Renewable energy reduces power prices by more than cost of subsidies, study finds

From The ABC

Renewable energy reduces power prices by more than cost of subsidies, study finds

By Liz Hobday

Posted Thu at 3:06pmThu 6 Dec 2018, 3:06pm

artists depiction of the Port Augusta wind farm, multiple turbines from a distance Photo: Solar and wind power reduced wholesale prices by about 30 per cent, the study found. (Supplied: Tadgh Cullen (DP Energy))

Related Story: Renewables ‘heading for 80 per cent of electricity market by 2030’

Related Story: Labor to revive National Energy Guarantee ‘even if it’s not the best’

A landmark study has shown that renewable energy has reduced electricity prices by far more than the subsidies paid for it.

Key points:

  • The study’s lead author said the research proved renewables were the key to lower power prices
  • Researchers found South Australians were paying, on average, the highest electricity prices in the world
  • Gas-fired power is pushing prices higher, while wind and solar are placing downward pressure on prices, the study found

The independent study, by the Victoria Energy Policy Centre, focused on the South Australian electricity market and confirmed households in the state have on average the highest electricity prices in the world.

The report comes as the Federal Government attempts to develop a fresh energy policy after the collapse of the National Energy Guarantee earlier this year.

The Government hopes to pass new laws to force energy companies — especially retailers — to offer customers cheaper electricity.

The study’s lead author, Associate Professor Bruce Mountain, said the research provided verifiable evidence that renewables drive down prices.

“I think in the current climate it’s critically important,” he said.

“We have an evidence base that puts this issue on the table for people to engage with.

“What our study finds unequivocally is the route to lower prices lies with cleaner sources.”

Wind and solar reduce prices by more than subsidies

The study used computer modelling to crunch electricity price data from the past five years.

It sampled wholesale market prices every half hour from 2013 to 2018, and calculated the factors that led to those prices.

It found that even though South Australians were paying the highest average bills in the world, wind and solar generation in South Australia actually brought wholesale prices down — and by far more than the subsidies paid for them.

It found that in the 2017–18 financial year, renewables reduced wholesale prices by an average of about 30 per cent, or about $37 per megawatt hour, mostly due to wind generation.

This was far more than the cost of the subsidies paid for them, which the study calculated was $11 per megawatt hour of electricity produced.

Renewable generators have been able to sell electricity on the wholesale market very cheaply, because the ongoing cost of producing electricity from wind and solar is effectively zero.

These cheap offers from renewable generators on the wholesale market displace more expensive offers from gas generators, effectively reducing prices for the entire market.

A graph showing how gas pushes South Australia's wholesale electricity prices higher, while wind and solar pull prices down. Infographic: In 2018, gas pushed South Australia’s wholesale prices higher, while wind and solar pulled prices down. (Supplied: Victoria Energy Policy Centre)

But gas generation drives up prices

But the study found the reduction in wholesale prices thanks to renewables has not been enough to offset the high price of gas.

The closure of the Northern and Playford coal-fired power stations has left South Australia reliant on expensive generation from gas-fired power stations, which are needed especially when wind and solar are not producing energy.

The study found electricity sourced from gas pushed prices higher by about 40 per cent on average in the 2017–18 financial year, or $56 per megawatt hour of electricity.

“Every additional unit of production you get from the wind or from the sun, that displaces gas generation, and brings your price down,” Associate Professor Mountain said.

“As long as you have so much gas generation with such inefficient and old gas plants … your prices will be high.”

Bruce Mountain, energy economist Photo: Bruce Mountain says the research comes at a critical moment in the national debate on energy. (ABC News)

The Grattan Institute’s energy program director, Tony Wood, said the study was a sharp analysis of the South Australian experience.

“Certainly renewables have benefited the system, and we would have had higher prices in South Australia without renewables, fundamentally because of the high price of gas,” Mr Wood said.

“And that’s a conclusion that I think makes sense and this report shows it very clearly.”

Policy vacuum part of the problem

The researchers also compared the average Australian household prices with those in European countries, which have the next highest residential electricity bills, and found other states on the east coast were not far behind.

South Australia was closely followed by Denmark and Germany, countries which pay by far the highest taxes.

The graph showed high prices were also being felt by households in other Australian states — next in line were New South Wales, Queensland and Victoria.

Mr Wood agreed that South Australia’s current energy mix meant expensive gas generation was setting the price for the whole market.

Read the full story here.


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E J Zuiderwijk
December 12, 2018 2:12 am

Yeh. And pigs can really fly after all.

Flight Level
Reply to  E J Zuiderwijk
December 12, 2018 3:03 am

A if bird strikes were not already bad enough, we now face pig strikes, courtesy of global warming financial lunacy…

Reply to  E J Zuiderwijk
December 12, 2018 5:31 am

No doubt they are factoring into the price of fossil fuels ‘damage’ in the future.

Of course this is BS. What they need to factor in is the BENEFIT of 20% more crops.

Reply to  MattS
December 12, 2018 12:17 pm

You are right try telling this BS X1000 to the people who struggle to pay the sky high power rates, they are victims of renewable power. Ontario. Canada. Australia, Etc.. the list is endless. ON top of the Carbon tax con game.

Charles Higley
Reply to  E J Zuiderwijk
December 12, 2018 5:41 am

Wow, they entirely ignore the initial huge prices, the cost of the excessive infrastructure for these distributed energy sources, all maintenance of which these is plenty, and the cost of decommissioning as they reach their relatively short lifetime limits. Yep, all that can be ignored because between all those costs, the cost of generating electricity by wind and solar is zero. Wow.

Then, they blame the cost of electricity on the gas-fired power plants, claiming their inefficiency. Again, wow, as it’s the unreliability of wind and sale power generation that requires the use of other reliable power sources when the former fail to produce.

If we were using gas or coal-fired plants in the first place, there would be no need for any backup sources, and forgo all the environmental, geographic, aesthetic, health of animals and humans, and economic damage caused by wind and solar.

Go nuclear and life would be even better, thus minimizing the overall footprint of gas and coal-fired power plants.

Walter Sobchak
Reply to  Charles Higley
December 12, 2018 7:03 am

Thank you. You have written what I would write, and better than I would have written it. This so-called study is absolute nonsense.

The reason why the wholesale price of “renewable” electricity is so low is that it is generated in quantities and at times and places where and when it is not in demand. Supply and demand is also a law.

If there were not government diktats or subsidies, the unwanted demand would not be supplied and the price would remain at true market levels.

Further the ultra low prices for “renewables” are less than the capital cost of creating them, which means that they are not sustainable if there are no explicit subsidies or subsidies in the form of required purchases.

Reply to  Walter Sobchak
December 12, 2018 9:41 am

Let’s address something else, Capitalism. Trump and other capitalists along with most conservatives consider this study beyond credibility; because if this study were accurate the fossil energy sector of the economy would already be in the business of renewable energy. If there is a profit to be made subsidies are not required.

What ever is not profitable is a drag on the economy; for example consider government.

JP Kalishek
Reply to  Dipchip
December 15, 2018 6:39 am

some of the fossil sector companies dabble in the renewables and when you look at it, it is because of the tax breaks and subsidies they can soak up, not because how viable they are. With the breaks and subsidies the resulting losses being written off help offset the increases in taxes on their carbon fuels based side of the business. It also is often a PR program, considered the same as advertising, and hey, the Greenies in the Gov’t will slide some monies their way for it.

What the story in reality is, “If we didn’t force folks to buy renewables, stopped penalizing the fossil fuels, and stopped all the subsidies, rates would be massively lower, but we would instead tax and fine the fossils even more if you block our renewable green boondoggles.” Cue up the Monty Python skit: “Nice economy you have there. Be a shame if something were to happen to it”

Justin McCarthy
Reply to  Walter Sobchak
December 12, 2018 10:42 pm

LA Time’s did an article discussing how solar power generators were actually paying other states to take electricity. What a weird world.

Reply to  Charles Higley
December 12, 2018 2:17 pm

The conclusion is based on the simplistic analysis of correlating the wholesale price of electricity in the national market with the amount of wind and/or solar generation. What they have found is that when intermittent generation is high the wholesale price is lower and when generation low the price is high (how clever is that). They provide a straight-line fit to that data and determine a price sensitivity to the contribution of intermittent generation in lowering the price.

They do not consider higher cost of transmission and distributions (networks in new suburban developments in Australia are being designed for peak generation not peak load) During the first weekend in December the South Australian grid demand midday Sunday was 1136MW; 800MW was being supplied from small scale rooftop solar. Wind generators were restricted but gas plants were still on-line and being paid for the stability service needed. The so-call FCAS (frequency controlled ancillary services) have skyrocketing costs as gas plant needs to be spinning to provide the system inertia but not producing much electricity. The paper does not mention FCAS costs.

There is some mention of reliably flexible generation (meaning mostly gas but also hydro if the pondage is adequate) displacing caseload (meaning coal) generation. In Australia, the marginal cost of coal is about AUD30/MWh while gas is about AUD120/MWh. And this substitution is already occurring.

There is no mention of the RET (Renewable Energy Theft) whereby electricity consumers pay owners of intermittent ambient generation for the privilege of using non-carbon based generation. For grid scale generation the additional transfer payment is more than the wholesale price and for rooftop solar it averages about the same as the wholesale price. None of the intermittent generation is economic without these transfer payments.

The paper did look at the price sensitivity to wind generation in the USA but has no comparison with the actual US prices because that would beg the question – why is electricity price so much lower in the USA than Australia and Europe?

This paper demonstrates why Australia’s electricity supply is in such a mess – analysis is inept. If battery prices ever approach an installed cost of USD200/kWh then there will be no owner occupied house in Australia taking power from the grid. The linked chart demonstrates the collapse of grid demand in SA:!Aq1iAj8Yo7jNgxTbiGs9ZlZ85uZW
Grid prices are so high that rooftop owners are stacking them with panels. On a mild sunny day the grid demand collapses through the middle of the day. All the grid scale intermittents have no load because gas is needed to be running to provide frequency stability.

The fundamentals are (a) that there is no benefit of scale with solar and wind generation (b) the very slight benefit of geographic diversity is offset by increased cost of transmission and distribution.

Reply to  Charles Higley
December 12, 2018 2:35 pm

Hey, this is a valuable report. Use it well and we will all benefit. First up, write to your MP, to ScoMo, to The Minister for Energy, demanding that all energy subsidies and mandates must be removed immediately. Renewable power is so cheap that it will blitz the others and save us all that money and we don’t need to bog them down with form-filling or to hold their hand any more. We don’t have to even worry about whether the reort is completely correct – if the power companies build new coal and gas stations because they’re even cheaper than renewables (the report didn’t address that possibility) then we all still win.

