Fossil fools in the Sunshine State

In the backlash against rising electricity prices, renewable energy has often been singled out as the convenient scapegoat, particularly by a conventional power industry keen to protect their economic position.

While the industry is entitled to their opinions, they are not entitled to their own facts, which are anything but supportive. While the spotlight has been rightly applied to infrastructure ‘gold plating’, the real elephant in the room is the corporate welfare doled out to already profitable sectors. Queensland is a prime example.

The coal and gas industries in the highly ironic Sunshine State are rapidly expanding under archaic laws that give mining right of way over other land uses. Their development has not only faced far fewer restrictions but these mature industries have been greatly subsidized. In his review of energy policy in Queensland, Clean Energy Pathways, energy systems expert, Trevor Berrill, has identified State subsidies to the coal and gas industry of at least $6.9 billion over the past 5 years, including hundreds of millions of dollars for the development of the oxymoronic ‘clean coal’.  Another $13 billion to be spent on infrastructure to support the industry in the next 20 years.

By contrast, renewable energy and energy efficiency industries have received about $900 million in the same period. The industry, however, still faces many barriers such as access to land for large-scale wind and solar thermal electricity projects, none of which are yet ‘off the ground’.

Look deeper into the data and Queensland is just the tip of the fossil fuel subsidy iceberg. In 2011, total fossil fuel subsidies by the Australian government were calculated by the Grattan Institute to be $12.2 billion. This compared to just $1.1 billion spent on climate policies, including support for renewable energy in 2010–11. In the previous three year period, fossil fuel subsidies also outpaced funding for government climate change initiatives by $1 billion.

When federal and state subsidies are combined with the cost of pollution, every Queensland home is paying $3475 per year to use fossil fuels. That is not a misprint. The figure includes Queensland Government subsidies of $1.42 billion per year ($750 per home), federal government subsidies of $10 billion per year ($1250 per home) and the $6 billion pollution cost of burning coal and gas ($3150 per home).

Even if the pollution cost is reduced by a factor of 4, the cost to support a profitable and highly polluting industry is more than $2000 per year per home.

Compare this to the cost of renewable energy support nationally at $100-200 per year per home and the Queensland solar feed in tariff that adds $54 per home by 2014.15, according the State Energy and Water Supply Minister. Hon. Mark McArdle.

The solar feed in tariff, however, has helped create highly successful solar PV industry in the 18 years after Solar One on the Sunshine Coast became the first rooftop solar PV system connected to a power grid. Queensland now boasts 250,000 solar homes and there are nearly 1 million nationally – a 100% annual growth rate of that has created a real industry sector with thousands of clean energy jobs.

The renewable energy support, however, does not factor in a number of benefits that electricity distributors are now starting to realize. In his analysis of electricity demand from 2008 and 2012, John Davidson calculates that the solar PV installed in Queensland is actually saving households without solar $56/year.

This is consistent with comments made by Energex’s Mike Swanston said on ABC radio after the temperature hit the high 30’s in Queensland recently.  The 500 megawatts of rooftop solar was, he said, “….making a big difference in reducing the peak demand across south-east Queensland.” Peak demand power is the most expensive power to generate.  With the generation cost of roof-top solar now at grid parity with domestic retail prices, solar is cheaper than gas generation to offset summer peak demand.

Coal and gas industries have a rightful competitive and unsubsidized place in the market, but let’s stop the fossil fooling that masquerades as real competition.

Our children will look back and wonder how such bipolar insanity could pass as intelligent policy. To paraphrase the Irish Proverb: if you are in a fossil fuel hole and you want to get out, the first thing to do is stop digging. Literally.

By removing subsidies and making prices tell the environmental truth, we can move steadily to a clean energy economy while contributing to climate change efforts internationally. That’s a win-win for us… and our kids.

Peter Fries is an environmental journalist and filmmaker. In 1994, he coordinated the Solar One Project, the first rooftop solar PV system connected to a state power grid.

