Coalition doyen: Strayan Sun no good for power

From Nick Cater executive director of the Menzies Research Centre, the Coalition’s chief think tank:

Last week the Victorian government showed casual disregard for the findings of the Finkel review by committing itself to a renewable energy target of 40 per cent by 2025. It announced the construction of yet more solar farms and promised households their energy bills would be cut by 60c a week.

Victorian Energy, Environment and Climate Minister Lily D’Ambrosio, an arts graduate and former union organiser, tried her best to justify the ­ludicrous assertion. “We know for a fact that more supply, in a pure economics 101 sense, means cheaper prices and that’s what we’ll be delivering,” D’Ambrosio said.

Sadly, the rules of supply and demand have long ceased to operate in what the minister calls “a pure economics 101 sense”, and nowhere more so than in Victoria, where energy bills have more than doubled since the renewable craze began.

Solar, an intermittent form of energy, will do nothing to increase the supply of dispatchable electricity, which is the only kind that matters. The only reliable commodity likely to emerge from the new solar farm is profits. The operator’s share price will not be determined by its ability to satisfy a market — which it can’t — but by the value of the renewable ­energy certificates bestowed on it. The new economics 101 works like this: the higher the target, the higher the price of certificates, meaning the Victorian government’s virtue signalling suits speculative investors just fine.

It is somewhat less advantageous to households, however, where power bill trauma is a condition no longer confined to the poor.

As anyone with an ounce of research knows, Victorian power prices are a little lower than other states, largely owing to a privatised network that did not gouge customers to gold-plate their Wheat Bix. He goes on:

On the other side of the Nullarbor, the news from the green economy is grim. South Australia’s only plastics recycling factory is closing because of — you guessed it — the punishing price of electricity. The bottom has fallen out of the recyclables market, particularly glass, which is heavy on freight and energy-hungry. Councils insist we separate our rubbish only to hand it to contractors who crush the glass and turn it into landfill.

The fascination for the next clean green shiny thing is undiminished by such setbacks. Throw away the keys to the Prius; by 2030 we’ll all be driving electric cars, according to a widely reported British study. Let us suspend our natural disbelief and imagine that by then all the obstacles to this electrical paradise will have been achieved, and the billions of dollars governments in the US and Europe have bet on this so-far uneconomical transport solution will look like money well spent.

They will have cracked the battery problem, and will have sourced sufficient cobalt and other minerals to manufacture them at an affordable price. They will be light enough and large enough to run for at least 600km between charges, the distance motorists reasonably expect from their cars. Drivers without off-street parking — as high as 57 per cent in Britain — presumably will be able to plug in at the kerb, regardless of the reservations expressed by Britain’s national grid operator.

Ho, ho, hoah. All so very droll. And so very wrong.

Why do all of these Coalition skeptics doubt the market so much? Thanks to the competition and free enterprise unleashed by government pricing the externality of carbon pollution, battery technologies are booming.

You can already drive your Tesla 450kms. 600kms will be a cake walk.

For cobalt, USGS thinks we have 57 years of identified reserves, 200+ years of identified resources at current production rates. Australian has a very large 15% of them. Perhaps we might even benefit?!

The more important point is that batteries are not batteries. There are all sorts of them. And, in a market, if any one gets too expensive then others will rise:

Once grid-scale battery costs do fall below that of coal then the market will simply bid the latter goodbye (progressively over time) We see that as coming in about five years if present trends hold.

I mean, sheesh, Nick, what would you say if you were at the creation of anti-biotics, the aircraft, or the light globe? All had government involvement. Oh no, too expensive, never take off, too much gubmint in that, let that flesh rot, the horse is the pinnacle of transport, darkness is our friend, ho, ho, hoah!

Meanwhile, countries that have a clue set themselves up developing and owning the intellectual property.

That was Australia in the 1980s and 1990s when it dominated global solar tech and thanks to dills like Cater it now underpins two-thirds of global solar production in Germany and China.

Ho, ho, hoah!

Comments

  1. Once grid-scale battery costs do fall below that of coal then the market will simply bid the latter goodbye.
    Statement Kinda suggests that Batteries will deliver substantially more energy over their useful life than is required for their Manufacture and that’s without considering the net energy costs to make / install PV solar (or wind) the typical sources used to charge these Batteries or the losses encountered with Charge/Discharge cycles.
    At what price per kwh and cycle count do you believe batteries will be cheaper than coal generated electricity. Just a few short years ago coal fired generators were profitable at electricity generation costs of 3c/kwh why won’t we see this price again?. That’s a heck of a price hurdle to overcome with Solar/Battery.

