Renewable energy does not generate price spikes
Some commentators and politicians blame the increasing uptake of solar and wind power for increases in electricity prices. But only a small portion of projected price rises can be pinned back to renewable energy. Renewable energy does not generate price spikes.
Clean Energy Council
In a recent media release the Clean Energy Council’s Chief Executive, Kane Thornton, points out that most of the price rises will be due to the need to replace old poles and wires and to upgrade the capacity of the electricity grid.
For example, the Federal Government estimates that for each average sized air conditioner that is installed, the electricity network has to spend $7,000 to upgrade its capacity to supply power to that air conditioner. Overall, the Australian Electricity Market Commission, over 90% of electricity price increases over the next three years will come from increases in costs for the traditional energy system.
As Mr Thornton points out: Renewable energy produces about 10 per cent of Australia’s electricity. The idea that 10 per cent of our electricity somehow makes the other 90 per cent unaffordable is absurd.
The alternative view is that an increase in solar power will actually help to reduce electricity prices. Why? Because air conditioning demand is at its highest on hot sunny days, when solar power systems generate a lot of power. They usually also generate that power close to the point of use, reducing transmission losses. Overall, this reduces the need to upgrade the electricity distribution network, so costs are kept down.
In a sunny country like Australia, solar power simply makes good sense. Sure, you’d expect us to say that, but it’s true. For home owners, solar power systems can now generate power at a price that is competitive with the retail cost of electricity. Rises in electricity prices will only make solar power even more attractive. Rather than being the cause of the problem, it is a far more compelling argument that solar power is the solution.