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Solar Power at $70 is still twice the price of brown coal

More fake news: Miners are only switching to solar because they can’t get access to cheap coal fired power.

“Miners switch on to renewables”

A better headline would be: Renewable targets make electricity so expensive miners are forced to switch to renewables.

The money quote:

Emily Alford is a principal consultant at Oakley Greenwood …  [she] told The Weekend Australian that solar generation cost about $200 a megawatt hour five years ago, and had dropped to about $70-$80 now.

Compare that to 53 year old Hazelwood coal power which was selling electricity for $30/MWh in it’s last month of operation. When brown coal stations set the price in Victoria they were winning bids at prices like $13/MWh.The cheapest electricity in the world comes from 30 year old brown coal plants.

The $70-$80 estimate is artificially low. Unreliable power makes the other baseload generators more expensive, adding $30/MWh to gas generators for example. Because the back up generators have to be there, not earning money while solar feeds in, they have to charge more to recoup those costs in a shorter working period. Doh. So add that cost to solar, not the gas.

Compare the real costs and weep:

I’ll repost those graphs from a year ago from the AER report on the closure of Hazelwood:. These are the price setting winning bids by different fuel types. It’s a better way to understand the real cost differences.

The following graphs show the percentage of time power stations located in various regions of the NEM were involved in setting the 5 minute dispatch price in Victoria (vertical bars) and the average price of the offered capacity which was involved in setting that price. –– Appendix C, AER, 2018

Brown coal:

AER Graph, 2018, prices set by black coal power.

Brown coal bid setting winning bids. The AER report on the closure of Hazelwood:

Bayswater coal plant used to be able to win bids at $40/MWh (or it used to have to bid that low to win). Thanks to the RET (Renewable Energy Target) destroying some of the cheapest power, that’s not happening any more. Costs are up and competition is down.

AER Graph, 2018, prices set by brown coal power.

Black coal, winning bids from The AER report on the closure of Hazelwood:

One gas plant. Not cheap to start. Not cheap to finish.

AER Graph, 2018, prices set by gas power.

Gas power, winning bids from the AER report on the closure of Hazelwood

As I keep saying: Solar power reduces fuel costs, but makes capital, staff, maintenance, and land costs more expensive.

Solar looks “cheap” when compared to expensive alternatives. Nobody mention coal:

Ms Alford says an initial push to justify installation of renewable energy generation on the grounds of pure carbon abatement, as part of the miner’s social licence to ­operate, has been overtaken by the cost benefits of adding solar or wind generation to the mix.

“We’ve got to a stage now with renewables where the commercial benefit outweighs any social licence consideration. Renewable generation is becoming a commercial no-brainer from a cost and economic point of view,” Ms Alford said. “If you’re burning diesel you’re burning cash, and on the east coast if you’re burning gas you’re burning cash.”

Solar power is only a “no brainer” economic choice because the electricity market has been brainlessly wrecked by the Renewable Energy Target and a host of other subsidies.

All journalists need to be reminded of the invisible elephant in the room. As long as they are not comparing a generator to brown coal, they aren’t looking at all the options.

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