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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

Energy market « Previous | |Next »
June 21, 2004

The Australian Financial Review has an an editorial on energy(subscription required, 21 6 04, p. 62). At the risk of boring people with energy yet again, I want to briefly mention it because of what it does not say. The arguments are poor in economic terms.

The editorial says:


"These facts stare us in the face. Cheap and abundant fossil fuel energy is the linchpin of our economic success, a competitive advantage that offsets the historic disadvantages of distance from the major rich-country markets and our small home market. We would be insane to sacrifice it prematurely."


Well, no one is suggesting that. They are suggesting cleaning up coal and encouraging a shift to a greater use of renewable energy. The editorial goes on to address renewables:

"Wind and solar undoubetdly have a supporting role to play in our energy future. But they remain too costly, lacking in scale and unreliable---when there is no wind or sun--to power base-load electricity generation for major industries, towns and cities."


Who is suggesting renewables will perform base-load electricity generation? Their value is different. Solar cuts in during the heat of the summer when the airconditioners are turned on in Adelaide. The value of the service provided by renewables is different from the base load.

An analogy to highlight the outmoded thinking of the AFR on energy from telecommunications. The base line is the old landline, fixed handset and fixed call charge. Mobile phones are far more expensive and they are largely supporting. But we use them and pay extra, even though they are unreliable and lacking in scale.

Why?

Because mobile phones provide a service that the old landline does not. The service is instant contactibility.

Similarily with solar power. We switch it on to deal with the sunny days. And we pay a bit more to do it becaue we value the service provided.

I reckon its about time the AFR dumped its prejudices---it even canvases nuclear power--and started thinking in market terms. After all, we are in the process of creating a national energy market that provides differently valued energy services.

| Posted by Gary Sauer-Thompson at 10:13 PM | | Comments (1)
Comments

Comments

When I was travelling in Turkey in 2002, I noticed that nearly every roof was covered by solar hot water systems. And I would wonder why the relatively poor turks could afford such systems and why Australia couldn't.
As far as alternative energy sources go I think they are reaching the stage where they are nearly competative price wise.
I would like to see the Fed and State gov's support these new alternative industries.
Did you see this story on catalyst in May on a new wave power device being built near Port Kembla