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Billions In Taxpayer Subsidies Hide The Enormous Costs Of Renewables

by Alan Moran
January 26, 2023, 1:01 PM
in News and Opinion
Reading Time: 4 mins read
A A
2

solar farm australiaAustralian governments have made energy policies focused on achieving higher shares of renewable energy that they claim is the cheapest source of power.

The Commonwealth government is planning for renewables to reach 82 percent of supply by 2030, while the Liberal Party’s plan is for 85 percent by 2050 and 61 percent by 2030. State governments have additional plans. [emphasis, links added]

In pursuit of these goals, governments around Australia are being sucked into a vortex requiring ever-increasing controls, while seeing mounting cost increases.

Subsidies that amount to $6.9 billion per year have propelled wind and solar, which had virtually no market presence 20 years ago, to their current market share of 27 percent.

The CSIRO and other bodies claim that these are the cheapest forms of electricity, but the absurdity of this is demonstrable – the market shares of wind and solar would be negligible without these subsidies.

And the subsidies themselves amount to over one-third of what electricity generation would cost if renewable requirements did not push up prices.

A recent study from the UK identifies a similar magnitude of costs to support renewables (which now provide 36 percent of the nation’s electricity).

The hidden subsidies to renewables amounted to 13 billion pounds ($24 billion) in 2021, a little over three times Australia’s $6.9 billion cost for a population two and a half times greater.

Among major countries, only Germany, which has gone even further down the renewables path, has higher energy prices.

As in Australia, the UK’s growth in subsidized renewables has brought an accelerating increase in prices.

That process in both countries predated the Ukraine War.

This contradicts Mr. Albanese’s response, ‘News Flash!!! There has been a war in Europe that has had a global impact!’ to a question from Chris Kenny on why electricity prices had failed to meet the ALP’s projected price fall of $275 per household but instead had risen by that magnitude.

In fact, European gas and coal prices, though still much higher than a year ago, have fallen (in the case of gas to a quarter of their June-October 2022 levels). That is in spite of a very strong increase in stored reserves.

Reasons for this included customer demand response and supply response of non-Russian sources (and Russian sea-borne sources), to high prices, a mild winter, and a shift from gas to electricity (including coal-generated electricity).

Australia’s ballooning energy costs are entirely self-inflicted. They are caused by years of bowing to green ideology:

  • increasing taxes on coal and gas;
  • discrimination against coal and gas by requiring increasing quantities be incorporated in consumers’ supplies, this month amplified by obligating an additional 30 percent cut in emissions from the 215 firms that account for some 28 percent of electricity demand;
  • governmental legislative and policy impediments on new mines for coal and gas (as well as the embargo on nuclear) and by government-appointed judges’ rulings on new mine proposals;
  • government electricity purchasing that excludes supplies generated by coal or gas.

Australia, like many other countries, is dreaming up new restraints on the use of hydrocarbons. Among these are bans proposed (and already legislated in South Australia) on gas ovens.

The rationale for these bans is that, though gas has lower CO2 emissions than coal, an electricity supply comprising solar/wind generation is claimed to have no emissions.

Governments, panicked by the failure of their interventionist energy policies to bring about the low costs they and their advisers confidently projected, have now introduced price caps on coal and gas.

With no sense of irony, the objective is to maintain hydrocarbon generators that are being driven out of business by governments’ discriminatory energy policies.

The measures exemplify a Hayekian ‘road-to-serfdom’ process, whereby interventions require consequential additional measures.

Having seen policies preventing hydrocarbon developments bring shortages and ballooning prices, the Commonwealth implemented price caps.

Predictably, the price caps cause supply shortages in an industry that has been prevented from developing new supplies by government embargoes that have been in place for over a decade.

So, governments move on to further control involving specifying levels of production that they think are attainable.

Unsurprisingly, governments working with ‘high-level’ policy advisers are even botching price caps and associated domestic reserve processes.

Companies are unable to interpret the Commonwealth regulations delegated to the ACCC.

New South Wales, working with the Albanese government, is seeking to reserve 22 million tonnes of coal for local consumption.

This ex post facto imposition of reserve tonnage requirements will have damaging effects on the reputation of Australia for political certainty and by causing investors to place a premium on future costs, will lower future income levels.

Moreover, much of the planned coal to be reserved for domestic use is of a more valuable quality than that used in domestic power stations. Redirecting it to domestic uses would be wasteful in itself.

This would be compounded since burning this higher-quality coal in domestic power stations would likely cause damage unless other costs were incurred.

In addition, planning 22 million tonnes of coal to be redirected from exports is evidence of incompetence since even with the Liddell power station open (it is supposed to close in April) only 15 million tonnes were used last year.

And if Liddell’s output is replaced by that of the remaining four power stations (Bayswater, Vales Point, Eraring, and Mount Piper), their greater efficiency would mean even less coal required.

Imprisoned by the green policies they have set in train, instead of abandoning the embargoes and taxes favoring their preferred renewable sources, governments are doubling down on the restrictions.

Yet, each new layer of interventions proves to be inadequate and the mirage of low-cost reliable wind/solar electricity constantly recedes to the horizon.

Read more at Spectator AU

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Comments 2

  1. Colin Harkin says:
    3 years ago

    Alan is right. We only hear that renewables are much cheaper, but our power bills haven’t gone down and based on most commenting on power generation, prices are expected to rise further into 2023 and beyond.

    It would be possible for someone to demonstrate that renewables cost a lot more and if Alan is included to put it together, I will volunteer to make sure Ambanese and Bowen receive a copy.

    Apart from the fagility of a renewables system, using a low density fuel, a grid that supplies electricity to millions of Australians along the east coast must be reliable under all conditions and well into the future. So we need a durable network. One that will last. I have read that a new HELE coal power station will last at least 60 years. (some of our existing plants are around 50 now) Also, the system must function during weather extremes – hot and cold. Australia is certainly well known for our hot summers when the airconditioners are working their hardest.

    The season that’s being overlooked is winter. Most of us here in the Climate Change Dispatch know that more people die in winter from the cold than the number of people who die in summer due to heat. Cold weather places higher demand on electricity supplies because people must be able to stay warm. Medical professions have said that a safe in-home temperature is not less than 20 degrees C. Older people will prefer around 24C EG nursing homes and retirement facilites.

    Let us now consider what is happening with the current Grand Solar Minimum and that it is continuing. A number of highly qualified professionals have said that Earth is at the beginning of the next cool period, which could reach its lowest temperatures by around 2050. This means that the next 25 – 30 years are going to be a lot colder vs today. It does not mean the planet will be covered in snow and ice. Average temperatures don’t need to fall by much for life to become difficult for us humans.

    My No 1 concern with renewables is we are not planning for the unknown, be it weather or equipment failures on what would be a fragmented grid with many potential causes for failure. Australia cannot risk the damage a failed electricity system would inflict on people and our economy and let us not forget our national security.

    Reply
  2. Spurwing Plover says:
    3 years ago

    Renewibles will never replace Fossil Fuels no matter what you see or hear from the Eco-Freaks and the M.S. Media gutter dwellers

    Reply

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