More from my backlog. It seems Conservatives simply cannot think things through.

Why Tony Abbott may spark an Australian energy revolution

By Giles Parkinson on 19 December 2013

The conservative campaign against Australia’s Renewable Energy Target (RET) reached the highest echelons of public office this week, when Prime Minister Tony Abbott joined the throng blaming renewable energy for rising electricity bills.

“We’ve got to accept … that in the changed circumstances of today, the renewable energy target is causing pretty significant price pressures in the system,” the Guardian quoted him as saying. “Cheap energy ought to be one of our comparative advantages …. I mean, this country ought to be an affordable-energy superpower.”

I hate to break the news to you, great leader, but there is no longer any such thing as cheap fossil fuel energy in Australia – the gas export boom and greedy network operators have put paid to that. Sure, you can shovel coal into a brown coal generator in the Latrobe Valley for $4 a tonne, but years of gold-plating in the networks and the profit margins for retailers who package up the bills means that those electrons cannot be delivered to suburban households for much less than the cost of a diesel generator at a remote mine. The grid is failing its purpose.

Mostly, the marginal cost of electricity generation is set not by brown coal but by higher price fuels, and particularly the price of gas-fired generators. Australians this week got a taste of what Origin Energy CEO Grant King meant when he said, earlier this year, that “there is no such thing as cheap gas.”

Queensland households were told this week that their electricity bills were going to rise by another 13.5 per cent in 2014/15. Like Abbott, the conservative state government blamed all things carbon and green energy, particularly solar.

But the biggest single contributor to the increased bills was a rise in gas prices, caused by the massive LNG boom in Queensland. Just the annual rise in bills caused by this surging gas price was more than the total cost of the renewable energy target, which in Queensland accounts for less than 2 per cent of the electricity bill. (In other states it is barely more than 1 per cent). Ironically, the rise in the gas component would have been greater were it not for the dampening effect on wholesale prices by wind and solar energy.

As sure as night follows day, those rising gas prices will flow through to consumers in other states, and will accelerate as gas prices double, and possibly triple, as many analysts suggest, once the LNG export market gets into full swing. Australia is trying to make a motza by selling its huge gas reserves to Japan, China and anyone else who will take it. And Australian consumers will have to pay the same price.

Abbott says that he will chair a panel that will look at how to “significantly” lower the price of electricity for consumers. He will quickly find out that the only option is to cut the value (and so the returns and the bill component) of network assets, a decision that his energy minister Ian MacFarlane’s proposed energy white paper appears to have already ruled out. (It would, after all, cause wails of protest from the conservative governments that own these assets in Queensland, NSW and WA).

There is growing evidence, however, that Australian consumers will not be easily conned by politicians and their advisors about the cost of energy, and renewables in particular. It was interesting to note that, even when News Ltd meekly repeated Newman’s renewables attack, it was shouted down by the majority of comments on their website, who called it for the nonsense it is.

One quarter of households swap suppliers each year looking for a cheaper offering – and so they should, because every household in states like Queensland and NSW is billed an extra $100-$140 a year just so retailers have the to do so. (So in effect, your discount is subsidised by higher bills to your neighbour. The discounts don’t cost the retailers a cent.)

More importantly, more than one million Australian households now have rooftop solar, a number that is likely to double or even treble before the end of the decade, putting yet more pressure on networks to justify their past investment and the returns that are hard-wired into bills.

It is interesting to note that, in Germany, the push for the energy transition now underway in the most dramatic of circumstances came not from politicians who led from the front, but from politicians who were forced to follow.

[continued ...]

[... continued]

Alan Pears, from Melbourne’s RMIT, had a similar message. In a submission to the AEMC’s market review, Pears asked what a socially responsible network operator might do. And he answered: It would support measures such as demand management, reward rather than penalise those who installed small-scale renewable energy systems and storage, incorporate storage into the network and cut fixed charges, which penalise low-income and small households the most.

He noted that network operators had lost their presumed position as natural monopolies. They now compete with an increasing range of distributed energy, energy efficiency and demand management options. While these options rarely allow a consumer to cost-effectively disconnect completely from the grid, they are moving in that direction.  Because of this, networks are not entitled to recover all their costs, and society is entitled to claw back some of their historical profits.

The other issue is in large-scale generation. Currently, the renewable energy target is the most effective means of reducing emissions. Wind energy is, and solar soon will be, cheaper to build than new fossil fuel generation. The incumbents want to stop any new generation for the simple reason that it will reduce their own profits, because they have already built too much.

Reports such as those from UBS, the CSIRO, and any number of international studies, including by former US energies secretaries, insist that only by changing and embracing cheaper renewables will current networks and generators survive, and avoid passing massive sunk costs on to consumers. Managing this will be the real test of Abbott’s review. It requires more than an ideological and self-interested rant against green energy.

Blah, blah, blah Adelcrow! As I have said many times before..........your full of shyte. Electricity prices trippled under the labor gov and now your blaming the the gov for it, your a dickhead as usual.

The new revolution is for stand alone solar systems to become affordable so we can all kiss the providers good buy!!!

Wonder if the providers are paying off  the battery companies like the oil companies pay off the car manufactures

Again, your a total fool Adelcrow, labor spent millions on independent and still blew the budget sky high. The new gov has everything under control you fool

Giles Parkinson:

Quote:


Giles owns a barrow and intends to push it hard. Seems like he has an agenda. I was amused at the T-shirt article. If the T-shirt bore the familiar bust of Che it would have received nothing but praise. Anything else gets condemned.

woof woof wrote on Dec 28^th, 2013 at 9:44pm:
An assertion which you can't substantiate. Can you?