Why power prices higher without a carbon price – Renew Economy

Extract from an article by Tristan Edis

Those within the Government that pushed to dump a scheme to reduce the emissions intensity of our electricity sector were very clear about why – keeping electricity prices low and power supplies secure.  The problem is that they’re not actually helping the situation, as it appears the Chief Scientist, Alan Finkel, has concluded in his review of energy security.

While leader of the Liberal Party, Tony Abbott argued the imposition of the carbon price would be a disaster for the economy by massively increasing electricity prices. Yet, as shown in the table below, the market is now pricing wholesale electricity contracts for next year at levels higher than what prevailed when the carbon price was in place.

It’s understandable why Liberal-National MPs are concerned about measures to phase out coal for less emissions intensive alternatives.  Coal is a very cheap fuel in this country and helps supply very reliable electricity. Fed into one of Australia’s existing coal power stations incurs an operating cost of about $10 to $25 per megawatt-hour of electricity. That’s really cheap by international standards.

The problem is that these coal power stations are beginning to age. To keep operating safely and reliably a number of the stations and mines will need significant refurbishment. That requires money, not nearly as much as building a new coal fired power station which costs billions, but still in the realm of a hundred million dollars or so.

Now a significant number of federal Liberal-National MPs (but not all) may happen to think human-induced climate change is a hoax. But they are having trouble convincing investors to place large bets on them winning the day, when just about every G20 nation’s meteorological agency and academy of science say climate change is real..(continues)

SOURCE: Tristan Edis, “Why power prices higher without a carbon price”, Renew Economy, 08 December 2016

Link to full article

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