Rowan Ramsey (Grey, Liberal Party) Share this | Hansard source

In Australia we are told that renewables are the cheapest form of energy—the cheapest form of electricity at least. In South Australia—on the mainland; apart from Tassie Hydro—we lead the nation with 71.5 per cent of our electricity grid delivered from renewables last year. Second is Victoria, with 36.8 per cent. So, in South Australia, we are double the next state in Australia. But here is the catch: we also have the highest electricity retail prices, at 45.3 cents per kilowatt hour. The next highest is New South Wales, with 33.84 cents—the source for this is Canstar Blue. For the record, Victoria is 30.42 cents per kilowatt hour. So South Australia has a 50 per cent higher electricity retail bill per kilowatt hour than the next state in Australia, and we have double the next state in renewable energy.

If renewable is the cheapest and we have the most in South Australia, why is it that our retail prices are the highest? There are two main reasons. First is the intermittent nature of wind and solar and the need for an alternative dispatchable source capable of powering the whole network at any time. The second is renewable subsidies, invisible to the wholesale market but embedded in the retail market. I wrote an article for a recent newsletter. It could have been virtually any evening in late autumn—that's our traditional calm period in South Australia. This particular evening it was 8.10 pm on 27 May. South Australia was consuming just over 1,800 megawatts of electricity; however, just 56 megawatts, or three per cent, of this requirement was coming from our 2,742 megawatts of installed renewable capacity. I regret to inform this place that our batteries were flat and contributing just five megawatts. Gas and coal were supplying the other 97 per cent, either generated in South Australia or coming from Victoria. This situation is common in autumn. We had months of it.

To explain, when renewables begin their penetration of a market, it's an easy fit because the full backup is available from existing generators. However, as renewables gain market share, with the aid of subsidies I might point out, they are able to undercut the baseload generators. Investment stalls, equipment wears out and eventually baseload generators withdraw from the market, just as they did at the Northern Power Station in Port Augusta around a decade ago.

So while baseload generators are unprofitable, and there are fewer days that we need them, in times of low renewable generation they are absolutely essential. The system cannot keep operating without them. So until the day renewables can supply energy for 24/7, 365 days a year a full backup system is required. Even if it is just for one or two days a year, a full backup system is required. Consequently, when renewables are in short supply, disposable generation—coal and gas—goes through the roof. The more of it you need, the more you pay. So in South Australia, where we need it the most, we pay the most, and that's one of the reasons why our retail power prices are the highest in the nation—as I said, by a factor of 50 per cent.

The other price driver is the hidden consumer subsidies. The electricity market is a labyrinth of hidden handouts, where renewable generators can make a profit by selling their electricity for down to $60 a megawatt minus. Minus $60 a megawatt on the back of hidden consumer subsidies that are embedded in our retail accounts. Chief amongst these is the LRET, or the large generation certificates that they produce. The cost is passed on to the retailer and the retailer passes it on to the consumer, but that item is not itemised on our account. No wonder those subsidies are popular in the industry! It is a hidden subsidy. It works well in giving them a return on their money, which they would not otherwise invest.

Given the political climate, investment in new coal is not going to happen. I've run out of time. That's a bit of a shame. That is why we have put nuclear— (Time expired)

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