Australian Prime Minister Malcolm Turnbull and Australian Competition and Consumer Council Chairman Luo De Simms have both refuted rumours that renewable energy is responsible for higher electricity prices, the Australian Broadcasting Corporation reported. They say renewable energy has little impact on electricity prices.
The report pointed out that over the past few decades, Australians have frequently been guided by the voices of some minority groups in Parliament and society, and many people believe that the transition to a renewable energy-oriented society has made Australia less competitive. Weakening its industry has even led to higher electricity prices. In fact, economic research shows that renewable energy is cheaper.
It is easy to ignore that 41 percent of rising electricity bills over the past decade have been grid maintenance costs, Sims said in an interview. Retailers charge as much as 24 percent for extra fees, compared with 16 percent for green energy projects, he said.
In response, Dr. Shi Xupeng, lead researcher at the Australian-China Relations Institute at Sydney University of Science and Technology, said in an interview with people`s Network that high electricity prices are the result of a variety of factors. In terms of electricity price composition, the main reason is that the price of transmission and distribution continues to rise. In contrast, electricity prices, whether renewable or natural gas, play a relatively small role. Renewable energy does push up electricity prices in the past, but it will fade away now and in the future. Although natural gas price has become a hot spot in the near future, its role in pushing up the price of electricity is overestimated. Although the current spot price of gas is relatively high, the vast majority of Australian gas is sold through long-term contracts, and the contract price is well below the spot price. In the long run, however, natural gas generation can be a decisive factor in the formation of electricity prices. Therefore, the establishment of a price-transparent natural gas market is critical.
Gas prices in Australia have quadrupled in recent years. Even more paradoxically, as one of the world`s richest natural gas reserves, its domestic gas prices are much higher than export prices. A survey by the Australian Competition and consumption Commission shows that gas shortages on the east coast are likely to be severe in 2018 due to continued growth in natural gas exports, followed by a sharp rise in electricity prices. Australia`s goverment recently put in place Australia`s domestic gas safety mechanism, a measure that would limit LNG exports to meet domestic demand. If gas prices in Australia slow down, then electricity tariffs may fall.
Moreover, the debate over the energy structure in Australia remains unabated. Some in the industry believe that compared with the coal industry, clean energy does not get enough goverment subsidies, at a disadvantage. However, people ignore the secondary effects of a large amount of subsidies on coal industry, such as the health costs of residents.
Based on this argument, Shi believes there are two bottlenecks in the development of renewable energy in Australia. One is decentralized renewable energy, such as rooftop photovoltaic power generation. Subsidies have played a big role in history. At present, Australia`s roof photovoltaic ratio is the highest in the world. Future subsidies in this area will gradually be reduced or even disappear. Second, centralized large-scale renewable energy generation, such as wind farms. He also gave advice on the development of this area, "the development of this area, so far, mainly rely on goverment to set renewable energy targets to promote. With the reduction of the cost of renewable energy, the factors that promote its development need to change from policy to design of electricity market, so that renewable energy can be absorbed by the electricity market. Taxes on carbon emissions or other forms of carbon prices are also conducive to the development of renewable energy. "
In the final analysis, the cost of power generation is the key to win in the price competition. Especially when installation costs are taken into account, the advantages of wind and solar power are even more pronounced. Renewable power plants take one to three years to complete from production to completion, while thermal power plants take four to seven years and are more expensive.
