No Respite: Wind & Solar Driven Power & Pricing Calamity Can Only Get Worse

With the debacle playing out in Europe and the UK, it takes a special brand of delusion the claim that increasing reliance on wind and solar will inevitably result in falling power prices.

And delusion, in that respect, is very much the order of the day amongst Australia’s Green/Labor Alliance.

When it comes to anything like sensible energy policy, Anthony Albanese, the PM (above left) and his witless Energy Minister, Chris Bowen (above right) are so far out of touch with reality, it’s frightening. Especially frightening for any energy-hungry businesses or industry, and terrifying for households already dealing with double-digit inflation and rising interest rates.

Brushed off as ‘cost of living pressures’, the predicted (by ALP modellers) 56% increase in electricity prices over the next two years, will wipeout hundreds of thousands of jobs in manufacturing and mineral processing (aluminium smelters we will be the first to go) and destroy thousands of small businesses which operate at the margins, at the best of times.

The Australian’s Economics Editor, Judith Sloan picks up the thread, below.

Hang on to your hat as energy crisis likely to get worse
The Australian
Judith Sloan
31 October 2022

Did anyone else notice the remarkable disconnect between last week’s budget speech delivered by Jim Chalmers and the actual content of the budget? In the speech, the Treasurer declared that Labor was delivering on its commitment to “cheaper and cleaner energy”. But in budget paper No. 1 we were informed that electricity prices would increase by 56 per cent across the next two years.

There is no doubt Labor is vulnerable on energy policy in general and on electricity prices in particular. Having repeatedly promised that household electricity prices would be $275 a year lower by 2025, the government ultimately will have no option but to walk away from this pledge.

Of course, it was a pledge that never should have been made, notwithstanding Anthony Albanese’s further claim that he “stands by the modelling”. (No one in their right mind would stand by assumption-laden modelling.) He is now keen to blame Russia’s invasion of Ukraine as the reason for rising electricity prices. Here’s the thing: the energy crisis in Europe predated Ukraine. And does anyone expect that energy markets will return to pre-existing conditions should the Ukraine situation be resolved soon? Most Western economies will continue to boycott Russian oil and coal, and the piped gas from Russia to Europe is unlikely to return to previous levels.

Many of the problems in Australia’s energy system are homegrown; it was only a matter of time before the full effects became apparent. As far as electricity on the east coast is concerned, the key problem is that the scale and timing of the exodus of 24/7 power plants – mainly coal-fired ones – have been such that even the substantial investment in renewable energy has been inadequate to deal with the shortfall, particularly given its intermittency.

Add the increasing unreliability of many of the remaining coal-fired plants – there is little incentive for owners to invest in adequate maintenance – and the stage is set for rising prices and loss of reliable supply.

The fact the Australian Energy Market Operator is constantly intervening in the market – it was suspended at one stage in the year – underscores the increasing fragility of the grid.

The trouble with spouting cliches such as renewable energy is cheaper energy is that it ignores the underlying physics, engineering and economics that drive electricity grids serving households and businesses.

Gas is increasingly becoming the key factor behind electricity prices because it is gas that can provide the firming capacity that allows the grid to operate 24/7 throughout the year.

As the marginal supplier, it is gas that determines the price, particularly at peak periods. For all the talk, batteries, even large-scale ones, don’t come close to providing equivalent firming capacity, even though they may offer up some ancillary services such as frequency/voltage control. This is why the distortions in the gas market are critical to understanding what is happening in the electricity market.

Treasury is expecting gas prices to rise by 40 per cent in the next two years. There is only one way in which the price of gas can sustainably revert to lower levels and that’s through more supply. All the talk of price caps, regulation, reservation schemes and higher taxes ignores the fact these interventions will all fail in the medium term and most will fail in the short term.

Beneath what is happening in the gas market is the belief by the producers and investors that the Labor government is hostile to gas. Climate Change and Energy Minister Chris Bowen has no intention of facilitating new sources of supply, including by underwriting the construction of pipelines. He has put the kibosh on the construction of the new government-owned Kurri Kurri gas-fired plant in NSW by insisting it run on 50 per cent hydrogen from the get-go, notwithstanding the absence of any source of hydrogen in the area. He also has vetoed the expansion of another gas-fired plant owned by Snowy Hydro.

