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Power failure: some inconvenient renewable energy realities

By Geoff Carmody - posted Tuesday, 30 January 2018

Some argue lower-emissions renewables like solar and wind are cheaper than fossil fuels like coal or gas. Really? Great news if it were true. Subsidies could stop. The market would switch to renewables unaided.

But these same renewables supporters won't let go of the subsidy teat. Why do they still want others to subsidise renewables? Because they know they're really not cheaper after all? They're right. They aren't.

It's worse. Such are the mixed policy signals and general uncertainty engendered by politicians that investment in dispatchable supply is under threat. That points to less affordability and reliability in future.


Politicians chose – and continue to choose – the costliest emissions reduction option

The focus on Australia's tiny contribution to reducing global anthropogenic emissions is worse. Politicians chose the costliest emissions reduction option: renewable energy targets (RETs). They still do.

Economically, this was the worst choice. Because costs are rising and reliability is falling, this will prove a poor choice politically, too.

Adding to costs, politicians ruled out some gas and all nuclear resources for lower-emissions power.

Simple physics shows renewables (solar, wind and hydro) are:

  • Subject to weather, and water supplies, for power generation.
  • Are thus uncertain and intermittent generators, not continuously reliable dispatchable power sources.
  • Have low energy densities: large areas, volumes and weight are needed to generate modest power.
  • As their share in power generation rises, they raise total costs of renewables/fossil fuel blends a lot.
  • The Australian contribution to lower global emissions from RETs has been/will be insignificant.

Politicians ignored flow-on effects

Adding to power failure, being one-eyed on emissions, politicians ignored side effects. Modern power systems are interdependent. Increasing the renewables generation bit affects how other bits perform.


This is crucial for the back-up power needed for reliability. Back-up capacity requirements (extra generation plus storage) increase dramatically as the share of renewables in total power generation rises.

We have two choices for back-up power: fossil fuel or even more renewables.

NEM rules require all generators to supply power at lowest cost. The rules mean fossil fuels can't do so for much of the time, adding to their power dispatch costs when they can. But subsidised renewables require multiple generation capacity plus storage (batteries, etc). Multiplied capacity for the same power costs a lot.

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This is an edited version of Geoff Carmody's 5 January 2018 booklet entitled "POWER FAILURE: affordable reliable renewables? Some inconvenient realities".

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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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