Price of wind power, solar power and household electricity

Mike Jonas

In a recent conversation I was shown a chart of Australia’s wholesale electricity prices, by state, with South Australia having the lowest rates of all states by far. The person presenting the chart claims that this demonstrates how renewable energy has reduced the cost of electricity.

But there are two small problems:

1. The chart is a real-time price chart that only shows the price at that particular time and

2. Electricity prices in South Australia are a huge negative number. In other words, they are struggling to find anyone who uses electricity even if it is paid to use it.

As many have pointed out, negative electricity prices don’t mean cheap electricity, it just means generators have unrecoverable costs. Those costs will have to be recouped at some point or they will stop working. In other words, negative electricity prices actually increase overall costs.

To see the full picture, you have to look at… the full picture.

I started by looking at the latest report from AEMO (Australian Energy Market Operator).

AEMO Report Q4 2022:

• [East coast] The average wholesale spot price was $93 per megawatt hour (MWh) across all National Electricity Market (NEM) regions, with Queensland, New South Wales and Tasmania at record highs in Q4. However, prices have fallen from the extremes seen at the beginning of the year. [Most of South Australia got separated following a transmission tower failure.]
• New minimum operating demand records were set in Q4… South Australia, Victoria and New South Wales all recorded new minimums for any quarter since NEM began and Queensland has Q4 active demand lowest since 2002.
• Output from wind and grid-scale solar grew strongly as new facilities were connected and put into operation. Although NEM’s wind fleet recorded its lowest recent quarterly utilization rate, Q4 2022 was the highest wind power generation of any Q4 on record. Queensland and New South Wales saw large increases in grid-scale solar, setting daytime prices more often than in the same period last year.
• The instantaneous penetration of renewables for NEM in total electricity generation reached 68.7% on October 28, 2022, surpassing the previous record of 64.1% (set on October 22). September 2022).

So wind and solar grew strongly, their penetration hit a record high, wind power hit a record high in Q4, but wind energy usage fell. As a percentage, demand fell to a record low and prices hit a record high in Q4.

It really doesn’t look like wind or sun drives down prices.

Let me rephrase that last sentence to make it a little clearer: It seems the wind and the sun are a real disaster.

OK, so that’s Australia. What about the rest of the world?

I hope that everyone here has seen this chart since ClimateDepot:

That chart is from January 2018, so I downloaded the latest chart available electricity price for living (June 2022) and wind and solar % primary energy equivalent data (2021) and assemble an updated histogram. Renewable energy is expressed as a % of energy, rather than in watts per capita, which can be more representative.

Sorry for putting the electricity price on the X axis instead of the Y axis.

A few things stand out in the updated chart:

• There is certainly a clear correlation, with higher wind + solar associated with higher electricity prices.
• Electricity prices in Denmark (DNK) and Germany (DEU) and several other countries have almost doubled in the last 5 years. Greece (GRC) did much better (I don’t know why – watching?)
• Britain (GBR) is a disaster area.
• Denmark has by far the most renewable energy (mainly wind), as a percentage, but only the highest cost country by a narrow margin. Norway’s hydroelectricity can be used as a battery which, although expensive, makes use of more wind power. Unlike South Australia, for example, where it’s often not even possible to give.
• A lot of countries with very low electricity prices are oil/gas producing countries that keep household electricity prices low through subsidies. That is not a viable option for fuel-importing countries. However, the implication is that countries that use a higher share of non-renewable energy (mainly coal, gas, nuclear and some hydro) tend to have lower electricity prices.

Conclusion: From all of the above, ie. Looking at the big picture, wind and solar clearly increase the cost of electricity.

But then, everyone who reads outside the controlled media knows it.