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Victoria plans to reduce electricity prices by copying state with most expensive supply in the world

In a genius move, Victoria, which has “soaring” electricity prices, now announces plan to copy South Australia where people pay more for electricity than anywhere:

The Andrews government this morning unveiled a new renewable energy target with a commitment to power up to 25 per cent of the state from renewables by 2020 and 40 per cent by 2025.

The government has backed the construction of two large scale solar farms in regional Victoria which will provide another 140MW to the state’s supply, and has set up a reverse energy auction system to bring forward an additional 650MW to the state’s supply.

Meanwhile the trams will run on sunshine.

Legislation creates savings, how?

Victorian households will allegedly each save around $30 annually on power bills under the new plan, while medium sized businesses have been projected to save up to $2400 a year under the legislation which will be introduced to parliament today.

It’s almost like Victoria plans to make electricity from legislation (hey, it’s renewable, and will never run out). By making electricity shockingly expensive, Government ministers can talk of “savings”, even though prices will be far higher than the average price of electricity for the last twenty years.

Do the maths. A few months ago, a major Victorian coal generator shut down. Hazelwood provided 1,600 megawatts, 22% of the state’s electricity at $30/MWhr. South Australia just signed a deal for solar power averaging a price of $70-plus-per-megawatt-hour (plus RET scheme, government loans, and who knows what other subsidies).

This is Soviet-style electricity management:

The plan would deliver an increase to the state’s energy supply because it gives investors the certainty they need commit to large-scale renewable energy projects, according to Energy and Climate Change Minister Lily D’Ambrosio.

The word certainty is code for guaranteed profits from forced customers who are not permitted to buy the cheaper alternative.

Strangely coal investors don’t seem to need “certainty” from legislation (governments and investors are building 1600 new plants in 62 countries, but not one in Australia.) Coal power investors get certainty by selling a product that they know freely consenting adults will always want to buy. One version of certainty is driven by the free market, the other by government dictat.

The cumulative effect of the renewable energy target is could cut Victorian greenhouse gas emissions by up to 16 per cent by 2034-2035, in what is the first time a renewable energy target has been enshrined in legislation in the country.


Meanwhile the tariff paid to solar rooftop owners will rise from 5 – 7c per kilowatt hour up to 11c, not because they provide something the state needs, but because other government rules have made electricity more expensive all round. (It takes a lot of bureaucracy to push prices this far above the free market.  This spike is an achievement of the Australian Energy Market Commission, the Australian Energy Regulator, the Australian Energy Market Operator and the Clean Energy Regulator. )

Bear in mind that some people are still getting 60c/Kwhr for their solar panels, and will until 2024. The Minister says: “We promised a fairer system and that’s exactly what we have delivered,” Ms D’Ambrosio said.

Meanwhile solar rooftop owners feel ripped off because they have to pay 30c per KWh themselves, but will only get paid a third of that. They might feel less miffed if someone reminded them that they provide an unreliable surplus product at the wrong time of day, yet get paid at three times the rate Hazelwood could have supplied that electricity for. Somehow I don’t think the Andrews government will mention this.

The free market is dead in Australian electricity.

h/t Pat, TdeF, Mark M.

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