We know there are very large gas reserves in Queensland’s Bowen Basin that could be accessed with the consent of the Queensland government. Likewise there are reserves of conventional gas sitting onshore in eastern Victoria, but there is no political appetite to facilitate their exploitation notwithstanding the high gas intensity of Victorian homes. (It is ironic that, in days gone by, Victorian households were encouraged to install gas appliances and hot water services and large swaths of the state are reticulated for domestic gas use.)

So the short answer is that, absent a policy to increase supply, we should get used to high domestic gas prices for the foreseeable future in line with high global prices. On paper, it may seem possible to restrict exports, but bear in mind the gas fields in Queensland, in particular, were developed only because of those export contracts.

Insisting that contracts be broken with international customers would be a very big call, with potentially damaging consequences down the track. Slapping an excess profits tax on the producers would generate revenue but bear in mind that the massive costs of the investment in the Curtis Island LNG trains and associated expenditures have not even been recovered at this point.

High gas prices also are affecting those manufacturers that use gas directly as a heat source in their production processes. While there is some speculation about altering processes to reduce the reliance on gas, at this point these manufacturers will be badly hit. Quite a number of them failed to secure longer-term gas contracts on favourable terms when they were available.

The bottom line for the federal government is that simply saying renewable energy is cheaper does not make it so. Not only are there substantial delays and cost blowouts in the new transmission lines required to get the renewable energy to the grid, there are also significant rises in the price of turbines and solar panels. China, the dominant supplier, has seen an opportunity in the market and has pounced.

As for Daniel Andrews proposing to resurrect the State Electricity Com­mis­sion of Victoria, this is simply politics but bad policy. A mere $1bn is to be devoted to the new entity by the state government across 10 years and the other 49 per cent will be offered to private interests to reduce electricity prices for Victorian consumers. It may help the Victorian Premier win the state election and it is enough to distort the market further even given its small scale. But any near-term impact on electricity prices is fanciful.

My advice is to hang on to your hat because the energy situation is likely to get worse. Only when common sense prevails will things improve.
The Australian

In the current circumstances, mindless panic can be excused.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.


  1. 120 b.p.m. says:

    Hmm… Britain to pay climate reparations for the industrial revolution? Yeh, those railways. What an inconvenience they have been to the world!

    What are these morons talking about at COP27?

    • Peter Pronczak says:

      “What are these morons talking about at COP27?”

      Would you believe what else but bowing to the money power that rules the world? Otherwise they would not add travel CO2 to their claimed problem & communicate openly, over the internet, & forego all 5 star holiday goodies. Can’t have that, they need rewards to believe they are doing something to benefit mankind.

      • 120 b.p.m. says:

        Well I suppose Britain could in turn seek reparations from Ancient Rome! I mean how far do we intend to go with this ‘backward’ way of thinking? Because this is where we are headed, if you take this Woke ideology to its logical conclusion.

        If only a few more COP27 members would travel by train, they might lead by example. Especially the electric ones! Trains that is!

  2. lizpenfold says:

    Candu reactors could replace our coal fired power stations to retain the communities, jobs and use the existing interconnectors to the grid. Safe small modular transportable reactors could be built on assembly lines in Australia and provide the energy needed for mines and industries and small communities across the nation to value add our products before export.

  3. Reblogged this on Calculus of Decay .

  4. I have been saying for years that the energy supply system is a slow train wreck especially in Europe but the Ukraine war appears to be the straw that broke the camels back as far as I can see.

    I simply cannot believe that Australia is continuing down the same track FFS. Are our politicians that dumb. Can they not learn from others.

    Once Liddell and Eraring power stations are gone providing we don’t blow them up with a toast of champagne we might survive. But if South Australia is any guide that is exactly what will happen.

    China and Xi Jigping must be ecstatic. Sun Tzu and “The Art of War” anyone.

  5. Peter Pronczak says:

    Apart from sense not being common, some in the media are getting sharper but will the Alice’s (or anyone else) survive Wonderland?

    COP27; every year the number goes up along with costs & prices. And the UN is supposed to be an understanding, intelligent, caring for all, leadership organisation.
    They like politicians, can’t be held legally liable for unity decisions, no matter how many suffer or die as a result.
    That needs to change. It’s getting more difficult telling who the actual criminals are.

    Every little bit helps; solar panels on wind turbines. How practical is that?!
    Throw another err, umm, idea on the barbie.

    Think I’ll build a bike & listen to the dynamo hum.

    Hint: If you want a child to learn the English language, get a government Style Manual.

    Stop with the left & right, there is social & antisocial, no in between.

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