It’s Time To Concentrate On Keeping The Lights On

Written by:
31 May 2023
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In this article, Scott Hargreaves contextualises and disseminates the findings of the IPA’s research into electricity prices, conducted as part of the IPA’s Net Zero Program. The IPA’s Net Zero Program aims to research the various ways net zero policies negatively affect Australia’s energy security, national security capabilities, and household electricity prices.

With the recent closure of the Liddell Power Station, our leaders must realise it is time to hit the pause button on our headlong rush towards reliance on greater renewable energy.

As occurred when the Hazelwood Power Station closed in Victoria, the removal of 10 per cent of the power supply of NSW can only mean a greater risk of higher electricity prices and more frequent calls on backup generation.

Just last week, energy authorities announced that already record high household energy bills are set to rise by between 31 and 25 per cent next year alone, depending on where you are in the country.

There is the very real prospect that this winter many Australians will be faced with the hard reality of having to choose whether to heat their homes or eat.

In NSW, and across Australia more generally, it is time for elected officials to do their job and focus on energy security and affordability – keeping the lights on and ensuring the remaining baseload power stations continue to operate for as long as is necessary.

This will mean pushing out closure dates well beyond those promised in the rush to meet the Federal Government’s unrealistic plans for net zero and increased renewable energy.

Fully 40 per cent of the market’s current generation is slated to close by 2035, which would be disastrous.

The announcement earlier this year by the new owners of the Eraring Power Station that they are prepared to discuss keeping it operating beyond its artificially early closing date of 2025 should be seized upon by the Minns Government.

It is a credit to the Premier and his Energy Minister that both have made positive murmurings about the need to keep Eraring going to keep the lights on. But this sentiment needs to be acted upon without delay.

While previous closures of baseload power stations in NSW and South Australia were effectively offset by the shutdown of energy intensive aluminium smelters, and by the shutdown of the car industry, the closure of Hazelwood in May 2017 provided an insight into what awaits us all.

Wholesale prices jumped more than 70 per cent. Over the following three years, the average wholesale electricity price was 135 per cent higher than the average over the previous decade. All the while, threats to system reliability became more acute.

This is despite the fact that between 2011 and 2021, wind turbine capacity in Australia more than tripled and solar capacity increased six-fold.

But what is occurring in Australia has already been tried, and has failed, elsewhere. Germany, for instance, offers a sobering lesson for Australia on the risks of moving towards an ever higher level of dependence on renewable energy.

Its electricity costs 50 per cent more than France (where 70 per cent of their power is nuclear generated) yet produces eight times the CO2 emissions.

This experience shows why the closure of Liddell should mark a line in the sand for the closure of baseload power plants, yet these critical lessons are being ignored by Australian policy makers.

Advocates for renewables like to recite that the wind and sunshine are free but the massive solar farms and wind turbines are not.

They also impose massive costs on the rest of the system, requiring thousands of kilometres of additional transmission lines and backup generation.

Remaining baseload generators are harmed by being forced to ramp up and ramp down to compensate for variable renewable energy. Consumers pay for all that.

There is no feasible or affordable combination of intermittent renewables, batteries, pumped hydro and grid extensions that can substitute for reliable and affordable baseload power stations, be they provided by coal or nuclear.

The inconvenient truth is that no major industrialised country has successfully decarbonised its electricity sector through large-scale investment in renewable energy.

Interestingly, the major market response from the closure of Liddell has been for the remaining coal-fired generators to increase their production to the limits of their capacity, with solar and wind incapable of plugging the gap.

This shows we cannot allow the remaining generators to close.

The refusal of the Federal Government to consider nuclear energy as an option means that it has, in effect, placed its obsession with renewable energy above the stated policy objective of reducing emissions.

Given this confused stance, it is legitimate now to prioritise energy security as the overriding objective – providing a stable national electricity grid and removing the source of upward pressure on energy prices.

In the short term, the Minns Government should pursue every means necessary to ensure that Eraring does not close in 2025 and that no other closures occur until like-for-like baseload replacements are brought online.

The cold hard truth is that Australia now needs NSW to keep the lights on.

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