Even if users agreed to pay much higher electricity bills, SA could not be 100 per cent renewable

This opinion piece first appeared in the Advertiser on 18 June 2015.

WE ALL want to believe in something, and quite clearly the Conservation Council of South Australiabelieves in renewable energy.

They believe that South Australia’s electricity supply can be provided 100 per cent by renewables. They can have their aspirations, but the sound management of the state’s ­crucial energy supplies needs to be based in reality, not flights of fantasy.

SA has a diverse energy supply: natural gas-fired generation (44 per cent), wind energy (33 per cent), coal-fired generation (17 per cent) and rooftop photovoltaic systems (6 per cent). It is also connected to the east coast national electricity market (74 per cent coal).

To  be  100  per  cent  powered by renewables, the state would  have  to  replace  coal and gas-fired generation, which is currently 61 per cent of total generation. And presumably it would have to disconnect from the national grid. How would this happen?

It won’t happen on price alone, because the cost of electricity generated by coal and gas is much cheaper than that produced by wind or solar.

Right now, the only way that solar and wind can compete with gas and coal is through a massive subsidy transfer, from households and industrial users to renewable energy providers.

This is worth about $30 billion over two decades, courtesy of the Renewable Energy Target (RET).

In effect, the RET guarantees 23 per cent market share for the highest-cost energy sources. Someone has to pay for this, and the burden falls on the average householder and industrial user.

The Conservation Foundation wants to add an extra burden on top of this subsidy to increase the renewable share further. It is proposing a ­carbon tax of at least $50 a tonne.

As we saw between 2012 and 2014, carbon taxes increase electricity prices – and a $50 carbon tax would have twice the impact of the one introduced by the former federal government.

But even if every single South Australian was prepared to pay much higher electricity bills, could the state become 100 per cent powered by renewables?

The short answer is no. Wind and solar power are intermittent. They depend on weather conditions, and the weather doesn’t always co-­operate. So where do South Australians get their electricity when the wind doesn’t blow or the sun doesn’t shine?

From brown coal electricity plants  in  Victoria  or  black coal  electricity  plants  in NSW. As SA is connected to the ­National Electricity Market, it can use supply from other juris­dictions when it is required. This ensures a reliable electricity supply for the state when it is cloudy or not windy.

But why use coal-fired electricity? Simple. Coal is the most reliable and affordable source of electricity generation in Australia.

It has been putting downward pressure on power prices in Australia for decades. And the reality is that coal will continue to play an impor­tant part in Australia’s energy mix for years to come.

Importantly, coal and a low-emissions future are not mutually exclusive. Investment in high-efficiency, low-emission technology has resulted in the latest coal-fired electricity plants being able to reduce emissions by about 40 per cent – much closer to the levels generated by gas-fired plant.

And the development of carbon capture and storage technology, like that at Boundary Dam in Canada, can now reduce emissions from coal-fired plants by 90 per cent.

There is no nobility in belief if the facts don’t support it. Renew­ables will be an important part of Australia’s energy future. But the reality is that coal will and must continue to play a fundamental role in our energy mix.