Energy giants want to thwart reforms that would help renewables and lower power bills

Darren England/AAP

Daniel J Cass, University of Sydney

Australia’s energy market is outdated. It doesn’t encourage competition and that’s holding back the transition to renewable energy. Important reforms to modernise the market are on the way, but big energy companies are seeking to use the cover of COVID-19 to prevent the change.

This is bad for consumers, and for climate action. Reform would help create a modern grid designed around clean energy, pushing coal-fired generators to retire earlier. Over time, it would also bring down power costs for households and business.

Renewable energy is the cheapest form of new electricity. It’s far better for the environment than coal and gas, and can deliver reliable supplies when backed by batteries and other energy storage.

Instead of delaying reform, Australia should be advancing it.

Wind and solar energy is better for the environment, and consumers. Tim Wimborne/Reuters

What’s this all about?

Regulators and governments recognise the need to modernise the rules governing the National Electricity Market. That market, established in 1998, supplies all Australian jurisdictions except Western Australia and the Northern Territory.

Reliable electricity requires that supply and demand be kept in balance. This balance is primarily provided by a system known as the wholesale spot market. Every five minutes, electricity generators bid into the spot market, specifying how much energy they will provide at a certain price.

An entire redesign of the market rules is scheduled for 2025. This should make the market work efficiently and reliably as coal retires and is replaced by renewable energy.

In the meantime, one important rule change is due to start in July next year, known as “5-minute settlement”.

Read more: Matt Canavan says Australia doesn’t subsidise the fossil fuel industry, an expert says it does

Currently, electricity is sold and sent out from generators in 5-minute blocks. But the actual price paid for this electricity in the wholesale market is averaged every 30 minutes. This means there are six dispatch periods, each with their own price, which are then averaged out when the market is settled.

This strange design has enabled big electricity generators to game the market. One method involves placing high bids in the first interval, then placing low or even negative bids in the remaining five intervals. This ensures that electricity from the big generators is purchased, but that they and all other generators receive an artificially high average price for the whole 30-minute period.

In 2017, the Australian Energy Market Commission (AEMC) decided to replace 30-minute settlement with 5-minute settlement.

The commission says the current system was adopted more than 20 years ago due to technological barriers which have since been overcome. It argues moving to 5-minute settlement would better reflect the value to consumers of fast-response technologies, such as batteries storing renewable energy and so-called “demand response” (a concept we’ll explain later).

The rule change would reduce power costs for consumers. Brendan Esposito/AAP

According to the AEMC, the rule change would lead to lower wholesale costs, cutting electricity prices for consumers.

But on March 19 this year, the Australian Energy Council, which represents most coal-fired power stations and the big three electricity retailers, sought to delay the reform. It wrote to federal energy minister Angus Taylor and his state counterparts, arguing the pandemic means energy companies must focus on “critical supply and reliabilty” issues, rather than implementing the rule change.

But energy consumption has barely changed during the pandemic, the Australia Institute’s national energy emissions audit shows. So delaying the reform to deal with supply and reliability issues appears unjustified.

Despite this, the Australian Energy Market Operator has proposed delaying the change for a year. Our submission, endorsed by energy and technology leaders, opposes the delay.

Moves by regulators to delay another 16 market reforms due to COVID-19 also seem to be afoot.

Change is possible

Last week, one big rule change to the National Electricity Market did proceed as planned. It allows “demand response” energy trading from 2021.

Demand response involves reducing energy consumption during peaks in demand, such as during heatwaves. Basically, the rule means big energy users, such as smelters and manufacturing plants, could power down in these periods, and be paid for doing so.

Technology pioneers such as battery entrepreneur Simon Hackett and Atlassian chief Mike Cannon-Brookes have backed this change.

Australia has successfully used demand response to provide emergency electricity capacity and other benefits. But it’s never been unleashed in the wholesale energy market.

The rule change doesn’t involve smaller users such as households. But it’s a promising start that creates new competition for fossil fuel generators and allows energy users to help make the grid more reliable.

Read more: New demand-response energy rules sound good, but the devil is in the (hugely complicated) details

Political warfare over climate policy has held back Australia, and the electricity market, for more than a decade. But energy reform that encourages greater market competition can readily be supported by political conservatives.

The demand-response rule change is a clear example: it has been championed by Taylor and his predecessors Josh Frydenberg and Greg Hunt.

Newly built renewable electricity is cheaper than new coal-fired power. Petr Josek/Reuters

Getting future-ready

Once the health crisis is over and economic recovery has begun, Australia will need the economic and social benefits of electricity market reform even more than before.

Such reform “stimulus” would help ready the grid for the inevitable retirement of coal-fired power stations, such as Liddell in 2023.

It would also align with state government investments in renewable energy, and boost private investment in new generation (which has recently slumped) and large-scale batteries.

