Why Australia won’t become a “renewable energy export superpower”

In a joint media release with Victoria’s Minister for Climate Change and Energy (note the order of the words, which seems to reflect their order of importance to the state government) on 19 December, Chris Bowen, the federal Minister for Climate Change and Energy (note his identical title), formally declared that Gippsland’s coast on Bass Strait had become Australia’s first “offshore wind (power) zone.” The creation of this precinct, Bowen said, is “a crucial step towards affordable, reliable and secure energy and new economic opportunities for Australia.”

Assessing it charitably, Bowen’s assertion is highly questionable. Considering it dispassionately – and as he tacitly acknowledged on 22 February and I detail in this wire – it’s demonstrably untrue.

Even in the world’s leading wind power-generating nations, fossil fuels remain by far the most important source of energy. In these countries, wind power’s share of total energy consumption has risen from effectively 0% before 2000 to an average of just 12% in 2021. Clearly, wind isn’t powering these “world leading” nations; but if it can’t there, then where?

In particular, Denmark is the world’s leading generator of electricity from wind turbines. That’s because so-called “renewables” generate a majority – albeit most recently a much smaller majority – of its power. Yet it’s clearly not a renewable energy export superpower; moreover, its economy continues to rely upon fossil fuels.

Like Chris Bowen on 22 February, wind power’s enthusiasts occasionally and grudgingly concede the truth: it isn’t reliable because it requires “firming” from “base-load” sources – namely fossil fuels, hydro or nuclear power. In these “world-leading” nations, as in Australia, the domestic supply of base-load power has waned as the demand for power has waxed.

As a result, increasingly lacking domestic firming capacity, each of these “world’s best” adopters of wind power has become a net importer of electricity. As The Wall Street Journal (“The Ukraine War Lesson Europe Refuses to Learn,” 23 February) observed, “green energy is incompatible with energy security, which makes it incompatible with national or continental security.”

Denmark’s situation is particularly noteworthy. In the 1990s, it exported a considerable proportion of its output. But as wind’s share of its mix grew, exports ceased and imports commenced; over the past several years, Denmark has imported an average of 15% and as much as 19% of the power it consumes. It imports primarily from Norway and Sweden (Europe’s leading producers of hydro-electricity).

The situation isn’t merely ironic, it’s comical. Forget exports of intermittent power: without backup from imported hydro, which wind power’s advocates can’t abide, “world-leading” Denmark’s allegedly “sustainable” electricity grid – and thus its high standard of living – would collapse!

Finally, wind power is unsustainable because it’s always been and today remains uneconomic. It’s expanded not because consumers willingly buy it, but because the government compels retailers and subsidises generators to provide it. Without coercion and subsidies, suppliers would revert to economically and financially sustainable power.

Again, Denmark sets a poor example. Its power isn’t just the dearest in Europe; it’s the world’s most expensive. More generally, the latest data reconfirm a longstanding general relationship: the higher is the proportion of intermittent power in a country’s mix, the dearer is its price of electricity.

The implications for Australia are significant and potentially dire. Like Denmark over the past 15 years, so too Australia during the next several: as its share of wind power rises, it will face a deficit of power supply relative to demand. But unlike Denmark, Australia cannot import electricity.

Bluntly, the aspiration to become a “renewable energy export superpower” is laughable when Australia’s supply of electricity will struggle to meet overall demand – and adding insult to injury, is increasingly expensive and unreliable. Is Chris Bowen, a leading promoter of the unfolding debacle, destined to become the Minister for Blackouts and the Energy Crisis?

The World’s Leading Producers of Wind Power

Using data from ourworldindata.org, which it compiled from figures produced by the United Nations and World Bank, Figure 1 plots the percentages of electricity and total energy produced by wind turbines in the world’s leading wind-generating nations. My criterion for inclusion as “world leading” is: during a recent year, wind generated 20% or more of a nation’s power. By this standard, eight nations qualify. Denmark leads the pack: in 2020, wind generated a majority (57.7%) of its electricity. Lithuania, Uruguay and the Irish Republic generated substantial minorities (35-45%); and Portugal, Britain, Spain and Germany significant minorities (20-25%).

It’s vital to understand: presently, only one of the world’s developed nations derives a majority of its power from intermittent sources. Not coincidentally, all but two (Britain and Uruguay) of these eight “leading” nations are members of the European Union.

Figure 1: World’s Leading Producers of Wind Power (as Percentages of Electricity and Total Energy)

It’s also difficult to over-emphasise the fundamental and obvious point that wind is intermittent and unreliable. Not only does it (and hence its output of power) vary dramatically from hour to hour and day to day, and significantly from week to week and month to month: it also fluctuates materially from year to year. In 2020, wind farms produced 57.7% of Denmark’s electricity – but in 2021, the most recent year for which data are available, just 48.6%. In Germany and Lithuania, too, wind’s share of electricity was higher in 2019 than in 2020 and 2021.