Reply to  Mike Jonas
December 12, 2018 3:37 pm

“Hey, this is a valuable report. Use it well and we will all benefit.

Good. Tell me how!

“First up, write to your MP, to ScoMo, to The Minister for Energy…”

That is not at all what I expected you to recommend, which was more along the lines of composting, bird-cage lining, and similar. But you’re absolutely right. This report proves that there is no need for subsidies. We should all see that this information gets into the right hands. Or the Left hands.

nw sage
Reply to  Mike Jonas
December 12, 2018 4:44 pm

There IS another way to get really cheap power – I should be able to require power companies to cut OFF my electricity whenever the cost of reserve power needs to be added whenever the wind doesn’t blow (enough or in the right places) or when the sun is down or behind clouds. That would solve the problem It is called interruptable power.

Reply to  Charles Higley
December 13, 2018 2:23 pm

What IS the cost for your so called excessive infrastructure? What IS the maintenance cost of wind and solar PV? Before YOU speak again, look up the statistics on the TESLA energy storage system installed across the Neoen wind farm. The French company that financed the project claim they loaned $66 million for the project and the energy storage system created $17 million in grid regulation costs the first year of operation. The article said something to the effect of “old” power plants, so what is the difference in efficiency and therefore amortization of an old gas fired plant as compared to a new technology gas fired plant? What are the decommissioning costs to get rid of an old natural gas fired plant? You do understand that even nuclear is NOT a source of generation that can be throttled like coal or natural gas fired generation? You will still need energy storage constructed along the grid to accommodate proper operation of nuclear.

Reply to  E J Zuiderwijk
December 12, 2018 5:55 am

Reduces power prices? Really?? Hogwash! Baloney! Balderdash!

I have twice gotten a letter from some greenbean group in Washington, DC, offering me the spectacularly low rate of $.095 per kilowatt hour if I switch to THEM as a supplier of electricity, with billing through my regular supplier, ComEd.

Since I check the charges on my electric bill (and you all should do that, too), I can confirm that my current per kilowatt hour rate is $0.065, which is 50% LESS than the greenbean’s rate charge.

Now, since I stick to a strict budget and monitor my household expenses, the idea of a 50% increase in the charge for my electricity is appalling. I haven’t switched to that yet, and won’t because – wait for it! – there is NO guarantee that the rate will NOT go up after three (3 – count ’em) months. They even say so in their promotional sheet, explaining the charge.

And in addition, this fabulous offer of a 50% increase in the KwH rate is from a company that uses “sustainable, renewable” resources from wind and solar farms in my area. Well, I know my “area” quite well, and there are NO solar or wind farms anywhere within 90 miles of me, period. Therefore, this wunnaful-a company is offering an unreliable resource as a replacement for a reliable resource, a coal-fired plant which could easily be replaced by a gas-fired plant if the company chose to do so.

I realize that most people don’t pay attention to this kind of thing. It’s easier to gripe about your electric bill than it is to look at the details, but if a 50% rise in just one thing is ignored and an unreliable source replaces a reliable source because you decided that green virtue signaling is more important than an affordable electricity bill, don’t expect sympathy from me when your power shuts off. I will just say “Told you so, numbskull”.

John Endicott
Reply to  Sara
December 12, 2018 9:27 am

Unfortunately, when their power shuts off, like so will yours because you are both connected to the same grid that their virtue signaling helped de-stabilized. Hope you have yourself a good reliable private portable fossil fueled backup generator to run while you are telling them “told you so, numbskull”

Gary Ashe
Reply to  Sara
December 12, 2018 3:07 pm

I do Sara.
I have automated a spread sheet, i put in the reading around midnight.

quite amazing 6.5 cents a kwh, i pay 0.163, 16.3p………plus vat 5%.
so £0.17……..thats what $0.28………..450% more than you Sara.

I use 4.4 kwh a day, average last 3yrs only 3 things plugged in 24/7 fridge/freezer computer oil central heating hot water pump.

i cook electric 5 days a week and 2 x 9 kilo laundry washes a week .. kettle microwave all the usual.

I Bet no-one here can beat that 4.4 kwh’s a day,

Reply to  Sara
December 12, 2018 3:45 pm

Just think of the $0.03 differential as a stupidity tax.

old white guy
Reply to  E J Zuiderwijk
December 12, 2018 5:59 am

those folks are delusional. they sure don’t live in my neighbourhood.

Reply to  old white guy
December 12, 2018 3:42 pm

Forthcoming “diversity laws” will see to that. Every neighborhood will be required to house 10% people who are barmy in the crumpet. Better make that 15%.

Reply to  E J Zuiderwijk
December 12, 2018 8:32 am

When the wind is blowing, it does indeed displace (say) gas-fired generation. That drives down the spot price of energy because the fuel cost for wind is zero. That reduces both the price and the volume of energy produced by the gas-fired generation. But it still has fixed costs and it produces less and less energy over which it can recover them, so the per-MWh price of gas generation goes up. According to wind and solar proponents, that means wind and solar are getting cheaper and gas is getting more and more expensive. Of course, if they want electricity at night when the wind is not blowing, they might want to cover the fixed costs of that gas plant. That’s a cost they typically don’t factor into their “wind and solar are cheaper” studies because they rely on the “unenlightened” buyers of non-green energy to pay them. Here’s a document that busts the “renewables are cheaper” myth.

Regarding, “The Government hopes to pass new laws to force energy companies — especially retailers — to offer customers cheaper electricity.” I’m sure that will work out well.

Reply to  E J Zuiderwijk
December 12, 2018 3:19 pm

Porcine aerobatics are all the rage in Professor Molehill’s mind, along with other unlikely things.

richard verney
December 12, 2018 2:15 am

Why compare with 2013. Before renewables were in the mix one did not have the silly market price which fluctuates hour by hour, day by day? This is the wrong metric to see to what extent renewables have added to the price of electricity. One needs to go back to an earlier point of time, rather than when governments had already skewed toe market to the detriment of the consumer.

What the computer programme needs to do is to ascertain the price of electricity before any renewables were in the mix, and then forward adjust that price to assess what the present day price would be if no renewables were in the mix by taking into account the change in price of coal and gas (pro-rated as appropriate) and adjusted for the increase costs of employing personnel in the power production industry. That price could then be compared to actual present day prices with renewables in the mix.

The computer programme could also check what the supplier’s profit margin was, at the time before any renewables were in the mix, and then when forwarding to assessing the present day prices for electricity without renewables (but adjusted for change in price of coal/gas) ensure that the supplier keeps the same notional profit margin as the supplier factually had in the past.

Krudd Gillard of the Commondebt of Australia
December 12, 2018 2:15 am

“Renewable energy reduces power prices by more than cost of subsidies, study finds.”

Go tell that to the Yellow Vests, I dares ya.

Reply to  Krudd Gillard of the Commondebt of Australia
December 12, 2018 3:55 am

Let’s test that claim by shutting down the gas plants and discontinuing the subsidies for wind and solar. I mean in the real world, not the computer model world.

Reply to  Trebla
December 12, 2018 4:03 am

I like the idea. Let’s give it a try in France.

Alan Tomalty
Reply to  Sheri
December 12, 2018 5:53 am

France is different because more than 70% of their electrical power comes from nukes.

John Endicott
Reply to  Alan Tomalty
December 12, 2018 9:22 am

Currently. They’re working to reduce that to 50% in favor of “renewables”.

Reply to  Alan Tomalty
December 12, 2018 7:27 pm

Alan, if France had legislation like Australia’s RET they would suffer the same result. I have never seen such cunningly designed legislation, which takes billions a year from electricity consumers and gives it to the owners of renewables generators. It’s not called a tax, or a subsidy, but what else is it? Whoever dreamed this scheme up is an evil geniius.

Reply to  Trebla
December 12, 2018 11:38 am

But, first provide names and addresses of all people associated with “The independent study, by the Victoria Energy Policy Centre”.

Then, based on the recommendations of the “independent study” shut down the “inefficient” power sources for a 1 month trial basis.

Then (in the name of good risk management policy) apply for grant $ to assess which specific properties were more likely to be trashed during the initial protest movement, and how in the future property damage can be mitigated during such protests.

Reply to  DonM
December 12, 2018 9:11 pm

Here is a link to their Advisory Committee – Prof Ross Garnaut and Anna Skarbeck stand out as fully paid up CAGW cheerleaders.

Reply to  Krudd Gillard of the Commondebt of Australia
December 12, 2018 8:33 am

What do you expect? These kinds of hollow, unsupportable claims are all the alarmists have left.

Krudd Gillard of the Commondebt of Australia
December 12, 2018 2:18 am

Beware, study paid for by Watermelon Labor Party of Victoria. Spruiked by solidly Maoist ABC.

Warning bells should be going off. I leave it to my betters to punch the holes in this cunning argument.

josh scandlen
Reply to  Krudd Gillard of the Commondebt of Australia
December 12, 2018 2:28 am

just read the article and you can quickly poke holes in it yourself. You don’t even need to be a PhD in physics to see the inherent flaws.

December 12, 2018 2:24 am

When you pay for a study to be done, it is amazing how often the results of the study are exactly those that you wanted. The ‘independent’ study, by the Victoria Energy Policy Centre, focusing on the South Australian electricity market confirms that households in that state would have had even higher prices without amazing ‘renewable’ power being introduced because of the high price of gas.
Years ago, where South Australia power was produced from coal, its electricity was amongst the cheapest in the World. Now with intermittent ‘renewable’ power in South Australia requiring back-up, gas has replaced cheap coal by government fiat, and the power is the most expensive in the World..

December 12, 2018 2:26 am

Well, there you go then! We should then subsidize even MORE and our electricity costs will surely find its way to zero. Come on, professor! Why didn’t you answer, or at least ask, the inherently obvious question…
Why gas prices are so high to begin with… Or what caused the price of electricity to be so high in the first place.

“But gas generation drives up prices
But the study found the reduction in wholesale prices thanks to renewables has not been enough to offset the high price of gas.
The closure of the Northern and Playford coal-fired power stations has left South Australia reliant on expensive generation from gas-fired power stations, which are needed especially when wind and solar are not producing energy.”

And there you have it. Close coal-fired generation stations increases electricity prices.
Now, frankly I’d LOVE to know why the price of gas is so high in South Australia but the good prof doesn’t seem all that interested. Wonder why? hmmm….

Reply to  Josh Scandlen
December 12, 2018 6:19 am

That is a valid question.

The power plant north of the IL-WI state line was a coal-fired plant, and put out a steam stream that could be used as a wind sock, telling you just which way the wind was blowing (among other things.)

It shut down earlier this year, because that electric company had completed the construction of a gas-fired plant, and they were ready to make the switch-over. They did this, because gas is cheaper as a fuel source than coal, which has to be hauled in by freight trains.

