Network costs form the biggest part of your electricity bill. Australia is a big country, and moving electricity around it is expensive. As the graph above shows, network costs have contributed 40 per cent of the total price increase over the past decade.
The reason we now pay so much for the network is simply that we have built an awful lot more stuff over the past decade. It’s also because it was agreed — through the industry regulator — that network businesses could build more network infrastructure and that we all have to pay for it, regardless of whether it is really needed.
Much of the debate about our future power generation has become mired in political point scoring and simplistic arguments designed to inflame and outrage, writes Ian Verrender.
Network businesses are heavily regulated. Their costs, charges and profits all have to be ticked off. This is supposed to keep costs down and prevent consumers being charged too much.
That’s the theory. But the fact is costs have spiralled. Between 2005 and 2016 the total value of the National Electricity Market (NEM) distribution network increased from $42 billion to $72 billion — a whopping 70 per cent. During that time there has been little change in the number of customers using the network or the amount of electricity they used. The result: every unit of electricity we consume costs much more than it used to.
The most surprising of those developments may be the South Australia achievement, which shows that since the closure of the Hazelwood brown coal generator in Victoria in March 2017, South Australia has become a net exporter of electricity, in net annualised terms.
Hugh Saddler, lead author of the study, notes that this is a big change for South Australia, which in 1999 and 2000, when it had only gas and local coal, used to import 30% of its electricity demand.
The fact that wholesale prices in South Australia were higher in other states – then, as they are now – has nothing to with wind and solar, but the fact that it has no low-cost conventional source and a peaky demand profile (then and now).
“The difference today is that the state is now taking advantage of its abundant resources of wind and solar radiation, and the new technologies which have made them the lowest cost sources of new generation, to supply much of its electricity requirements,” Saddler writes.
Australia’s energy watchdog will investigate suspicions that electricity networks and gas pipelines have overcharged consumers by $400 million a year to cover their corporate tax bills.
Network charges have been the single biggest factor in rising household electricity bills over the past decade. The charges cover the cost of the “poles and wires” used to transmit and distribute electricity.
By Andrew Blaker | (The Conversation) | – – Solar has become the world’s favourite new type of electricity generation, …
So much for axing the tax: a growing crisis in the electricity market has led to wholesale power prices more than doubling in a year, and rising to at least twice what they were under the controversial Labor-Greens carbon price.
The federal government’s plan to reduce Australia’s Renewable Energy Target (RET) could jeopardise billions of dollars in investment while giving a boost to the fossil fuel sector, experts have predicted.
Industry minister Ian Macfarlane and environment minister Greg Hunt have proposed a reduction in the target, from 41,000 gigawatt hours (GWh) of renewable energy by 2020 to around 27,000 GWh.
The ministers said the reduced target would represent “a real 20% of electricity production in Australia, as was the original bipartisan intent” of the scheme. Declining electricity demand means that the current target represents around 27% of Australia’s projected 2020 energy use.
The new proposals stop short of the measures recommended by the Warburton review, which set out a range of options to narrow the existing scheme, including ending all subsidies for new large-scale renewable energy projects and for rooftop solar panels.
Dylan McConnell, a research fellow at the Melbourne Energy Institute, said that “shifting the goalposts will decimate the large-scale renewable industry” and endanger more than A$10 billion of investment.
“Despite what Mr Macfarlane might think, Australia signed up for a 41,000 GWh Large-scale Renewable Energy Target,” he said. “Importantly, this is also what the energy industry signed up for.”
“The proposed “real 20%” target effectively reduces the existing target by 60% – a substantial disruption to a longstanding, popularly supported and (previously) bipartisan policy,“ he said.
“There is no technical limit preventing more than 20% renewable energy in a power system, and the fact that 27% might come from renewable sources is something to celebrated, not condemned. In addition, the Warburton review itself showed that the impact of the RET on prices is far from significant, and in fact will deliver lower electricity prices in the long term.
“I find it hard to believe that removing policy that decreases both prices and emissions and increase renewable energy generation is what Australians signed up for.”
Tony Wood, energy program director at the Grattan Institute, said a real 20% renewables “always seemed like a reasonable outcome”. “But I’m not clear on how this will avoid trashing existing and committed projects,” he said.
He also welcomed the government’s plan to protect emissions-intensive industries such as aluminium from having to pay subsidies towards renewable energy generation, although he said it was not clear how this would affect the scheme overall.
Andrew Blakers, director of the Australian National University’s Centre for Sustainable Energy Systems, described the new policy as a “free kick for fossil fuels”.
“The RET is a specific target: 41,000 GWh by 2020. It is not a percentage. A reduction from 41,000 to 27,000 GWh is a massive impediment to growth of the renewable energy industry, and a corresponding free kick for fossil fuels. Because of the resulting reduction in competition in the wholesale market, the price of electricity would go up, as would carbon emissions,” he said.
