This page examines the accuracy of claims made about renewable energy during the Federal Election campaign, correcting the record where necessary and calling out any falsehoods and misrepresentations.
In an interview on the Sky News program First Edition on 10 May 2022, Coalition Senator Matt Canavan made several claims about the recent rise in wholesale electricity prices.
The claims made by Senator Canavan refer to the Australian Energy Market Operator’s (AEMO) Quarterly Energy Dynamics - Q1 2022 report, which found that average National Electricity Market (NEM) wholesale spot prices had increased to $87/MWh in the first quarter of 2022, up by 67 per cent compared to Q4 2021 and 141 per cent compared to Q1 2021.
“This is remarkable, it’s totally unprecedented for prices to be this high at this time of year.”
Wholesale electricity prices are impacted by several factors, including weather-related demand, supply availability and commodity prices. As a result, the first quarter of each year has historically seen the highest wholesale prices as hot weather causes a spike in demand due to increased cooling requirements by households.
In the period between 2017 and 2019, Q1 wholesale prices were quite high, averaging $119/MWh, $90/MWh and $130/MWh respectively.
However, over the past two years, Q1 wholesale prices in the NEM have fallen as more renewable energy has entered the system. This resulted in the average Q1 wholesale price falling to just $36/MWh in 2021, which was the lowest level seen since 2012.
As a result, Senator Canavan’s contention that it is “totally unprecedented for prices to be this high at this time of year” is untrue, with wholesale prices having been higher than today’s prices in 2017, 2018 and 2019.
However, the recent wholesale price increases highlight the need to replace ageing thermal coal generation with new renewable energy generation to keep prices down, as evidenced in the significant reduction in wholesale prices seen in the first quarters of 2020 and 2021.
“This big increase in prices came after the Liddell coal-fired power station shut its first unit on the 1st of April, so it all jacked up after that point, in fact they’re up about 140 per cent since that.”
In this claim, Senator Canavan implies that the rise in wholesale prices can be attributed to the closure of Unit 3 of the Liddell coal-fired power station on 1 April 2022.
A previous incident at the Liddell Power Station provides an excellent counterpoint to Senator Canavan’s claim and demonstrates how renewables can keep prices down, even in the face of failures at coal generators.
In December 2020, a transformer incident at the Liddell Power Station resulted in Unit 3 being forced offline (the same unit that was closed permanently in April 2022), with the unit remaining out of service for the entire first quarter of 2021. If Senator Canavan’s claim is correct, this outage would have caused a significant wholesale price spike during Q1 2021.
However, AEMO’s Quarterly Energy Dynamics - Q1 2021 report found that wholesale prices in the quarter saw reductions of up to 68 per cent year-on-year, falling to their lowest average level since 2015 and the lowest Q1 average since 2012. The second-largest price reduction was in New South Wales, which would have been most affected by the outage at Liddell. This is likely due to the record level of renewable energy that was commissioned at the time, with 1990 MW of large-scale wind and solar and 2963 MW of rooftop solar entering the system in 2020 alone.
Fast forward to 2022, and we are in a different world. AEMO’s Quarterly Energy Dynamics - Q1 2022 report clearly states that the main reasons for higher wholesale prices is the “reduced availability of thermal generators” (approximately 30 per cent of coal power generation capacity in the NEM is currently offline) and “higher prices for key generation fuels, influenced by volatile international energy commodity prices”. This emphasises the importance of bringing forward investment in transmission, renewable generation and storage to replace our increasingly unreliable thermal coal fleet.
As a result, Senator Canavan’s implication that the closure of Unit 3 at the Liddell Power Station contributed to the increase in wholesale prices from April 2022 is based on previous events at the Liddell Power Station and AEMO’s findings.
However, Senator Canavan is correct that the disorganised exit of unreliable coal can drive increases in wholesale prices, as was seen with the sudden closure of the Northern and Hazelwood Power Stations in 2016 and 2017 respectively and the current series of outages affecting Australia’s coal-fired power stations. This highlights the importance of getting new renewable generation, storage and transmission built to replace unreliable coal before it fails and exits the system.
