According to Griffith University scientists, a scenario that relied solely on fossil fuels would have resulted in a 30% increase in Australia’s consumer electricity rates since 2021. The new data shows that Australia‘s electricity generation costs today would have increased by up to 50% if it had only used coal and gas rather than renewable energy sources.

The Study

The 30% increase in electricity rates since 2021 has been used by right-wing politicians and climate doubters to argue that energy bills would decrease if new coal-fired power plants were built in favor of renewable energy initiatives.

Paul Simshauser and Joel Gilmore of Griffith University’s Centre for Applied Energy Economics and Policy Research modeled a counterfactual scenario in which resource-rich Queensland had chosen to pursue an electricity grid based on fossil fuels starting in 2005, when coal and gas were “unambiguously the lowest cost technologies,” rather than heeding the global push towards net zero and climate science.

However, Simshauser and Gilmore came to the conclusion that coal can no longer be considered the inexpensive energy source it once was due to rising commodity prices, rising construction costs for new power plants, and significant advancements in renewable energy technology.

The Results

According to their modelling, if Australia had only used coal and gas instead of renewable energy, the cost of producing electricity today would have increased by up to 50%. This shows that giving up on green energy would likely result in higher power bills rather than lower ones.

According to data they claimed applied to the other east coast states, the renewables scenario generated an average wholesale price of $99.70 per megawatt hour, which is consistent with the $93–$103 range that futures pricing projects for Queensland over the next three years.

In comparison, the modeling showed that the average cost for an all-coal or all-gas power grid was slightly more than $150/MWh. (This does not include the harm that burning fossil fuels does to the environment through carbon emissions.)

However, the authors point out that the assertion that energy was once less expensive to produce is accurate: in 2005, coal-fired power cost $88.6/MWh in current dollars (after inflation).

In order to replace the aging fleet over the next 20 years, the research estimated that new coal-fired power plants would need to be developed. It also pointed out that the cost of building and financing these plants had climbed at a rate that was many times faster than inflation.

The expenses of building and transmitting the modelled renewable energy build-out were also considered in the research.

Despite being speculative, the report’s findings, according to its authors, were representative of the reasons why tens of billions of dollars have been invested in renewable projects over the previous five to six years.

Claims

Claims that a straightforward solution to rising prices was a return to fossil fuel energy were bolstered by predictions that power prices would decrease as a result of the adoption of renewable energy sources.

The Guardian: “It is worth noting that when the various governments (NSW, Victoria, Queensland, Commonwealth) from both sides of the political divide made policy announcements suggesting renewables would be cheaper,” the authors said.

Those predictions were reasonable at the time, but “the world has changed significantly since then”.

Power costs both domestically and internationally surged as a result of Russia’s invasion of Ukraine, which rocked the world’s energy markets. Global supply systems were disrupted by COVID, and construction costs skyrocketed.

The Guardian: “Nevertheless, the current trajectory is proving cheaper than the counterfactual,” the authors said. “This should come as no surprise. If there was a lower cost way, markets and investors would find it.”