Engineers warn of bill shock under green energy surge
Electricity bills will soar and gas and coal-fired power stations will close if the share of wind and solar generation increases dramatically, engineers have warned after analysing the nation’s energy supply.
The analysis casts doubt on Labor’s claim that a 50 per cent renewable energy target — the centrepiece of the opposition’s climate change policy — would reduce electricity prices.
It found bills were likely to soar 84 per cent, or about $1400 a year, for the typical household, if wind and solar power supplied 55 per cent of the national electricity market.
The analysis by a group of veteran engineers — written and funded by five mechanical, chemical, electrical and nuclear engineers, with decades of experience in the power industry — was sent to premiers, federal cabinet ministers and shadow cabinet late last month.
It contrasted the costs of supplying electricity in the national electricity market under different mixes of generation. This included the Australian Energy Market Operator forecast for the year 2040 of 65 per cent renewable energy including hydro, as well as five other scenarios, including replacing coal-fired or gas generation with nuclear power.
The AEMO scenario, the closest to Labor’s policy, would lead to retail electricity prices rising by 84 per cent to 39c per kilowatt-hour — adding $1374 to the average household’s 2017 electricity bill based on the competition regulator’s June report into the electricity market.
Robert Barr, an electrical engineer and academic at University of Wollongong, said “in practical terms what would happen is the coal and open-cycle gas stations would go broke long before we reached this situation”.
Co-author Barry Murphy, former managing director and chairman of Caltex Australia, said the scenarios with high levels of renewable energy could force coal-fired power stations to be turned on and off at irregular intervals, or spin their turbines uselessly, “which isn’t economic so they would shut down”.
Labor in government would ensure at least 50 per cent of the nation’s electricity was sourced from renewable energy by 2030.
The new figures emerged as Scott Morrison moved to shift the emphasis of Coalition energy policy away from reducing emissions to cutting prices and shoring up reliability. In Cairns yesterday, the Prime Minister criticised NSW and Victorian governments for restricting gas exploration.
“We have to be prepared to use all the resources we have available to get electricity prices down,” he said. “They’re achieving that in Texas while at the same time reducing their dependency, because of the abundance of gas reserves there, on other fossil fuels.”
Mr Morrison noted that electricity prices were a third lower in the US state than in Queensland.
The analysis takes aim at “technology agnosticism” that ignores the “complexities of power system engineering”.
“Looking at the total cost of particular forms of energy in isolation is sensible only if you’re going to rely on that form of energy alone, but for the electricity market, it’s the total system costs that matters,” Mr Murphy said.
The study recommends ceasing subsidies for renewable energy and ending the national ban on nuclear energy. “The fact is technology matters, and poor and poorly informed choices on the NEM can lead to expensive mistakes that could bedevil our prosperity,” it found.
The AEMO scenario of 65 per cent renewable energy by 2040 would reduce emissions at a cost of $365 a tonne of carbon dioxide, the study estimated. Replacing coal-fired power generation with nuclear power would reduce emissions by a far greater amount at an abatement cost of $27.50 a tonne. The Gillard government’s ill-fated carbon tax envisaged a tax of $29 a tonne.
“Even if you allow for the reductions in the cost of batteries, etc, it doesn’t make much difference to the total cost because of the extra transmission costs,” Dr Barr said. “If we put a whole lot of wind farms into the system, we need to spend a lot of money on the transmission network for power that is intermittent.”
The AEMO forecast would require more than a 40-fold increase in the solar capacity and around a tripling of the number of wind turbines. “That’s a total of 62,000MW of unreliable, intermittent, weather-dependent generating capacity, with a lot situated a long way from points of high consumption,” Mr Murphy said.
In his first speech as Energy Minister last week, Angus Taylor all but dropped the national energy guarantee, the Turnbull government’s proposal that included promises to meet emissions reductions agreed to in the Paris agreement.
The new analysis calls for a bipartisan agreement to end the ban on nuclear energy — despite ongoing uranium exports — that has prevailed since 1998.
“Countries like Germany can experiment with high levels of renewables because they can always import nuclear power from France or Czech Republic when there isn’t enough wind or solar energy, but we’re on our own,” Mr Murphy said.
The authors said much of the existing analysis rested on arbitrary assumptions that the cost of renewable energy would fall in the future rather than “actual costs and actual use”.
“Speculating about future costs 22 years hence is futile: where will gas prices go, or recent developments might reduce nuclear costs, who knows for sure,” Mr Murphy said.
“The South Koreans would jump at the opportunity to help us with building nuclear power stations.”
Dr Barr said: “I don’t think politicians realise how much damage is being done to industry.”