Yesterday, The Australian reported that rebates given to solar panels would cost households across the country an additional $200 per year. The government’s Small-scale Renewable Energy Scheme (SRES) provides up-front rebates for consumers who install solar panels. The cost of these rebates are then carried by all electricity users.
But the claim that this scheme will place significant upward pressure on electricity bills is misleading, the product of an often confusing and heavily politicised debate on electricity prices in Australia. What’s going on here?
What is the impact of solar rebates?
There is considerable modelling which indicates that SRES has a relatively minor impact on electricity bills. A critical problem with The Australian’s figure is that it is based on the assumption that only households will bear the cost, when in fact, they will be shared by all electricity users, including businesses.
“One of the straight out errors is they’ve summed up the total gross costs of the scheme, and divided that by the number of households,” energy markets analyst Michael Manzergarb told Crikey.
“What it doesn’t take into account is that these costs apply to all users, including commercial and industrial users.”
Residential users only consume about one third of Australia’s electricity, meaning the bulk of the costs generated by the SRERS are carried by commercial and industrial electricity users. A more accurate figure can be found in a recent report by the Australian Energy Market Commission.
The report found that the scheme costs $32 per household in 2018-2019, and will increase to $34 in 2019-2020, significantly less than The Australian’s figure of $195 per household. Another report, this time by the ACCC called for the scheme to be phased out, but also conceded that doing so would only save consumers between $15 and $30 per year.
Even Energy Minister Angus Taylor, hardly a champion of renewables, pointed out that the scheme only contributed about 3% of an average household electricity bill.
Later in the piece, The Australian quotes Origin Energy as saying that SRES and state-based subsidies accounted for up to 15% of all electricity bill costs. But once again, the AEMC report paints a more nuanced picture. Nationally, environmental policies contribute an average of 6% to electricity bills. Only the ACT, where environmental policies account for 14% of electricity costs, gets close to The Australian’s figure. The ACT is an outlier, due to its introduction of a 100% renewable energy target in 2016.
Importantly, these numbers are based on all environmental policies, not just the comparatively small SRES. Mazengarb believes this conflating of SRES with other, bigger schemes is “misleading”.
Has The Australian done this before?
This isn’t the first time The Australian has misrepresented the impact of renewable energy schemes on electricity prices, and as Crikey recently reported, the paper has a long history of hostility toward climate science.
Last year, they ran an almost identical piece, claiming solar rebates would cost consumers an extra $100 per household. Like this year’s piece, the article was based on analysis by Demand Manager, a renewables trader. Curiously, Demand Manager CEO Jeff Bye responded to criticism of the most recent piece by admitting that The Australian was “looking for a big figure”, so he gave one.
According to CSIRO communications adviser Ketan Joshi, these articles demonstrate an approach common in reporting on renewable energy, where big numbers and lump sums are employed to make the schemes appear big and scary.
Mazengarb agrees that The Australian often exaggerates the costs of renewable schemes, with the opinion section displaying particular alarmism.
“They calculate the absolute highest cost of these schemes, then they run these numbers to make it look like they’re billions of dollars, so [the schemes] get attacked without providing any context.”
What’s causing higher energy prices?
The debate about solar rebates comes against the backdrop of a protracted political fight over rising power prices in Australia. Conservative politicians frequently blame higher costs on renewable energy schemes, but the reality is far more nuanced.
“If you point to something that’s 3-4% of the electricity bill and try to blame it on that, you miss the bigger picture,” Mazengarb said.
Price gouging by electricity companies, over-investment in network infrastructure, high gas prices, and policy uncertainty have all contributed to the current situation. Renewable energy could actually help reduce prices. According to Mazengarb, more investment in renewable energy could put downward pressure on wholesale (the cost of generating electricity) in the long-run, offsetting any increase in electricity bills.
“[Renewable power sources] cost more to build, but once they’re built, they don’t have any fuel costs, which puts downward pressure on prices in the long term.”
The Clean Energy Target, born out of a report by chief scientist Alan Finkel and subsequently dumped by Malcolm Turnbull, found that an increase in renewables could occur alongside lower energy prices.
