A terrific analysis
Labor Living In Cloud Cuckoo Land On Energy Policy Future
Written by Scott Hargreaves 20 August 2022
The Albanese government’s energy policy and AEMO’s latest plan achieve that rare feat of being both unrealistic and unaffordable, while also making the system less reliable.
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From an engineering standpoint, each additional renewable energy project reduces system-wide reliability. Companies cannot commercially operate base-load power stations, which need to run for 70–80 per cent of the time, when wholesale power prices are so often negative.
The reason prices are negative is because renewable energy generates spasmodically depending on the vagaries of the weather. This is why wholesale electricity prices increased over 85 per cent when the 1600MW Hazelwood power station in Victoria closed with six months’ notice in 2017.
As coal-fired baseload generation has been under increasing pressure, gas-fired generation has supplied the peak load and covered for renewables when weather conditions take them out of the market. But as Australians have witnessed this winter, exploration and development of gas supplies have not kept up with demand for energy.
It is also of concern that the Albanese government’s move to legislate emission-reduction targets will hand further legal ammunition to activists to use the courts to block new coal and gas projects, further reducing the sources of the only fuels that keep the lights on.
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Across the five regions of the NEM, households would face average annual energy bill increases of between 95 and 125 per cent, with the average annual bill in NSW rising up to $2600 a year.
Renewable energy supporters suggest batteries and pumped hydro can be the source of back-up power. Yet grid-scale batteries remain small.
If it ran at maximum capacity, the vaunted 150MW battery in South Australia could supply 5 per cent of the state’s peak demand for just one hour. Meanwhile, Snowy 2.0’s cost overruns and lack of answers on transmission capacity is making it a joke. Total projected costs have blown out beyond $12bn.
There are also further challenges to the renewable energy generators’ social licence to operate that AEMO is so often concerned about.
About 90 per cent of solar panels installed in Australia come from China. Polysilicon is a critical part of solar panels, and 45 per cent of global polysilicon comes from the Uighur region in China.
According to a 2021 report by a team at Sheffield Hallam University, all manufacturers of polysilicon in the Uighur region have either used forced labour or been supplied raw materials by companies that have.
There is also the emerging waste problem of how to dispose of old solar panels.
A 2021 article in Harvard Business Review, The Dark Side of Solar Panels, highlighted this issue, noting that “the economics of solar – so bright-seeming from the vantage point of 2021 – would darken quickly as the industry sinks under the weight of its own trash”. The article notes there has also been no serious discussion about the recycling of wind turbine blades.
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Germany thought it had a plan when it was retiring both coal and nuclear while building renewables. However, we now know the system only worked at all because of the gas supplied by Russia. As Vladimir Putin turns the tap on and off, there has been a scramble towards something more realistic.
Back in Australia, it would have been better if the former Coalition government had not let Scott Morrison succumb to Boris Johnson’s fantasy of a global agreement on net zero. However, we at least now have the opportunity to avoid Europe’s fate through exploring nuclear and prolonging the life of coal-fired power stations.
Proponents of renewable energy raise objections that nuclear will take too long and will require governments to effectively underwrite construction. That is, they demonise nuclear energy for requiring governments to take the same supportive and long-term approach the renewables lobby has been demanding, and enjoying, for decades.
The electricity market was officially suspended for the first time in June and is effectively being nationalised on a command and control model.
When Climate Change and Energy Minister Chris Bowen occasionally hops behind the rhetorical wall of “the market” just to take potshots at nuclear energy, it is proof of his rhetorical agility, but not his credibility.
Despite its title, the government’s Rewiring the Nation is not in fact a plan. A workable plan would not allow reliable capacity to be diminished until a dependable future solution arrives.
Sensible people would not sell their brand new car and commit to driving an unreliable wreck that may or may not start, while waiting a decade for a newer model that may or may not arrive. But that is what Australia is doing.
The modern electricity grid, which has been developed over the past century, provides a remarkably high level of reliable supply. What Australians must face is that it is about to get a whole lot more unreliable. This is not an energy transition, it is a regression.https://ipa.org.au/ipa-today/labor-living-in-cloud-cuckoo-land-on-energy-policy-...
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