“I don’t think our energy network is prepared, that’s why I’ve been saying we should be building reliable power stations like new HELE coal-fired power stations not relying on this intermittent, unreliable renewable energy that we have been.”
Senator Canavan’s implication that building HELE coal-fired power stations will improve reliability is not supported by the facts.
A report published by the Australia Institute in September 2020 found that Australia’s “high efficiency, low emissions” (HELE) supercritical coal-fired power stations are among the least reliable coal-fired power stations in the country, breaking down 25 per cent more often per gigawatt than older subcritical power stations in the NEM. These so-called “reliable” HELE power stations include:
Despite the recent rapid influx of clean energy into the NEM, AEMO has also stated that reliability is not currently an issue in the NEM, with the recent update of its 2021 Electricity Statement of Opportunities (ESOO) finding that expected investment in New South Wales means that there are no realistic reliability gaps for the next five years.
Building new HELE coal-fired power stations is also likely to result in increased wholesale prices. Analysis by Lazard’s shows that the unsubsidised levelised cost of energy for utility-scale solar and wind in 2021 ranges from $26-$50/MWh. In comparison, the cost of coal ranges from $65-$152/MWh. As HELE coal plants are far more complex than subcritical coal plants, the cost of building a new HELE coal plant in Australia is likely to be towards the top of that price range.
“We’ve had record investments in renewable energy, so where is all this renewable energy that’s meant to bring down prices?”
If Senator Canavan is looking for the renewable energy that has played a significant role in reducing energy prices over the past few years, a good place to start would be in his home state.
Over the past three years, Queensland has added more than 2 GW of rooftop solar capacity (the second-most in Australia), commissioned 16 large-scale solar farms with a combined capacity of 1083 MW, and commissioned Australia’s largest wind farm. Over this time, the proportion of Queensland’s electricity that comes from renewable sources has increased from 14.1 per cent to 19.6 per cent.
The main problem is that the renewable energy industry has been hampered by a lack of leadership at the federal level and out of date regulatory processes. These bottlenecks have slowed down the necessary buildout of renewables, which has left the system vulnerable to the effects of coal generation failures. If Senator Canavan wants low-cost, reliable energy for his Queensland constituents, the best thing he can do is get out of the way and let the renewable energy industry get on with it.
The Clean Energy Council finds that all the claims made by Senator Canavan regarding increasing wholesale electricity prices to be false.
AEMO’s Quarterly Energy Dynamics - Q1 2022 report clearly states that the reasons for the significant increase in wholesale electricity prices is due to the failure of coal-fired generators and increased commodity prices. This has been made worse by a lack of federal leadership, which has slowed down the rollout of the renewable generation needed to replace these ageing coal generators.
At a time when cost of living pressures and interest rate rises are considerable concerns for Australians, Senator Canavan’s efforts to pin the blame on renewable energy and advocate for the very technology that is contributing to the problem is both misleading and dishonest.
Liberal National Party candidate for Flynn, Colin Boyce, described the government’s net-zero emissions pledge as “not binding”. Boyce told the ABC on Monday 25 April 2022:
“It leaves us wiggle room as we proceed into the future. Morrison’s statement that he has made is not binding. There will be no legislation attached to it.”
The claim refers to the Coalition’s plan to deliver net-zero emissions by 2050, titled Australia’s Long Term Emissions Reduction Plan, which was released by Prime Minister Scott Morrison and Minister for Industry, Energy and Emissions Reduction Angus Taylor on 26 October 2021.
The Minister for Energy and Emissions Reduction Angus Taylor distributed a media release on 19 April 2022 stating that:
“Energy consumers would be left $560 per year worse off by 2032-33, on average across the country, under Labor’s plan to increase the size of the transmission network to almost $100bn.”
The claim refers to the Australian Labor Party’s (ALP) Rewiring the Nation policy, which was first announced in October 2020. The claim relies on modelling from an unspecified source that hasn’t yet been released to the public.