Aside from not building new, more efficient gas-fired plants in Australia, what is the real reason for not using gas to generate electricity? (I know the answer, but…..)

December 12, 2018 2:29 am

”The closure of the Northern and Playford coal-fired power stations has left South Australia reliant on expensive generation from gas-fired power stations, which are needed especially when wind and solar are not producing energy.”
Well blow me down with a feather. Who would have thought that by closing down the cheapest reliable energy source and replacing it with unreliable intermittent power its all of a sudden more expensive.
What were the power prices in comparison when the coal fired power stations were still operational I wonder.

December 12, 2018 2:38 am

Up to around 2003, Australian consumer power costs followed the cost of living increases. After this time, renewables were added and subsidies paid to the renewables. Australian power costs in some eastern states have now skyrocketed and have doubled since 2008. Other Australian states that have less renewables (Western Australia has only 11%) have a lot lower power costs than South Australia. So please don’t tell me that renewables lower power costs.

Reply to  Graeme#4
December 12, 2018 3:46 am

knocking down pt agusta and privatising power
the single most stupid moves ever for SA
short of paying ditherall not jailing him.
makes even the statebank debacle look less smelly
just chaged powercos
same comapny Vic price is high but bearable
sthaus prices are eyewatering.
and this is maybe THE cheapest provider of about 12 or so listed

December 12, 2018 2:43 am

Yep, just install evermore sustainable renewable energy and pretty soon energy costs (like availability)will be at zero, while everyone pays all their money into maintaining the system.
Enjoy as we enter an exciting new era of exchanging everything you got for nothing you want! 🤣

December 12, 2018 2:46 am

*computer modelling*
As soon as I saw that I gave up reading. Also knowing the exact opposite is true.

Reply to  mikebartnz
December 12, 2018 2:02 pm


George Lawson
December 12, 2018 2:49 am

Then why do they need the subsidies?

Michael F
December 12, 2018 2:51 am

I’d like to sell the author a bridge I have just acquired in San Francisco.

December 12, 2018 2:52 am

This isn’t a random pattern:


Electricity costs as a function of per capita installed renewable capacity. Wind and solar only, excludes hydropower. [Updated to add Australia and correct the units] – Source: Willis Eschenbach


Part of Australia already has the most expensive electricity in the world…

Although the causes of Australia’s high electricity prices are a bit more complicated than Germany’s or Denmark’s. The costs are skyrocketing due to a lack of investment in fossil fuel infrastructure and the inability of wind & solar to actually replace coal…

What caused the power price spike?

There are two main causes of the sudden jump in electricity prices. And despite the frothing anger from the shock jocks, it has nothing to do with the rise of renewables.

The main cause is a lack of investment. And the second is the soaring price of gas.

As old coal-fired plants have been retired, there has been insufficient investment to replace them because power companies have been left in policy limbo over carbon pricing.


How does gas affect electricity prices?

The second contributor to soaring electricity prices has been the sudden spike in gas prices.

In the absence of any political leadership, the power industry correctly figured renewables such as wind and solar eventually would be cheaper and more efficient than coal. That is because the fuel — wind and sun — is free and the maintenance costs of the plants is low.

The problem with renewables is their unreliability. Given Australia’s gas abundance, the idea was that gas would cut in whenever there was an energy shortfall.

Unlike coal plants that take weeks to fire up or shut down, gas turbines can be turned on and off at short notice, making them ideal to fill the breech when renewables are offline.

As the last player to enter the market, during power shortages, gas becomes the overall price setter. In case you have not noticed, gas prices have quadrupled because the exporters — many of which are the electricity generators — have sold more gas to offshore customers than their reserves. So, they pillaged local supplies, sending domestic gas prices through the roof.


ABC (Aus)

This sentence is 100% disingenuous:

And despite the frothing anger from the shock jocks, it has nothing to do with the rise of renewables.

The “rise of renewables” may not be the direct cause of Australia’s high electricity prices. However the transition from coal to [fill in the blank] is the direct cause.

Unlike the US, Australia doesn’t produce enough natural gas to export large volumes of LNG without driving up domestic prices.   Australian LNG landed in Japan is actually 40% cheaper than natural gas produced and sold in Australia.

Australia’s coal-fired plants are shutting down and being replaced by unreliable wind & solar and expensive natural gas plants. Claims that wind & solar are now less expensive than coal per MWh are wholly irrelevant. Solar and wind have to be 1/4 to 1/2 the price of coal per MWh to compete. And, even then, they can’t actually provide base load, because they are non-dispatchable.

Even if we assume this is accurate, neither storage nor back-up is factored into the cost of new power generation.

Let’s assume that they can purchase battery backup for $140/kWh and the Li-ion cells last 10 years. Over ten years, $140/kWh works out to about $38.50 (US) per MWh of generation.

Over the twenty year lifespan of the wind and solar power plants, the batteries would have to be replaced once.  That brings the storage cost up to $77 (US) per MWh of generation.  Convert to AUD and it’s $99/MWh.  Tack that on to the LCOE:

Energy supply Cost of energy w/Storage  (AUD/MWh)
Solar $177 $239
Wind $160 $217
Ultra supercritical coal (so-called “clean coal”) $134 $203

Wind & solar only appear to be affordable…

Until you add in the cost of storage…

(CCGT = combined cycle gas technology.  OCGT = open cycle gas technology, a common type of “peaker” generator.  AUS $8/GJ ~ US $6.30/mcf)

Even with Australia’s high natural gas prices, combined cycle natural gas and coal are much cheaper than wind & solar, if you factor in the storage costs.

Australia’s electricity rates have skyrocketed because they didn’t maintain their base load capacity (mostly coal-fired generation). Perry’s resiliency pricing plan would prevent this from happening here.  While allowing natural gas to kill coal & nuclear would be very good for my industry, in the long run, it wouldn’t be good for grid resiliency, electricity consumers or our nation’s energy security.

Reply to  David Middleton
December 12, 2018 3:23 am

Thank you David.

The subject study by the Victoria Energy Policy Centre is false nonsense. Wind and solar power are too intermittent and too diffuse, and to date grid-scale power storage is an expensive delusion.


Reply to  David Middleton
December 12, 2018 4:01 am

If a OCGT is 35% efficient, the cost of the power produced is higher by, at least, the lower efficiency of the unit. Add to this the added cost to maintain a system that is mostly in a dormant status has to drive up the cost of power significantly. And probably greater than the cost of renewable energy.

If South Australia is bidding $2,000/MWh for power from where ever it can get it, that cost is not a reflection of the energy value used to generate that electricity but a representation of the desperate need for power to keep the lights on. A political requirement, not a demand requirement.

The need for this added power is driven by renewables, yet is higher than the cost of renewables because of the need to fill a hole in power demand quickly.

And if those renewables were not in the power mix, the need to fill that hole would not require the desperation that it now does, and power costs would be significantly lower.

old construction worker
Reply to  David Middleton
December 12, 2018 4:50 am

“and the maintenance costs of the plants is low.”? I don’t buy it.

Reply to  David Middleton
December 12, 2018 4:50 am

I was going to post your first graph, Electricity Price vs. Installed Renewable Capacity. You saved me the effort.

The graph shows all you need to know. Anywhere they have installed a lot of renewables the price goes up a lot.

It looks like Australian electricity is more expensive than it needs to be anyway.

If data and analysis is required for any political purpose, someone will find a way to produce it. The more money is involved, the more corrupt science.

Money … dominates science’s agenda today … link


He (the author) goes on to describe the sycophancy, backbends and, sometimes, dishonesty practiced by researchers, and the willingness of some government scientists to keep their mouths shut when it behooves their bosses. link

Science has its fair share of fake news, and then some. The study that says renewables reduce electricity prices is fake news. It’s easily contradicted by the evidence of what has happened every time countries pushed more renewable energy.

Reply to  commieBob
December 12, 2018 9:31 am

Australia replaced inexpensive coal generation with a combination of wind and OCGT generation needed as backup to the wind power.

Comparing the cost of 100% OCGT power to the cost of a combination of OCGT and wind power makes no logical sense. You would only add the expensive OCGT generating capacity because you needed a backup for wind power. OF COURSE you’re going to show a savings by adding wind power.

Steve O
Reply to  s
December 14, 2018 12:39 pm

Ha. I said the same thing, only my comment was more clumsy and less direct!

Tom Halla
Reply to  David Middleton
December 12, 2018 4:58 am

Nice analysis. SA is doubling down on stupid.

It doesn't add up...
Reply to  David Middleton
December 12, 2018 7:05 am

Natural gas supply in Australia is a logistics problem, not a question of inadequate quantities. Most of the gas is remote from centres of demand, so it’s more akin to shipping Alaskan crude to Texas, as used to happen. Gas production around Geelong that supplies the pipeline to Adelaide is in decline.

Reply to  David Middleton
December 12, 2018 7:09 am

What does it mean by cost of storage? It certainly cannot be batteries. The $140/kWh is a theoretical level for low cost autobatteries at cell level. We are talking about high quality batteries with a lot of power output and high frequent charge/discharge cycles. Last years first, but small battery park in Australia, made by Tesla was assumed to be sold at $400/kWh. To assume declines of the costs in the future might be realistic though not necessarily. Material prices (cobalt) have been skyrocketing the past 2 years and energy prices will keep rising with rising shares of renewables. Both, material & energy costs, are the biggest contributors to battery prices.

Reply to  paulclim
December 14, 2018 3:37 pm

The very technology needed was developed in Australia in 1988. There are several (flow) battery companies that can design and install a solution for utility scale energy storage in the MW to GW range. Companies like ESS Inc., Primus, UET which is now constructing a 800MW storage system in China. Energy storage IS the answer, it allows overgeneration from renewables like solar PV and wind generation AND also allows fueled generation plants to run in a mode that allows amortization of their plant assets instead of running in “spinning reserve” mode then “ramping” up to supply electricity at premium prices per kWh. Getting rid of or decreasing “fuel” charges on the electric grid can be handled by distributed energy storage at less cost than (another) Peaker plant.

Joseph Campbell
Reply to  David Middleton
December 12, 2018 7:36 am

David: Thanks for an excellent note…JLC

Reply to  David Middleton
December 12, 2018 2:37 pm

Your analysis is simplistic. It grossly underestimates the cost of intermittents. In the real world you cannot rely on averages and diversity for intermittents. Massive overbuild is required. The capacity factors are much lower than the natural values. Even with storage at USD140/MWh you will not be able to produce on-demand supply for less than USD400/MWh.