Electricity remains Australia’s highest-polluting sector. Around the world, electricity markets are planning the transition from high to low emissions.

Delaying reform in Australia would be a major setback on the path to our essential energy transition.

Richie Merzian, Climate & Energy Program Director at The Australia Institute, contributed to this piece.

Read more: Putting stimulus spending to the test: 4 ways a smart government can create jobs and cut emissions

Daniel J Cass, Research Affiliate, Sydney Business School, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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A C Osborn
June 20, 2020 6:19 am

” It doesn’t encourage competition and that’s holding back the transition to renewable energy.”

What a complete and utter load of cobblers.
It is only subsidies that got them and are keeping them going.

Bryan A
Reply to  A C Osborn
June 20, 2020 8:24 am

It’s a beautiful day in the neighborhood
A beautiful day for a Neighbor..

Good morning boys and girls…
Can anyone say Conspiracy Ideationist?

I knew you could

Reply to  Bryan A
June 22, 2020 5:36 am

Interesting comment, Bryan A.
Except, I do not have a clue to whom you refer.

Reply to  A C Osborn
June 20, 2020 10:43 am

It’s competition that’s holding them back….not the lack of

Reply to  A C Osborn
June 20, 2020 7:24 pm

Disclaimer: I do software development work in the Australian NEM and gas markets.

The author is completely clueless on what it actually takes to ***implement*** settlements in the market. It is very challenging and the data are often rather poor. Now with the wave of a wand the volume of interval meter data will increase by a factor of six. Which means your processing power, network and storage all goes up by a factor of six – breaking your systems and imposing costs on retailers for zero benefit to the customer.

Sure the generators will ‘game the system’. Smart participants will optimize while obeying the rules in any system. The original author has a childish mentality if they think it would or could be any other way.

I personally will benefit greatly from the needless work created by the 5 Minute Settlement. I rather hope to get a light aircraft out of it. But that’s because ideologues like the authors have persuaded politicians to implement unnecessary changes to the system. Bureaucrats do like to fiddle, since its not them who actually has to make their hairbrained schemes work – and its the users and taxpayers that foot the bill while the market participants (generators, transmission network owners and retailers) cash in.

The authors seem unaware of a massive expansion of hydro capacity underway in eastern Australia. True renewables that actually work. Although Australia is a pretty good country for nuclear energy too (it has lots of uranium, is stable geographically, has areas safe to put plants that are not among to large numbers of people).

These days does anyone still believe self-styled “experts” are anything but shills for whoever pays their salaries ?

Komrade Kuma
Reply to  Moa
June 21, 2020 10:14 am

There is a whole industry out there of spruikers and spivs selling ‘expertise’ to schmuks in government covering a vast range of areas. The real problem is that the schmuks have so little understanding of the matter at hand that they have no capacity to even evaluate the actual expertise of the ‘esperts’ in the first place, to understand the critical elements of the brief that the experts are given ( or suggest they be given) let alone to actually understand the reports and advice provided in due course.

This is very much the result of the cult of managerialism where ‘expert’ managers run shows under contracts which reward the managers based on a rubric that turbocharges their bonus payments using easily achievable parameter targets that are typically short term in nature. Cutting costs on say repairs and maintenance is a classic, short term win for the bonus quantum, long term lose for the entity where ‘long’ just means well after the genius responsible has topped up his portfolio and CV and moved on. Such parasites are also targetted by the ‘independent expert’ industry which in turn flourishes due to their existence.

The two sets of self serving filth are complementary to each other, an almost perfect symbiosis, binary black holes of integrity.

Reply to  Moa
June 22, 2020 5:38 am

Excellent insights, Moa!

Komrade Kuma
Reply to  A C Osborn
June 21, 2020 1:35 am

By way of explanation for the utter load of cobblers, from his web page at The Conversation (spoken with a rising inflection, cos like, its about self important twaddle that’s trying to sound important…) :-

“Dan is a Research Affiliate in the Discipline of Strategy, Innovation and Entrepreneurship at The University of Sydney Business School. He is Energy Policy & Regulatory Lead at the Australia Institute and enrolled in the Diploma of Energy and Resources Law at Melbourne Law School. He is on the board of Solar Head of State and company secretary of the Deborah Cass Prize for Writing.”

Wow, a CV to be adored by some…..

To paraphrase Shakespear, ‘What’s in a CV? A pile of sanctimonious sounding tosh by any other name is but a pile of sanctimonious sounding tosh’

Jay Willis
June 20, 2020 6:37 am

“”Renewable energy is the cheapest form of new electricity. It’s far better for the environment than coal and gas, and can deliver reliable supplies when backed by batteries and other energy storage.””

