Power Costs – Response to Minister’s Answer Take Note of Answers

The people of Australia are not all that concerned about the cross-chamber rhetoric that occurs in here. They’re actually concerned about outcomes and the things that make a difference to their daily lives. What they’re seeing at the moment is headlines in the Adelaide Advertiser saying that power prices will increase by some 35 per cent over next year. In the context of this budget period, estimates are now that power prices will in fact increase by around 50 per cent. For many families in Australia, that is crippling in terms of their ability to pay their power bills as well as the other aspects. So the question for them is: if this is the forecast and if this is what is happening, does the government have a plan to actually address the cost of living? Does the government have a plan that will help families?

The minister, in answering the question that was put to her, talked about two things. One is the Powering Australia plan and the importance of the transition which is occurring. The claim was that the government is all across, and is following, the transition that is occurring overseas. I would just like to point to overseas. Media reports this week in the UK are highlighting that more than half of UK adults are struggling to pay their power bills, and, in Germany, some 4.2 million Germans are seeing electricity bills rise this year by over 63 per cent. A lot of people have said that that’s because of the war in Ukraine, but, if you go back through the media from energy organisations in Germany, in fact, in 2021—which was before the war in Ukraine—Germany saw the highest increase in their power costs on record. Germany is often held up as a leader in this so-called transition of power, and, if the Powering Australia plan is following Germany’s lead, then it’s not a good outlook for Australian people.

South Australia is also sometimes held up as an example in terms of the penetration of variable renewable power, but, when I speak to industry figures in South Australia, they highlight that one of the ways that the market operator manages power supply there is by managing demand, and the impact on industry, in terms of forced shutdowns and lost productivity, is measured in the tens of millions of dollars. So there is a cost to that kind of management when you have a high penetration of variable renewable energy, and that cost to industry also means that there is a risk to jobs and job security, which is another factor that families are concerned about.

The key point that Australians need to understand is that, in terms of the science of climate change, the narrative and the rhetoric that has led to the commitment towards net zero and the Powering Australia plan are not actually representing the latest science. The OECD Nuclear Energy Agency report that was issued in April this year highlights—and this is on the basis of work they have done with the International Energy Agency and others, with world-leading engineers and economists—that wind and solar will not get us to net zero and will likely send us broke if we try. And, as they work through all the systems costs, they come to the same conclusion that the IPCC and others have come to in all of the various scenarios that they model: if the world wants to get to net zero, then, as you start constraining emissions, you reach an inflection point where the cost of firming starts to go exponential. That’s what we’re seeing in Europe, and that’s what we are starting to see in Australia.

The answer that the IPCC, the OECD and the IEA have come to is to point to the fact that, as they look around the IEA member nations, the lowest-cost power considering not only levelised systems but systems cost is long-run nuclear power. Even for new build nuclear power, when you look at systems costs, it is the cheapest form of power. So there is an answer to getting to net zero while still having affordable, reliable power, but what it requires is for people to say, ‘Wind and solar have a place but it is not the answer.’ There is a need for firming with a clean, reliable source and the best engineering and economists in the world tell us that the cheapest and most affordable way to achieve that is to remove the prohibition we have on nuclear power and to invest in Australia’s future.