Wind and solar energy costs more and is less reliable

July 29th, 2016

“To be financially viable, wind and solar generally require prices for their power that are higher than what our other existing power generators receive.”

That sentence was in the middle of an article in The Guardian this week in which author Tristan Edis was trying to argue that renewable energy was cheaper than existing coal and gas-fired sources.

Mr Edis did not even mention the direct Commonwealth subsidies and other incentives offered by State Governments to support renewable energy.  A report by Principal Economics for the Minerals Council last year calculated that in 2013/14, renewable energy was being subsidised to the tune of $3 billion a year (on top of the $18-$20 billion in taxpayers funds spent on installing Australia’s wind farm plant).

This was the equivalent of an additional tax of up to 9% on each and every household electricity bill, and up to 20% extra tariff on industrial users, Principal Economics calculated.

But don’t expect the renewables industry to acknowledge this, or the role of non-performing wind farm assets in the recent electricity price spike crisis in South Australia.

The denial from renewables promoters and environmental groups, such as The Australia Institute, was so strong that the Australian Energy Council (AEC) was moved to publish a set of clarifying facts about the realities of the situation in South Australia and the rest of the nation.

So, take note, all those trying to push blame away from the unreliability of renewable energy in the recent electricity price crisis in SA:

“The global electricity industry is learning valuable lessons….the hard way,” the AEC said in a statement.

“To suggest that renewable energy has nothing to do with the situation in SA is wrong,” it said. 

As we have explained, other factors were at play in the SA crisis which spawned spot prices of 100 times the average and an urgent plea from the Government to the owner of a dormant gas-fired generator to get back into operation to meet demand and help drag the spot price back down from the stratosphere.

Renewable energy promoters,were not only in denial, they went further, claiming that renewable energy was bringing prices down and that more wind farms would reduce renewable energy’s unreliability.  We exposed the nonsense of these claims in a letter to the Australian Financial Review, reproduced here.

And the AEC reaffirmed the truth  in its statement, which included the following in a question & answer section:

“Q:  Don’t more renewables lower electricity prices?  A:  No.

“Q: Can wind and solar replace coal and gas? A: Only partially.” 

There was plenty of explanation behind these two answers, but the bottom line the AEC wanted to reiterate was that the Australian electricity market needed conventional power – from coal and/or gas – in order to achieve reliable supply and keep a lid on prices.

Technology may resolve the unreliability factor in the future.  Until it does, we need conventional power, and gas is the commodity which offers strong economics and lowest emissions, as the necessary baseload back-up.

As the AEC said:

 “Renewable energy is popular and it is easy to support policies based on big renewable targets.  But they are not enough on their own…”


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