…and the rainbow unicorn will top up those imaginary batteries, which are as big as castles. Windmills will be made of fairy dough and the solar panels made of gingerbread. And all we need to do to get to this magical kingdom is reverse the minute dispatch polarity on the spot market to even things up. This article is like one of those patents for perpetual motion, initially it can be hard to see exactly where the anti gravity kicks in and the flying house leaves the ground.

Thanks for posting.

Curious George
Reply to  Jay Willis
June 20, 2020 6:57 am

Please not again. Some Research Affiliates have a serious learning disability.

Walter Sobchak
Reply to  Jay Willis
June 20, 2020 9:56 am

I read that bilge and started banging my head on the desk. I still don’t know whether to laugh or to cry.

Reply to  Jay Willis
June 20, 2020 4:39 pm

”Renewable energy is the cheapest form of new electricity. It’s far better for the environment than coal and gas, and can deliver reliable supplies when backed by batteries and other energy storage.””

So add the cost of new transmission lines and storage to the cost of solar and wind, and the total cost is higher than gas or coal. End of argument.

David A Anderson
Reply to  MACK
June 21, 2020 10:23 pm

Plus a dozen other reasons that steady state producers; coal, natural gas, hydro, nuclear, etc… is far cheeper and far more capable.

In truth people have to go to extensive indrotrination programs to write such drivel, and use so many words to say it.

June 20, 2020 6:40 am

“It’s far better for the environment than coal and gas, and can deliver reliable supplies when backed by batteries and other energy storage”
Dropped after that. When one of the first sentences in an article is an outright lie, it’s not even worth to read the whole thing.

Dennis G Sandberg
June 20, 2020 6:40 am

Impossible to comment on something so totally baseless. Can anyone take this drivel seriously?

“Reform would help create a modern grid designed around clean energy, pushing coal-fired generators to retire earlier. Over time, it would also bring down power costs for households and business.

Renewable energy is the cheapest form of new electricity. It’s far better for the environment than coal and gas, and can deliver reliable supplies when backed by batteries and other energy storage.”

Hari Seldon
Reply to  Dennis G Sandberg
June 20, 2020 12:08 pm

“Reform would help create a modern grid designed around clean energy, pushing coal-fired generators to retire earlier. Over time, it would also bring down power costs for households and business.”

OK, if the gurus of the “renewable energy” would like to create a modern grid, please, they should create this “modern grid” on their own behalf (and with their money). On this way they could be very competitive offering their “very cheap” renewable energy directly to customers. Period. It would very interesting to see which market share could they get with VOLUNTARY customers in a free market enviroment.

Hari Seldon
June 20, 2020 6:51 am

From the article:

1. “Renewable energy is the cheapest form of new electricity. ”

2. “It’s far better for the environment than coal and gas, and can deliver reliable supplies when backed by batteries and other energy storage.”

To “1”: According to the practical experiences in Germany, the so-called “renewable energy” is maybe the MOST EXPENSIVE form of electricity. Since the start of the “renewable energy”-hype in Germany the electricity prices has been more than doubled, and the German electricity price is maybe the highest all over the world (in Europe definitely).

To “2”: The second part of the sentence is conjunctive: “when backed by batteries and other energy storage.” Unfortunately currently is not known any energy storage method which could be used in industrial dimensions (mass storage) in an economical way (at affordable prices).

Any more question, please?

Reply to  Hari Seldon
June 20, 2020 12:12 pm

Why do they always take pictures of smokestacks with backlighting, as in the article above? Oh, I can answer that. It makes the emissions look black. These days, the emissions are mostly CO2 and steam.

Patrick MJD
Reply to  Ellen
June 20, 2020 9:59 pm

There are both in that picture, smoke stacks and cooling towers. But I get your point.

Reply to  Hari Seldon
June 20, 2020 3:22 pm

There is an outfit in the UK, Highpoint Power, building a “cryogenic energy storage” in which they “liquify air”, Store it away, the as it warms and expands they blow it over a turbine to generate power, presumably at night or when the wind isn’t blowing. No claims regarding efficiency, of course. How costly is it to “liquify air”?

It doesn't add up...
Reply to  Cube
June 20, 2020 4:13 pm

If you get some free cooling from regasifying LNG in a heat exchanger it can be a bit cheaper. Likewise if you have the cooling water from a conveniently co-located power station to regasify your liquefied air it’s a whole lot cheaper. If you ignore such thermodynamic inputs you can even pretend you have a round trip efficiency of 70%. Or you can look at reality.

Reply to  Cube
June 20, 2020 4:25 pm

I’d be really surprised if they get much more than 10 to 20 percent of the energy invested back.

Reply to  MarkW
June 20, 2020 7:58 pm

Really hope you can find that out.
I’ve seen many publicly funded “renewable energy” projects which never report the amount of RE they generated. Actually, it probably depends on how deep you have to dig to get it. If things ain’t working as advertised, then don’t shout about it, OK?