What do you make of The Australian‘s reporting on this issue? Write to boss@crikey.com.au.
Is anybody really surprised by the lies and misinformation flowing from the Daily Telegraph or the Australian, what really surprises me is that some people actually buy it and read it, only the truly brain dead would take any credence from these extreme right wing propaganda rags.
There’s no doubt that sustainable energy will cost more than the fossil fueled generators it is to replace. In the struggle for share in the subsidy, fans of wind and solar often wildly exaggerate the costs of nuclear. With fossil carbon as our common enemy, we need to get on the same side.
No. The coal-powered plants are set to reach the end of their lifespans, and extending them will be expensive, as will building new coal-powered plants, and extremely expensive to build one of your nuclear power plants.
Renewables might be expensive to build the infrastructure, but once it’s built the fuel is free, and it’s also infinitely scalable.
Come on Roger. Catch up.
https://reneweconomy.com.au/black-coal-plants-push-australian-wholesale-energy-prices-to-record-highs-23196/
Solar and wind are around $50-60 MWh, with firming from a battery is another $10-20 MWh. Clearly they are now the cheapest new investment option and approaching the same cost as running existing coal plants (let alone the insane costs required to keep the old coalers running for a few more years).
So compare that to nuclear power which is now at “The average lifecycle cost of electricity from new nuclear plants is now $151 per megawatt-hour”
https://reneweconomy.com.au/taxpayers-should-not-fund-bill-gates-nuclear-albatross-20636/
and existing plans for new nuclear plants being shuttered
https://reneweconomy.com.au/with-uk-nuclear-power-plans-in-tatters-its-vital-to-double-down-on-wind-and-solar-31048/
Sure. Come on over and join the team!
New generation capacity will cost more than the generation it replaces because that being replaced is old and has long since been written off as an asset.
New capacity is cheaper to build in Solar PV or wind than coal powered stations and, especially, nuclear powered stations.
*cost per MWh installed capacity
In determining the total carbon footprint of a nuclear reactor, greenhouse gases emitted at all stages of its life-cycle need to be considered. This includes construction, operation, fuel production, dismantling and waste disposal. The mining, purification, casting and transport of uranium particularly adds a significant cost. Germany commissioned a study some years ago and concluded that the total carbon cost of nuclear energy was essentially commensurate with coal fired power stations. As for The Australian, it has long ceased to be a newspaper. You wouldn’t expect any genuine investigative reporting in that rag.
If you run your comment through your mind a couple of times, Inversius, you will see that it is the sort of empty insult shared among consenting idiots at a drunken Party meeting.
Which “Germany” commissioned this study? By an act of the Reichstag perhaps? It was no respectable technical institution! Almost certainly it was chanted off at a similar drunken meeting, but in German.
All of the nuclear fuel handling you quote could be done by electricity, eventually to be decarbonised of course. Considering that a whole year’s generation of each kilowatt would only fission one gram of fuel, its preparation could not emit much more than a few grams of CO2. In contrast, per kilowatt-hour the German electricity system currently emits more than 450 g of CO2, and thus four tons of CO2 across a year gets dumped into the greenhouse. Apparently that’s better for the greenhouse. When chanted off at the appropriate drunken meeting, that is.
In fact all the cement and steel used in construction could eventually be similarly manufactured – carbon free. Even before mass production sets in, current nuclear reactors are costing only six dollars per kilowatt of generating capacity. That wouldn’t buy you much coal, resulting in a relatively carbon-free structure to generate millions of kilowatts for sixty to a hundred years. You couldn’t say that much for a modern wind farm, not even in German.
But what you can say, Roger, is that when the cleanup costs are added to the building and running costs, the price of current designs is prohibitive.
The British had a parliamentary enquiry about 10 years ago into cleaning up a half dozen mothballed nuclear plants. The estimated price was so astronomical they decided instead to just lock up the sites and leave it for another generation to sort out.
