Our energy resources should make us an energy bowl for the growing economies around us while also providing cheap power to domestic consumers. Instead, we are now told we should expect more blackouts and face wholesale prices three times higher than just a few years ago.
An energy system is the backbone of any well-functioning economy – without it we can’t power our homes and cities, let alone the industries and businesses needed to generate jobs.
Australia has access to an abundance of energy resources – coal, gas, solar and wind - but we are now told we are in the midst of an energy crisis. Our energy resources should make us an energy bowl for the growing economies around us while also providing cheap power to domestic consumers. Instead, we are now told we should expect more blackouts and face wholesale prices three times higher than just a few years ago.
In truth, this energy “crisis” is not one inflicted by circumstances beyond our control, in fact it’s the result of a series of complex policy failures over a number of years. Starting from the Howard government’s 2001 introduction of a Renewable Energy Target, significantly ramped up through the subsequent Rudd years, the energy market has been severely distorted. Soaring investment in poles and wires, a raft of green schemes and state based policies overpaying households to invest in solar only added to a confused national energy system.
As a result of these interventions numerous power stations exited the market as the investment needed to keep them viable ceased being cost effective. But now the situation has reversed – demand is exceeding supply, wholesale prices are skyrocketing and the reliability and security the community expects can’t be guaranteed. The only real solution to this issue is new investment in power generation to ensure that supply can meet demand. Businesses which invest in power generation are playing a very long game. Just the planning, permitting and construction of a power station — wind, solar or gas — can take several years, and any new coal-fired plant would take much longer. We should recognize the wind doesn’t always blow and the sun doesn’t always shine. Intermittent energy generation from solar or wind alone won’t provide the services Australians expect.
Against this backdrop, every sudden change in policy, shift in position and government intervention at best confuses and at worst jeopardises the will for private investment. Putting the responsibility for investment back onto governments isn’t a realistic solution. This transfers the risk of poor investment decisions back onto taxpayers who already shoulder the burden of our growing public debt. None of this is to mention blanket moratoriums on gas exploration which limit our supply of newer, cleaner energy resources. These moratoriums, instituted at the behest of the same activists urging a rapid move to zero emissions, place us in the ridiculous position of considering new coal-fired stations for the first time in 15 years.
The energy “crisis” will only be solved when we get the policies right to encourage new investment and ensure that the cleaner fuels and natural resources of which Australia has so much, are accessible. Policy stability and an evidence based approach – it sounds simple but as the last few years have demonstrated, it’s anything but.