Note that South Australian intermittents have now achieved about 50% market share on average. Even with the 120MW HPR battery and and the even bigger battery that is Victoria (640MW and infinite storage) the wind generators are regularly demand constrained. To get to 100% supply from intermittents plus storage the capacity factor for wind will be under 10% and for solar under 7%.

Steve O
Reply to  David Middleton
December 13, 2018 4:21 am

Your charts showing Implied Cost are revealing.

If OCGT gas is needed in combination with wind, then the costs of electricity from those individual technologies is interesting, but what is most relevant is the cost of the combined system of wind with OCGT backup. An inexpensive, low variable cost source is combined with an expensive, high variable cost source and the total cost depends on the mix. Based on the charts, it does not seem likely that wind could be cheaper than coal because the mix would need to strongly favor wind for almost all power generation, and you still have the fixed costs of both.

It sounds like the authors study did a “what if scenario” of an illogical configuration, comparing the low cost (wind power) component of the system to the high cost (OCGT) component of the system. That comparison makes no logical sense. Sure, if you add wind power to a system that is comprised of only the expensive backup component, then yes, costs will go down. They’ve proven that the low cost component of the system costs less than the high cost component of the system.

The ONLY reason to make such a comparison is to deceive people.

Reply to  David Middleton
December 14, 2018 3:12 pm

A lot of information in your charts and graphs show prices in Australia are VERY high. What you don’t show is that after about 25 cents per kWh, it is more profitable for the (individual) to install solar PV or wind generation with their own energy storage system. With your very own chart showing 50 cents per kWh for South Australia, everyone should have installed solar PV with energy storage on their property a long time ago. What YOU have done is promoted the same argument that has been used in the U.S. for the past 20 years. YOU are institutionalized into utility scale centralized generation, when it is more efficient to use solar PV generation where it will be used. IF more alternative energy generation is to be the “standard”, then adoption of more distributed energy storage is the correct direction.

The TESLA (small 100MW) energy storage system installed across the Neoen wind farm has proven itself as a smoothing, frequency regulation asset within the grid infrastructure. At the current rate of return, it will have paid for itself in another 4 years of service. Amortization of a coal fired plant or natural gas fired plant will be in the “decades”. THIS IS your problem, it takes too long to pay off old technology that does not serve you well, at 50 cents per kWh you all should be installing some solar PV on your properties. At that rate it should take only 5 years to payoff the generation system.

Richard A. O'Keefe
Reply to  Solarman
December 15, 2018 2:15 am

In my country, about 40% of houses are rented, and the proportion is growing. Landlords are not going to install solar panels. Why would they? It’s just one more thing to maintain, and doesn’t save *them* any money. Many of the rest cannot afford it. For example, one rather optimistic firm claims that I should save X thousand dollars a year if I installed their system, but their system costs 4X thousand, and having lost my job, I cannot afford even X/4 thousand. I’d love to have savings of X thousand dollars a year, but I can’t get there from here. And unlike the next generation, I don’t have swingeing student loans to pay off. For what it’s worth, the current estimate from my power company is 0.25 NZD/kWh. (You can believe that if you want. Spot pricing is very spiky.)

Reply to  Richard A. O'Keefe
December 15, 2018 3:45 pm

I understand your dilemma and can only hope that you find a new career for your future. As for 40% rentals, IF you as a renter find a “portable” solar PV design that can be “unfolded” and set in place somewhere on the property, then there is still a way to use solar PV to lessen YOUR monthly costs. Solar PV was predicted by one Thomas Edison over one hundred years ago as “the thing” for mankind’s energy needs.

“Thomas Edison, a genius in his own right, was so convinced by the limitless source of fuel from the sun that he said: “I’d put my money on that. What a source of power! I hope we don’t have to run out of oil and coal before we tackle this.”
The U.S. Department of Energy states that 173,000 terawatts of solar energy strikes the Earth every second.”
“That’s 10,000 times the world’s total energy consumption.”

It was the actual “fight” between Edison and his view that all homes should be powered by D.C. and Tesla who worked for Edison at the time believed that A.C. was a better power option. Edison and Tesla butted heads and Tesla took his A.C. design to Westinghouse and developed it for them. NOW we are actually at a crossroads once again. Since we can generate D.C. directly from panels on our property and can store the power for later use, it might just be practical to go (backwards) and use a house designed and wired to use a majority of D.C. driven appliances for one’s personal use instead of all A.C. all the time.

December 12, 2018 2:58 am

The cost of maintenance of wind turbines is zero? Most are not running in wind farms here in CA.

Reply to  Donald Kasper
December 12, 2018 4:17 am

That’s how it costs $0. Turn it off.

Reply to  leowaj
December 12, 2018 7:25 am

Isn’t it funny, they turn it off, but don’t subtract it from the “installed capacity” numbers.

Brooks Hurd
Reply to  Donald Kasper
December 12, 2018 7:40 am

I would not say “most” however I see far too many non-operating wind mills as I drive around California. It seems that the older the wind farm, the higher the percentage of non-operating units. I am assuming that the problem is bearing failure. I expect that the owners have determined that bearing replacement is too costly to justify the repairs. It difficult to find data on the service life of windmills, but from what I have found, it appears that the MTBF is 8 to 12 years, not the 20 years that used was to model costs. T
The fixed costs of renewables on an annual basis is much higher than the cost models, therefore it’s not surprising that the SA article simply ignored fixed costs. They also ignored the costs of demolition and disposal.

Reply to  Brooks Hurd
December 12, 2018 11:00 am

Along Altamont pass, rather than fix broken windmills, they got new subsidies to replace them, broken or not, with bigger windmills, some of which are already not spinning. Fossil fuel plants have an expected service life of 50 years or more. Windmills seem to have a service life less than 20 years. After 20 years, solar cells are only at about 80% of their original capacity, if they haven’t already been destroyed by weather. The shorter service lifetimes also need to be accounted for in the cost of generation.

Reply to  co2isnotevil
December 14, 2018 3:57 pm

You have taken on the utility bias when YOU say after 20 years solar cells are “only” about 80% of their original capacity. Many of the solar PV manufacturers have 20 to 25 year 80% warrantees on panels. BUT, there are panels that were built in the 1970’s that still are being used, output name plate rated power today some 40 years later. With the new manufacturing, testing, sealing technologies brought forth in the past 10 years, we don’t really know how long a solar PV panel will last, putting out useable power without “fuels”. Even with tariffs, current costs of solar PV panels run from around $1.05 to $0.88 per watt. Get rid of tariffs and one could see a pallet quantity of panels at 50 cents per watt. One can “over design” a solar PV system for their home or business and build in over capacity to use over a 30 year period, 40 year period, 50 year period.

December 12, 2018 2:59 am

I’m confused by this study. Could someone cleverer than me explain why countries with the greatest proportion of renewables have the highest electricity prices?

Reply to  Graemethecat
December 12, 2018 4:31 am

The higher rates are due in (large) part to the fact that unreliable renewables require expensive backup from dispatchable (reliable) hydrocarbon sources. This study is just an exercise in deception to hide the reality that an existing, reliable and cheap system was replaced with an unreliable system that requires backup by the reliable system. That added cost of backup is blamed on the backup system itself, rather than on the unreliable system that necessitated the need for backup in the first place.

It’s kind of like blaming experts for higher project costs, after they were hired back as expensive contractors to rescue the project after losing their jobs to incompetent, low wage affirmative action (or whatever) hires who tanked the project.

Reply to  icisil
December 12, 2018 5:35 am

Thank you. As I suspected, Hobday’s “study” was mendacious and deceptive.

Reply to  icisil
December 12, 2018 11:50 pm

Here’s an even better solution:
1. Build your wind power system.
2. Build your back-up system consisting of 100% equivalent capacity in gas turbine generators.
3. Using high explosives, blow your wind power system all to hell.
4. Run your back-up gas turbine generators 24/7.
5. To save even more money, skip steps 1 and 3.

Reply to  icisil
December 15, 2018 4:03 pm

Ran across an article the other day that said natural gas Peaker plants were “cycling” due to the wind and solar PV generation outputs fluctuating. The Utility status quo still haven’t realized there is a better way to use solar PV and wind generation, even using the same old sorry inefficient grid infrastructure. Instead of cycling fueled plants like natural gas Peaker plants or running coal fired plants in “spinning reserve” a great deal over a 24 hours. With energy storage constructed along the grid would enable the Peaker plants to run longer without “cycling” and the coal fired plant could run in a more efficient mode of operation selling power to the grid instead of keeping a boiler hot until demand on the grid increases. There are companies that design and build flow batteries for large scale grid energy storage, they are ready and waiting for the electric utility industry to catch up to the technology.

Reply to  Solarman
December 15, 2018 5:04 pm

…energy storage constructed along the grid…”

Those batteries don’t exist yet. The only way you could convince me those batteries exist is manufacturer’s name and the model number. That is all.

Brooks Hurd
Reply to  Graemethecat
December 12, 2018 7:50 am

The backup generation needs to be maintained and fully manned so that it is available 24/7/365, since wind and solar is unreliable. The fixed costs of the backup, plus maintenance and manpower will be factored into each MWh of backup power produced. This also increases the cost of nat gas power in SA. This stand-by cost should be included in the wind and solar cost per MWh, but such a realistic cost analysis would not be in line with the author’s agenda.

Reply to  Graemethecat
December 14, 2018 4:11 pm

It’s the institutionalized electric utility business model. These utilities have become accustomed to owning and “controlling” how and when their inefficient centralized fueled generation plants run and when they don’t run. Now there are the (new kids in town). These entities install their non-fueled but intermittent generation resources along the grid. These resources are not immediately controllable by the status quo utility. The old school utility now has to run plants in “spinning reserve” which burns fuel to keep the boilers ready in case grid demand increases. The utility doesn’t get money if they don’t have their plants ramped up to sell you power. So, YOUR electric rates go up with some kind of “fuel” charge tacked onto the electricity rate per kWh to pay for the utility’s operating costs. The utilities are resisting change, the change is to put in distributed energy storage along the grid infrastructure. Then, when wind and solar PV generate excess energy, it can be stored and the energy use “shifted” to other hours of the day. IF a fueled generation plant is online and solar PV and or wind generation peak, the plant can stay online and help charge the battery again for load shifting.

December 12, 2018 3:05 am

Lea Creek still has plenty of coal, so the solution is to build a new Gee Wizz coal fired power station, possibly at Lea Crreek.

So as we are repeatedly told these days, solar and wind are now so cheap that they do not need subsidies. So stop paying the owners any subsidy. Also tell the utilities that its up to them where they obtain their electricity, so if they do not want the ever so cheap wind and solar, so be it. That is what a free market is soposed to be like.

Of course the varing power supply from both solar and wind might be considered a problem, but according to them, the Green blob, that problem is easily overcome by the use of batteries, but they are to carry the cost of these batteries. Only then with the electricity a nice steady flow, will the utilities be interested in such chap power.