“In contrast, retention of the RET at 41,000 GWh by 2020 allows Australia to reach more than 90% renewable electricity by 2040 by natural attrition of existing fossil fuel power stations – the deployment rate of wind and solar required to achieve the 2020 RET target is readily achievable, and fast enough to replace each fossil fuel power station in an orderly fashion as it reaches the end of its working life.”
Solar subsidies to stay
Mr MacFarlane said the government would not change the financial incentives for installing solar panels, worth about A$2,500 for a typical 3 kilowatt system. The Warburton review recommended that this program, known as the small-scale RET scheme, be brought to an end.
Labor has said it will not support the changes to the large-scale renewables target, which was aimed at brokering a compromise over the RET’s future.
The situation will be clouded still further by the confirmation that the government-funded Climate Change Authority will go ahead with plans to produce yet another review of the RET scheme.
Tony Wood applauded the government’s move to reduce uncertainty over the scheme by scrapping the requirement for it to be reviewed every two years. But he said there would be a long way to go to reach a clear bipartisan policy.
“There’s quite a gap to close and I don’t see Labor in any mood to compromise. One has to wonder why we had to go through all the pain of the Warburton review to get here.”
- theguardian.com, Wednesday 22 October
- Here are little known facts about coal: its use is responsible for 400,000 premature deaths per year globally, and many more illnesses. In India, coal contributes to between 80,000 to 115,000 premature deaths and 20m new asthma cases annually. It is also responsible for around 40% of the greenhouse gas emissions that are dramatically changing the world’s climate and impoverishing millions of people.
This, however, did not stop Tony Abbott from glossing over these costs when he declared recently that “coal is good for humanity”, nor did it stop environment minister Greg Hunt from saying that coal will lift millions in the developing world out of energy poverty.
But coal is not the solution to energy poverty. Local renewable energy is. India’s people are best served by renewable energy sources like wind, solar and small-scale hydropower. That’s why Indian giant Adani’s proposed Carmichael mine in Queensland’s Galilee Basin, one of the world’s largest, is such a backward idea – and why I have joined the fight to stop it.
scenario emphasising coal.
This difference is even starker when you take into account the costs of imported coal from Australia and Indonesia. Increases in imported Indonesian coal prices have made the massive Tata Mundra and Adani Mundra power projects in the Indian state of Gujarat uneconomical, leading to plant shutdowns.This price differential would be even greater for Australian coal. Recent analysis from the Institute of Energy Economics and Financial Analysis has shown that the cost of imported Galilee coal-fired power generation in India is double the current average wholesale cost of electricity. More than 300m Indians simply cannot afford Australian coal.
The coal from Carmichael, when burnt in Adani’s power stations in India, will damage the health of the Indian rural poor and the land and water on which they depend for their livelihoods. And they still won’t be able to afford the electricity generated.
Abbott said “coal has a big future as well as a big past.” He and the coal companies want us all to believe that coal is inevitable. Coal helped build the economies of developed countries and so it must be the right choice for the rest of us. Yet by that logic, the opium trade and slavery should also be reintroduced, since they also contributed to the enrichment of many countries.
All the pieces are in place now for developing countries to choose a clean energy path that is cheaper, faster and healthier than coal. It would be nice if the Australian government focused on this, rather than exporting dirty, outdated coal.
China’s dirty coal ban will lose us billions of dollars in sales. Why air pollution in China. Abbott has said there’s no point in pursuing RET’s as they will have no effect on the global environment China and other major polluters don’t do anything. Well China now has. Guess Abbott’s argument will need to change. We don’t need to do anything because the worlds biggest polluters are now doing it for us. Would you employ him as a sales person for your company? The country has.
What are we going to do with our dirty coal if it takes 2 years to ship to China instead of one we can’t put up it’s already dropped to cost out of the ground. We can sack the workers whose jobs Abbott was saving. We could close 50% of those mines we have subsidised at least Clive Palmer has a job and assetts like cars to sell unless the bank owns them.
What do financial advisers really mean when they say “We are all trying to sort out what is going on. the information is fairly fluid right now” Your money is going down the drain. We will have to find ways of using more coal here at home gut the RETs
Our coal producers say China is propping up their own mines due to their economic slow down it really has nothing to do with pollution. They can’t dare admit it’s long-term can they. Caught between a rock and a hard place , ‘lie’. Another sound bite coming from the Minerals Council is “there is no evidence that it will affect Australia”. How much spin and bullshit can you put on this. Palmer has “the Chinese are fucking liars they really want our coal. They want our coal. Please want my coal” this is like the captain of the Titanic telling his passengers and crew not to panic the hole in the hull is a good thing it’s letting the water out.