Eric Vieira
June 20, 2020 6:58 am

“Renewable energy is the cheapest form of new electricity. It’s far better for the environment than coal and gas, and can deliver reliable supplies when backed by batteries and other energy storage.”
What is “new” electricity? Renewable is only “reliable” when backed by coal and/or gas and certainly not cheaper, since one has to include the added costs for backup or storage systems.
A complete “conversion” would necessitate so much land, concrete, steel and other natural resources that it would result in an ecological catastrophe.

Bryan A
Reply to  Eric Vieira
June 20, 2020 7:03 pm

The ONLY thing Cheap about wind/solar is the fuel source
The other thing CHEAP about Solar is the quality of components manufactured in China

Ed Zuiderwijk
June 20, 2020 7:00 am

New renewables is cheaper than new coal plants. Hey, tell that to the Chinese and Africans: they are doing it all wrong.

Reply to  Ed Zuiderwijk
June 20, 2020 9:04 am

You need to understand that in the current context- White live don’t matter.

Les Francis
June 20, 2020 7:01 am

Welcome to the product of the modern education system.
We have people in Australasian education systems who can come up with such drivel

Gary Pearse
Reply to  Les Francis
June 20, 2020 9:30 am

And he is an associate prof in the business school. Nevermind competitive energy sources, Australians graduating from such institutions won’t be able to compete in any sector of the economy. Business is all about paying attention to details and researching all those details. Our Associate is certainly dissociated from good business practice when he simply accepts on faith the most important variable in business and that is input costs.

Disconnect from life outside of academe has always been an issue as regards practical application, even in the sciences. Business and Engineering were to a large degree, exceptions in bygone days. Bless, them, I was fond of my geology profs. They gave me the scientific tools needed to give me a profession on the outside. However, companies that hired me had to bring me up to date 20-30yrs as the first task of my employment.

Today’s scientific (and as it turns out, business) education is so corrupted by sinistral politico-economics, that they turn out polished products that are essentially ineducable in their field outside.

Like I wouldn’t want my old profs to be calling the shots on mining exploration, I don’t want climate science profs being the arbiters on things climate and what must he done about it.

Russ Wood
Reply to  Gary Pearse
June 21, 2020 9:31 am

Old engineering saying: “In theory, there’s no difference between theory and practice, but in practice, there IS!”

June 20, 2020 7:03 am

Paying manufacturing businesses not to produce at certain times sounds like a great business model . More effective subsidies to fix a broken system. If they want to be fair dinkum , make it a level playing field and create an energy system that is both reliable and cheap. Zero renewables and just base load energy ( fossil fuels) = cheap and reliable.

Paul C
June 20, 2020 7:10 am

“Renewable energy is the cheapest form of new electricity.” It therefore requires NO subsidies or regulatory incentives to be used in preference to any other form of (reliable) electrical generation. I think I’ve covered everything that needs to be said in that one sentence.

June 20, 2020 7:11 am

If renewable energy is truly the cheapest then the Government needs do nothing but permit the capitalist energy market to perform. It will then push out other sources in very short order. Much quicker I think than any scheme Government could conceive. So cut the subsidies and see what happens.

Reply to  DHR
June 20, 2020 8:15 am

The people pushing green are the same ones that want to destroy free market capitalism, largely because the free market doesn’t want what they’re peddling.

Reply to  DHR
June 20, 2020 9:22 am

“If renewable energy is truly the cheapest then the Government needs do nothing but permit the capitalist energy market to perform.”
In fact all that is being proposed here is that the market operates with five minute periods independently, rather than linking them in half hour blocks in a way that big producers are able to game. That is, to permit the capitalist energy market to perform.

Hari Seldon
Reply to  Nick Stokes
June 20, 2020 10:12 am

Dear Mr. Stokes,

Maybe the government should delete ANY offering period. The customers should decide themselves regarding the supplier. To be quite honest: Which customer would like to change the supplier in a 5 minutes tact?

A C Osborn
Reply to  Nick Stokes
June 20, 2020 10:13 am

You need to give it up, your defense of the indefensible is embarrassing.

Reply to  Nick Stokes
June 20, 2020 10:23 am

“Gaming the system”

Nobody comes close to wind & solar generators when it comes to “gaming the system”.
Two words –

Brooks Hurd
Reply to  Nick Stokes
June 20, 2020 11:42 am


If they achieve the 5 minute windows, they will quickly find that far from improving the economics, it makes the price swings even more extreme.

Bryan A
Reply to  Brooks Hurd
June 20, 2020 12:34 pm

Enron tried something similar to “Game the System”

Reply to  Nick Stokes
June 20, 2020 1:11 pm

Nick is correct, and his comment also applies to the proposal for demand side response. Both good reforms by the sound of them that will help consumers.

