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Paying twice, and more – why renewables are a luxury good

By Graham Young - posted Thursday, 21 September 2017


“Renewables are cheaper” is the latest three word slogan to slink into political discourse.

And if they’re “cheaper”, the argument goes, then the cure for high electricity prices is more renewables.

But renewables are in fact more expensive, and if you want to cure high prices, the last thing you would do is dose up on the problem.

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The cheapness claim is based on pricing sleight-of-hand: the boosters give you the price of the product, minus all the things you need to make it work.

Not that renewables don’t have their place, but when they are added to our electricity network they are the primary culprit for high prices.

Around the world there is a statistically significant relationship between the penetration of renewables and the price of electricity.

Denmark and Germany have the highest power prices and the greatest penetration of renewables. Hungary, US and Croatia the lowest, and the least penetration of renewables.

In fact, renewable generators are so expensive taxpayers have to pay them a bribe, called a “large-scale generation certificate” (LGC)

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An LGC represents a megawatt hour of renewable energy production and in August the spot price was around $85 per MWh. Problem is that the spot price of a MWh of electricity is $79, six dollars less.

So the renewable energy generator gets paid more, just for turning-up, than a conventional generator receives for pumping out power all day.

Then there is their unreliability. Wind and solar only work when it is windy and sunny, and this rarely happens at periods of peak demand, and doesn’t happen all day long.

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This article was first published in the Courier Mail.



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About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

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