Left-wing think tanks and renewable energy rent seekers are ramping up their campaign against reliable sources of power.
Last week, the Australia Institute published its quarterly National Energy Emissions Audit to boost RE and rubbish nuclear power. The report concludes that the construction of new sources of baseload power just does not stack up.
South Australia gets a gold star for generating more than half of its electricity through wind and solar. For a total of forty-four hours last July, wind and solar could have met all demand!
These factoids cover up the real crisis that has been produced by injecting unreliable energy into the grid in advance of the storage capacity that is required to even out the highs and lows of intermittent energy.
In the same report we find that wholesale electricity prices for the state have more than tripled since the introduction of renewable energy. South Australia is home to some of the highest electricity prices in the world.
We have the resources to generate the cheapest power in the world but instead we pay twice or three times as much American families and businesses.
The crisis will come when more renewable energy comes into the market and the reliable sources of baseload power are crowded out. Intermittent surges in renewable generation drive energy prices downwards and the coal-fired plants operate for much of the time below their optimum level of production. Even while they provide the vast majority of power across the 24/7 period they become less economically viable with every addition of wind or solar power to the mix.
As long as they survive we are spared from the disastrous consequences at the “choke point” in wind supply. That is when there is virtually no wind, when the wind fleet is delivering as little as 2% of its plated capacity. We have survived the choke points so far but the situation will be very different when one or two more coal-fired plants go out of service.
We know that the Liddell power station set to close its doors next in 2022. This will make the grid less reliable and more prone to blackouts. It will also drive up prices. The real crunch will come when another reliable station is missing, whether it is closed for economic reasons or for scheduled or unscheduled maintenance.
Under normal circumstances the various energy providers would compete on level terms but the renewable providers have two advantages: they are subsidised and they have first preference to access the grid when the wind is blowing and the sun is shining. The Australian Financial Review reports that these subsidies are set to hit a whopping $2.8 billion a year up to 2030. Politicians are making us pay to make electricity more expensive and less reliable!
The solution to Australia’s energy woes lies in government pursuing a technology neutral approach. Remove all subsidies for specific energy and ensure that energy rebates for those suffering economic hardship are applied on a source-neutral basis. Abandon renewable energy targets that distort the market and allow private developers to focus on the cheapest and most reliable forms of power.
Coal, nuclear and gas will most likely win on a level playing field. Data from a 2017 Heartland Institute report suggests that existing coal, nuclear and gas facilities in the United States produce energy at one third of the cost of new wind facilities.
By contrast, the current status quo of heavily subsidised yet unreliable renewable energy ensures that wealthy energy companies can attract a premium price for their natural gas to provide base-load power as cheap coal-fired generation continues to lose profitability and get phased out due to successive government policies.
Australia can enjoy cheap power prices once again if government policy stops distorting the market at the expense of struggling energy users.
Sam Jacobs is a Research Associate with the Australian Taxpayers’ Alliance.