Who would have thought? Nations with more renewables have more expensive electricity

By: - Climate DepotJanuary 25, 2018 2:40 PM


The Mystery: The most resource rich nation on Earth has the highest electricity prices?!

Ask anyone and get confused: It’s poles and wires, gaming of the system by capitalist pigs, excessive taxes, privatization, and record gas prices. The CleanEnergy Council  tells us that Australia has one of the longest electricity networks in the world — we need lots of poles! And so we do. But once upon a time Australia had the cheapest electricity in the world and we still had lots of poles. Not only were miles of poles and wires, there were also capitalist pigs, excessive taxes, and privatized generators. There were wild gas price spikes too, (during which we probably just burned more coal).

Evidently, something else has changed. Something seismic that wiped out all the bids below $50/MWh. 

Perhaps it has something to do with the 2,106 turbines in 79 wind farms that on random windy days might make 4,325MW that didn’t exist in Australia in 1999 when electricity was cheap and our total national wind power was 2.3 megawatts?

Another clue might be the 1.8 million new solar PV installations, which theoretically generate 7 gigawatts of electricity at noon on cloudless days if all the panels have been cleaned. Back in 2007, we had 14MW.

But of course, cause and effect are devilishly difficult. The one thing we know for sure is that even though sunlight and moving air is free, there is no country on Earth with lots of solar and wind power and cheap electricity.

Any day now, renewables are going to make electricity cheap, but when that happens, it’ll be a world first.

See the graph: the more renewables we have the more we pay…

Cost of electricity, countries, graph, renewables capacity.


Source: Paul Homewood at NotalotofpeopleKnowthat inspired graphs by Johnathon Drake, and Willis Eschenbach, and Dave Rutledge, similar to this one. This particular graph came via Judith Sloan in The Australian, though I can’t seem to find the exact link.

 We’re high achievers price-wise

Australia is far above the trend-line.  Our electricity is even more expensive than it should be for the amount of renewables we have. At a guess this might be because other nations have more “hydro” in their renewable mix and less wind and solar.  Or they have access to nuclear power (like all the EU countries). It may be made worse by the way our energy markets are managed, the profusion of bureaucracies, the subsidies and rebates, the renewable energy target, or the overlapping state and federal green aims. It also may be that in our smaller market we have a few big players gaming a volatile, complicated market. Stability may cost more here, due to the fragility of our network.

Don’t blame wind and solar… oh, wait

To isolate the effect, this graph from Euan Mearns takes out the “hydropower” and biomass aspect and just looks at wind and solar. Spot the trend:

(Note that “Aust” means Austria, not Australia)

Europe, renewables, countries, cost of electricity, graph.

Figure 1 The Y-axis shows residential electricity prices for the second half of 2014 from Eurostat. The X-axis installed wind + solar capacity for 2014 as reported in the 2015 BP statistical review normalised to W per capita using population data for 2014 as reported by the UN.

As Euarn Mearns says, there’s more than one variable at work here, but the inescapable conclusion is the countries with the highest levels of renewables pay the highest prices.    h/t Don B.

Is that another 10 cent price rise coming?

According to wikipedia our wind power capacity is set rise 250% or something crazy (I’m skeptical):

From wiki wind power in Australia–  As of May 2017 a further 12328 MW of capacity was proposed or committed.[2] “AEMO Planning and Forecasting – General Information Page”. Retrieved 7 June 2017.

For a population of 24 million that means we would add another 500 watts/capita. Eyeballing the trendline in the graph,  prices would rise by another 10c/KWhr. (Don’t try to unpack the x and y units exactly and calculate it. That’s another story.)

Say it again: there is no country on Earth with lots of solar and wind power and cheap electricity.


Moran, Alan (2017) The Finkel Report’s Recommendations on the Future Security of the National Electricity Market:
Impacts on the Australian Economy and Australian Consumers, Regulation Economics.

Rating: 9.7/10 (62 votes cast)

Who would have thought? Nations with more renewables have more expensive electricity 9.7 out of 10 based on 62 ratings