During the past 15 or so years, significant decarbonisation of the electricity sector has occurred in these eight nations (Figure 2). Before the GFC, fossil fuels generated an average of two-thirds of their power; it then fell to 40% in 2020 – where, for the moment at least, it’s stabilised. Until the early-2000s, “total renewables” (including hydro) generated a constant 10% of power; since then, it’s vaulted five-fold to ca. 50% in 2020. Wind power, whose share increased from effectively 0% in the mid-1990s to 30% in 2020, has provided a disproportionate share of renewables’ rise in these countries.

Figure 2: Percentage Shares of Total Electricity Consumption, Eight-Nation Average, 1990-2021

Crucially, however, and as I’ve emphasised elsewhere (see in particular “Global Energy Transition” – Fact or Fiction? 6 February 2023), the consumption of electricity comprises a minority (just 17% globally in 2021) of the total usage of energy. Moreover, wind and other forms of intermittent power can to some extent decarbonise the household sector (including personal transport) – but not most of the agricultural, industrial and transport sectors. Consequently, only in Denmark during the past several years have wind farms produced more than 20% of the country’s total consumption of energy. The Irish Republic came close in 2020 (17%), but in Germany, Spain and the UK it’s just 10% and in Lithuania barely 5%.

In these “world leading” countries considered as a group, fossil fuels remain overwhelmingly the most important source of energy (Figure 3). Their share of the total energy mix has fallen from 88% in 1990 to 74% in 2021. Wind’s share has risen from effectively 0% before 2000 to 12% today. That’s modest decarbonisation, but hardly compelling evidence that wind can power these economies.

Figure 3: Percentage Shares of Total Energy Consumption, Eight-Nation Average, 1990-2021

“The World’s Leading Wind Power-Generating Nation”

In the 1970s, Denmark pioneered the development of wind power. “The home-market for wind turbines, combined with supportive policies and R&D support (in other words, lavish subsidies), has helped Denmark become a world leader in wind power technology” said Nordic Energy Research in 2012. In that year, Denmark’s government resolved to increase the country’s share of electricity produced from wind to 50% by 2020 and to 84% by 2035 (subsequently amended to a broader “100% renewable electricity by 2030” target). Today, a Danish multinational, Vestas, is the world’s largest manufacturer and installer of turbines.

Figure 4: Percentage Shares of Total Electricity Consumption, Denmark, 1985-2021

At first glance, Figure 4 will warm the hearts of wind power’s proponents. In 1985, fossil fuels in general and coal in particular generated virtually all of Denmark’s electricity. Beginning in the late-1990s, fossil fuels’ share began to wane and others’ (particularly wind’s) to wax: by 2020, wind turbines produced almost 60% of its power, renewables as a whole 80% and fossil fuels just 20%.

But upon closer inspection, Figure 4 should also furrow wind enthusiasts’ brows: for the first time in 20 years, in 2021 fossil fuels’ share of the power consumed in Denmark rose materially; simultaneously, renewables’ and wind power’s shares sagged – the latter by almost ten percentage points.

Denmark is a world leader of wind power, and renewables generate a majority of its electricity, but no matter: its economy nonetheless continues to rely upon fossil fuels (Figure 5). Summarising a complex situation, the world’s highest power prices (see below) have helped to expel a significant percentage of Denmark’s industry to other countries. But its agriculture sector is very large – indeed, is a big exporter – and fossil fuels rather than intermittent sources drive it.

Hence two crucial questions: if wind and other intermittent sources of electricity can’t propel “world-leading” Denmark’s economy, whose can they? And which does the Commonwealth Government value most: “decarbonisation” of electricity or “reshoring” of industry? These goals are antithetical.

Figure 5: Percentage Shares of Total Energy Consumption, Fossil Fuels and Renewables, Denmark, 1985-2021

Leading Consumers of Wind Power Depend upon Imported Base-load Power

Proponents of Australia’s “energy transition” assert that intermittent and particularly wind power’s share of power output will continue to rise. Indeed, for the next several years it’s more likely than not to occur (but probably won’t reach the government’s target; details below).

I hasten to add that the increased percentage of intermittent power in Australia’s mix will do nothing to alter the world’s climate – but much to intensify Australia’s existing energy and economic problems.

In these eight “world leading” nations as well as Australia, renewables’ share of electricity output have risen and fossil fuels’ have sagged, but the necessity of base-load power (whether coal- or gas-fired, nuclear or hydro-powered, etc., to “firm” the grid when the wind doesn’t blow enough or too strongly) hasn’t abated. In these “world-leading” wind power-generating nations, the domestic supply of base-load power has ebbed as the demand for imports was waxed.