No we not only have the Gawlewr rail line awaiting electrification, but we are going to need power to build the new submarines. The expansion of the steel works at Whyalla also will need additional power , plus the just announced new Space Station. So all of this ever so cheap electricity will find a market.

Of course we know this will happen, as all of the modelling says so.


John in Oz
Reply to  Michael
December 12, 2018 3:48 am

As if your added electricity sinks are not enough, include the recharging of the electric vehicles they wish to force us to use.

Ivor Ward
December 12, 2018 3:21 am

It must be a joy to be so academically gifted and so well endowed with computing power that you can ignore basic logic and common sense.

Franz Dullaart
December 12, 2018 3:23 am
December 12, 2018 3:26 am

and still not one of them stops to think for a little while and then maybe ask “why do we need so many gas plants anyway” The are soaked in delusional thinking that the answer if more renewables , after all the wind is always blowing somewhere. This is the state that had to panic spend half a billion dollars going into a summer election to ensure the lights stayed on.

John in Oz
December 12, 2018 3:33 am

Experience would suggest he is wrong that renewables lower prices.

From renewable-crazy South Australia, here are my average per quarter KWh rates for the few years I have been tracking it as I had put 5KW solar on (thanks for the subsidies and feed-in tariffs):
(note Oz formatted dates as dd/mm/yyyy)
24/12/2010 $0.20
28/03/2011 $0.21
27/06/2011 $0.23
26/09/2011 $0.25
23/12/2011 $0.25
27/03/2012 $0.27
27/06/2012 $0.26
25/09/2012 $0.31
24/12/2012 $0.30
26/03/2013 $0.33
25/06/2013 $0.31
24/09/2013 $0.32
20/12/2013 $0.30
25/03/2014 $0.34
24/06/2014 $0.32
24/09/2014 $0.34
22/12/2014 $0.29
25/03/2015 $0.32
24/06/2015 $0.31
24/09/2015 $0.31
22/12/2015 $0.27
24/03/2016 $0.29
24/06/2016 $0.28
27/09/2016 $0.33
21/12/2016 $0.31
24/03/2017 $0.33
26/06/2017 $0.33
26/09/2017 $0.38
20/12/2017 $0.38
23/03/2018 $0.38
23/06/2018 $0.38
23/09/2018 $0.38

A 92% INCREASE over 8 years

John in Oz
Reply to  John in Oz
December 12, 2018 3:44 am

I would also add that the RETAIL price is generally fixed for a contract period so is not affected by the intermittent wholesale prices so this study is of little comfort to us peasants that are paying the highest prices in Australia.

Reply to  John in Oz
December 12, 2018 3:34 pm

Actually you can make even grander claim – the highest price in the developed world!

I gather your figures exclude the connection fee. To get true cost you should average your connection fee over the energy consumed. That inevitably has to rise as energy sales fall due to the amount of rooftop in SA.

With Australia’s RET it makes sense for roof owners to cram solar panels on the roof. That will eventually starve out all the grid connected intermittents. Storage is already close to economic in SA. It would be already if there was no Victoria to act as SA’s big battery.

Reply to  John in Oz
December 15, 2018 4:21 pm

Once again you are showing that the business model of the electric utility is arcane creating the usury and increase in your electricity rates. WHEN the utility basically threatens you that IF you don’t DO something to save energy, then they will HAVE to build another power plant to service your needs. So, NOW you’ve replaced every light bulb in the home with LED lighting, replaced some old appliances with Energy Star appliances, put a timer on your water heater, etc.. The Utility finds that YOU and the rest have actually decreased your energy use AND they are not selling as many kWh as they used to. The crybabies now create a rate case that they have “lost revenues” due to the public saving energy. Sooner or later your electric rates go up to “absolve” the utility of not selling as much power as before. Lousy economics, the less kWh they sell the more each kWh of electricity costs YOU. Then as more alternative energy goes online, there are times of the day throughout the year that there is more energy generated by solar PV and wind than the grid demand needs. The solution is energy storage constructed along the grid infrastructure not more natural gas Peaker plants. As the technology progresses, flow batteries are very capable in storing and shifting power generation and power demand along the grid, cheaper than building more fueled power plants.

Rod Evans
December 12, 2018 3:38 am

The climate alarmists are nothing if not inventive.
A few years back the EU were debating a trade war with China regarding the supply of solar panels. The EU complained the Chinese were offering panels at below the cost of EU manufacture. This led to severe pressure from EU manufacturers to block Chinese clean energy imports. That would never do as it would drive down the price of solar installations.
It doesn’t get any dafter than the champions of green energy, demand the blocking of cheap green energy, but that was their position.

Scott W Bennett
December 12, 2018 3:41 am

This is what I have most feared about out a totalitarian world, having to endure the utter absurdity!

It is simply untrue to say renewables cost zero to run; of course!

Essentially, the reality is that they are poaching the market that supports them.

That is because renewables are unreliable and therefore the most important cost of running them is in the price of backing them up!

Above and beyond that is the debt accrued just to create them. They come into being already owing their working lifetime to loans.

Ok, I’ll entertain the idea that it costs nothing to generate power, fine how are you going to payback your massive loans that have shorter terms than the lifetime of the utilities themselves?

I’ll tell you how and it’s not by selling power as cheaply as possible!

Malcolm Chapman
December 12, 2018 3:42 am

The study says “We have an evidence base that puts this issue on the table for people to engage with.”

Morons that can mix metaphors like this, without flinching, need to be sent back to literacy and honesty school.

December 12, 2018 3:44 am

These people truly are delusional

December 12, 2018 3:49 am

A slight??? problem here with the logic. Renewables require 100% potential backup and this backup cost is properly to the account of the renewables. Fiddling around with marginal costs contaminated by subsidies and regulation is little more than an attempt to deceive. A deception successfully achieved by the published outcome.

If you own a wind turbine and are required by law to provide a fixed constant energy supply range; then in the event of wind loss you would have to subcontract the supply to others at your own expense. A cost of which you would need to take into account when pricing your product.
That is the principle which should be applied across the grid.

December 12, 2018 4:01 am

Proof that math is dead.

December 12, 2018 4:08 am

Comment on the scatterplot (Electricity cost vs. Installed renewable capacity):

Price for electricity in the Netherlands is on trend. However, energy bills in the NL are composed of two components, electricity and natural gas, of which the latter part is more than half of the bill generally speaking. The natural gas price contains quite a big tax to support renewable energy generation, which does not show in the wholesale electricity price.

William Brackett
December 12, 2018 4:17 am

Regardless of whether one agrees or disagrees with the study’s findings, subsidies for renewables should end. Let them compete in a free market. If they are truly cheaper energy sources, the market will sort that out.

Steve O
December 12, 2018 4:33 am

The idea is to replace coal with a combination of renewables and gas. The gas is needed as backup to fill in for generation blips. The type of gas generation needed to fill in is a lot more expensive than gas generation designed to provide base load, and the variable cost component of gas is significant.

Is the study saying that Australia has the wrong proportional mix of gas and wind?

There is no such thing as “the cost of solar power” because solar power can’t exist on its own. It’s the same with wind power. What is relevant is the cost of the combination of solar and gas that provides reliable power. If you have sub-optimized the mix, then by definition you can lower the total cost by adjusting the mix.

Reply to  Steve O
December 12, 2018 8:18 pm

The type of gas generation needed to fill in is a lot more expensive than gas generation designed to provide base load, and the variable cost component of gas is significant.”

It’s not so simple as that even. What they’re doing is playing around with this “Levelized Cost Of Energy” which takes the price of the total unit, divided by the energy produced. Sounds simple, right? Except that a standalone gas (or even coal) fired power plant can run about 98% of the time throughout its life, and the calculation of LCOE reflects that. But if that same plant must be built to back up the unreliables, but by law can only produce power when the unreliables can’t, then the LCOE has a much smaller denominator to work with, driving up the LCOE. Nothing else has changed, to turn an economical source of energy into uneconomical! Now that’s a deck stacked against you, if you’re a power company!

December 12, 2018 4:37 am

The argument that renewables will ever be cheaper than fossil fuel ( or nuclear ) energy defies logic. If renewable require 24/ 7 backup why are they needed at all. Just have the 24/7 backup and save not just the subsidies but all money wasted on renewables. Cut out the middle man . This article is a fanciful joke.

Dodgy Geezer
December 12, 2018 4:40 am

So…. how does this work?

They are saying that when the wind blows, the cost of wind-generated electricity is low. Which is probably true. Since price depends on market conditions, if the wind is blowing well and there is lots of electricity available, prices will be low.

And that if the wind ISN’T blowing, and you have to use gas, there will be much less energy available, and prices will be high.

But, of course, that’s not a gas issue. It’s a rigged market issue. Or rather, not an issue at all, because these studies are not meant to provide enlightenment, they are meant to provide support. As a drunk uses a lamp-post…

Don B
December 12, 2018 4:41 am

WUWT posted this “study” with no comment or analysis? This “study” is dishonest.

December 12, 2018 4:44 am

Once again the conclusions reached in this study are the result of computer models…. not real world empirical data. w

December 12, 2018 4:48 am

It doesn’t take a genius to start with the most expensive electricity in the world and then write a ‘model’ that ‘determines’ that adding in more electricity which has no fuel cost will reduce the net electricity cost. In fact, it takes an idiot. There is a whole lot more to the cost of turning on a light bulb in your home than the fuel cost of the electricity. There are some minor details, such as reliability, power lines, sunk cost, repair, maintenance, billing, administration, etc., that add to the cost. It takes only a fool to ignore these.

December 12, 2018 5:16 am

When otherwise intelligent people can’t tell the difference between politically inspired nonsense and reality… is when one starts to worry.

michael hart
December 12, 2018 5:25 am

“A landmark study has shown that renewable energy has reduced electricity prices by far more than the subsidies paid for it.”

Yeah, right. Like the kind of landmark a dog leaves on the pavement. All the people living with ‘renewable energy’ know or care about is that their prices have gone up as the fraction of renewables goes up. A “study” which appears designed to convince them otherwise is either a lie or the product of an incompetent mind.

If renewables really could compete, they would need no subsidies at all. That is precisely why proponents of renewables also propagate the lie about fossil fuels being subsidized. When you point out the lie in their numbers they then retreat to the lie about “external costs”. That allows them to make up any number they like-another lie in other words. It is always one lie stacked on top of another.

The naive faith of many in academia is frequently exploited by these types of “study”, and will lead to the longer term mistrust of people and publications coming out of apparently corrupt university departments.

John Endicott
Reply to  michael hart
December 12, 2018 5:46 am

A “study” which appears designed to convince them otherwise is either a lie or the product of an incompetent mind

you are too generous, It can be both.

