Australian news, and some related international items

Chief Scientist Dr Alan Finkel to report on Australia’s energy options

Finkel’s fine line through Australia’s testy power politics By Giles Parkinson on 5 June 2017  It now seems certain that chief scientist Dr Alan Finkel will deliver a range of options for government policy makers when presenting his review to the COAG ministers and leaders this Friday.

There will be mention of the emissions intensity scheme, but because a carbon price of any form is not on the menu of this Coalition government, other more “palatable” alternatives will be on offer, including a low emissions target, an option on pairing new renewables with storage or back-up and, possibly, a pathway for regulation.

All have their merits. But as in any policy, the devil will be in the detail and the way these schemes are designed – for the future or the past. And it is going to be interesting to see how Finkel presents his case. Will it be his view of what should be done? Or will it be focused on what can be managed in the current political environment?

Certainly, there is a growing chorus among politicians and the mainstream media that something should be done. But there is not a lot of thought into what these policies can actually achieve, even though they should obviously seek to meet climate targets and manage the energy transition efficiently and at lowest cost.

 And already we are running into problems. Two significant reports from three leading institutions were delivered to the Australian government last Friday that show that wind and solar is the cheapest avenue to a decarbonised grid.

The problem was that none of the institutions could bring themselves to actually say it: that wind and solar are by far cheaper than coal and gas and any “other low-carbon technologies”.

The Australian Energy Markets Commission and the Climate Change Authority reinforced their support for an emissions intensity scheme (EIS), and only saw a low emissions target (LET) as a second-best measure. Once again, those recommendations simply reinforce preconceived ideas, and lousy modelling.

Both institutions came out strongly in support of an EIS last year, but as we pointed out at the time,

here and here, these positions were based on hopelessly pessimistic modelling inputs on the cost of solar and wind.

The AEMC said, then, that an EIS would be $15 billion cheaper for consumers than other options, but this was based on ridiculous assumptions, on the cost of solar energy in particular, as we highlighted in this story: Australia’s energy rule-maker hasn’t a clue about renewable energy.

Even a minor adjustment to their absurdly high forecast of solar costs showed that a high renewable energy target would deliver $15 billion in cost savings to consumers. But that conclusion, included in their own report, wasn’t highlighted.

If realistic costs of renewables and gas had been used, then it is safe to assume that the results would have shown that a high renewables policy would deliver significantly more savings than a gas-focused policy.

The tragedy is that the AEMC and CCA have now released data that confirms that those modelling assumptions were completely out of whack, but they have done nothing about it.

The independent assessment from the Centre of International Economics confirms RenewEconomy‘s observations that their modelling for both the AEMC and the CCA report used renewable energy prices (way too high) and gas prices (way too low) that were well out of the ball park.

June 7, 2017 - Posted by | General News

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