As a result, each has become a net importer of power. Wind power, in other words, is unsustainable, and it’s unsustainable because it’s unreliable. Nowhere – including Denmark – can a wind-powered grid support itself; everywhere – especially in Denmark – it must rely upon base-load power, whether domestic or imported.

Figure 6 plots the percentage of Denmark’s consumption of electricity supplied by imports: numbers less than zero indicate that it exported power, and numbers greater than zero indicate that it imported it. During the early- and mid-1990s, it exported the equivalent to up to 40% (in 1996) of its domestic consumption. By the early years of the century, however, exports ceased and imports commenced; over the past decade, it’s imported approximately 13% of its power requirements. Before 2009, Demark exported the equivalent of 5.6% of its domestic power consumption; since then, it’s imported an average of 11.8% and as much as 19%.

Figure 6: Imports of Electricity as a Percentage of Total Demand, Denmark, 1990-2021

It’s true that correlation isn’t causation; yet where there’s smoke there’s often fire: as the percentage of wind power in Denmark’s electricity mix has risen, so too has the share of imported electricity (r = 0.63). Nobody’s ever called Denmark a “renewable energy export superpower.” That’s because it doesn’t export intermittent energy. Quite the contrary: it imports power – indeed, relies upon these imports – in the form of base-load (hydro and nuclear) power from Norway and Sweden.

For a decade, Denmark has been unable to manage without significant imports of electricity: in 2021, domestic production supplied 83% and imports 17% of total consumption. It’s imported power from countries where hydro generated most (e.g., 92% in Norway in 2021) power; “as a result,” says Wikipedia, “Denmark used hydroelectricity despite domestic production of it being close to zero.” Indeed, “part of the electricity consumed (3-4% according to older data) came from nuclear power, despite the country having no nuclear power stations.”

The Albanese government is tacitly but enthusiastically following Denmark’s lead. The implications for Australia are ominous:

Of the 16 countries that presently derive 90% or more of their electricity from low-carbon sources (Norway and Sweden are among them; Denmark isn’t), ALL rely upon hydro and/or nuclear energy; NONE have decarbonised using intermittent power. Yet Denmark is undeterred. So far, it hasn’t proved that decarbonisation is possible without rising reliance upon imports of base-load power – but it may be demonstrating that it’s not possible.

This result generalises. Figure 7 plots the average percentage of electricity in these eight “world leading” nations supplied by imports. Until 2008, they either exported power or met all of their needs from domestic sources. Since then, imports have met ever greater percentages of demand. Across these “world leading” producers of wind power, as wind’s share of the power mix has risen, so too has the country’s reliance upon imports – specifically, reliable, base-load power, whether hydro, fossil fuelled or nuclear.

Figure 7: Imports of Electricity as a Percentage of Domestic Demand, Eight-Nation Average, 1990-2021

Does Anybody STILL Believe Intermittent Power Is Cheaper?

Intermittent power’s zealots relentlessly assert that it’s cheaper than coal-fired and other reliable sources of electricity. In a report released in 2021, the CSIRO “used a new, more accurate approach for analysing the cost of renewables like solar and wind, to include additional ‘integration’ costs such as storage and new transmission infrastructure, and still found solar and wind continue to be the cheapest sources of new-build electricity generation.”

So why have power prices risen so much – not just in Australia but in other countries that have boarded the intermittent bandwagon? Above all, why is world-leading Denmark’s power the world’s dearest? There’s no shortage of rigorous and comprehensive studies that debunk CSIRO’s claim (see in particular Table 2 in Investors beware: “Cheap" renewables are very expensive, 14 June 2022).

It’s long been well-known – and ignored or denied by wind power’s partisans – that as the percentage of wind power in a country’s electricity mix rises, so too does its price. Figure 8’s left-hand axis does double-duty: it measures both (1) the average price of electricity (€ per kilowatt hour) in ten nations during 2022 and (2) wind’s percentage of electricity consumption in that country in 2021 (the most recent year for which these data are available. Eurostat, the EU’s statistical agency, has compiled the price data. These two series’ correlation is very strong (r = 0.93). Neither Serbia nor Turkey are members of the EU, but have applied to join. Perhaps that’s why Eurostat’s electricity price data includes them.

Figure 8: the Price of Electricity (€ per KWH) and Wind Power’s Percentage of Total Consumption, Selected Countries, 2021

Figure 8 includes four countries whose generation mix relies primarily upon fossil fuels (Serbia, Turkey, Hungary and Poland), one which relies almost exclusively upon hydro (Norway), the world’s leading generator of nuclear power (France) and three “world-beating” generators of wind power (Denmark, Germany and Spain). Because it’s no longer a member of the EU, Eurostat no longer records British electricity prices. Other sources put them on a par with Spain.

