The Coalition and the powerful right-wing lobby groups that help direct their policies show no signs of backing off in their campaign against renewables – or any other technology, for that matter, that might usher in a cleaner, cheaper and more reliable grid.
Craig Kelly has distinguished himself on EVs, a sweaty George Christensen on Facebook rails against anything Green or anti-coal, and Matt Canavan continues to wage a war on behalf of the coal industry.
On Monday, on ABC’s Q&A program, they were at it again: energy minister Josh Frydenberg and the Institute of Public Affairs teaming up to demonise renewables, and to propose some hopelessly unrealistic solutions to Australia’s energy trilemma.
It cannot go without comment.
Frydenberg went first, jabbing away at the opposition with some notionally plausible claims about renewables costs and their impact on reliability, claiming that it was wind and solar that was causing South Australia’s problems in both prices and reliability.
Nice line, but it’s as false as it has been.
As this document from the local network operator, then known as ETSA, noted way back in 2005 – way before any renewables came into the system – South Australia had long suffered from a lack of good quality coal, really expensive gas generation, and not enough competition.
To make matters worse, the state experience huge variations of demand.
These variations were caused by South Australia’s climate – mild most of the time, punctured by periods of extreme heat – which forced 90 per cent of households to turn to on the air-con, and grid operators and generators to load up investments to cater for the peak demand that occurred on just a few days a year.
“That is a primary cause of the electricity price differential between SA and other States,” ETSA noted at the time (in 2005). “That is why prices to residential customers are high.”
Now, that volatility still exists today. The crap coal is gone, the gas generators are even more expensive, and market is still plagued by a lack of competition.
Frydenberg, however, would have you believe it is all the fault of renewables.
Finally though, we are seeing what renewables combined with storage can do. Frydenberg may mock the Tesla big battery, as he often does, but it is already spoiling the party for the gas cartel, and more storage will introduce more competition. He should be saying, what a good idea.
Frydenberg may claim the opposite, but the South Australian grid is reliable, even at 50 per cent “intermittent” wind and solar. The stats over the past 12 months suggest that is no impediment to a properly working system, particularly since the cultural and managerial revamp at AEMO.
What it shows is that a high renewable energy system actually works, and it is in the coal-dominant grid on the eastern seaboard, with the tripping of big coal generation units (41 trips this summer alone according to the Climate and Energy College), that is causing the headaches, as AEMO predicted.
It’s disappointing enough that the country’s federal energy minister should have such a blind spot on new technology, but it appears to be a party-wide phenomenon – witness their aversion to renewables, battery storage, and even demand management. At least Catweazle was funny.
The Institute of Public Affairs, on the other hand, is more than just a mischief-maker. It set out a list of policy “wants” when the Abbott government was elected, and the Coalition, even under Turnbull, has done its best to oblige.
The $60 billion claim for the cost of renewables has been rebuffed so many times over the last few years, but the pundits in the Murdoch media, and the right wing blogs and think tanks, have no shame.
The $60 billion number was first thrown around by the then Abbott government in 2015, and related to assumed capital costs. That was debunked nearly three years ago.
Since then, the $60 billion number has been recycled, this time as the ongoing cost of the renewable energy subsidy, but that is also rubbish.
Even if you multiplied all the renewable energy generated by the maximum price of large-scale certificates (LGCs), you would still not get to $60 billion, as we pointed out in this article here: The amazingly positive renewable story the Murdoch media won’t write.
In it, we noted how The Australian had incorrectly calculated a $45 billion figure as the cost of all renewables built under the RET – they assumed all output would receive the market price of LGCs of around $80/MWh), and then added in the CEFC loans (which will be repaid), and the ARENA budget to boot.
As it turns out, much of the new wind and solar generation being contracted ascribes little or no value to the LGC, and even those going “merchant” i.e. selling the LGCs on market, expect them to have negligible or even zero value once the RET is met by 2020.
Even Frydenberg admits that renewables will slash electricity bills significantly in coming years, and this is confirmed by the modelling done for the National Energy Guarantee.
So why haven’t they already had an impact? Well, they have to some extent. But the vast majority of the large-scale renewables target is only now under construction, or about to start, thanks to the three-year investment strike engineered by the Coalition when it sought to kill the RET, then reduce it significantly.
IPA’s Nuclear nonsense
The next claim by the IPA – that you could build 10 nuclear power stations for that price ($60 billion) – is also laughable, and plain wrong.
Such a result only exists in the imagination of right-wing think tanks and nuclear boosters. The bill just for the construction of the new Hinkley nuclear plant in the UK is more than £20 billion. That’s $A35 billion.
If you add in the life-time costs – the metric the IPA is using for renewables – then Hinkley soars to £50 billion, or $A88 billion.
The story is not much better in the US, where the cost of new nuclear plant is soaring and most have been canned, leaving consumers with a hefty bill for an unfinished project.
Then the IPA’s director of policy Simon Breheny, casually claimed that nuclear energy would bring down costs for consumers down.
What sort of nonsense is this? Let’s use Hinkley again: the tariff demanded by the developers (French giant EdF) starts at £92.50 per megawatt hour, $A168/MWh, and rises with inflation (so it will be something like $A500/MWh by 2050).
The UK government estimates the cost of other nuclear plants will be up to £124/MWh in 2025. At least it will be cheaper than that other great white elephant, coal and carbon capture and storage.
So, is nuclear’s high cost the fault, only, of high upfront capital costs? No.
Let’s take a look at the country with the most nuclear plants, France. According to EdF, which runs the nuclear fleet, the cost of just maintaining those reactors in reasonable condition will require average wholesale prices of €55/MWh until 2025.
That translates into a price of $A86/MWh – which compares to where wholesale prices in Australia are now, but above where they are predicted to go once the new wind and solar farms (costing closer to $55-70/MWh) come on board.
And remember, that’s just for maintenance costs. As AGL has found with Liddell, the cost of maintaining ageing technology just does not stack up against the plunging cost of renewables and the various forms of storage.
Imagine if Australia had to pay to build a brand new fleet of coal, or even nuclear plants. Ideological insanity.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.