Komrade Kuma
Reply to  Nick Stokes
June 20, 2020 4:00 pm

Honestly Nick, 5 minutes? Whaaat?? That’s your idea of baseload?

That’s like having cars allowed only 1 litre fuel tanks then letting ‘the market’ loose on fuel sales with a cap of 1 litre on sales. Sounds like a bit of a ‘scheme of arrangement’ to me, a bit like the old ‘bottom of the harbour’ scheme from a few decades back in Oz *, i.e. a deliberately confected action intended for no other rational, objective purpose than to favour the sole advantage of the proponents or the direct beneficiaries.

If these ‘renewables’ bozo’s cannot supply power for long enough the bake a cake then their product is simply not fit for the purpose of baseload power. The Australia Institute ( I mean, what a bit of marketing spivvery right there) are in it for themselves, a bunch of self promoting, snake oil spruikers trailing their coats for some street trade, IMO.

* Scumbag outfits avoided tax by literally destroying their financial records (sending them to the bottom of the (Sydney) harbour) so obviously they had no evidence of income and thus no tax to pay. Nick is 4th gen. Aussie so he knows of what I write. I think he fully understands the broader concept too, implement a system than completely frustrates any rational assessment or regulation. What can go wrong?

It doesn't add up...
Reply to  Nick Stokes
June 20, 2020 4:21 pm

You lack imagination if you think that 5 minute blocks can’t be gamed. Brooks Hurd is right. You can expect a lot more volatility. Volatility makes hedging expensive. The winners will be those with the best algorithms. It will become more like financial markets where getting the right answer nanosecond faster than someone else means you win and they lose.

Patrick MJD
Reply to  It doesn't add up...
June 20, 2020 11:19 pm

And the consumer ALWAYS loses. Smells like ENRON in the morning!

David A Anderson
Reply to  Patrick MJD
June 21, 2020 10:30 pm

5 minutes, nonsense and ZERO to do with capitalism. The author and Nick are, in this case wacked.
Consumers could not care less about 5 minute power. Give me power 24 7, and let the market decide.

Patrick MJD
Reply to  Patrick MJD
June 22, 2020 4:42 am

No, the consumer pays.

John in Oz
Reply to  Nick Stokes
June 20, 2020 4:48 pm

How do those with intermittent, uncontrollable outputs ‘guarantee’ the supply, even over 5 minute intervals?

Wind and solar are fully dependent on sunshine, clouds and wind, all of which are beyond their control. As ‘renewables’ are not required to provide their own backup sources, there should be a picture of them in the dictionary under ‘gaming the system’.

Pat from kerbob
June 20, 2020 7:15 am

Does Oz have legal weed?
This guy sounds like one of our canadian greens after too much green.

Practically everything in this article is a lie.

Patrick MJD
Reply to  Pat from kerbob
June 22, 2020 4:43 am

Puhlease, don’t give our “leaders” “ideas”…FFS.

Bruce Cobb
June 20, 2020 7:16 am

It’s hard to tell where the delusions stop and the lies begin.

Reply to  Bruce Cobb
June 20, 2020 8:23 am

The lies began upon the inception of the IPCC starting with the big feedback lie that comprised the only theoretical plausibility for a climate sensitivity large enough to justify its formation. It’s been down hill ever since AR1 where the resulting cascade of lies were canonized as ‘settled’ science.

Bryan A
Reply to  Bruce Cobb
June 20, 2020 8:27 am

Definitely Dilauded

Komrade Kuma
June 20, 2020 7:33 am

There has been a massive cyber attack on Australia, apparently by a state agent these past few days. It would seem that WUWT has been added to the target list and that the state agents has activated some deep cover (well that was the idea until they just got so full of themselves) assets within.

This sort of eco loon drivel is pumped out by the essay bots at the Australia Institute pretty much continuously. It is easily reacognisable by the rhetorical approach:- make an assertion of some ideologically compliant kind taken from the template manual, throw in some ad hoc sneering at all parties who might call the assertion out for the drivel it is, add invective and pomposity and meander imperiously to a glorious conclusion.

There are certain state actors who regularly spout press releases using the same sort of haughty, pompous, sanctimonious arrogance on a regular basis. They particularly like to target other parties who gainsay them in any way either directly or by implication. The interesting thing is that they purport to be highly advanced and totally communally oriented regimes yet have unelected leaders for life with it seems very fragile ego’s which may explain it all.