Roger Knights
Reply to  John Endicott
December 12, 2018 12:15 pm

Evil or stupid—or both?

Dark or dim—or both?

December 12, 2018 5:25 am

Ignoring that the prices are increased, and reliability decreased takes a lot of hard work.
The report in question is a level of deceptive financial reporting worthy of Lord Stern.
But it seems to come quite naturally to climate consensus promoters.

kent beuchert
December 12, 2018 5:32 am

A weird argument that depends upon very high gas prices – from their quoted cost reductions, sounds like their gas power has a wholesale cost of over $100 per MWhr or more than 10 cents per kWhr.
These were gas prices years ago in the U.S. (actually were higher),before fracting drove the prices of gas so low that utilities built baseload gas power generators to replace coal plants. And led to export of LNG to China, Japan, etc. This article makes the rather irrelevant point that if conventional power generation is expensive enough, renewables are cheaper. Molten salt nuclear reactors being developed by Moltex Energy have calculated that their small modular reactors can produce power for less than $40 per Mwhr, two and a half times cheaper than Australian gas fired power and much cheaper than renewable power, especially when one considers the fact that
a molten salt nuclear reactor never requires a refueling shutdown, can produce power in load following manner, meaning no need for peak power generation plants , can be located anywhere,
close to within cities, reducing transport losses. Its environmental footprint is miniscule – thousands of times less than wind and solar, and doesn’t require bodies of water for cooling.
Considering alternatives indicates incompetence about power generation technologies.

John Endicott
Reply to  kent beuchert
December 12, 2018 5:38 am

Molten salt nuclear reactors being developed by Moltex Energy have calculated that their small modular reactors can produce power for less than $40 per Mwhr

great, so where are all these Molten Salt nuclear reactors so I can see how well they work in the real world compared to their calculations? Eh? there are none? get back to us when they have some.

John Endicott
Reply to  kent beuchert
December 12, 2018 5:44 am

Considering alternatives indicates incompetence about power generation technologies.

considering something that doesn’t yet exist in commercial operation indicates stupidity as well as incompetence about power generation technologies. When they actually bring one on line in the real world so everyone can see how the reality stacks up to the hype, then they’ll be worth considering vs the alternatives. not before.

Unicorn farts can produce power for less then $20 per Mwhr, twice as cheap as Molten salt reactors. By your logic considering molten salt over Unicorn farts indicates incompetence about power generation technologies.

Back in the real world, actually existing power generation technologies being considered is not an indication of incompetence. Choosing unreliable intermittent power generation technologies (ie wind and solar) for the backbone of your grid, however (as I’m sure you will agree), is.

Reply to  John Endicott
December 15, 2018 4:44 pm

Good ol’ Kent Beauchert above claims Molten Salt reactors are “load following”, not quite true. As these reactors may be arguably more dispatchable than very large LWR designs, they still have some kind of operating fluid to drive a turbine to spin the generator to make the power in the first place. YOU can only “ramp” down any “fueled” generator so much until you can’t recover and ramp up fast enough to address demands on the grid. Alternatives are intermittent as the utility has CONSTANTLY whined about. These are YOUR electric power administrators, hold them accountable for the money YOU pay them for each kWh of electricity they sell to you. Distributed energy storage constructed along the grid infrastructure IS the answer to intermittency AND the required fast action of the load demands along the grid. The TESLA energy storage system installed across the Neoen wind farm has proven to be a grid smoothing and frequency regulation resource on the grid. This ancillary use of the battery has proven to be a greater stabilizing function on the grid than another Peaker plant. The battery storage has engaged in milli-seconds to a few seconds instead of several minutes to perhaps an hour for typical fueled generation resources.

December 12, 2018 5:34 am

Since the subsidies are paid from tax moneys which are coercively lifted from the very same people who have to pay the high electricity costs, then they should have been counted at the fully burdened cost. i.e., for every penny collected in taxes, some portion falls through the cracks in government “overhead”, to pay the workers and keep the lights on in the (tax-money constructed) buildings… that amount needs to be added to the price of the subsidies. Which doesn’t change the fact the whole “study” is hogwash. It was a hired hit, the company producing the report knew what answer they needed to get when they accepted the commission, they were going to produce that same result even if they never even turned on a computer to model their models.

Reply to  Red94ViperRT10
December 12, 2018 4:03 pm

Australia does not subsidise intermittents via tax. We have well disguised theft (RET) whereby electricity consumers are required to pay for certificates that retailers are obliged to buy from intermittent generators in proportion to their total sales. The present prices are AUD62/MWh for LGCs and AUD36/MWh for STCs. In 2017 LGCs reached AUD90/MWh, about the same price as electricity in the wholesale market so doubles income of large scale intermittent generators.

If the federal government does not increase the RET, the price of LGCs will collapse by 2021 as the industry will reach the 2030 CO2 reduction target as early as 2021. The high grid price is encouraging rapid uptake of rooftop solar. On weekends rooftop solar peaks at about 70% of the supply in the South Australian network on a mild sunny day.

When electricity industry representatives talk about investment certainty in the industry they mean they want the target for intermittent market share to stay ahead of actual so the value of the subsidy does not collapse.

Very few people outside the industry understand the RET. It is essentially government mandated theft from poor consumers to more wealthy generators. I make enough income from my rooftop generation to pay for my gas heating. By the end of winter I usually have a small gas bill but aiming to reduce heating requirement to get a net income. As soon as intermittents were given priority access to the grid market it was clear prices would be driven higher. Early installers of rooftop solar also got very favourable terms.

John Endicott
December 12, 2018 5:35 am

“A landmark study has shown that renewable energy has reduced electricity prices by far more than the subsidies paid for it.”

Great. Since renewable energy is so good at reducing electricity prices, then companies and consumers will naturally want to switch to renewables and we can eliminate the subsides as they are clearly not needed. So why do we still have subsidies? And how come electricity prices have skyrocketed since the introduction of renewables in the mix despite renewables reducing the prices?

December 12, 2018 5:42 am

What’s up with all the reposts from green blogs and mainstream media?

Reply to  Sobaken
December 12, 2018 5:50 am

Target practice.

Reply to  Sobaken
December 12, 2018 5:58 am

Deconstruction practice.

December 12, 2018 5:56 am

I felt like an idiot for asking myself this question: “Okay, exactly where is the link to this LANDMARK STUDY ?” — I couldn’t find it in the article, nor in any rendition of the article or reference to the article posted. Why was a link to the EXACT article referenced obvious ?

But then I thought, “Well, surely, I’m not that dumb — it must NOT be so obvious, after all. If it’s there, I still have not found it, and so I went looking for the original LANDMARK STUDY myself, and I think I found it here:

and, at the time of this writing, here is the EXACT link to the EXACT “landmark study” referenced:

Now I don’t know how long those links might say active, but, as of 12/12/2018 8:50 AM Eastern Standard Time USA, they are active.

I haven’t read it yet, but now I know where it is, if I wish to torture myself to do so.

tim maguire
December 12, 2018 5:58 am

If renewables reduce electricity prices even without subsidies, then why are they being subsidized?

Do away with the favouritism and a straight up market-based competition will lead to a fossil fuel phased out without all the government manipulation.

Coach Springer
December 12, 2018 6:00 am

Research? Audit would address the truth, not “research.” Given their own emphasis on timing in a national debate, cherry picking studies by special interests are more accurately labeled “propaganda.”

December 12, 2018 6:04 am

Okay, from the EXACT report referenced, this is interesting — a disclaimer:

Disclaimer: The Victoria Energy Policy Centre and Victoria University advise that the information contained in this publication comprises general statements based on scientific research. The reader is advised and needs to be aware that such information may be incomplete or unable to be used in any specific situation. No reliance or actions must therefore be made on that information without seeking prior expert professional, scientific and technical advice. To the extent permitted by law, the Victoria Energy Policy Centre and Victoria University (including its employees and consultants) exclude all liability to any person for any consequences, including but not limited to all losses, damages, costs, expenses and any other compensation, arising directly or indirectly from using this publication (in part or in whole) and any information or material contained in it.

That does not seem to indicate a lot of real-world confidence in this … “landmark study”. They don’t seem to want to put at risk the careers or “educational institutions” associated with this … “landmark study”, which indicates to me that academics cannot be held accountable for real-world application of their dream-world … “research”.

Am I being too harsh? — I’ve only gotten as far as the front matter so far.

Non Nomen
Reply to  Robert Kernodle
December 12, 2018 7:47 am

What an eloquent disclaimer. They might have put it a bit shorter:
Forget this garbage.

December 12, 2018 6:05 am

‘Installed renewable capacity’

Renewables – wind/solar – have no capacity. They have potential, but not capacity.

Coach Springer
December 12, 2018 6:06 am

Australia has nearly unlimited coal resources, has recently tried to lessen its carbon footprint, and has the highest electricity prices in the world. But it lessens the cost of electricity, so the subsidies are worth it.

Thinking of a Slim Pickens quote from Blazing Saddles.

Reply to  Coach Springer
December 12, 2018 6:26 am

What’s the difference between a climate scientist and an engineer? A climate scientist merely glances at a watch to determine what time it is, while an engineer checks to see whether the watch being looked at is stopped or actually running.

That’s all I got.

December 12, 2018 6:14 am

“The Government hopes to pass new laws to force energy companies — especially retailers — to offer customers cheaper electricity.”

“The study used computer modelling to crunch electricity price data from the past five years.” (sic)

“Bruce Mountain says the research comes at a critical moment in the national debate on energy. (ABC News)”

These 3 sentences from the article tell you all you need to know,

Reply to  Nik
December 12, 2018 6:50 am

Ahh, price controls.

And we had thought it couldn’t get any worse.

December 12, 2018 6:24 am

According to the US Energy Information Administration, which periodically publishes updated levelized cost of electricity figures for various new generation sources of utility power generation entering service in 2022, onshore wind power is the cheapest source of electrical energy in the US, including the subsidies, at 37.0 dollars per MW-HR. Coal with conventional carbon capture is 48.3, natural gas at 48.3, nuclear at 79.5, hydroelectric at 73.9, photovoltaic at 46.5.

So yes, in the US today, for new plants coming on line meeting current regulatory requirements under the Clean Air Act, wind power is the cheapest source of power we have, and PV is slightly cheaper than either coal or NG.’

LCOE considers capital cost, subsidies (tax credits), operational costs, fuel costs, discount rate, and cost of financing.

Steve O
Reply to  Duane
December 12, 2018 6:51 am

There’s no such thing as “the cost of wind power” because wind power cannot exist on its own. It has to be part of a system that includes 100% of the capacity duplicated as backup capacity.

