$1.1 billion for two days of power

The next time you hear the well-worn line that power from the sun or wind is “free” think of the whopping bill that Victoria and South Australia faced last week to try and power their renewable-dependant States when demand soared – over $1 billion for just 48 hours.

While Queenslanders were paying spot electricity prices of $105.63 per megawatt-hour and NSW $109, Victorians reached an astonishing $14,309-a-megawatt hour limit, while South Australia was paying $14,500.

But the fact is, we all end up paying as these costs are passed onto energy users. 

The Australian reports:

“Victoria and South Australia copped a combined $1.1 billion energy cost hit in less than 48 hours last week as extreme weather conditions delivered windfall gains to energy generators and drove upward pressure on power prices for households and businesses….

Energy experts told The Australian that 20-year high average spot prices of more than $3300/MWh, which shot to $14,500/MWh for about five hours, would ultimately be passed onto energy users as generators and retailers negotiated new contracts and hedging arrangements…

“At the end of the day, however, no matter which generators ­pocket the cash, it will be the energy user collectively who ends up footing the bill,” WattClarity analyst Paul McArdle said.

Energy users will also foot the bill for the buyback of power from industrial users, after the market operator AEMO invoked its ­Reliability and Emergency ­Reserve Trader powers.”

Both the South Australian and Victorian Governments have presided over the closure of coal-fired power stations as they lauded policies promoting increased renewable energy sources.  So how did renewables fare during the crisis last week?

“At 4.50pm on January 24, with a demand of 9221MW in Victoria, renewables were supplying 595MW from a total wind power capacity of 1740MW. In South Australia from a demand of 2954MW, wind and solar were contributing 303MW from a total wind power capacity of 1929MW.”

Renewables are unreliables – and as last week’s experienced showed – it can be extremely costly when our national power grid can’t meet demand.

Federal Labor’s policy of 50% renewables by 2030 will put even more pressure on the Australian energy supply market – and not just during peak times in summer, but on a more frequent basis. It will mean that the crisis in South Australia and Victoria will be replicated across the country – with load-shedding, dangerous blackouts and businesses forced to halt production.

Reliable and affordable energy supply is critical to our economy and our way of life.  Australia is the world’s largest exporter of coal – yet, ironically, our energy supply is frequently pushed to breaking point because we are shutting down reliable coal-fired power plants in an ever-increasing ideological push toward more renewable energy sources.

Renewables certainly have a place in the energy market – but at the moment they cannot provide reliable base-load power. We must stop forcing prices up and creating a crisis in reliable supply.