Anyone who tries to tell you that reducing wind power in South Australia will solve the issue of rising power prices is playing a slick trick.
Trying to pin the blame on wind farms is a slick snake oil sales tactic which everyone should be wary of – not least because it is mostly being peddled by politicians and old energy companies which haven’t branched out into newer forms of power.
As the old saying goes, for every complex problem there is an answer that is clear, simple and wrong. Electricity is a complicated beast, but that doesn’t stop people searching for an easy fix they can sell to mums and dads who are struggling with their power bills.
Slashing wind power investment will have virtually no effect on power prices. In fact it might even push power prices higher – both the Australian Energy Market Commission and the Australian Energy Regulator say that wind farms are helping keep wholesale power prices in the state lower than they otherwise would be.
And it would also rob regional areas of the state of the much-needed investment and jobs that wind farms generate, which to date have added up to more than $2 billion.
Furthermore, it should be noted that South Australia had the highest power prices in the country before the state had built even a single wind turbine.
Currently wind power is supported by the national Renewable Energy Target, which encourages renewable energy at the lowest possible price.
The good news is that although about two out of every five Australian wind farms are in SA, the modest cost of the Renewable Energy Target is spread evenly across all states.
So South Australia actually gets the benefit of all the jobs and investment – as well as all that clean energy – while the costs are divided up across the rest of the country.
So why are power bills so expensive?
The Australian Energy Market Commission, the expert body in this area, says you can pin the state’s sky-high bills on two main factors: A relatively small number of customers spread over a wide area, and a lot of expensive gas-fired power.
These things are just as true today as they were a decade ago. Some analysts say the price of gas will triple this decade and Australian manufacturers in particular are very concerned about where gas prices are heading.
Adding to this, around 45 per cent of our power bills go towards the cost of the poles and wires that transport it around, and this has been the biggest driver of cost increases right across the country over the last five years. And many analysts expect this to rise even further out to the end of the decade.
So, just like you wouldn’t buy a bottle of miracle tonic or snake oil from a quack in the middle of Rundle Street mall, think twice before you buy the argument that wind power is our biggest power price villain.
By the time you realise you’ve been cheated, they won’t be handing out any refunds.
By Clean Energy Council Policy Director Russell Marsh
Published in The Advertiser on 18 April 2014