Renewable energy is only ‘cheap’ if you obsess about the endless albeit extremely low density supply via nature as being ‘free’. But so is coal, oil and gas its just that it has been preprocessed by the old girl into a hight density form and stahed away. The capital cost of the infrastructure required to harvest a low density source is relatively large with perhaps the exception of solar. Wind, wave, tidal etc are intermittent, only harvestable at low to moderate intensity but infrastructure must survive their extreme events which means massive over engineering , typically in remote locations with very hostile environments reaquiring large, robust servicing equipment and relativelu massive supporting structures which must be transported to, constructed, installed and commissioned then service through ( often short) life, the overhead cost of which is just plain friggin’ nuts.

But hey, the energy is cheap! Well hey, so is the rational for such lunacy.

June 20, 2020 7:37 am

The wonderful about universities is that one can be completely detached from reality.

June 20, 2020 7:38 am

plausible (adj.)

1540s, “acceptable, agreeable,” from Latin plausibilis “deserving applause, acceptable,” from plaus-, past participle stem of plaudere “to applaud” (see plaudit). Meaning “having the appearance of truth” is recorded from 1560s. Related: Plausibly.

Steve Case
June 20, 2020 7:41 am

…Once the health crisis is over…

Ha ha ha ha That has worked so well at crippling the economy that the left will never allow it to be over.

Terry Bixler
June 20, 2020 7:45 am

Do not mention any hard facts then jump to conclusion. Imagination running wild.

June 20, 2020 8:07 am

Energy companes want the cheapest power – if renewables were that, then they would be the first to demand them. Renewables are NOT made reliable by batteries, which can store very small amounts of grid level power. Nor do batterie produce power – they simplyy store it, and must be rechsrged by the renewables all the while the renewables are powering the grid. Wind is environmentally obnoxious, on many counts. Solar provides power for less than half a day (at max output, about 5 hours, sun willing). The obvious future low carbon reliable power is small modullar molten salt nuclear reactors. They will arrive en mass years before a renewable network can be built out and will instantly make obsolescent those renewable power generators. Renewable folks have latched on to batteries as if they can transform renewable generators into something worthwhile.

June 20, 2020 8:14 am

Here in Southern California, we just got our new proposed rates for electricity – up 11% on average, across the board (a bit over 14% for residential use). And we’ve seen an INCREASE in the amount of that “cheap” renewable power from wind and solar.

Once again, the truth is there for people to see – the more renewables, the HIGHER the cost of power.

J Mac
June 20, 2020 8:26 am

“Renewable energy is the cheapest form of new electricity.”
A lie told often can be come the ‘new’ truth, eh? Uhmmmm – No!

Bryan A
June 20, 2020 8:32 am

But energy consumption has barely changed during the pandemic, the Australia Institute’s national energy emissions audit shows.

Well of course it hasn’t. People who work away from home use energy at work. Those same people when sequestered at home simply use the same energy to work from home instead. The only energy not utilized is that required to transport the worker between locations.
Electricity usage not changed, petrol usage reduced.

June 20, 2020 8:44 am

We need more cowbell.

June 20, 2020 8:51 am

The “renewable energy is cheaper than fossil fuels” mantra is pure propaganda and everyone knows it. If it were true people would see their electrical bills go down instead of constantly up as more renewables are added. If it were better for us why is reliability getting worse, not better? After decades of pushing renewable energy we’re still at a low percentage of renewable energy vs fossil fuel energy. What’s going to happen when we approach even 50%?

June 20, 2020 8:52 am

“Renewable energy is the cheapest form of new electricity.”

Well to test that ivory tower theory in practice all we need is a level playing field with our communal grid instead of the current State sponsored dumping practices normally the ACCC would be all over like a rash. All that requires is to mandate any tenderer of electrons must reasonably guarantee them along with FCAS 24/7/365 9ie short of unforeseen mechanical breakdown) or they can keep them.

Then and only then can we look at forward tendering supply times along with sensible peak pricing and various consumers entering the market of their own free will and signing onto demand management. If you start out with a fundamentally flawed assumption that consumers only need some random electrons flowing through their transmission lines at the vicissitudes of daylight and weather then naturally all conclusions that follow from it is just so much fairy dust.

June 20, 2020 10:17 am

It is horrifying to realise we are paying people like this bloke.

He is either a total lair, or an utter idiot, or probably both. Such people should not be on the pubic payroll.

June 20, 2020 10:41 am

I find discussions on renewables always a bit confusing because of the intricacies surrounding the shady economics that define what any form of energy is costing the regular taxpayer. Even in this case I don’t know where to begin.

Before starting someone needs to declare what the cost of energy produced is using coal/gas and renewables without including excess regulation, taxes and subsidies. Regulations, taxes and subsidies just muddy the discussions and are used to justify bad outcomes. Give me the cost per kwhr for each as a base case and we’ll that as a basis for our discussion.

