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Tony Wood, Grattan InstitutePower prices are set to go up again even though renewables now account for 40% of the electricity in Australia’s main grid – close to quadruple the clean power we had just 15 years ago. How can that be, given renewables are the cheapest form of newly built power generation?
This is a fair question. As Australia heads for a federal election campaign likely to focus on the rising cost of living, many of us are wondering when, exactly, cheap renewables will bring cheap power.
The simple answer is – not yet. While solar and wind farms produce power at remarkably low cost, they need to be built where it’s sunny or windy. Our existing transmission lines link gas and coal power stations to cities. Connecting renewables to the grid requires expensive new transmission lines, as well as storage for when the wind isn’t blowing or the sun isn’t shining.
Notably, Victoria’s mooted price increase of 0.7% was much lower than other states, which would be as high as 8.9% in parts of New South Wales. This is due to Victoria’s influx of renewables – and good connections to other states. Because Victoria can draw cheap wind from South Australia, hydroelectricity from Tasmania or coal power from New South Wales through a good transmission line network, it has kept wholesale prices...
