Prices for power are going up rapidly. The price of wholesale power has quadrupled in the last few months with gas, coal oil prices rising sharply as world demand rises and protracted war in Ukraine rages on.
The new Federal Government says renewable power must come on line sooner to fill in the shortfall in Australia’s current energy needs. Not only that but we need a great deal more of it to reach the net zero target both sides of politics have committed to. The problem remains however that just how we get to this admirable target is not clear and indeed at this point it simply is impossible with current technologies.
Let’s examine what Governments can do now to keep the lights on and industry continuing to grow and produce jobs and income and maintain living standards.
Firstly, there must be more investment in renewables of course and the new Federal Government is committed to this. But what investment. The grid needs substantial upgrading over coming years to meet the enormous challenges it will faces in getting power to where it is needed. Both State and Federal governments will need to find the funds to help pay for this. Make no mistake we are talking 10s of billions to do this.
Solar and wind farms need to be built to harness the renewable energy and most importantly huge storage capability needs to put in place to cater for both night time power when there is no sun and to back up wind power when there is little breeze to power the turbines. In order to bring truly large-scale solar meeting base load demand to market this expenditure is essential.
Clearly industry is prepared to pay for large parts of these costs but only if there is a guaranteed framework in which they can operate. This has not been the case for decades and the Governments along with grid operators have not improved the infrastructure to meet the expectations of both those investing in power production and Australian consumers who want and need reasonably priced energy.
Governments face a raft of unpalatable choices. Coal is the cheapest form of power, is in abundance in Australia, but clearly more polluting than other forms of energy.
And what is reasonably priced energy?
Today most home owners are paying around 20 to 25 cents per kWh and by world standards this is reasonably priced power. But the cost of a move away from cheap coal and gas power must be meet and no doubt this cost will be passed to consumers in the form of higher power prices.
But how high? Twice the cost is unreasonable and would have a major impact in the economy with lost jobs, lower living standards and an economic cost the country cannot and should not bear. It would be unsustainable for the economy and many consumers. It would be hugely unpalatable for voters and if it happens Governments will pay a hefty price at the ballot box and rightly so.
But Governments face a raft of unpalatable choices. Coal is the cheapest form of power, is in abundance in Australia, but clearly more polluting than other forms of energy. Gas is also in huge deposits in Australia, is less polluting than coal but is still a fossil fuel with around 50% of the emissions of coal. Most gas in Australia is off shore gas and there are significant costs to be born bring it to market on the east coast in particular.
Another alternative is nuclear power. Very clean power in terms of emissions but the viability of nuclear power stations, given the advances in this technology, needs to be carefully assessed and the fear factor of nuclear disaster put into real perspective rather than treated hysterically as it has in the past.
Finally renewable power and storage which is seen as the great saviour today but has its own very real problems including longevity, costs, maintenance and most importantly the intermittent nature of most forms of renewables and the resultant issues of supplying base load power.
The cost of storage is possibly the most significant problem with renewables. Today much has been made of battery storage by various State governments. However, the actual amount of storage available in the market is tiny when considered in relation to the overall need of Australia’s grid. Most storage installed today, cycled once per day, would last about 10 tears and then it would need replacing
This means the actual cost of energy stored and retrieved is around 17 cents or more per kWh. Given the actual cost of supplying the energy has to taken into account, the transmission of this energy, billing maintenance and profit it’s hard to see the costs of energy to most users being under 40 cents per kWh or about double what it is today. There is technology that reduces the cost of battery storage well below 30% of current costs but it is more expensive upfront and short-sighted government policy has left this technology on the back burner.
One thing is clear. Energy costs are rising and consumers face higher and higher charges. Solar with long lasting batteries ((20 years plus) is the best long-term solution on a home and in business. It is not only viable but advisable to minimise the impact of both current electricity prices along with future rises in this cost. It was a great investment over the last few years but now it is imperative or you remain at the mercy of the power providers who themselves face enormous challenges into the future.
By Dawson Johns
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