Energy transition has lost its way

Long-suffering electricity users would be right to question whether the repeatedly made promise that more renewables means cheaper prices is merely a mirage. News that the Australian Energy Regulator will allow the default market offer to rise between 19.5 per cent and 23.7 per cent is an insult to anyone who believed the Albanese government had a plan to bring prices down. Small-business customers are facing increases of 14.7 per cent to 28.9 per cent.

Consumers can expect no end of excuses for why this might be the case: the Ukraine war, high gas prices, unexpected volatility in the wholesale market, unprecedented supply challenges. But the big trend has been a withdrawal of baseload capacity resulting in a more erratic market that must prop up the vagaries of power supplies delivered by intermittent wind and solar.

The federal government has made extraordinary interventions in the gas market in a bid to ease prices in the wholesale market, something that is yet to show up in consumer prices. The federal government says without market intervention, prices would have risen further. But the more likely prospect is that these interventions will result in less supply security in the future as the major gas producers reconsider their long-term development plans. Renewable energy enthusiasts still maintain that building more wind and solar plants will solve the problem and lead the nation to a low-emissions nirvana. At some point, those responsible must take stock of what is actually happening. Longstanding suppliers such as the Liddell coal plant in the Hunter Valley are being closed without adequate replacement. Wholesale electricity prices surged by 80 per cent in the days after the Liddell shutdown. Meanwhile, the projects that were supposed to smooth the transition, including the Snowy 2.0 pumped hydro project, are years behind schedule and billions of dollars over budget. There can be no confidence the federal government will be able to manage the dramatic electricity grid transformation it has promised to achieve of 82 per cent renewable energy by 2030. The latest electricity price rises are a bitter pill for households and industry already faced with high inflation and rising interest rates. Those responsible must do more than simply believe that doing more of the same will achieve a different result. Energy users deserve a plan that will deliver lower prices today and guarantee reliable supplies into the future as details of the promised low-emissions transformation are properly developed.