26/09/2017

The Truth About Soaring Power Prices: Wind And Solar Not To Blame

ABC News - Ian Verrender

A vocal but powerful minority argues coal is the future, but that's simply not the view shared by the power generators. (AAP)
Separate events, different states, alternate days. Between them, however, competition kahuna Rod Sims and Prime Minister Malcolm Turnbull last week demolished an old chestnut about renewable energy: it is not the cause for the recent spike in electricity prices.
In fact, according to both, it has had very little impact.
For the past decade or more, we've been bombarded with the message from a vocal but powerful minority within Parliament and the broader community that the switch to renewable energy has made Australia uncompetitive, crippled our industry and driven power prices higher.
The real issue is that, fundamentally, they don't believe climate change is real or that humans have adversely affected the planet.
Having spent so long denying science and rejecting the overwhelming body of evidence, they're now being forced to ignore economics; that renewables have become a cheaper longer term power source.
Coal is the future, they argue.
Coal-fired generators have no future here
That's simply not a view shared by the power generators, whose primary motivation is to turn a profit and stay in business, or the banks who must finance them.
Nor is it a view shared by BHP, the nation's biggest company that built a large part of its wealth on coal exports.
Last week, it confirmed it was reviewing its membership of the Minerals Council of Australia because of "materially different positions" on issues such as a Clean Energy Target and climate change.
Technical innovation around renewable energy generation has seen costs plummet.
So much so that US investment bank Goldman Sachs — hardly a standard bearer for radical ideology — now argues that, rather than pushing power costs higher, renewable energy is the cheapest form of power generation. More on that later.

The truth about the power price spike
As the theatre over keeping open the creaking Liddell coal-fired power station in NSW's Hunter Valley played an encore last week, the ACCC boss and the PM delivered a few sobering nuggets.
First, there was Rod Sims at the National Press Club in Canberra on Wednesday: "Forty-one per cent of the increase in electricity prices over the last 10 years has been in network costs and we keep forgetting that."
He went on: "Those poles and wires that run down your street are the main reason you are paying too much for your electricity."


Rod Sims addresses the National Press Club on "Australia's Gas and Electricity Affordability Problem"

According to Mr Sims, extra retail charges account for 24 per cent of the higher prices while higher generation costs as a result of a failure to invest make up 19 per cent of the price hikes.
Green energy initiatives contribute just 16 per cent to the recent price hikes.
On Thursday in Brisbane, responding to questions, the PM concurred, explaining that "particularly for retail customers, the largest single part of your bill is the network costs."
"That's the poles and wires basically," he said.
Gas, not coal, will fix prices
But then he elaborated on the more immediate issues, particularly around generation and the changes that have been foisted upon consumers.
"In terms of the green schemes, they do have a cost but it is a relatively small cost," he said.
"Gas is the biggest single fact at this point in time."
What does gas have to do with it? As the PM explained, the electricity price is set by the last generator to come into the stack.
It's what economists call the marginal cost of production. You might be to meet half the demand at low price. But it is the expensive bit at the end that determines how much a producer will charge everyone.
When it comes to electricity, gas is that last final element.
"It is peaking power," the PM said. "The increase in the gas price has increased the cost of electricity."

The gas debacle
Gas prices haven't just increased. They have quadrupled.
And the tragedy is that Australia, with one of the greatest reserves of gas on the planet, now charges its households and businesses far more to use that energy than the countries to which we export.
Gas forgotten in energy debate
With the continued reversal of policy on carbon pricing and climate change, the unofficial industry consensus was to build solar and wind generation with gas-fired back-up to shore up reliability; a decision affirmed by the chief scientist Alan Finkel in his report on how to cope with future challenges.
But three major export terminals were built at Curtis Island just off Gladstone in Queensland, with Santos building a plant that required far more gas than to which it had access.
To fulfil its export contracts, it began sourcing gas previously destined for the domestic market.
That forced the price of domestic gas sky high just as a global glut sent international prices crashing.
It's now cheaper to buy Australian gas in Asia. A fortnight ago, gas from West Australia's giant Gorgon project was sold to India at $8.70 a gigajoule. East coast gas sells here for $17.50.
That's why the Federal Government has shanghaied gas producers like Santos to direct export gas back into the local market.
If Australians could get the same deal on our gas that Indians have secured, our electricity would be much cheaper.

