Solar is not the Cause of Increasing Electricity prices

Archived News, Posted on 28 Feb 2011

Much has been written recently about increasing energy bills, with some commentary including what could only be described as creative interpretations of the facts.

At its most shrill, some of this commentary has sought to blame increased amounts of renewable energy as the primary driver, when a cursory glance at the issue would reveal this to be plainly wrong.

Many in the renewable energy industry, including Pacific Hydro, are becoming increasingly concerned that renewable energy is being wrongly identified as the reason for current and future price increases.  A recent report prepared by the Australian Industry Group (AIG) clearly shows that rapidly escalating network costs are the primary reason for increased power bills. Other significant factors include increasing costs associated with running and maintaining existing fossil fuel power stations.

In stark contrast, policies like the Renewable Energy Target (RET) will have a minimal impact on energy bills, especially when compared to other costs such as network upgrades and maintenance and expected increase in natural gas prices.
Costs associated with renewable energy are several orders of magnitude below the level of cost increases driven by rising consumer demand, increased infrastructure costs and escalating fuel costs, due to the continued globalisation of our energy markets – a point once again emphasised in the AIG report but conveniently ignored in some reporting.
In fact, recent evidence indicates that more renewable energy is likely to result in lower long-term energy costs as we move towards a cleaner, more sustainable economy.

While addressing climate change isn’t cost free, it is perfectly clear that the cost of producing and transmitting energy will continue to rise over the coming years and that a majority of these cost increases have nothing to do with existing climate change or renewable energy policy settings.

While some commentators like to make false claims, the significant benefits of renewable energy and the RET scheme are often ignored. The RET will drive investment of approximately $25 billion in new zero-emissions power stations over the next 10 years, most of which will be made in regional Australia. According to official estimates by the Australian Treasury Department, the RET is likely to result in an increase in energy bills of just 2 to 4 per cent by 2020.
Another benefit of renewable energy that is not well understood is that it has the effect of reducing the wholesale price of electricity. This has been confirmed on many occasions in reports by organisations such as Roam Consulting and the Business Council of Australia.

The reduction in wholesale electricity prices from increased renewable energy generation is rarely taken into account or reported, which is strange given it makes a significant contribution to lowering the overall cost to consumers of policies like the RET.

This was written by Lane Crockett who is general manager at Pacific Hydro Australia, thanks Lane.