Copyright 2012 Peter O. Fries

 

 

 

Comments

14 responses to “Fossil fools in the Sunshine State”

  1. AlexeiT Avatar
    AlexeiT

    Sorry Peter – the ‘that’s not a misprint’ paragraph must contain a misprint:

    “…$3475 per year to use fossil fuels. That is not a misprint. The figure includes Queensland Government subsidies of $1.42 billion per year ($750 per home), federal government subsidies of $10 billion per year ($1250 per home) and the $6 billion pollution cost of burning coal and gas ($3150 per home).”

    $10b = $1250/dwelling, $6b = $3150/dwelling ?
    $750+$1250+3150=$3475 ?

    Please correct/explain/provide an in-text explainer.

    1. Warwick Avatar
      Warwick

      Perhaps i’s the denominator i.e. federal subsidies are across Australian households not just Queensland.

      1. Jonathan Maddox Avatar
        Jonathan Maddox

        Yes of course, but that’s not enough. The numbers given don’t add up.

  2. Nick Cummings Avatar
    Nick Cummings

    The best way to make the people making money out of Coal reduce their production, is to make it more profitable for them to use those same assets in the production of something else, i.e., renewable energy.

    For instance, the next time an open-cast mine floods, don’t pump it out, turn it into a facility for producing ‘green’ Hydrogen, using solar-powered-electrolysis.

    With one such facility, Australia would instantly become the world’s biggest ‘green’ Hydrogen supplier. – and more importantly to the mine owners, they would be at the cutting-edge of the NEXT resources boom . . .

  3. Landon Kahn Avatar

    Great article Peter. We spoke about the fossil fuel subsidies last year (http://todaesolar.com/2012/10/24/coal-fired-power-stations-are-burning-out/). The energy companies do a fantastic job of cover their subsidies but highlighting the renewable subsidies.

    Public opinion would be significantly different if the general public was aware of the vast gap between the two and the real cost to homes of those subsidies.

  4. Peter Bysouth Avatar
    Peter Bysouth

    Dear Mr Fries, while the article is great emotional stuff, it would be better if you explained that the majority of the “subsidies” are tax deuctions that are available to all commercial investment whether renewable or non renewable. Depreciatiopn of assets is by far the largest of the purported amounts.
    “Subsidies” to the diesel fuel industry is the same as that used by farm and other off road users that comes in the form of an excise rebate because it is not used on roads (for which we are informed the excise was to pay for).
    Dont get me wrong, while I would like to see the fuel excise rebates done away with for environmental and budget reasons, I don’t think we can or should change basic tax law. While you may think your reason would be just so would every other rent seeker who would also want the same. e.g. why should Qantas not have the same tax law as their competitors such as Singapore, Cathy or Emirates(?).
    Emotional arguments can be/are dismissed by politicians and policy makers. A simple counter argument would be to compare the above listed “subsidies” per GW/hr of produced electricity. So that even without removing hydro from the equation renewables don’t come off so well.

    1. Chris Fraser Avatar
      Chris Fraser

      A fine balancing argument. It’s easy to rub salt into the figures of the offending fossil generators simply because the investment pipeline, and therefore the depreciation claimed, is simply so much more than renewable technologies.

      While I would be interested in levelling that playing field by studying the subsidy $ per MWh we should note also that emerging technologies are also learning by doing. To me this means that a graph could be drawn to show how this learning makes for a more efficient use of the subsidy over time. And then judge whether this trend and the saving by not processing fossil fuels, still makes the new ways cheaper.

  5. Elizabeth Avatar
    Elizabeth

    Peter, you accuse the fossil fuel industry of creating their own facts, and yet you haven’t got your facts right either. You have confused subsidies of coal mining in general with power generation. Most of the coal mined in Australia is exported, so your figures are not a fair representation of the subsidies to actual generation plant (not pie-in-the-sky “clean coal”). You also don’t consider the inherent subsidy to solar roof top panels in the cost of upgrading distribution transformers to handle grid imports from households (most were originally designed only to export to households). This is a very complicated area and it would be nice to know all the facts without the emotion from one side or other of the argument.

