Antinuclear

We don’t need nuclear power – the path to cheaper electricity is renewables

The Australia Institute, September 22, 2024 by Matt Saunders

The last thing Australia energy market needs is nuclear power. The data is clear – more renewables will lead to cheaper electricity.

Tomorrow the opposition leader, Peter Dutton, is discussing his plans to introduce nuclear power with anti-renewable energy commentator, Chris Uhlmann. No doubt we will hear the same claims about renewable energy causing electricity prices to be high and the need for nuclear power to keep prices down that both men have said in the past.

And just as was the case in the past, such claims will again be wrong.

The increased use of renewables in supplying electricity is not the cause of higher retail electricity prices – and it is clear that more renewables will lead to lower prices.

Research and data from the Australian Competition and Consumer Commission (ACCC), the Australian Energy Market Operator (AEMO), the Australian Energy Regulator (AER) and the CSIRO all make it abundantly clear that renewables are the cheapest form of electricity, and that the high cost of energy is driven by the cost of gas and coal produced electricity.

It is not surprising that people can be misled about the cause of electricity prices. Australia’s National Electricity Market (NEM) is a complex market stretching to 1,925 pages of rules and regulations such that any explanation of price determination will be greatly simplified.

So let us set out the two key issues to understanding retail electricity prices:

1.      The cost of generating electricity (the wholesale price) is a surprisingly small component of the many costs that contribute to household electricity prices.

2.      The wholesale price is rarely determined by the costs of generating electricity from wind and solar. Wholesale prices are most often determined by other forms of power generation, mainly fossil fuel sources, that are more expensive than most renewable generation.

According to the ACCC the wholesale price makes up only 33% of retail electricity prices. The other components that make up the retail price of electricity include network costs (transmission and distribution), retail costs and margins, and environmental costs

If wholesale electricity prices were to double then retail prices would increase a maximum of only 33% per cent. According to earlier ACCC research about two thirds of the increase in electricity prices over the last ten years caused the increase in transmission costs.

Renewables Do NOT SET Wholesale prices

Perhaps the most confusing aspect of the NEM is how prices are set (so much so that websites like Wattclarity can devote themselves to disentangling what is going on!)………………………………………………………………………

 the best way to reduce electricity prices is to:

• reduce demand for electricity through energy savings measures that reduces the periods when the wholesale price is set by expensive fossil-fuel generation such as gas.
• increase production of renewables – so that it can more regularly be the price setter in the system.

Despite what you might hear tomorrow, or from others, the key to lower energy prices is not nuclear, let alone more gas, but much, much more renewable energy. While the energy market continues to rely on gas and coal, Australians will continue to pay higher prices for their electricity, and if nuclear were ever to come into the system, the price would jump even higher.  https://australiainstitute.org.au/post/we-dont-need-nuclear-power-the-path-to-cheaper-electricity-is-renewables/

September 23, 2024 - Posted by Christina Macpherson | energy