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Power price rises in Australia and renewable energy

Power prices have risen steeply in South Australia and this has been widely blamed on the fact that SA has had by far the greatest growth in new renewable energy of any Australian state, particularly wind power.

In fact, SA had high power prices before developing most of its wind power, and SA's power prices have risen substantially less in the period from 2006 to 2016, when most of the state's wind farms were built, than they did in the predominantly coal-powered eastern mainland states.

This page was written 2017/08/27, modified 2019/09/09
Contact: email daveclarkecb@yahoo.com (David K. Clarke) – ©
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Power prices have risen less in South Australia, with its adoption of renewable energy, than the average for the eastern states

The detractors of South Australia's renewable energy miracle often make misleading claims about power prices. South Australia does have high power prices, but they were high both before and after the adoption of renewable energy and they are high because SA had and has a higher percentage of expensive gas-fired generation than the other states.

According to the Australian Energy Regulator the annual volume weighted average spot prices on the wholesale electricity market in SA have risen more in the period during which the state developed its renewable energy than in Queensland, but less than NSW and much less than Victoria.

Average wholesale spot prices from the Australian Energy Regulator and percentage rise in average spot prices in the period during which SA developed most of its renewable energy. Prices in dollars per megawatt-hour.
 PeriodQldNSWVicSA
5 year average before renewablesJuly 1998 to June 2003$46.6$34.2$33.4$51.4
5 year average following development of substantial renewablesJuly 2014 to June 2019$77.2$71.0$75.0$93.8
Percentage rise 66%108%125%82%

The power price rise in SA during the period of renewable energy introduction was less than the average of that in the eastern states; 82% against 100%

It can be calculated from the table that while South Australia's power prices were 35% higher than the average for the other states before the adoption of renewables they were only 26% higher in the last five years, following the adoption of substantial renewable energy.

It is also notable that in the year to the time of writing this section (September 2019) SA has exported nearly twice as much power to Victoria than it has imported, suggesting that wholesale prices in SA have become generally lower than those in Victoria. In addition, the ratio of exports to Victoria to imports from Victoria has been steadily increasing since late 2016. See OpenNem.

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Ben Phillips' research

Electricity costs
Table credit: Household Energy Costs in Australia 2006 to 2016, Ben Phillips, ANU Centre for Social Research and Methods, February 2017.
Ben Phillips of the Australian National University Centre for Social Research and Methods in February 2017 wrote a research note titled "Household Energy Costs in Australia 2006 to 2016". The note was available for download as a pdf file, but for some reason is no longer. Table 2 in the note (reproduced below right) showed that while real growth in expenditure on power grew by 49% in South Australia in the period from 2006 to 2016 (during which most of that state's wind farms were built), the corresponding figures for NSW, Victoria and Queensland were 66%, 73% and 87%, respectively. It is significant that the only state that built no wind power in that period, Queensland, had the greatest rise in expenditure on power.

In fact, South Australia's adoption of renewable energy has been a great success, contrary to the lies from the coal lobby.

Also of significance is the situation in the Australian Capital Territory, which has a target of 100% renewable energy by 2020. Growth in expenditure on electricity there in the 2006-2016 period was only 34%.

So the evidence is exactly opposite the claim of those opposed to renewable energy; power prices have risen least where there has been strong growth in renewables and most where there has been little renewables development.

When you point out these facts to a renewable energy detractor he/she is likely to respond with "but wind power is subsidised". They like to ignore the fact that fossil fuels are hugely subsidised, not least in being allowed to dump their polluting wastes into our atmosphere at no cost to the fossil fuel industries but huge cost to our, and our children's, planet.

Explain this to the renewable energy opponent and, as likely as not, he/she will then deny the reality of anthropogenic (man-made) climate change and ocean acidification; opposition to renewable energy often goes together with denial of climate science.

I have written more on the cost of wind power on another page on this site.



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SA's success in adopting renewables
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