Lies, Damn Lies, and Kilowatt-Hours

Peter Smith31 Jul, 2023 4 Min Read
You figure it out.

When I recently reviewed ex-Australian chief scientist Alan Finkel’s book Powering Up, I wrote that his book is “not all pixie dust.” To amplify, it’s an amalgam of factual information and pixie dust. To illustrate, he makes the point that the green electricity to power electrolysers would need to fall to US$10 per megawatt-hour in order to make the process of making green hydrogen anywhere near competitive. No reason to doubt this hard-headed analysis. And the pixie dust? He thinks that indeed renewable energy can bring the price of electricity down to US$10/MWh.

Before the last Australian election last year, the prime minister, as he’s since become, said on 97 occasions that annual household electricity prices would fall by $275 by 2025. Since then they have risen by considerably more than $275. And my retail electricity provider informed me just a few weeks ago that average household electricity bills would rise by a further $287.48 as from August 1. Very precise.

My latest quarterly bill says that I used 6.17 kilowatt-hours per day. Not so very much but then I use gas for heating, and have those new-fangled light bulbs to show off my green credentials. Though I’m feeling guilty because I was apparently responsible for spewing out 0.41 tonnes of greenhouse gas. Woe is me. Yet, I feel happy in knowing that I did my bit to benefit trees and crops and such. Sad happy, happy sad. Cognitive dissonance is not only faced by those suffering sexual dysphoria.

Just tell us when it's free.

My bill is $248.19. This compares with last year’s bill for the same quarter of $219.37, when I used 6.54kWh per day. Hmm, usage down bill up? In fact my bill per kWh has increased by 20 percent over the year. And, as I said, more increases to come. My point is that electricity is getting dearer, which is passing strange in view of “the cheapest form of energy” increasing its footprint. Our climate-change minister, poor Chris Bowen, must be lying awake at night wondering what’s happening; though, fear not, his absolute faith in renewables is unlikely to be overturned by something as mundane as facts. To boot, it all rather dents Finkel’s optimism about producing green hydrogen at a competitive cost.

Let’s move to the broader stage, from households to wholesale markets, to get a better grasp on where electricity costs are in these days of saving the planet from a fiery fate. Electricity is not an easily tradeable good. So its price is not usually the same across different jurisdictions. Of course markets have their way of bringing things into alignment. One way, in this case, is by inducing industry to move from higher- to lower-priced electricity regions. And viola! De-industrialisation of the West continues and China wins yet again folks. But back to wholesale prices.

The Swedish energy company Vattenfall has just pulled out of a U.K. offshore wind project because it could not deliver electricity at the contracted price of about £45 per megawatt-hour; about USD58/MWh. The U.S. Energy Information Administration estimates domestic U.S. wholesale prices will be about USD51/MWh in 2023. This is well down on prices in 2022 but that change is aberrant. Prices around the world were artificially inflated in 2022 as the Russian incursion into Ukraine pushed up prices for natural gas and coal.

Average wholesale prices of electricity in Australia for the first quarter of 2023 varied between states. From $64 per MWh in Victoria (hint: brown coal) to $114 In Queensland. A national average was about $90 or USD60. Close enough to the U.S price and to the price the damned English demanded of Vattenfall. Don’t they know that saving the planet costs?

I intimated a certain doubt about getting the price of electricity down to US$10. However, there is one very scorned "heavily-emitting" source of power which gets as close as we are ever going to get. That is brown coal. Victoria sits on hundreds of years of supply of easily extractable brown coal. Brown coal delivered electricity at a price of about US$22 in the first quarter of 2023. This compares with black coal at a respectable US$60, far cheaper than hydro (US$81) or natural gas (US$92).

This way to the poorhouse.

But stop the press. Brown coal’s cheapness is passe. The cost of wind and sun was reported by the Australian Energy Regulator as being negative in the first quarter of 2023. There it is. Perpetual motion, alchemy, fusion, the singularity, call it what you will, is staring us in the face. Not just free energy but energy which pays us for using it. Oh joy! Mind you, here comes Jo Nova the party pooper:

The prices for solar and wind power were the nonsensical minus $24 and minus $41/MWh. They’re not included [in my chart] because they are not dispatchable, and most of the costs of the unreliables are hidden in subsidies. When we spend $20 billion on pumped hydro and transmission lines, those costs, like the batteries and demand schemes should be added to the wind and solar charges. When the rest of the reliable grid has to charge more to cover their costs of sitting around on “standby” — those higher costs should be added to the renewables bill too.

Ms Nova doesn’t seem to feel the vibe. She’s all facts and common sense. Won’t do at all. Cancel her! We must silence those who insist on telling it as it is. Including that pretentious Nobel prize winner John Clauser, who had the temerity to criticise the IPCC. That’s the only way we’ll save the planet.

After a career in economics, banking and payment-systems management, Peter Smith now blogs on the topics of the day. He writes for Quadrant, Australia’s leading conservative online site and magazine. He has written Bad Economics, of which, he notes, there is much.


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3 comments on “Lies, Damn Lies, and Kilowatt-Hours”

  1. They should totally put the UN on Wind or Solar Power Only the same for the District of Criminals.

  2. Oh! You live in a land down under?
    Where power’s slow and Greens blunder.
    Can’t you hear, can’t you see their plunder? Ah…
    Better run, better take cover…
    Living in a land down under.

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