Article by Graham Lloyd, courtesy of The Australian.
13.03.2025
Power prices are going up another 9 per cent. The Energy Minister has blamed increased breakdowns at coal fired generators for the price rise.
“Not a day in the last two years have we had a coal-fired power station not break down somewhere in Australia,” Bowen said on Thursday.
“Not talking about planned maintenance, I’m talking about unexpected breakdowns which then see energy prices spike.
The Albanese government’s intention was to replace that power with “more reliable, cleaner, cheaper renewable energy”, he added.
There is a lot to unpack in Bowen’s excuses to hide the fact that power price decreases promised by the Albanese government in opposition are a thing of the past.
Firstly, coal-fired generation plants have been rendered unreliable and uneconomic because of government policy that favours highly subsidised renewable energy plants that cannot deliver power on demand.
The price paid to high-cost options to meet the peak demand, including batteries, is paid to all bidders in the market, lifting prices no matter how cheap renewable energy production might be.
Bowen’s solution is that we must build more renewable energy plants. For doubters, it is a case of Albert Einstein’s observation that insanity is doing the same thing over and over again and expecting different results.
The fact is that, despite the billions of dollars spent on renewable energy projects to date, fossil-fuel generation still supplies the majority share of electricity demand.
Ironically, a glut of solar generation at the middle of the day is of growing concern to energy market regulators because prices are too low for those in the market to make a profit. At these times, coal and gas are shut out of the system and solar producers cannibalise themselves in a saturated market in a way that is not sustainable.
Bowen’s claims that unreliable coal generation is the problem does not hold up to scrutiny. Announcing the default market offer draft determination on Thursday The Australian Energy Regulator said wholesale market and network costs, the two largest components of DMO prices, had led to increases of 2 per cent to 12 per cent for the majority of customers.
“Average wholesale market spot prices increased across 2024, impacted by factors such as high demand, coal generator and network outages, and low solar and wind output that drove high price events across DMO regions,” the regulator said.
“These high price events have also affected the price of wholesale electricity contracts for 2025-26”.
This means the reality of high price events due to low solar and wind output have been factored into contract prices, ensuring a structural increase in prices.
Building more renewables and spending billions of dollars on transmission lines that receive a guaranteed return on investment is not the smart solution
The twisted logic of Chris Bowen’s renewable energy obsession is back on full display.