No wonder the Government is looking for a scapegoat. Labor has chosen to blame coal. The argument goes that Putin’s invasion of Ukraine has caused the price of coal to skyrocket and that coal fired power stations are “unreliable”.
We do not get our energy needs from Russia. So, it is not clear why our energy prices are so dependent on them, just a generation since the defeat of the Soviet Union.
This argument does not fit the facts either. Australian electricity prices did not rise after Putin invaded Ukraine, they surged a month later, after the Liddell coal fired power station shut a quarter of its capacity.
In March this year – the month after the Ukraine invasion – Queensland’s electricity prices fell 10 per cent from the previous month. In the month after the Liddell shutdown, prices surged by 50 per cent, and they have stayed high ever since.
The price of coal has gone up since the Ukraine invasion as Europe desperately tries to buy every ounce of black rock available. Germany has even torn down a wind farm to expand a coal mine. But most Australian power stations do not pay these high world prices as they have long term contracts
in place for coal supplies.
However, fewer power stations have been entering into such long-term contracts as Governments have ridiculed the idea that coal should be here for the long term.
Others also claim that coal is unreliable and the outages at coal plants this year have lead to shortages of electricity. Coal fired power stations are not unreliable but old coal fired power stations are unreliable. Just as old cars, old fridges and old mowers can break down.
Our power stations are breaking down more often because we have not invested in new power stations.
Over the past decade Australia has shut down enough reliable electricity to power almost 5 million Australian homes. We have replaced it with new reliable power that can only power 1.2 million homes.
Australia is leading the world, however, at installing one type of power, solar and wind energy. Australia has installed solar and wind at a rate four times higher than the rest of the world in per person terms.
Unreliable and weather-dependent renewable energy cannot replace baseload coal fired power. By trying to, we have left our power system chronically short of energy when it is cloudy and windless.
Every developed country in the world that has installed lots of solar and wind energy has ended up with higher power prices.
The only way you can blame coal for our energy crisis is because we are shutting coal fired power down before renewables are ready. To get power prices back down we need to keep our old coal fired power stations running and build new coal fired power stations to replace them.
