from rooftop installations to be stored in household batteries. They want 100,000 households to have these batteries which will receive a subsidy of about $2000, which is not enough to be a real incentive since the batteries and their installation is are likely to cost $18,000 per household.
In addition, they will revive National Energy Guarantee, a variation of the carbon tax which the Coalition repealed in 2013. That is likely to mean a further increase in wholesale electricity costs of about 50%.
For 25 years we’ve heard constant propaganda that subsidies to green energy will provide a transition path to the inevitable triumph of wind and solar over so-called archaic fossil fuel generators.
The foreshadowed cost competitiveness of renewable energy has failed to materialise, something that’s evident from its continued need for subsidies and additional spending, billed to consumers, on transmission and on market management measures to compensate for renewables’ inherent lack of system strength.
The upshot for Australia has been the destruction of what once was the lowest cost of electricity system in the world.
But there is more. The ALP plan is to reduce all the economy’s emissions by 45 per cent, not just the 30 percent that come from electricity.
The other sectors include transport, agriculture and building. In the case transport, the ALP is foreshadowing emission controls for cars with cost implications. There’s no indication about how the goals will be achieved for commercial vehicles or for planes and ships. But the cost will be colossal.
For agriculture a similar reduction in emissions to that of electricity would be required. How will this be achieved? Will we reduce our sheep and cattle herds by maybe in 30%, and return vast grain acreages to wilderness?
The ALP is living in a dream world. It is most unfortunate since they are likely to be elected into government next year and will seek to implement some of the absurd policies that they are proposing. The outcome will be much lower living standards and a likely reduction in the reliability of the electricity system we have come to rely upon.