From what I remember, coal is about 1 cent per kwhr, nuclear 2 cents, wind 15 cents and solar 22 cents. Those are old numbers so some downward shifting of numbers for renewables could be justified. Then there is the cost to the system for installing intermittent and not phase friendly energy. And the cost to add baseload power to backup unreliable and not dispatchable power.

Start with the base case, work in the problems of installing unreliable (another cost level), not phase friendly power and then move to regulations designed for the purpose of denigrating fossil fuel energy and promoting unreliable renewable power ( where this article seems to be focused on).

It is at this point that renewables look attractive, or as attractive as can be made when putting lipstick on a pig.

Sweet Old Bob
June 20, 2020 11:12 am

Yes. Do 5 min. slots .
BUT bid two days ahead .
And if you do not deliver , YOU PAY someone else to deliver .

June 20, 2020 12:56 pm

So massive subsidies for renewables is to hide the fact that they are significantly more cost effective than base-load sources??

Is that also why I haven’t ridden in a solar-powered airplane yet??

Or maybe I have but the jet engines were just loudspeakers making a tremendour roar so I wouldn’t feel guilty robbing the rich!

June 20, 2020 2:26 pm

I’m an old finance guy who worked in the sector. A couple of comments. The rules are currently set so that renewable get first bid status even though they cannot guarantee generation. This means they are always first in the queue ahead of the real generators able to generate power on demand. One could ask why the coal or gas generators bother. Answer hedging. Retailers need certainty. Hedging gives it to them.
Second how can renewable be cheaper? A plated capacity wind generator produces “on average” 20 to 30 percent of that capacity in the year. To make up for that they pit up more windmills. Unfortunatelythe wind is still the same. Solar is the same. Totally useless at night with no storage. And when its cloudy or in winter production tanks.

Then there is the policy if demand reduction. How can a market operate properly if demand is reduced artificially? This is an artifice set up to support unreliable renewables. Its socialist thinking and doesn’t help business or society.

Chris Hanley
Reply to  Jock
June 20, 2020 3:51 pm

They call it ‘demand response’ and is so popular it is referred to as its acronym ‘DR’.
“Demand response (DR) is the voluntary reduction or shift of electricity use by customers, which can help to keep a power grid stable by balancing its supply and demand of electricity. It can help to make electricity systems flexible and reliable, which is beneficial if they contain increasing shares of variable renewable energy …”
“… DR typically involves paying some energy consumers to voluntarily cut or shift their use of power to better match supply”:
As more wind and solar is foisted on consumers, more ‘demand response’ will be needed, the more payments will be needed presumably coming from other consumers.
Demand response (DR) is a euphemism for supply collapse.

It doesn't add up...
Reply to  Chris Hanley
June 20, 2020 4:39 pm

Given that in Australia the maximum electricity price at wholesale is now over A$14,000/MWh, there could be some fancy profits to be made. But DSR bids are often set by the cost of backup generators, which the grid refuses to provide. It could probably do so more economically than most businesses if it were not ideologically opposed to it.

Brooks Hurd
June 20, 2020 3:00 pm


If they achieve the 5 minute windows, they will quickly find that far from improving the economics, it makes the price swings even more extreme.

Another Ian
June 20, 2020 3:31 pm

This might have something to do with that calculation?

“Reifying a classification plus a message to 2dogs”

June 20, 2020 4:04 pm

I am sure that the Large Energy Companies are gaming the system and it needs reform, but this is quite a separate issue from the use of ‘renewable’ power. So-called ‘renewable’ power is intermittent and unreliable and makes the grid unstable. This requires the use of extra baseload power to fill in when there is no wind and at night. If it was not highly subsidised, ‘renewable’ power would disappear, leaving behind the ruins of windmills and solar farms.
As for ;gaming the system’, nothing comes even close to ‘renewables’.

4 Eyes
June 20, 2020 4:08 pm

Conflation. Contradiction. Deception. Ignorance. Bias. Presumption. Assumption. That’ll enough for now.

June 20, 2020 4:13 pm

Demand response “creates new competition for fossil fuel generators”. Well if ever there was twisted logic, this is it. Demand response involves users switching off when their needs could be supplied by fossil fuel generators if only the rules hadn’t been changed to prevent their needs being supplied by fossil fuel generators. IOW “creating new competition for fossil fuel generators” means closing fossil fuel generators so that consumers have to use something else and have to close down when it isn’t available. What a warped interpretation of “competition”.

It doesn't add up...
Reply to  Mike Jonas
June 20, 2020 4:43 pm

In reality it is just cover for inadequate grid investment in peaking and backup capacity for renewables.

June 20, 2020 4:21 pm

Riddle me this Batman, why when green energy was voluntarily available in the city of Canberra, was the price of green energy much higher than standard grid energy. The scheme proved so unpopular that over the next few years the left wing Canberra government dropped it and just integrated it into the overall price. Everyone paid more.