We have reserves of good coal which will continue to be in demand is another line. Does this mean mines we have already subsidised will close and we will be then asked to subsidise new ones. If I was a mining company I wouldn’t worry too much nothing needs to come out of the ground and the government cheques will keep coming it’s Corporate Welfare.
With the Abbott Government’s RET review controversially advising abolishing Australia’s renewable energy target, a new international report suggests renewables are the only way forward.
RENEWABLE ENERGIES ARE INCREASINGLY SEEN as the best solution to a growing global population demanding affordable access to electricity, while reducing the need for toxic fossil fuels that are creating unsustainable levels of greenhouse gas emissions.
‘Rapid technological progress, combined with falling costs, a better understanding of financial risk and a growing appreciation of wider benefits, means that renewable energy is increasingly seen as the answer.’
‘Not only can renewable energy meet the world’s rising demand, but it can do so more cheaply, while contributing to limiting global warming to under 2 degrees Celsius – the widely cited tipping point for climate change
‘A technology once considered as niche is becoming mainstream. What remains unclear is how long this transition will take, and how well policy makers will handle the change.’
In the next two decades, the report noted, world electricity generation is expected to increase by 70 per cent.
But the report warned:
‘There is growing consensus on the threat of climate change brought on by increasing atmospheric concentrations of greenhouse gases, prompting worldwide efforts to reduce emissions.’
‘If business continues as usual, these efforts will not succeed. The average emissions intensity of electricity production has barely changed over the past 20 years. Gains from the increasing deployment of renewables, and less intensive fossil fuels such as natural gas, have been offset by less efficient power plants and the rising use of coal. Without a substantial increase in the share of renewables in the mix, climate change mitigation will remain elusive.’
There is also increasing concern about the health impacts of burning fossil fuels, the report said, adding the U.S. Environmental Protection Agency recently found that ill health caused by fossil fuels nationally costs between US $362 billion and $887 billion annually.
In addition, the European Union’s Health and Environment Alliance found that emissions from coal-fired power plants cost up to €42.8 billion in yearly health costs.
The report says something has to change:
‘Fossil fuels powered the first industrial revolution, but even in the new era of shale oil and gas, questions remain about their compatibility with sustainable human well-being. The stage is set for the era of modern renewable energy that is cost competitive, mainstream and sustainable.’
The report noted that the challenge today is how to finance and accelerate the continued deployment of renewables.
The report added that politicians have an important role to play:
‘If they make it clear that renewable energy will be a larger part of their national energy mix, and commit to long-term, non-financial support mechanisms, they could reduce uncertainty and attract more investors.’
Deploying renewables also stimulates economic activity, creates jobs, provides power for those left off the grid, the report said. Most renewables do not deplete finite resources and they also reduce the risk of ecological disasters.
In an accompanying media release, IRENA Director-General Adnan Amin said speeding up the adoption of renewable energy technologies is the most feasible way of reducing carbon emissions and avoiding catastrophic global warming.
Amin was quoted as saying in the release:
“A convergence of social, economic and environmental forces are transforming the global energy system as we know it. But if we continue on the path we are currently on and fuel our growing economies with outmoded ways of thinking and acting, we will not be able avoid the most serious impacts of climate change.”
ABBOTT POINT IS HISTORY
In Delhi last week, the Indian government committed to a plan to provide low-cost loans and grants to set up some of the world’s largest solar PV parks across the country, each of them comprising as much as 20 gigawatts of capacity, about 10 times what India has built to date.At a cost about 32 per cent below the global average for solar, according to data compiled by Bloomberg, and well below the average for coal-fired power generation.
China & India have become increasingly critical to the stability or continued growth of the seaborne coal market.Add to this India’s five-year solar lighting goal and you have what looks like a much diminished future coal equation for Australia.
According to official Chinese government statistics, coal use accounted for 25.4 per cent of the capital’s energy consumption in 2012 – a figure that is expected to shrink to less than 10 per cent by 2017.
China’s plans to slash its already declining coal use poses a major – but certainly not unheralded – problem for Australia’s coal industry.According to data from Newcastle’s Port Waratah Coal Services, China has accounted for just over 25 per cent of coal through the Port of Newcastle, the world’s biggest coal export hub in 2014.On top of this, the price for thermal coal has plunged more than 10 per cent in the last two months – due largely to major importing nations like India making it clear that renewable energy is offering a competitive energy alternative.
Currently, thermal coal is sold for less than $70 on the spot market, well below the mark for Australian producers to make money, let alone the cost of production and the level to get the finance for the massive new projects Prime Minister Tony Abbott is hoping to encourage.
Any chance of a boom as China grows may prove ephemeral.”