Antinuclear

Studies such as that conducted by the CSIRO suggest that nearly half of Australia’s households could cut themselves off from the grid if the networks and their government owners get too greedy and resist, rather than adopt, new technologies and new ways of doing business.

Why Tony Abbott may spark an Australian energy revolution  REneweconomy, By Giles Parkinson on 19 December 2013 The conservative campaign against Australia’s Renewable Energy Target (RET) reached the highest echelons of public office this week, when Prime Minister Tony Abbott joined the throng blaming renewable energy for rising electricity bills.

We’ve got to accept … that in the changed circumstances of today, the renewable energy target is causing pretty significant price pressures in the system,” the Guardian quoted him as saying. “Cheap energy ought to be one of our comparative advantages …. I mean, this country ought to be an affordable-energy superpower.”http://reneweconomy.com.au/2013/why-tony-abbott-may-spark-an-australian-energy-revolution-64382

I hate to break the news to you, great leader, but there is no longer any such thing as cheap fossil fuel energy in Australia – the gas export boom and greedy network operators have put paid to that. Sure, you can shovel coal into a brown coal generator in the Latrobe Valley for $4 a tonne, but years of gold-plating in the networks and the profit margins for retailers who package up the bills means that those electrons cannot be delivered to suburban households for much less than the cost of a diesel generator at a remote mine. The grid is failing its purpose.

Mostly, the marginal cost of electricity generation is set not by brown coal but by higher price fuels, and particularly the price of gas-fired generators. Australians this week got a taste of what Origin Energy CEO Grant King meant when he said, earlier this year, that “there is no such thing as cheap gas.”

Queensland households were told this week that their electricity bills were going to rise by another 13.5 per cent in 2014/15. Like Abbott, the conservative state government blamed all things carbon and green energy, particularly solar.

But the biggest single contributor to the increased bills was a rise in gas prices, caused by the massive LNG boom in Queensland. Just the annual rise in bills caused by this surging gas price was more than the total cost of the renewable energy target, which in Queensland accounts for less than 2 per cent of the electricity bill. (In other states it is barely more than 1 per cent). Ironically, the rise in the gas component would have been greater were it not for the dampening effect on wholesale prices by wind and solar energy.

As sure as night follows day, those rising gas prices will flow through to consumers in other states, and will accelerate as gas prices double, and possibly triple, as many analysts suggest, once the LNG export market gets into full swing. Australia is trying to make a motza by selling its huge gas reserves to Japan, China and anyone else who will take it. And Australian consumers will have to pay the same price.

Abbott says that he will chair a panel that will look at how to “significantly” lower the price of electricity for consumers. He will quickly find out that the only option is to cut the value (and so the returns and the bill component) of network assets, a decision that his energy minister Ian MacFarlane’s proposed energy white paper appears to have already ruled out. (It would, after all, cause wails of protest from the conservative governments that own these assets in Queensland, NSW and WA).

There is growing evidence, however, that Australian consumers will not be easily conned by politicians and their advisors about the cost of energy, and renewables in particular. It was interesting to note that, even when News Ltd meekly repeated Newman’s renewables attack, it was shouted down by the majority of comments on their website, who called it for the nonsense it is…….

Studies such as that conducted by the CSIRO suggest that nearly half of Australia’s households could cut themselves off from the grid if the networks and their government owners get too greedy and resist, rather than adopt, new technologies and new ways of doing business.

Sadly, the policy makers and asset owners are being egged on by ideologues and ageing die-hards, who describe such scenarios painted by the CSIRO as “science fiction”, and who are convinced that future energy grids will look like they did 50 years ago, and whose only motivation appears to protect short-term business interests.

UBS this week made it clear what’s at stake for incumbent utilities in Australia, Europe and north America, and how they face a “perfect storm” from renewables and storage. It recommended the incumbents were better off embracing rather than resisting new technology, and that includes renewables, both large-scale and small-scale……..

Reports such as those from UBS, the CSIRO, and any number of international studies, including by former US energies secretaries, insist that only by changing and embracing cheaper renewables will current networks and generators survive, and avoid passing massive sunk costs on to consumers. Managing this will be the real test of Abbott’s review. It requires more than an ideological and self-interested rant against green energy.http://reneweconomy.com.au/2013/why-tony-abbott-may-spark-an-australian-energy-revolution-64382