It’s not wind vs. X.
It’s “wind + backup” vs. X.

The the cost of the combined system also changes as the proportion of wind power changes.

Walt D.
Reply to  Steve O
December 12, 2018 7:34 am

Spot on.

Reply to  Steve O
December 12, 2018 8:05 am

Wind energy “exists” and produces power on a reliable basis because prevailing winds are predictable, and wind power is only produced where such winds are predictable. Just because the wind at your house or in your community is not predictable does not make it unpredictable everywhere. There are many places in the world where the wind blows predictably for major portions of the year. That is why those places are where wind farms are developed.

Even dispatchable power plants do not operate 100% of the year – typical annual power production factors for thermal power plants are around 85-87%. For hydro power plants, 50% is average. For current generation wind turnbines, it is 50% also. NEIA uses 43.5% production factor as the average for all wind plants today.

And power storage is also an option for wind and solar, just as it is for hydro. Whether it be chemical batteries or production of hydrogen gas for use in vehicles and stationary power plants.

Steve O
Reply to  Duane
December 12, 2018 9:04 am

“…wind blows predictably for major portions of the year.”

— What happens during the minor portions of the year?

Where power storage is an option, is it included in the cost? Where a traditional power plant provides the backup, how much of the plant is included as part of the cost of wind power?

Reply to  Duane
December 12, 2018 7:20 pm

I’ve heard you say some dumb things Duane, but you keep upping the anti.
Yes, meteorologists can predict that today will be windier than tomorrow, but they can’t and never will, be able to tell us what speed the wind will be blowing at 30 minutes from now, much less tomorrow at noon. Until they can get to that level of predictability, then wind is not predictable.

And the idea that it’s ok because the wind is blowing somewhere is even more stupid.
So what if it’s blowing somewhere, when the power is needed here.
Do you think it’s easy to minute by minute change the level of power being sent across the interconnects?

And then Duane goes for the trifecta of stupidity. He brings up claims about mythical power storage devices that are somehow going to make renewables reliable, while also doubling or tripling the cost.

John in Oz
Reply to  Steve O
December 12, 2018 1:50 pm

Your argument is the reason that anyone wishing to be paid to supply electricity to the grid must guarantee a minimum level of reliable, dispatchable power, not just the potential to generate power.

Reply to  Duane
December 12, 2018 6:52 am

‘Coal with conventional carbon capture’

Wut? There is no such thing.

Dick Patton
Reply to  Duane
December 12, 2018 9:05 am

LCOE does not count the cost for the fact that wind is not dispatchable, so it imposes costs on the rest of the system, and wind power might not be useable since it has no relation to electricity load.

The second problem is that to reduce the cost of wind, EIA is using fantasy numbers, which is too bad. They should use realistic numbers. They have a capacity factor of 43%, whereas in actual fact the capacity factor of US wind plants is around 33%. If less favorable sites are used, the factor goes down. The factor in Germany, for example, is 21%. As long as the specify where the wind plant is going I have no problem, but they can’t go into an area with marginal winds, and the areas with winds that strong are very limited. They don’t mention that little detail in the report. A discount rate of 6.5% is far too low – considering inflation of 3% it should be more like 10%. Finally, the cost is reduced by 1/3 from the last actual estimated cost in 2016. Since GE power is going out of business I don’t think the cost is going down.

The actual cost is more like $100/mwh. The people at EIA are tilting in the direction of windmills. the only cost savings is in the fuel ($25/mwh). The levelized avoided cost of electricity is treated the same for a dispatchable and non-dispatchable source, but you cannot avoid any of the cost of the system, except the fuel, with a non-dispatchable source, which is why the costs keep going up as you add wind and solar. Spending $100 to save $25 is no way to save money, so of course prices go up.


Reply to  Dick Patton
December 12, 2018 12:48 pm

Dick P,

I guess you are one of those experts that the study’s disclaimer says people should consult with before using any information in the study that might have real-world downsides causing lawsuits that the producers of the study wish to avoid to keep their cushy careers in tact … to keep earning the big bucks to pay for their rich-boy/girl/? toy “renewable-energy”-derived, sky-high-expensive electricity.

I decided that I just don’t know enough about the energy business to understand the lingo of the actual report, and so I won’t be trying any further to grasp its errors. Just a cursory attempt led me to believe that there is heavy reliance on an economic model with some convincing looking math, but I’d have to be a wiz in this area to dissect the flaws there, which I suspect do exist in that lovely equation.

I didn’t even know what “wholesale electricity” was — I had to look it up — I didn’t know the product being called this or what consumer bought such a thing. Electricity seems so fugitive — how could you trap it to sell to somebody wholesale, so that they could turn around and sell it to me retail? [that’s where my ignorant mind was at the time].

Now I get that it’s pretty complex how electricity is delivered to my house, and I wonder where, in this complexity, the math of the study might be inadequate.

James Clarke
December 12, 2018 6:24 am

“In the land of the blind, the one-eyed man is king!”

In a land where the government forces anything that is not a renewable to be prohibitively expensive, renewables will indeed become the cheaper energy source, but your energy will be the most expensive in the world!

These people are selling sow’s ears and trying to convince the world that they are really silk purses.

Matt From Raleigh
December 12, 2018 6:25 am

I love how they don’t figure in the capital expenses from wind power.

A coal or gas fired power plant generally lasts for 50 years. Wind turbines need to be replaced every 15 years. So the capital expenditure is triple for wind. That never makes the story.

Steve O
Reply to  Matt From Raleigh
December 12, 2018 9:19 am

That should be accounted for as part of the depreciation calculation. What’s generally missing is the cost of a backup facility, or batteries.

Alan Tomalty
December 12, 2018 6:47 am

End all renewable subsidies tomorrow and end all regulations that require renewables to be a minimum fixed % of usage . Wind power causes voltage transients costs, inverter costs, voltage variation costs, waveform distortion costs, frequency variation costs etc at the power plant. Solar also has many of these costs. New tranmission power line costs have also not been factored in. Factor in the costs of fossil fuel backup.

If the above is implemented and the extra costs are factored into the price, the WIND and SOLAR industries would die tomorrow.

Walt D.
Reply to  Alan Tomalty
December 12, 2018 7:33 am

… and place price caps on electricity if it is so economical.

December 12, 2018 6:55 am

“end all regulations that require renewables to be a minimum fixed % of usage”

Amen. Most are state Renewable Portfolio Standards (RPS). A really, really bad idea. They cause all sorts of stupid actions.

December 12, 2018 7:13 am

Out here in the real world, renewable energy always increases the cost of energy.
What are these guys smoking?

Non Nomen
Reply to  MarkW
December 12, 2018 7:50 am

What are these guys smoking?


Robert W Turner
December 12, 2018 7:29 am

This is 1984 level – if I tell you the sky is green, it’s green – pure propaganda.

John B
December 12, 2018 7:44 am

The study deals with wholesale prices not retail prices. The consumer pays retail not wholesale and retail includes other costs.

Wind and solar get priority so when they can supply energy, it must be bought. That means fossil fuel generators must go off-line but stand ready to reconnect when the wind or solar generators cannot supply… frequently and intermittently. That leaves the fossil fuel generators with costs which they cannot recover because they cannot sell their output as they normally would.

As wind and solar make up more of the energy mix, the time will come when fossil fuel generators sell too little to make it profitable and then they will need subsidies as they must have enough standby capacity to fill in when the ‘renewables’ drop out, but they will not sell enough to be profitable or make investment worth it.

Additionally when wind and solar are producing but the demand is too low, they must disconnect but are paid anyway – this is quite appart from subsidies – and this drives retail prices up too.

If you look at just one input cost and then assume this alone determines end-user cost, you are bound to get the wrong answer.

December 12, 2018 8:11 am

The study’s lead author, Associate Professor Bruce Mountain, said the research provided verifiable evidence that renewables drive down prices.

“I think in the current climate it’s critically important,” he said.

Is this clever pun intentional?

December 12, 2018 8:25 am

Just did my own eyeball of the data as well. . .
took less than a minute,
there is a direct link between age of plant and cost, the older the generating kit, in years, the cheaper the electricity, bingo, proven. Also a direct link to age of consumer, proven .
Easy stuff is this maths especially when you know all about break even points like wot I do. after the breakeven everything is profit, init ?

December 12, 2018 8:49 am

If it were all gas all the time, the prices would be 1/3 what they are now. But because of the renewables and the shuttering of coal plants, you do not have enough base load to cover when the reneables do not provide enough electricity. This brings about scarcity which then causes prices to rise.
This study is aimed squarely at the ignorant and stupid.

Bill Murphy
December 12, 2018 9:02 am

RE: “…because the ongoing cost of producing electricity from wind and solar is effectively zero.”
And in what alternate universe might this be true? I’m not a climate scientist nor an engineer, but I have spent a lifetime operating mechanical and electrical devices of all types, from bicycles to 4 engine transport category airplanes to server farms, and NOTHING operates with an ongoing cost of effectively zero. Even a bicycle requires consideration of capital and replacement cost, and maintenance costs such as oil for the chain and gears, as well as eventual replacement of chain, tires, pedals, bearings, grips and so on. It’s well known that solar panels begin to degrade as soon as they are exposed to light and they require a considerable amount of labor cost to keep clean and the electronics, wiring and associated equipment maintained. Wind farms have a lot of very heavy moving parts subjected to wide and sometimes very rapid variations in load and torque. I don’t have numbers on the MTBF of wind turbines, but from all the photos around of catastrophic failures I suspect it happens more than some would like to admit. And the repair/replacement cost is NOT “effectively zero.”

Reply to  Bill Murphy
December 12, 2018 3:21 pm

MTBF of a wind turbine is around 6 weeks. Not all failures will halt production though.

Service life to BER is 10-20 years depending on location.

Reply to  Bill Murphy
December 12, 2018 7:23 pm

In addition to the costs that you list Bill, there’s also the cost to the rest of the system that has to adapt to large amounts of unpredictable power.

December 12, 2018 9:26 am

The report is a great example of how to lie with statistics.

The high price of gas is a result of intermittent renewables. If renewables were able to deliver 7×24 gas costs would be low.

December 12, 2018 9:46 am

the reoprt is an ivory tower magicians trick. It is cleverly disguised nonsense.

If the report is correct, you can cut electricity prices but shutting down all gas generation and going 100% with renewables.

And while this is correct mathematically your average 6 year old could tell you why it is utter nonsense because renewables are unreliable .

The good professor has not factored in the value of reliability to his calculations. Gas is more expensive because reliability has value which is reflected in the price.

If gas was as unreliable as wind or solar the demand for gas would drop and the price of gas would fall to equal that of wind and solar.

