June 17th 2017


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Articles from this issue:

COVER STORY The Great Barrier Reef is dying? ... Again?

CANBERRA OBSERVED McCain, Keating wade into South China Sea

EDITORIAL No heads roll despite quarantine foul-ups

EDUCATION FUNDING With Gonski reboot, Turnbull taps in to way to lose Catholic vote

INDIGENOUS AFFAIRS Aboriginal recognition in the constitution?

NATIONAL AFFAIRS Low job prospects keep a generation at home

INTERNATIONAL AFFAIRS Donald Trump has the world in a spin

EDUCATION FUNDING Gonski numbers shrink in the light of day

SAME-SEX MARRIAGE Qantas bans pensioner: an abuse of process

MUSIC Jim Black: accent on rhythm

CINEMA King Arthur: Legend of the Sword: The East End treatment

BOOK REVIEW Apocalypse and redemption

BOOK REVIEW Poems exhibit delicate strength

LETTERS

ELECTRICITY Bad science + bad economics = bad policy

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ELECTRICITY
Bad science + bad economics = bad policy


by Peter Westmore

News Weekly, June 17, 2017

Following last year’s big power outages in South Australia, after the closure of the Northern Power Station, and soaring electricity prices with the closure of the huge Hazelwood Power Station in Victoria, the Turnbull Government responded by asking Chief Scientist Alan Finkel to conduct an inquiry into the future security of the national energy market.

The centrepiece of the review should have been guaranteeing the provision of long-term energy security, at the lowest cost, for Australian businesses and consumers. As coal has provided the lion’s share of Australia’s electricity for the past century, and will continue to do so into the future, the effective use of Australia’s almost inexhaustible coal deposits to provide energy security should have been central to the review’s findings.

Instead, the review has recommended an energy future without coal, in order to meet Australia’s commitments to the Paris Climate Agreement.

I will leave it to others to examine whether the Paris Climate Agreement sets the appropriate benchmark for Australia’s energy security. What is beyond dispute is that Australia’s energy security requires the continued use of black and brown coal. Anyone who doubts this should look at Figure 4.2 in the report.

It shows that black and brown coal contribute over 150,000 gigawatt/hours to Australia’s electricity annually, compared with less than 20,000 GWh for gas and hydro, which are ahead of the output for wind and solar power. Broadly speaking, coal provides base-load power, and other energy sources are available to meet peak-load power, because they can be turned on and off relatively easily.

To suggest, as the report does, that gas and alternative energy sources such as wind and solar can replace coal in the supply of base-load power is delusional.

The report also fails in its analysis of the inherent unreliability of wind and solar power. The failure of these alternative energy sources was clearly seen in last year’s blackouts in SA, the state that has gone further than any other in mandating renewable energy targets.

Renewables

South Australia now generates over 40 per cent of its energy from renewables, and requires interconnectors with Victoria to get access to sufficient electricity to meet the state’s requirements.

Electricity from interstate coal-fired generators, and from gas-fired generators in western Victoria, are required to prevent blackouts in South Australia.

The result of the state’s dependence on renewables and on imported electricity has also meant that South Australian consumers, including industry, pay substantially higher prices for electricity than users in other states, and the price has escalated since the closure of the Northern Power Station, the last coal-fired power station in the state.

The closure of coal-fired power stations in recent years is almost entirely due to the fact that the national energy market gives no incentive to the production of base-load power, and provides massive subsidies for alternative energy generation, indirectly provided by consumers and fossil-fuel generators, which has made older base-load power stations uneconomic.

The report also fudges the figures on the cost of alternative energy sources, claiming that renewables are comparable in price with fossil fuels, and even suggests that future technological advances will make wind and solar power cheaper than coal and gas.

It is significant that Japan, a first-world nation that has signed the Paris Climate Agreement, recently announced that it will build an additional 45 new coal-fired power stations, using the high-energy, low-emissions technology being used in most modern power stations being built around the world.

The massive Adani coalmine in Queensland is designed to provide coal for similar new thermal coal-fired power stations in India. China is using similar technology and Australian coal to expand its electricity output.

But the Finkel report has ignored all this, supporting the phasing out of coal-fired electricity generation in Australia.

In other words, Dr Finkel is smarter than Japan, India and China!

While environmental lobbyists have claimed that renewables are cheaper than coal, a business consultancy, BAEconomics, released a study showing that renewables received more than
$3 billion in subsidies in 2015–16, funded mainly through the Federal Government’s Renewable Energy Target and state government solar feed-in tariffs, and paid by consumers.

The Minerals Council of Australia calculated that the subsidies worked out at $214 per megawatt/hour for solar energy, $74 per MWh for wind, $33 per MWh for other renewable energy sources, and just $0.40 per MWh for coal. Despite this, electricity from base-load coal is by far the cheapest in Australia.

Unlike renewables, coal is also subject to heavy mining royalties, which amount to a separate tax on coal-fired electricity, and discourage investment in base-load power. A tripling of the coal royalty preceded the recent closure of the Hazelwood Power station in Victoria.

Little wonder Australia faces an energy crisis of unprecedented gravity, while the solution stares us in the face.




























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