Energy Minister Angus Taylor has welcomed and claimed credit for wholesale electricity prices halving during the current year. Unsaid is that the final price has not shifted much – and that’s because all the subsidy-reliant wind and solar create other costs (new transmission, frequency control, lack of “system strength”) which electricity consumers need to cover. These aside, the pattern is that each major coal plant closure, caused by subsidised renewables depressing wholesale prices, brings a surge in prices and a new plateau which has already taken Australia from the world’s cheapest to among the dearest electricity supply jurisdictions.
Turning a blind eye to this, Minister Taylor declares, “We are winning the trifecta — affordable, reliable and sustainable electricity” with new wind/solar installations equivalent to four new coal generators. Such boosterism sits oddly with the desperate measures being employed to shore up the system, measures that include a new EnergyAustralia gas plant in NSW supported by a 20 per cent subsidy, another one by Snowy Hydro underwritten by the Commonwealth and rules that prevent generators from closing even when they are losing money.
They also are inconsistent with the Energy Security Board’s (ESB) 2025 Options Paper. This recognises that, unless we address the cracks that have been created in the drive to replace reliable coal with unreliable wind/solar, a disaster is imminent. Though the ESB fails to acknowledge that renewables need subsidies to compete, it does realise that replacing coal by wind/solar means ever-more subsidies, interventions, directions and creation of markets to allow a stable supply that is automatic in a fossil fuel or nuclear-based supply system.
I address these issues in a piece in The Spectator, which charitably concludes,
“Angus Taylor is imprisoned by subsidy seekers and agenda-driven politicians at home and abroad who misunderstand the economics of electricity. He likely sees no choice other than to continue existing policies and hope we can muddle through. Perhaps we will avoid a catastrophic failure of the electricity supply system but this will only be at the expense of far higher costs with damaging implications for households and the competitiveness of agricultural and manufacturing industries.”