From Quadrant on Line.
Labor has promised to ensure that 50 per cent of Australia’s generation will come from renewables by 2030. This is nonsense on stilts—and very expensive nonsense at that.
A recent analysis by Brian Fisher, former head of the Australian Bureau of Agricultural and Resource Economics, showed just how costly this policy would be: a cumulative cost of $472 billion to 2030, compared with $69 billion for the Coalition’s 26-to-28 per cent reduction target.
Fisher’s analysis also resonates with the best international research, informed by experience such as that in Germany, where its Energiewende program since 2000 has led to greatly increased costs for no recent reduction in greenhouse gas emissions. Energiewende has cost billions of euros in subsidies and, having dug an enormous hole, German policy-makers have chosen to dig deeper rather than admit they are not going to strike climate policy paydirt.
He responds to the ludicrous claims that are made about cheap renewable energy.
Numbers like $50/MWh are frequently tossed around by spruikers of renewables, but this price is acceptable to investors only because they stand to double this income from the sale of renewable energy certificates. Fortunately, we have available some estimates of non-subsidised costs of wind and solar systems in Australia that are regularly updated by the company Lazard. Their most recent estimate (November 2018) is $US43 to 131/MWh for solar, or $A61.92 to 188.64/MWh converted at the most recent estimate for Purchasing Power Parity (PPP) of $A1.44 to $US1. The estimate for wind is $US34 to 73/MWh, or $A48.96 to 105.12. The spruikers of renewables are always promising us that costs will continue to come down, but Lazard’s Levelised Cost of Energy (LCOE) Analysis report warns that “over the past several years the rate of such LCOE declines have started to flatten”.
But, as noted above, income from generation plus sale of renewable energy certificates is only half the story, because this ignores the costs of integration into a reliable electricity system.
Analyses such as those from Blakers and his colleagues rely upon estimates of the LCOE from renewables, but such estimates ignore system costs that can double the cost of renewables.