    1. Ronald Brak Avatar

      Hi Elizabeth. Can you tell me more about these upgrades to distribution transformers to handle grid imports from households? I’m very interested to know which local grids are now acting like utility solar and exporting electricity.

    2. Chris Fraser Avatar
      Chris Fraser

      Martin Nicholson (an regular on RE and a professional) once advised that an excess of rooftop PV can increase voltages in the distribution grid. However on hot days when PV comes into its own i can imagine this export would be swamped by energy demand for running refrigeration and AC. So i am also interested in understanding situations where PV is plentiful but demand is low, and just what is the impact on old transformers at that time.

      1. Giles Parkinson Avatar
        Giles Parkinson

        I think the boffins at CSIRO had a good look at this and came up with a conclusion that differed markedly from what Martin or many utilities will tell you. In fact, CSIRO didn’t think it was much of a technical problem at all, more of a cultural issue. https://reneweconomy.wpengine.com/2012/networks-should-have-nothing-to-fear-from-solar-pv-42809

      2. Elizabeth Avatar
        Elizabeth

        Export to the grid will occur at any time that generation exceeds consumption, not necessarily just on hot/sunny days. Most people intentionally run their system so that they use more power when they are not generating, as they get paid more to export than the save by using their own power. Also, if people aren’t home during the day, most PV systems will be oversized for household baseload and will be exporting any time there’s enough sun. Is anyone in this discussion actually an electrical engineer that knows anything about transformers? I assumed this was common knowledge…

        Some useful references:
        http://www.theaustralian.com.au/national-affairs/carbon-tax/rooftop-solar-panels-overloading-electricity-grid/story-fn99tjf2-1226165360822

        And from AEMO:
        http://www.aemo.com.au/Reports-and-Documents/Information-Papers/Rooftop-PV-Information-Paper-National-Electricity-Forecasting 8 January 2013

        “Physical constraints within distribution networks can limit uptake volume. For example, to feed excess energy into
        the distribution network, rooftop PV systems must generate power at a higher voltage than in the street. If several
        systems do this simultaneously, this raises the street voltage. If the street voltage exceeds the threshold of a
        rooftop PV system, it will shut down and the system’s owner will be deprived of expected revenue.
        Anecdotal reports indicate that to prevent this, some distribution businesses are already imposing restrictions on
        the size of rooftop PV connections. However, alleviating this constraint involves distribution network augmentation.
        In the future, household electricity storage could also play a role.”

        1. Ronald Brak Avatar

          Thanks for those links, Elizabeth, but I thought you were saying transformers had to be modified as local grids were producing more electricity than they were using, which is something I didn’t think had happened even in South Australia which has the most solar per capita in Australia.

          The analogy in the Australian article comparing electricity to water is pretty bad. If Queensland and Western Australia are having problems with their quite puny solar capacity they should check out and imitate South Australia which has or had about four times as much solar as a portion of total electricity use as Queensland. Or maybe they should look at what Germany and Italy are doing. Currently Italy beats both Germany and South Australia and gets about 5.6% of its electricity from solar.

          The AEMO report is already quite outdated, but that’s kind of unavoidable when writing on a rapidly developing sector like solar.

      3. Chris Fraser Avatar
        Chris Fraser

        Thanks Giles and Elizabeth for the links. (Goodness, i even commented in the June, 2012 article and promptly forgot it).

        So at least it appears that AEMO and CSIRO agree, PV saturation does not raise a technical problem that smartening the grid cannot fix ;-

        “If you can predict what will happen, you can predict cloud coming and output about to drop, you can do some intelligent things,” Platt says. “You might do some load drops, then get a balance of supply and demand. Or you might choose to charge up batteries.” (CSIRO).

        Perhaps there begins the culture issue. Would the network operator have any incentive to permit a load drop, when some centralised generator has already successfully bid and got paid for his output ? Perhaps the network operator also has a role in storing some energy to act as a buffer ?

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