Although filtered by a reporter, The Guardian has a good record of factual accuracy. Government is also claiming to save us $120 p.a. on energy compared to business as usual, which really means there will still be price rises. This report seems to fly in the face of everything some pollies claim. Of course the report states ‘wholesale’ not retail. I wonder where those ‘missing’ dollars will end up?
Something which one does not know in such news articles is whether government subsidies of any form are considered as part of the cost of generation, or whether they net generator costs when it supplies the national energy market. I assume that government subsidies are not included as part of the cost to consumers who are also taxpayers, as the report was released before the current government announced the reduction/removal of current subsidies.
Unless you know the assumptions behind such modelling it is impossible to say how realistic the predictions might be. Going into the predicted consequences is rather pointless unless you have some idea of the chance that they will happen.
I am also puzzled by the claim that the obligation to limit emissions will be on the retailer. If there isn’t enough low emission power available what will the retailers do? They cannot stop buying as they also have to guarantee reliable supply. How does that part of the scheme work?
The saving could also be based on additional supply pushing down power prices rather than renewables being cheaper form of energy. Where supply exceeds demand, especially when all generators are operating at capacity, then this reduces the electricity pool or spot price. Where there demand exceeds supply, the spot prices increase until they reach an set limit of about $14,000/MW.
I expect when another coal fired generators are expected to close in 2021 (which is after the reported saving period of 2018-20), there will be electricity price pressures. The Victorian government estimated that the cost per consumer of the close of Hazelwood was about $44 (to $88) per year in additional electricity costs.
The Turnbull promised $120 saving will not appear for about 5 years. So in the meantime we will pay more each year until then. This cut will only be a cut on an increased price. Bravo for saving us $120 on the $1200 increase </end sarcasm>
Those stratospheric wholesale price intervals are often caused by the generators restricting supply, (there generally is no real shortage) in order to make massive profits. A significant portion of the profits of the generators is made on something like 40 hours per year, during periods of peak demand in heatwaves or cold spells. This is particularly the case in SA, where the gas generators have been gaming the system. Much has been written about how they do this on RenewEconomy. According to the ACCC, its ok for them to so this, as stricly speaking, it is within the rules.
The Qld govt, which owns quite a bit of the FF generating capacity, has recently instructed their generators to stop gaming the system, to ease the price pressure on consumers.
I don’t trust the Guardian myself, they have a bad habit of “shaming” conservative governments.
When the socialists are in power they suddenly become quiet.
I can’t see how a 50% renewable energy target will lower energy prices in Australia, the sums just don’t add up.
The Guardian has Pulitzer prizes for investigative journalism and is respected as being factually accurate. See through the words used and at least consider that there might be a reason some governments get ‘shamed’.
If the calculation is even 50% accurate it is more accurate than pretty much any claim any of our pollies has made about anything.
There’s no doubt at all now that both the capital and operating costs of new both solar (especially) and wind farms are cheaper than the equivalent costs of energy generated from new coal or gas. There are many examples to support this, and India for one is removing plans to build coal-fired power stations for that reason. Economically, the move to renewables is a no-brainer.
But, at least here in Queensland, it’s the network that contributes most to our power bills - 60% on average - giving the State government a nice little earner of about $1 billion a year. And the government holds no equity in the network, which they’ve valued at about double its worth. But of course neither party wants that to get out. For more information, follow these links…
If wind and solar is the answer, ask the SA people what they think of having the highest power prices in the world.
Or is the SA government just incompetent.
We must debate nuclear and cleaner coal, wind and solar is totally inadequate for our vast nation.
This has been extensively covered in this forum and numerous other places. High electricity prices in SA are caused by the gas generators gaming the system. The ACCC is happy with this, as strictly speaking, it is within the rules to make available just 1MW short of what is required, thereby forcing the wholesale price to astronomically high levels, ie $14/kWh or more.
This rorting gets passed on to the consumer, hence the historically high prices. However, if you look at the facts, SA’s price has recently often been lower than other states, because of renewables, which have zero to minimal marginal cost to produce, unlike gas, which is very expensive.
I’d suggest some of the commentary on this subject, such as that found in the Murdoch media, has been more than incompetent, it is deliberately misleading.
“Cleaner coal” is still filthy, and would do nothing to reduce the energy sector greenhouse gas emissions. There is a separate thread to debate nuclear energy.
Suggest you read up.
Please cite your source for that statement. I trust your source will be one that is non-partisan and holds scientific as well as economic rigour.
If you have time, here are three recent reports about the challenges the SA electricity network and market faces:
While @gordon has indicated a potential reason why SA electeicity prices are elevated, there are also other reasons which the ACCC report outlines. This includes the removal of coal electricity generators which makes gas generation more important especially in times of high demand. This along with the unplanned additional gas demand to meet generators requirements, has constrained the amount of gas generation required to support the demand on the network. When demand increases, which usually peaks on very hot or very cold days, there is insufficient supply which causes prices to increase significantly. If at the same time other forms of generation, such as wind, solar and other coal generation are all not operating at maximum generation capacity (e.g. due to low or high wind events, cloud or night, unplanned generator outages or unplanned partical network outages), the the network can be stressed impacting on spot prices.
As South Australia has become more reliant on the Vic-SA interconnector, this can magnify the price problem in SA…that is, where the interconnector is at maximum load, there is greater risk of demand exceeding supply in SA where a high demand/low supply event occurs.
There are also many other SA (and NEM) price pressures and these are outlined/alluded to in the above reports.
The other thing to consider is that a significant proportion of electricity charges are because of network (distribution and transmission) network charges. These charges are spread across all electricity consumers, namely those connected to the grid. When there is a loss of large users such as the car manufacturing industry in South Australia, the same fixed network costs are then shared between a smaller pool of consumers. As a result, it could be argued that the network costs per unit of energy delivered would increase slightly in such cases. The more dispersed the transmission and distribution networks, like that which service regional areas and also connect renewables which are often located away from population centres, the higher the network costs are (to augment, operate and maintain). It could be argued that SA is a state that has a dispersed network.
As the energy cost makes up about 40-50% of a typical bill, there needs a significant increase to have any real impact on the bill. If there was say a 10% increase in energy charges, this would only result in a 4-5% increase in whole bill cost (assuming other charges also don’t increase).
It’s a bit hard to trust any modelling that’s not open to outside scrutiny:
Many thanks phbriggs2000 for your post, well balanced, which is exactly what we need in this debate.
So, the fact that SA has removed coal generation and replaced it with green energy (the highest concentration in the country), this has no impact on power prices?
Gordon we will agree to disagree.
You would go much further towards generating genuine debate if you gave reasons why you think the price of power in SA is due to renewable use and just how nuclear power will solve the problem. I would expect your analysis to factor in all the costs of the options. To just make a bald statement and then sit back and watch the fun is mere bait casting, slightly amusing but hard to take seriously.
I’m sure the good people of SA will take this debate very seriously when they vote in 2018.
I’m not sure they will take it seriously - its politics after all and it is said we get the government we deserve - but if they do I hope they take @syncretic’s advice and introduce some information that can actually be debated.
Failing gas and coal-fired power stations are the biggest threat to grid security this summer, increasing severity and number of heatwaves mean this problem will only worsen if more renewables are not deployed in a hurry.