I have a piece in the Spectator today that draws together some recent developments in energy policy being developed in the half dozen or so agencies that control what is ostensibly, and was in earlier days, a market with supply largely from private enterprise. I also did a session on the issue with Chris Kenny.
The destruction of the once highly efficient electricity supply industry by government and bureaucratic oversight is, of course, well known. This, the most vital Australian industry, continues to hurtle towards Armageddon, courtesy of government subsidies to the intrinsically uncompetitive renewables. And the besieged Energy and Environment Minister, Angus Taylor, is in Paris defending the semi EU-type policy Australia has adopted while trying to avoid going the full Greta.
This week we had three publications from agencies that are piloting us towards the economic oblivion politicians have determined upon.
The Australian Energy Market Commission (AEMC) has released its price forecast for the next few years. Halleluiah! Prices to households are falling 10 per cent the year after next after ramping up 30 per cent (250 per cent for wholesale prices) since the 2017 forced closure of Hazelwood. The generosity of subsidies is such that firms have piled into the renewable supply so enthusiastically that prices are likely to come off their peaks after next year.
But if anyone think this will be a new trend, the Department of Energy and Environment (DOEE) inadvertently offers a wake-up call. In compiling its apology for Australian actions to meet the Paris Agreement’s 2030 report, DOEE plans for the exotic wind and solar renewables (alongside more batteries and Snowy 2 to buttress their intrinsic unreliability) to raise their market share from a projected 20 per cent in 2020 to 40 per cent by 2030. To break even, renewables require $100 plus per MWh compared with $40-50 for coal, so high future energy prices must remain.
Completing the trifecta, the Australian Energy Market Operator (AEMO), announced how it is racing around the country spending money to buy insurance in terms of supply that might not be available and demand reductions to prevent blackouts this summer. AEMO is an inveterate promoter of renewables and urger for new transmission lines (financed by mandatory charges on the consumer) to connect them to markets put out its summer awareness report. This activity and the costs it entails would be unnecessary had we left supply to the market. But the system has been so defiled by regulatory measures that it can no longer operate on auto-pilot.
All these plans, all these political interventions in pursuit of low emissions and subsidies! Few catallaxy readers would be surprised that the outcome is the replacement of the previous world class electricity supply system with today’s unreliable high cost supply.