Energy companies warn sidelining renewables will raise power bills

The industry argues that the cheapest path for consumers is to invest in replacing aging coal generators with retrofitted renewable energy, rather than building new coal-fired plants or forcing the expansion of aging and increasingly unreliable plants, which can break down without notice and cause huge price increases.

“The least-cost, lowest-impact path is an energy system dominated by renewables and supported by battery storage, gas and pumped hydropower,” senior executives said.

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But the Energy Council of Australia stresses that replacing aging power stations is “not cost-free” and will increase people’s electricity bills, at least for a while.

Building more wind and solar farms, large-scale storage projects and thousands of kilometers of extra poles and power lines to piece together a larger and more complex grid will increase the costs that must be passed on to consumers, it said.

The report said electricity prices have “never been under more pressure” due to the heavy investment required to replace and decarbonise aging generation assets. He called for a more open and honest dialogue about how much the energy transition will cost homes and businesses.

“I think this is the calm before the storm,” one senior executive said.

In particular, network costs for maintaining and improving transmission infrastructure, which accounts for approximately one-third of the customer bill, are expected to increase significantly in the coming years.

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CSIRO calculates that a new coal-fired power station, using modern technology to keep emissions as low as possible, would produce electricity between $111 and $178 per megawatt hour, or the midpoint of $145. Meanwhile, energy from renewable sources on a mostly renewable grid would cost between $116 and $165 per megawatt-hour (the midpoint is $141), and that also takes into account billions of dollars in additional costs like paying for batteries, gas, and transmission lines.

Australian Energy Council president Louisa Kinnear said renewable energy was among the lowest-cost energy sources once built and operated. “But we still need to take into account the costs of building new supply and adopting our existing system to accommodate and power low-emission, intermittent sources,” he said.

“In the long term this approach will be cheaper than continuing to invest in existing or new coal-fired power generation, but we need to ensure the transition is carefully managed.”

Canceling the commitment to net zero emissions by 2050 and weakening interim climate targets would breach the terms of the Paris Agreement, which Australia signed in 2016.

Major investors, who have poured billions of dollars into green energy projects across Australia, described the Coalition’s backtracking as “significant and disappointing”.

“But the fundamentals remain,” said Richie Merzian, CEO of Clean Energy Investor Group, which represents funds including U.S.-based BlackRock, France’s Neoen and Australia’s Macquarie Bank. “Next generation essential, clean energy is the best path back and the current government is committed to supporting this.”

Debby Blakey, chief executive of $100 billion pension giant HESTA, which has invested heavily in the energy transition, said bipartisan support for climate targets, including net zero, was important for investors to know policies would remain stable.

“This is critical given that investors are committing capital over very long periods of time for investments such as energy infrastructure,” he said. “Attracting global private capital to invest in Australia’s transition is supported by long-term policy certainty.”

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