According to a recent Weekly Times article, wind energy is behind recent hikes in South Australia’s electricity prices. Those of you following the effect of increased renewable energy generation is having on the National Energy Market will know that this narrative is contrary to recent observations.
In an analysis published by The Conversation, Melbourne’s Energy Research Institute fellow Dylan McConnell argues:
Renewable energy sources such as wind and solar power appear to be the impetus behind a South Australian proposal to substantially drop electricity prices, just as other states are hiking theirs.
The Essential Service Commission of South Australian (ESCOSA), which regulates retail electricity prices, has released a draft price determination that proposes an 8.1% reduction in the electricity standing offer, (that is, the default retail price that must be offered to South Australians, at a minimum).
The proposal, which follows an ESCOSA investigation into the wholesale energy costs, translates to a reduction of $27.19/MWh, potentially lowering South Australian electricity bills by an average of $160 per household.
The reason why wind energy is depressing electricity prices in South Australia is an accepted phenomenon known as the ‘merit order effect.’ Because the wind is free and has no fuel costs, it out competes more expensive fossil fuel generators. Climate change campaigner Ben Courtice published an excellent backgrounder on the merit order effect at the Yes 2 Renewables blog.
Don’t buy the spin that renewable energy increases the cost of electricity. Get informed.
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