Guest essay by Eric Worrall

WUWT recently reported how a disastrous attempt by South Australia to rely on renewables resulted in peak spot prices of $14,000 / MWh (up from $100 / MWh). Now we have an explanation why – the policies were not aligned.

The electricity price hike blame game: a sad product of a dismal climate change debate

The high prices in South Australia should serve as a warning to all. This is what happens when climate change policy is not aligned with energy sector policy.

Recent news reports highlighting that the price of generating electricity in South Australia has increased three to four times its historic levels have left politicians, commentators and renewables advocates in an agitated state. One side of the debate blames renewables, the other argues vociferously that it’s the fault of evil fossil-fuel generators and that renewables actually reduce the price of electricity.

This blame game is a sad product of the dismal debate Australia has had about climate change and the transition to a low-emissions electricity sector over the past decade. Transitions tend to be painful. The challenge for policy makers is not to avoid the transition because it’s painful – running away at the first sign of high prices does not make a brave politician. It is to make the transition as painless as possible.

But a debate about how best to make the transition is not the debate the country has been having. Instead we have oscillated from arguing that climate change does not need a substantial response, to introducing policies such as Direct Action that have no perceived impact on consumers and limited impact on the environment, to advocacy for an immediate transition to cheap, job-creating renewable electricity. The result is a policy mess, with no clear direction forward.

The high prices in South Australia should serve as a warning to all. This is what happens when climate change policy is not aligned with energy sector policy and when state policy is not aligned with federal policy. Setting a 50% renewable electricity target in South Australia appears foolish when it is not clear that the electricity system can handle that level of intermittent wind and solar power.

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