Renewables or coal: What is the cheapest?
When it comes to cost, coal lobbyists usually refer to the subsidies doled out to the renewable sector to argue the industry wouldn't exist if it had to stand on its own.
That's a valid point. But it overlooks two things; the vast billions handed out to the coal industry and the increasing competitiveness of renewables.
Every coal fired generator in Australia was built, not just partially subsidised, entirely with taxpayer funds.
When they were privatised, many were given state owned coal mines with contract prices way below market, effectively a further subsidy.
Then there are the health costs.
A health study in the Latrobe Valley last year identified much higher respiratory and asthma admissions to hospital than the Victorian average while life expectancy was significantly lower than the state average.
But it is the cost of energy generation where the game really is changing.
As the Goldman Sachs graphs above show, renewable energy costs have plunged by up to 70 per cent since 2009 and will be the cheapest form of generation in Europe this year and in the US within eight years on a levelised cost basis.
When the cost of installation is taken into account, however, the story changes.
When the cost of installation is taken into account, wind and solar are much cheaper. (Goldman Sachs)
Wind and solar are much cheaper. Not only is the fuel free and faces no regulatory risk — in the form of a carbon price — but the technology is simpler and quicker to install.
Australia's chief scientist Alan Finkel went one step further. He factored the extra costs of adding gas or battery backup to ensure stability or baseload power in the system.
The Finkel review, explained
Wind still came out cheapest, with solar only marginally more expensive than black coal.
Renewable plants can be built within one to three years while coal-fired plants take between four and seven years to build.
Putting aside arguments about climate change, the main problem with coal-fired electricity is that the numbers no longer stack up.
It's too expensive, it has much higher regulatory risks and renewable technology is rapidly advancing.
It will take more than a taxpayer subsidy to build one here. It will need a full taxpayer handout. And it will result in more expensive power bills.
Coal is simply a form of stored solar energy. New technology has delivering cleaner, more efficient and cheaper ways to directly harvest solar energy to power our lives.
Don't expect that innovation to stop.

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Portuguese Children To Crowdfund European Climate Change Case

The Guardian - 

Group from region hit by deadly forest fires to sue 47 countries alleging failure to tackle climate change threatens their right to life
The fires in Leiria this summer killed more than 60 people. Photograph: Paulo Cunha/EPA
Portuguese schoolchildren from the area struck by the country’s worst forest fires are seeking crowdfunding to sue 47 European countries, alleging that the states’ failure to tackle climate change threatens their right to life.
The children, from the Leiria region of central Portugal, where fires this summer killed more than 60 people and left hundreds injured, are being represented by British barristers who are experts in environmental and climate change law.
Supported by the NGO Global Legal Action Network (Glan), they are seeking an initial £35,000 to mount the case in the European court of human rights.
The crowdfunding bid was published on Monday on the platform CrowdJustice, which has raised millions to help bring citizen-led cases to court.
Lawyers will seek a ruling from the court that the countries being sued must significantly strengthen their emissions reduction policies and commit to keeping the majority of their existing fossil fuel reserves in the ground.
The lead counsel, Marc Willers QC of Garden Court Chambers, said: “This case intends to build on the successes which have been achieved through climate change litigation across the world so far.
“It will be unique because it will be the first case in which multiple governments are brought before a court at the one time in relation to their failure to properly tackle climate change.
“Climate change poses a major and increasingly worsening threat to a number of human rights and governments in Europe are simply not doing enough to address it.”
The children, aged between five and 14, all come from Leiria, which suffered Portugal’s deadliest fires this summer.
Some experts have blamed the increase in forest fires in Europe on climate change.
A 14-year-old who is part of the group taking action said: “Climate change causes many problems, but if I had to name the ones that worry me the most, it would be the sea level rise, which leads to the destruction of shores and infrastructure such as dams, roads and houses, and also the increase in the number of forest fires that we’ve been observing lately – especially this summer, as the fires caused many deaths and left our country in mourning.”
The legal action will target the 47 nations who are the major emitters in Europe – including the UK, Ireland, Germany and France. These 47 were collectively responsible for roughly 15% of global emissions and held a significant proportion of the world’s known fossil fuel reserves, said the Glan director, Dr Gearóid Ó Cuinn.
European court of human rights decisions are binding on these states.
The case is also being taken to raise public awareness about what Glan says are the shortcomings in government policies on climate change.
Ó Cuinn said: “We will work with civil society organisations throughout Europe to use our case to highlight the fact that unless governments urgently take much stronger action to prevent the release of greenhouse gas emissions, it is only a matter of decades before we’ll be witnessing the catastrophic consequences of insufficient action.”
Two years ago a group of Dutch citizens – organised by the NGO Urgenda – successfully sued their government for negligence for knowingly contributing to a breach of the 2C maximum target for global warming.
Three judges ordered the Dutch government to cut its emissions by 25% by 2020, saying their lower targets were unlawful given the scale of the threat posed by climate change.