Hi Bref. You could even go further, and say that assessing the lifetime cost of any process should include _all_ of its wastes. Cleaning up to what standard, becomes a serious question. Currently there is an unnecessary distinction between natural and artificial radio-isotopes (where zero residue is impossible to achieve but is still in the standards), and there is a pervasive failure to indicate a tolerable level (where the net harm is less than the net benefit). It would be understandable if the Brits are leaving a cleanup job until a more sensible generation reshapes the standards to the science, but it is more likely they are just letting the short lived isotopes die away.
However, all this fussing over radioactive residues is nitpicking when compared to the mass of CO2 that would have been dumped permanently into the greenhouse by the equivalent coal plant. A gigawatt-scale coal plant would (at 1 kg/kWh) emit 500 million tons of CO2 into the living environment. This is the greater threat to humanity, and it is the threat that people should be frightened of.
“equivalent coal plant…would emit 500 million tons of CO2… ” – over the sixty years expected of a nuclear power generator, that is.
Oh, I wasn’t advocating for coal. I’m firmly in the harnessing of sun, wind and hydro energy camp.
Bref, anyone who tells you that all of Australia’s power needs can be supplied by “sun, wind and hydro” is concealing the need for massive backup for each of these boutique generators. That is to say, most of Australia’s power. Pervasive cynicism is allowing natural gas as candidate to replace coal indefinitely in this role. Unlike nuclear, gas emits copiously.
Tidal hydro, pumped hydro and the advent of large scale battery storage (especially when low cost proton batteries are mass produced) will negate the need for massive centralised power plants.
Storage for the whole country? If you run your statement through your mind a couple of times, you will recognise it as empty Party line. In a spell of bad weather, when everyone’s batteries go flat at the same time, we need the grid to be ready for full load, running full blast (and paid for by someone else). That’s why it’s called dispatchable power. If the country is too superstitious to use nuclear, dispatchable backup requires massive gas with massive emissions in clear breach of our targets for 2030, 2050 and 2100.
No matter how many times you proselytise for nuclear power in Australia, it’s not going to happen with the current technology. The current plants are too large, expensive and take too long to construct.
Perhaps when small modular units which are mass produced become commercially available, then nuclear power will become feasible for Australia. But not now.
How “dispatchable” is nuclear power?
My take on the term “dispatchable” is that it was devised to highlight intermittency in renewable energy sources.
But in the true sense it means power that can be dispatched in rapid response to fluctuating demand.
The fastest response power dispatchers are batteries, hydro and open cycle gas. Coal and nuclear, not as quick.
Regarding a bad spell of weather, how bad must it be that there is no generation of wind or solar power over the entire eastern seaboard?
Note that solar PV cells generate power even under heavily overcast skies. Not as much as on bright sunny days, obviously, but it doesn’t fall to zero on cloudy days.
Solar PV, coincidentally, also generates maximum power about the times of peak demand in Australia. That is, in summer, on hot sunny days in the mid to late afternoon.
You know, when everyone turns their air conditioners on.
It may be an inconvenience for you to recognise that burning natural gas emits less CO2 per MWh than does burning coal, particularly when used in a combined cycle gas turbine.
Wayne, that is just mindlessly repeated propaganda and horribly out of date. While those smears might have applied to the first-of-a-kind (FOAK) big nuclear plants of the previous century, it was not true of their NOAKs, nor the new wave of factory-built small modular reactors. With orders currently being accepted, SMRs are small, cheap, fully-built and arrive on site virtually ready to plug and play.
You’re assuming only batteries. Factor in tidal, pumped hydro and solar/wind in conjunction with the advent of vast underground salt based storage and very large battery format storage, all doable with todays technology and in fact already in existence overseas.
The nuclear industry has been dining out on the promise of small, clean generators since the 50s and they haven’t delivered.
Its about time our pollies started thinking outside the box and stopped being in the pockets of the mining industry.
Roger,
SMRs are still not commercially available. When they are, I’ll consider them:
http://www.world-nuclear.org/information-library/nuclear-fuel-cycle/nuclear-power-reactors/small-nuclear-power-reactors.aspx
Hundreds of nuclear generators large and small have been bought and operated quietly in dozens of countries around the world. Small reactors have been offered by several countries. The front runner SMR for multiple production is the NuScale, which has already sold 12 modules to the UAMPS corporation. An Australian order would join a queue, likely to lengthen suddenly as decarbonisation becomes serious around the world.