      • PV solar costs more than 3c/kwh just to install, so unless you expect some major advances in technology like thin film PV with so called Solar paint / Solar wrap than there’s no way that generation plus storage costs will be less than 3c/kwh.
        PV+Battery wins out at the Retail level where our power companies hope to extract 30c to 50c/kwh. At these retail prices PV + Battery is a slam dunk winner for the households that have suitable sunny roof space. That still leaves about half the residential population and practically all commercial interests buying grid supplied electricity. the $64K question is, Can PV/Wind and Battery storage deliver power to this population cheaper than Coal?…that’s a real difficult ask and will take technology that we don’t currently have. Maybe Sodium batteries will win out maybe Nickie/Iron or maybe Zinc/Air truth is no one really knows how these technologies fail maybe Bromine flow batteries who knows…we just don’t have enough data to even guess at failure rates or cycle lifetimes. But as I said 3c/kwh is a heck of a hurdle to have to overcome.
        With Liddell power station closing in 2022 NSW will be fast approaching SA’s level of power insecurity and I’d be prepared to wager that the NSW gov’t steps in with a plan to create electricity certainty (probably through a state funded super critical generator). LNG wont do it, Solar wont do it, Wind wont do it and Batteries won’t do it not by that date.

    • Given that space and portability are not an issue for grid batteries, it’s easy to use batteries that last decades. Nickel Iron or Saltwater.

      When a battery lasts 50 years, the numbers should look very good compared to coal.

    • 3c/kWh from completely depreciated assets and minimal maintenance spending.

      Once you start to include maintenance bills (a $400M spend was required to keep Hazelwood open), you suddenly can’t produce energy quite as cheaply anymore.

      We don’t accept that argument from renewables, so why should we accept it from coal?

    • Manufacturing was desecrated for the great god of globalisation by incredibly cretinous minds. Since mid 80’s anyone with an idea had to beat a path out of here to see anything realized – & it’s still just as fucked or worse now!

      • AUS can put a 20% import tax on EU/India/Indonesia/RSA made cars. But no, the ALP is too stupid to.

      • They’ve been bending over & pushing lower for decades regarding tariffs & you blame one ‘team’? Now they’ve finally killed the car industry maybe they can start putting tariffs back up….. source of revenue….. but they’ll be Told not to by some ‘world authority’ with who’s interests at heart? It doesn’t matter what lies they present, or how much they pretend to care, they’re all fucked. All those arseholes are on the same side & it’s not Australia’s!!

      • Exactly. The reason we have no internet industry is because Telstra gouged everyone 25c/MB for data crossing their network in the late 90’s. It was impossible to bypass the monopoly provider.

        Hence, the Silicon Valley internet boom simply couldn’t happen here, and so we never got an internet industry.

      • “the ALP is too stupid to”

        Psst. Don’t tell anyone but the ALP hasn’t been the federal government since before Holden and Toyota manufacturing were shut down in Australia.

  2. This Brit often appears on Sky News to mouth anti-poor lines. “Oh, inequality is not high enough, oh, AUS will have hyperinflation if unemployment falls to 4%, oh, we should demonize the unemployed”.

    Um, Brit, you want unemployment to be higher than 10% but also want to demonize the unemployed?

    Brilliant. The ALP should want the unemployment rate we had in 2008 – 4%: The budget deficit was tiny then (what is it now with shrinking wages!) – and that is all the ALP should be concerned about.

    The ONP and Greens are polling at 10% each. Interesting times.

  3. HadronCollision

    I want whatever wheatbix Nicko is on, obviously substantially superior to my povvo weetbix(R)

  4. Victorian power prices are a little lower than other states, largely owing to a privatised network that did not gouge customers to gold-plate their Wheat Bix

    That’s why Victorian grid equipment is on average 20 years older than grid in NSW. Despite not investing much in the grid Victorian private utilities collect more revenue (per km of infrastructure) than utilities in NSW. Just wait for replacement work to start, prices are going to be much higher than in other places.

    The reason why electricity is cheaper in Victoria is the fact that due to its size, geography and density it’s cheaper to provide supply in Victoria than in NSW or QLD

  5. Jumping jack flash

    ” It announced the construction of yet more solar farms and promised households their energy bills would be cut by 60c a week.”

    hahaha!!
    oh, my sides!

    I currently pay almost $60 a week for my electricity.

  6. Did a bit about WA get truncated, or does he not know where the Nullarbor is? (Sorry, no subscription to the Australian to check)

  7. scootytootyMEMBER

    I can picture people scoffing at petrol powered cars when they first arrived saying they risked running out of fuel. Why bother with that stress when their trusty horse could just take a quick feed at the side of the road then be on its way.

    • That line about Henry Ford not asking focus groups what they want because they would have asked for a faster horse is a load of rubbish. Cars were already invented by Mr Benz. But cars were very expensive due to a patent on the petrol engine.

      And now cities like Copenhagen and Amsterdam get around on a bicycle anyway. Singapore and London have a congestion charge because they want people to come in via trains instead.

  8. Victorian power prices are a little lower than other states, largely owing to a privatised network that did not gouge customers

    Then why are they only a “little” lower in Victoria?

    Sounds like a “little and largely” show btw.