Essay by Eric Worrall
Surprise – despite a political promise of cheaper power bills, turns out someone has to pay the trillions of dollars required to “transition” to renewables.
Electricity prices to soar as energy transition falters
Angela Macdonald-Smithand Jenny WigginsUpdated Oct 10, 2022 – 6.40pm, first published at 2.19pm
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“Next year, using the current market prices, tariffs are going up a minimum 35 per cent,” Alinta Energy chief executive Jeff Dimery told the summit in Sydney, with disagreement from Origin Energy and EnergyAustralia.
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Mr Dimery warned Australia was “out of time” on putting in place policies to support investment in new firmed renewables capacity to replace the coal power plants exiting at an accelerating rate, worsening upward pressures on pricing.
“What cost $1 billion to acquire is going to cost me $8 billion to replace. So let’s talk about that and still explain to me how energy prices come down, I don’t get it.”
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It makes it harder to achieve the drop in power prices promised by Labor by 2025 in the run-up to the election in May, although Climate Change and Energy Minister Chris Bowen did not back away from that assurance.
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“It appears that some people think [the energy transition] will be easy and cheap, but I think most people in this room understand it’s hard and expensive and likely to drive energy bills [up] in the near term,” said Andrew Richards, CEO of the Energy Users Association of Australia.
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“If you look at the quantum of investment required … [estimates] look at anywhere between $US100 and $US120 trillion of investment necessary to effect transition by 2050. That is orders of magnitude more than the supply chain is capable of doing today.”
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Could it be nobody ran the numbers, before our politicians opened their mouths and committed to an impossibly expensive energy solution?
Note the $US100+ trillion is a most likely a global transition estimate, though this isn’t clear from the context.
The cost of Australia transitioning is around AUD $7 trillion by my estimate, much of that cost is battery backup. Though this estimate is just the cost of replacing current demand, it does not include the cost of providing additional electricity for a 100% electric vehicle fleet.
And of course, there is a real question whether the transition is even possible, given European solar manufacturers appear to be choosing to close their factories rather than face the prospect of using their own product to power operations.
