Electricity Price Shock

Electricity-bill-shock-energy-cost

The brave new world of energy poverty is about to hit one of the most prosperous and energy-rich nations in the world. With electricity prices jumping by about 20% next month we are in for a tough time economically and financially. And of course the burden will as always fall hardest on the poor.

As Jo Nova points out this is how the climate change scare mongering policy is working out:

Many are blaming a “failure of energy policy”, but miss the point entirely — this is not failure but success. The aim of those energy policies was to close down coal fired stations and it worked. The Renewable Energy Target, the carbon tax, and other anti “carbon” policies did what they were supposed to do and forced the closure of both the Port Augusta power stations and Hazelwood (which supplied as much as 5% of Australia’s electricity). That left us dependent on gas instead of having the flexibility to ignore the current gas price outlandish cost.

With politicians and Chief Scientist Finkel colluding to drive up the price of electricity by forcing more renewables on us, there is no way that electricity prices are going to stabilise or fall.

At the moment, Government policy requires that retailers must take all wind and solar available at whatever price is set. Coal generators then get the left overs, but here is the rub- they cannot quickly slow down their systems (or speed them up for that matter) and coal generators run most efficiently at close to maximum power. Ironically all those wind turbines and solar cells do little to reduce the CO2 production at these plants.

So the operators of coal generators have to basically burn more coal than they optimally need to, take the price set by the Energy Market Operator and provide the “left overs” that wind and solar cannot supply on any day. Despite all the hidden subsidies in the electrical supply market, wind costs about $80 per Megawatt hour, solar $100 MWh and the wholesale price for coal is about $20 MWh.

The system is set up to destroy our cheapest form of energy generation in the long term. There will be no  more coal powered generators constructed because the current policy makes them unviable The only reason the we have any coal powered generators left in Australia is that the costs of constructing them were paid off decades ago.

Throw into that horrible mix the requirement of the Finkel review that all renewable systems must include batteries, that must surely double the cost of power generated that way- great for energy security but lousy for affordability. And then require all operators to give three years notice before exiting the industry- you have to maintain a loss-making business for three years- what planet are these people living on?

Meanwhile all of that heavy industry that used to be the life blood of Australia’s economy will go to places where electricity is cheaper- India and China most likely. Ironically the cheaper electricity in those two countries is partially fuelled by Australian coal. And of course under the Paris agreement those two countries get a free pass until 2030 from any reductions in their carbon emissions.

Australia is either being run by lunatics or traitors. I’m not sure which.

 

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