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Climate Crunch: Australia To Fail On Paris Commitments Without Massive Renewable Switch

Fairfax - 

Australia will fall short of its Paris carbon reduction targets signed under Tony Abbott unless it lifts its renewable energy production to levels higher even than Labor's plan for 50 per cent green energy reliance by 2030.
The first assessment by the Australia Institute's new Climate and Energy Program, to be released on Monday, has found that unless a higher burden is placed on the more expensive process of carbon reductions in other sectors – agriculture, transport and manufacturing – then the electricity generation sector will need to aim for a renewable energy target of at least 66 per cent by 2030, and possibly as high as 75 per cent.
Australia's Paris carbon reduction targets were signed under former prime minister Tony Abbott. Photo: AAP
That is, a power generation sector where the fossil fuel component is reduced to perhaps a quarter of the size it is now.
Power generation currently accounts for 35 per cent of total emissions, which is twice as much as the next biggest contributor, fuel combustion and transport, at 18 per cent.
Industry produces 14 per cent and agriculture 13 per cent.
The current emissions reduction target, committed to in Paris while Mr Abbott was prime minister, is 26-28 per cent lower than the 2005 level – part of Australia's  contribution to a global effort to restrict the planet's temperature increase this century to no more than 2 degrees Celsius.
The government is now wrestling with how to go about this after  Chief Scientist Alan Finkel proposed a clean energy target which would lock in a 28 per cent reduction in energy-related emissions by 2030 through a four-pronged strategy emphasising energy security, reliability, affordability for households and business, and meeting Australia's emissions targets.
Last week Mr Abbott indicated he would cross the floor in Parliament to stop further renewable-friendly policies, calling it "unconscionable for a government that was originally elected promising to abolish the carbon tax and to end Labor's climate obsessions to go further down this renewable path".
Chief Scientist Alan Finkel proposed a clean energy target which would lock in a 28 per cent reduction in energy-related emissions by 2030. Photo: Wayne Taylor
The comments underlined the bind faced by the formerly green-tinged Prime Minister Malcolm Turnbull.
Along with Energy Minister Josh Frydenberg, Mr Turnbull has been working feverishly behind the scenes to settle a CET in official policy by the end of the year, although his government's febrile internal politics now look like producing a watered-down and renamed version designed to foster a new so-called high-efficiency, low-emissions coal-fired power station.
Acting Labor leader Tanya Plibersek has indicated the party's support for a Clean Energy Target (CET). Photo: Alex Ellinghausen
However, the Australia Institute, which has taken over the intellectual property of the Climate Institute, says even Dr Finkel's model would be insufficient on its own to meet the international obligations signed under Mr Abbott.
"This analysis of the economic modelling demonstrates meeting these targets for the electricity sector with a policy like the clean energy target is likely to require 66-75 per cent of electricity to be supplied by renewables," said Australia Institute executive director Ben Oquist.
This was because a CET "provides less of an incentive for gas generation than an EIS (emissions intensity scheme) or a carbon price".
Mr Oquist said the country was at a "critical juncture" and government must decide if it is to meet its commitments in the cheapest way, which is through greater renewable energy dependency than currently envisaged, or by demanding the more expensive and disruptive changes required in other parts of the economy.
"If Australia adopts a weak clean energy target which does not provide a strong signal for renewables, we risk turning Australia's moderate Paris targets into an extremely expensive task," he said.
"It remains to be seen if we choose to meet those Paris commitments the easy way or the hard way."
The discussion paper was written by the institute's director of research, Rod Campbell, who described it as ironic that government-commissioned modelling showed that policies that would actually "minimise renewable energy penetration such as carbon pricing and an emissions intensity scheme have already been rejected".
"All that remains is the CET that would bring in the largest share of renewable generation, or the prospect of failing to meet our Paris climate targets," he said.
Acting Labor leader Tanya Plibersek said the solution to a 10-year political standoff on climate policy was within reach because Labor had signalled that it would "cop" a CET.
"We don't think that is the No.1 approach, but as the No.2 approach we are happy to compromise with the government to introduce a clean energy target," she told the ABC's Insiders.
"The problem is not the gap between Labor's position and Malcolm Turnbull's position, the problem is all inside the Liberal and National parties where they've got a determined small rump of people who are absolute wreckers when it comes to greater investment in renewable energy," she said.
"This government is in its fifth year, we've seen seven coal-fired power generators close down, taking 4,000 megawatts of baseload power out of the system and nothing replacing it. That's a real problem."
Last week, Mr Abbott proposed ending all subsidies on renewable energy as a political strategy for positioning the Coalition.
"This is an opportunity for us to sharpen the difference with Labor on an issue which is of deep concern to the public, on a hip-pocket issue where we can be on the side of voters and Labor is on the side of green extremists ... let Labor be the party of renewable energy and us the party of reliable energy," he said.

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