Let’s instead have real choice – All individual households in Australia should be able to elect, on an annual basis, the source of their electricity, and hence the price.

As for businesses, just how good are you going to feel when the business you work for says that due to savings available under a “demand response”, we are shutting down the workplace. Off you go, enjoy the afternoon off without pay.

It doesn't add up...
Reply to  DPP
June 20, 2020 4:48 pm

It gets to the point where if businesses can’t make things work they shut down altogether. Not just for an afternoon. Basically any business that can’t justify operating with backup generators has an incentive to move somewhere where they have reliable power supply at reasonable cost.

It doesn't add up...
June 20, 2020 4:53 pm

I did wonder whether the author didn’t have an r in his name. It would have made more sense.

June 20, 2020 5:59 pm

Seriously? How do such unsubstantiated articles get published as a serious contribution to the challenges facing the Australian electricity grid? Perhaps the author would like to actually study the implications of intermittent generators disrupting the grid. “Renewables are cheaper” is just plain wrong. Australia’s Chief Scientist Dr Alan Finkel reported the levelised cost of solar in 2020 as A$ 91/MWhr without backup, and A$172/Mwhr with 12 hours backup. New coal A$76/MWhr.

John Bruyn
June 20, 2020 7:12 pm

What Daniel is saying is that introducing renewable energies has increased the cost of energy and has created a whole new set of problems. On that basis, it is not modernising but stupidising Australia’s energy supply that has made manufacturing of many products uneconomic and created unemployment for many people who once were proud to have the job they did and, were able to feed and clothe their families.

Where have all the workers gone?
Long time ago…..?
Where is Australia’s car industry now?
When will they ever learn?

Patrick MJD
Reply to  John Bruyn
June 20, 2020 10:40 pm

The demise of the car industry in Aus was largely due to their own, unionised, stupidity. Should someone be paid AU$110k to build a car in Aus? It’s why cars were 4 times as much to make here as opposed to Asia and 2 times as much as in the EU zone. GM Holden and Ford were making cars, very badly, that no-one wanted to buy. Even though I do try to buy locally made, I would never have bought an Aussie made car.

June 20, 2020 9:34 pm

The reason they want 5 minute increments instead of 30 minutes is because wind and solar cannot provide 30 minutes of reliable power.

Ideally renewables would like to see millisecond settlement intervals.

Darren Porter
June 20, 2020 10:10 pm

The Conversation should be renamed Pravda

Hari Seldon
Reply to  Darren Porter
June 21, 2020 4:21 am

Dear Mr. Porter,

With full respect please allow me to say “no”. I come from an East-European country, and before 1990 we had to read (as part of the communist indoctrination) in the school Pravda. Your statement should be corrected on the following way: The article from Mr. Daniel J Cass, University of Sydney is like an article from Pravda. The comments to this Pravda-article would have never been published in Pravda, and the authors of the comments would be on the way to work camps in Sibirien. If Mr. Biden and GND will win in November, we (the authors of the comments) all will be sent also to green (communist) correction facilities.

June 21, 2020 6:03 am

“Where have all the double-glazing salesmen gone?” (Long time gassing)
This is not a question that kept me awake at night.
But I have just revisited this question now that I’ve realised what the answer is.

“They’re selling solar panels and green energy!”

Patrick MJD
Reply to  JCalvertN(UK)
June 21, 2020 8:17 pm

Double-glazing did have benefits. For a start you were replacing typically 30 – 50 year old wooden window frames that had poorly fitting panes of glass. Certainly true the UK IIRC. But Everest wasn’t the best!

Reply to  Patrick MJD
June 22, 2020 4:49 am

From what I heard, Anglian and Everest were the acceptable face of double-glazing.
But there were countless other ‘dodgy’ ones whose salesmen were nothing but skilled con-artists who would turn-up on people’s doorsteps and give them the full patsy treatment. Before they came to their senses, the gang had been through, and their genuine heritage windows had been replaced by nasty plastic jobs that were only held-in by a single undersized screw. Then the extortionate invoice would arrive . . . .

Looking at solar panel sales websites, I found that most of them promised “solutions” without prices, quality assurance or even brands – but they all seemed to expect the prospective buyer to ‘ask for a quote’. This is exactly the same tactic used by fly-by-night double-glazing salesmen.

June 21, 2020 8:08 am

Can these Mensa candidates name a single place where the addition of renewable energy has actually cut energy costs? (With the exception of remote islands that have to import diesel fuel to run the generator, from this list.)

June 21, 2020 12:41 pm

The renewable energy industry is like the deodorant industry.
Both are peddling solutions to problems most people didn’t realise they had.
To flog the product, they’ve first got to flog the problem.
Which is where alarmist scientists come in handy.

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