Roger,
NuScale is shown as near term developed on a website which is a nuclear proselytiser. When and if it’s commercially available I’ll consider it.
“The front runner SMR for multiple production is the NuScale, which has already sold 12 modules to the UAMPS corporation.”
From their website:
“UAMPS CFPP is projecting the first NuScale Power ModuleTM to achieve commercial operation in 2026.”
https://www.nuscalepower.com/projects/carbon-free-power-project
This is a process that started in 2015.
Wayne (from Wayne. I use a bicycle shop that actually has three Waynes, which creates confusion whenever I telephone ‘Wayne, this is Wayne, can I speak to Wayne?…’),
I work on the assumption that anything that’s 5-10 years away is going to be permanently 5-10 years away.
In primary school my class had 3 Waynes.
I was agreeing with you.
The only other project on their website is projected to be operating in 2024.
The thing with nuclear power plants is that they seem to be overly susceptible to cost overruns and construction delays.
Wayne,
So was I. : )
It seems as though Waynes aren’t that uncommon.
Mate, the world’s moving on. Unless there’s a major breakthrough and they can produce safe and clean nuclear energy from small decentralised plants, the technology is going nowhere.
Even the SMRs you’re talking about use essentially the same ‘old’ technology on a smaller scale, a little larger than used in a submarine, so not safe and not clean.
Back in 2009 when I was still a subscriber to the Australian I read an article criticising solar panels, which so impressed me, that I went out and put my first 8 panels on the roof (which generated all the electricity I used for 10 months of the year, with a small shortfall in 2 months). And cancelled the Australian.
I recently upgraded my system to 24 panels and lost the 40 cents a unit feedin tarif (which I knew would happen). Currently I’m exporting more than 35 units a day for which Synergy pays me 7 cents. And I import less than 2 units a day, for which I pay Synergy 26 cents a unit. As well as a fixed service charge of around 80 cents a day.
Synergy (and the general community) seems to be getting a good deal.
I think that the deal should be that you only pay for the electricity you import from the grid over and above the electricity you export to the grid. over the billing period (3 months here).
That is:
If I send 100 units to the grid and receive 120 units from the grid over the billing period, I should only have to pay for the difference, 20 units (or they pay me, if it is the other way around).
Wayne are you considering buying battery storage and going completely off grid? For the amount you import it probably isn’t cost effective but it does mean you could stick it to Synergy!
No. I considered getting a backup for the rare occasions my suburb has a blackout and I lose power, often around 5 am when it’s still dark. I have solar panels to reduce my carbon footprint. I’ve also installed a total of 40 panels on my two rental properties.
I don’t object to the amount Synergy charges to consumers. And anyway, I’m in credit to the sum of over $2000, which I haven’t bothered claiming. Saving money was never one of my considerations.
Great work!
And the cost savings to the environment of household solar? Priceless!!
Nice effort Kishor but out of date on the important facts. LCOE ( levelised cost of electricity) which includes design, build, capital and running cost for new plant is lower for renewables in most countries and has been for past few years. He scene has changed a lot in a short time.
Regarding current plant comparisons, daytime solar has reduced wholesale generation costs more than the subsidy costs. Wholesale costs are dominated by gas prices which are an as yet unprosecuted rort.
The means to reduce actual bills is well documented but the industry is well protected by the dinosaurs at the AEMC and the party recipients of donations. Similarly I don’t expect action soon on the great PRRT robbery on gas exports.
Do some research then a corrective rewrite please.
“daytime solar has reduced wholesale generation costs more than the subsidy costs.”
A point I was about to make mark. Solar in particular has cut peak costs through the summer substantially, but I doubt any calculation of benefits was factored in.
And how about those coal and other fossil fuel subsidies, and the gas rort, and the gold plating rort, and the regulatory capture, and the ……. zzzzzz.