Has Australia ‘over-invested’ in renewable energy?

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Spoiler alert: No. And energy minister Angus Taylor clearly hasn’t been paying attention to the history of our electricity infrastructure.

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No. Minister Angus Taylor clearly hasn’t looked at the history of our electricity infrastructure. Renewable energy policy has been poorly designed, to some extent because of politicisation, and to some extent because no-one imagined it would grow this fast, driven by astounding cost reductions and technology developments.

Put it in perspective. Base load coal power stations have always produced ‘too much’ electricity overnight and on weekends. So electricity agencies offered low ‘off-peak’ prices to encourage more people to use this ‘waste product’.

They actively promoted off-peak electric hot water storage technologies and management controls. Indeed, a colleague of mine used to describe base load power stations as being like a car whose engine could not be turned off, so it would have to be left idling in the driveway.

Coal-fired power stations are also unable to supply peak demand – unless we have over-invested, so there is idle capacity available. And the prospect of failure of a large generation unit was managed by maintaining large amounts of ‘spinning reserve’ as well as investing in flexible generation such as hydro and gas turbines – which had low utilisation, but offered ‘insurance’. The load factor of Victoria’s coal power stations under the State Electricity Commission was around 60 per cent.

The Renewable Energy Target has been the main driver of renewable electricity. The Howard conservative government introduced it as part of its Kyoto ‘Safeguarding the Future’ commitments.

The Howard government also offered incentives of up to $4,000 per rooftop solar system before the 2007 election. Labor offered double – and won the election.

Then former rock star Minister Peter Garrett had to deal with the resulting budget blowout, which led to the redesign of the 2020 RET to separate small and large renewable energy targets, so the cost of PV incentives was shifted from the budget bottom line to electricity consumers, via electricity retailers.

State governments of all persuasions have offered populist (sometimes very generous) feed-in tariffs for PV exports. These are great vote winners.

Rational renewable energy policy that responded to evolving technologies, renewable energy technology prices and trends in demand would have looked very different.

Incentives would have been focused regionally, to avoid high cost electricity supply and high transmission and distribution losses near fringe of grid, and in areas where power line capacity was stressed. Policy would have incentivised development of complementary options such as demand response, demand management, energy storage and even Australia’s ‘forgotten fuel’ energy efficiency.

We are now, at last, seeing Western Power and Synergy in Western Australia adopting strategies that involve providing fringe of grid consumers high quality stand-alone electricity systems with ongoing maintenance support – which save both the consumer and the community money. But energy market rules block this on the east coast.

We need to listen to AEMO, CSIRO and a range of smart energy analysts, and implement rational and strategic clean energy policy (including demand side measures). The time for throwing rocks is well and truly over.

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