December 12, 2018 10:04 am

The ABC, (like all other government “under-funded” broadcasters) should lead the way in cost saving by divesting from any gas generated electrical power and only using whatever is available solar and wind for their operations.

Peak audiences around noon on sunny days will appreciate their frugality.

Russ R.
December 12, 2018 10:20 am

So we finally find out what the scarecrow did with his “diploma of thinkology”.
He became the energy program director for Grattan Institute.
And he says “chamber another round and point it at the other foot. I won’t hurt a bit”.

John Robertson
December 12, 2018 11:48 am

Perfect example of the Catastrophic Anthropogenic Global Warming logic.
Modern Progressive reasoning as well.
“Math is hard, but we feel the answers should be thus..”
We went from the age of enlightenment to the age of delusion in one short step.
Yet far too much of Government Maths uses this same line of reasoning,seems to indicate our civil service is fully staffed with persons who have never had a real job.
Money comes from the government is the true state of reality,amongst our progressive comrades.

Reply to  John Robertson
December 14, 2018 6:26 am

Numbers are the first thing regressives manipulate (polls for example) ’cause they think the public is so uneducated that they’ll never know any better. You CANNOT believe any number coming out of the media, especially from “climate scientists”.

December 12, 2018 12:26 pm

“This was far more than the cost of the subsidies paid for them, which the study calculated was $11 per megawatt hour of electricity produced.”

Each MWh of electricity generated by wind and solar farms receive a large scale renewable certificate currently valued around $80.

Can anyone explain where he got the $11 from?

Reply to  Peter
December 12, 2018 4:33 pm

The $11 is averaged across all generation. The RET is currently 16% so average subsidy for intermittent generation works out at $68/MWh. The current price for LGCs is $62/MWh. In 2017 they peaked at $90/MWh. Prices for STCs are around $39/MWh.

If the RET is not increased, the price of LGCs will collapse. Victoria is now offering a direct government subsidy for rooftop because the volume of STCs is estimated on output till only 2030 and value is likely to slide with increased uptake. A 6.6kW rooftop system now costs around $2400 when the subsidies are accounted for being about $3800 for forecast STCs and $2000 direct from State government.

Roger Knights
December 12, 2018 12:30 pm

If renewables were cheaper, or equally expensive, the rest of the world—the developing world—would be installing them instead of coal plants. But instead the ones that have tried renewables, like China, are pulling in their horns.

December 12, 2018 12:39 pm

The study authors do not understand the value of predictability, planning and accuracy in fuel purchasing.

Gas is not a storable commodity, and a gas fired power station operator needs to be able to accurately plan its gas requirements to be able to purchase at the best price. This means having the ability to anticipate gas requirements weeks, months or even years in advance (as fuel supply operates over these timescales).

In the prompt market (hours- to days-ahead), the marginal cost of gas fired power station will always be above the zero marginal cost of renewable sources. This allows renewables to displace gas fired power sources when renewables are producing. There is an assumption that gas fired power stations stand ready to produce when renewable sources don’t. As a result, the intermittency of renewables turns onto intermittency in prompt demand for fuels. (Dieter Helm noted this effect in a recent report for the UK Government.)

This intermittency translates into price volatility in prompt fuel prices. Gas prices spike-up when demand increases unexpectedly (intermittent power sources not producing but not be foreseeable). Gas prices collapse when gas purchased is no longer required (intermittent sources are producing more than could be foreseen).

The total cost of gas purchases goes up for a combination of two reasons. If a gas fired power station operator (and its competitors) purchases gas in the forward market, it will land itself with significant losses when (inevitably but not foreseeably) everybody is forced to dump excess gas back into the market. Alternatively, if it (and its competitors) waits to purchase in the prompt markets, it will be forced to buy on the price spikes when everybody is competing for the limited supply available at that time.

The study authors have looked at past prices and arrived at the conclusion that renewables save money compared to the cost of generation linked to purchases in these volatile fuel markets. Their mistake is to assume all other things equal, and they have missed the point that intermittency of renewables is responsible for price volatility and increasing fuel purchase costs.

Reply to  Jordan
December 12, 2018 2:18 pm

“Gas is not a storable commodity, and a gas fired power station operator needs to be able to accurately plan its gas requirements to be able to purchase at the best price. This means having the ability to anticipate gas requirements weeks, months or even years in advance (as fuel supply operates over these timescales).”

Exactly and that’s why when new significant new gas developers needed long term contracts to defray gasfield development risk local users like gas generators with blue sky renewables ahead of them passed while Asians stuck their hands up for it. Now we have the bizarre situation that as a large exporter of gas we’re building import terminals to bring gas in from OS to supply the local market. It’s what you get with fickle renewables sticking their finger in the pie.

December 12, 2018 12:41 pm

Dr Finkel reported levelised costs in a report for the Australian government as follows:
Wind $92/MWhr (no backup)
Combined Cycle Gas Turbine $83/MWhr
Open Cycle Gas Turbine $123/MWhr
Supercritical Coal $76/MWhr (unavailable in SA)
SA baseload is currently supplied by combined cycle gas turbines at Pelican Point, Osborne, and Torrens, but then they must rely on high cost open cycle gas and diesel turbines (with extremely high spot gas prices) – and when wind is available it therefore lowers the spot price compared to open cycle gas or diesel. But that ignores the fact that when the wind doesn’t blow you must retain 100% gas capability to meet peak evening demand, so SA consumers are being forced to pay for the investment in wind generators and the backup gas/diesel generators – double the investment, therefore higher prices overall.
Another warm to hot summer’s day in Vic and SA with temperatures in the low 30s, and how’s that wind going? Well, prices are above $100/MWhr, and that wind is delivering just 400 MW in SA versus demand of 1600 MW rising to 1900 MW peak this evening, and 600 MW of wind in Vic versus demand of 6300 MW rising to 7200 MW peak this evening. But according to the learned professor and his cohorts, it would have been $38 worse without that wind.

Reply to  Robber
December 12, 2018 2:39 pm

“Dr Finkel reported levelised costs in a report for the Australian government as follows:”

No the only way he could work out levelised costs of power was if there was a level playing field. Namely no tenderer of electrons to the communal grid could tender anymore than they could reasonably guarantee (ie short of unforeseen mechanical breakdown) 24/7 all year round. But then the real truth would out as solar and wind would have to invest in storage to up their average tender or partner with thermal and pay them their just insurance premia or some combination of the two.

Simply put you can’t guarantee the electrons you can keep them but who could tell that to all the mums and dads with useless rooftop solar creating a duck curve management problem for real power. They know damn well stand alone with battery backup doesn’t pay (except in extremely remote off grid areas) so we continue to live the true cost lie for the obvious.

December 12, 2018 2:00 pm

So this is Aussie science. Yikes!

December 12, 2018 2:12 pm

And wind farms also considerably reduce (jam) radar effectiveness in the surrounding.

December 12, 2018 2:42 pm

These jackasses have an infinite supply of gall, that much is for sure.

December 12, 2018 3:08 pm

A single pensioner living in a flat in Adelaide gets a bill of $800 for the quarter, my bill in Qld is $450 for two people.

Anyone that says the South Australian way is cheaper is lying or a moron. The power bills do not lie.

December 12, 2018 4:35 pm


Jordan, Ferdberple, John B, E J Zuiderwijk, Flight Level, Charles Higley, Sara, richard verney, Krudd Gillard of the Commondebt of Australia, nicholas tesdorf,tom0mason, David Middleton, commieBob, old construction worker, Donald Kasper, Ivor Ward, Malcolm Chapman, and Dodgy Geezer

And old style method of critique is to actually look at the individual arguments in the research article, and actually determine what might be incorrect.

You all just dismiss the study on your judgement with no facts. So I can dismiss your opinions without any comment.

Reply to  trafamadore
December 12, 2018 11:36 pm

Scientific theories can be invalidated by experiment.

… a single experiment can prove me wrong. Einstein

It isn’t necessary to show why the theory is wrong. The experiment is sufficient.

The fact that renewable energy always increases electricity prices invalidates the analysis that says otherwise. It isn’t necessary to show the errors in the analysis.

Reply to  trafamadore
December 13, 2018 11:16 am

Thanks for your contribution trafamadore. I could see the mistake from the description as I have spent much of my life working at the sharp end on the above topic, and I could see the authors made a common mistake for this type of analysis (one I have seen before on more than one occasion).

I wasted a few minutes of my life looking at the report as you suggested. And yes, they make the mistake I thought they had. They assume statistical independence of gas price versus wind contribution, whereas I explained why there is good reason to consider that this does not hold.

In Figure 17 and accompanying discussion, the authors recognise increasing volatility in gas prices (as I told you) and increasing gas price (as I told you). At the same time, wind contribution increases. if intermittency of the wind contribution is at least part of the cause of the change in the gas price volatility and price, they are not statistically independent as candidate explanatory variables.

Multiple regression therefore cannot draw conclusions about their respective contributions to power prices.

The authors don’t appear to grasp the significance press-on with a multiple regression analysis on spot power price, including candidate explanatory variable “W(h,s)” half-hourly gross wind generation in MWh, and “G(d,s)” daily gas spot price. You can see this in their Equation 1.

The way to properly check their conclusions would be to put their data and analysis in the hands of a skilled statistician who is aware of the condition sand pitfalls of this type of analysis.

Right now, I consider their conclusions to be, at best, highly questionable

Bob in Castlemaine
December 12, 2018 7:47 pm

So really all we need to do is to teach windmills to generate when there’s no wind and solar panels to generate when there’s no sun? Then we wouldn’t need those damn dirty gas turbines.
Of coarse it goes without saying also that, unlike in Ozz where Green zealotry forbids fracking and loony Left state Victoria even bans conventional gas extraction, in countries like the US where gas is relatively cheap the price of electricity has been coming down right?

D Cage
December 12, 2018 10:55 pm

If this is correct then end fossil fuel taxation and renewable energy subsidies as the paper pushing overhead is no longer necessary.

Reply to  D Cage
December 13, 2018 1:39 am
December 13, 2018 3:27 am

Hmmm…backfill an unreliable and infrastructure-costly method of power generation with an overly-expensive (bad) method of power-generation, so your unreliable method looks like a good method by comparison.

Got it.

Richard A. O'Keefe
December 15, 2018 1:52 am

“the ongoing cost of producing electricity from wind and solar is effectively zero.”

That is impossible. No, let me rephrase that. You can reach such a conclusion only by creative accounting beyond the dreams of Enron. In the real world, everything wears out and breaks. Maintenance is a thing.
Replacement is a thing. Huge decomissioning costs are a thing. Salaries are a thing. Management bonuses and perks are very much a thing. If the ongoing cost of wind and solar were effectively zero, so would the ongoing cost of producing hydro power be, and it isn’t.

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