It’s true, to anticipate a criticism, that these prices aren’t perfectly comparable from one country to another. That’s because, in Eurostat’s words, the price of electricity in the EU “depends on a range of different supply and demand conditions, including the geopolitical situation, the national energy mix, import diversification, network costs, environmental protection costs, severe weather conditions (and) levels of excise and taxation.” The prices in Figure 8 include taxes, levies, GST/VAT, etc., for household consumers, but exclude refundable charges for non-household consumers.

It’s also true that Figure 8 omits most EU nations – and that if it included all of them the relationship would be messier. Equally, however, there’s NO example – not a single one – of a country which (1) generates an above-the-EU-average percentage of its electricity from wind and solar and (2) whose power prices are below average. Similarly, there’s NO example of a country which (1) generates an above-average percentage of its electricity from base-load (i.e., fossil fuelled, hydro and nuclear) power and (2) whose power prices are above average.

It’s therefore unarguable: below-average power prices necessitate a heavy reliance upon base-load power. And above-average prices stem from heavy use of intermittent sources. Attention Anthony Albanese, Chris Bowen, Jim Chalmers and others: the phrase “low-cost renewables” is an oxymoron. Perhaps voters will communicate this message to you at the next election.

Conclusions

On 1 March, Michael Shedlock (“Largest U.S. Grid Supplier Warns of an Energy Shortage Due to Undeliverable Mandates”) encapsulated the situation arising from the rise of intermittent power in the U.S. His key points apply equally to Australia:

• Power prices will continue to increase;
• The risk of brownouts and “load shedding” (and, I add, blackouts) is also rising;
• Governments will fail to reach their much-vaunted intermittent power targets;
• Most intermittent power projects are financially and economically unviable – but (including those on the starting block) will continue regardless because massive subsidies allow them to exist as tax-consuming “zombies”;
• Higher power prices and the rising costs of untenable power projects will both cause and reflect higher consumer price inflation.

Above all, nobody should expect that any of this existing boondoggle and emerging energy crisis will do anything for the environment – never mind the climate. Indeed, and as I detailed in Investors beware: “Cheap" renewables are very expensive, intermittent power harms the environment.

Implications

Contrary to Chris Bowen’s assertions on 19 December, wind power isn’t reliable; it’s erratic and intermittent. It therefore requires backup (“firming”) from a reliable source(s); without this firming, it’s insecure. For this and other reasons, it’s inherently expensive – and for rising numbers of consumers, unaffordable.

For these and other reasons, wind power destroys rather than generates wealth. It forecloses rather than creates economic opportunities; for these and other reasons, it’s inherently unsustainable.

Unlike the large and growing number of people suffering “energy poverty” and associated anxiety, intermittent energy’s politically well-connected and thus securely-subsidised extremists blithely inhabit an evidence-free cocoon. Australia “has the potential to become a renewable energy-powered export superpower,” gushed WWF Australia on 5 December. It exhorted “our leaders to make Australia the world’s leading exporter of renewable energy by 2030 and to put us on the pathway to 700% (yep, that’s what they said!) renewables by 2050.”

WWF didn’t stop there: “as the world shifts to a low carbon future (sic), Australia has everything we need to take the lead and become a renewable energy export superpower. We’ve got endless sunshine, plenty of space, powerful winds, world-class expertise and strong trade relationships ... Australia can power our whole nation with clean and affordable renewable energy, plus have plenty left over to sell to our neighbours.”

That’s fantasy. The reality is that there are no plausible grounds to believe that Australia will soon become an exporter of intermittent power – never mind a “renewable energy export superpower.”

First, even if the technicalities were surmountable (they’re not at present), intermittent energy’s price would still be prohibitive because it’s innately dear. Electricity is a commodity; hence low-cost wins and high-cost loses. (That, I think, is a key reason why governments subsidise intermittent energy so lavishly. They can’t pick winners, but losers flock to governments like flies to cow-pats.)

Secondly, the technical difficulties are colossal – and add to intermittent energy’s inherently high cost. The recent entry into administration of Sun Cable, which intended to construct the world’s largest battery, a solar farm and a 3,700 kilometre cable to supply $A billion of “green energy” per year to Singapore by 2027, should but probably won’t bring people to their senses (see also “Australia Aims to Become Renewable Energy Export Superpower,” The Financial Times, 11 August 2020). 

Thirdly, and reinforcing the first point, there’s no international market for expensive power. Yes, governments force their own subjects to buy it, but sovereign governments can’t force it upon one another. That’s a key reason why the world simply isn’t decarbonising (or at best is doing so glacially), fossil fuels remain by far its most important source of energy – and intermittent sources of energy are, in global terms, relatively insignificant (see also “Global Energy Transition” – Fact or Fiction? 6 February 2023).

Finally, if Australia mimics Denmark, then wind’s continued rise will necessitate imports of electricity. But from where: New Zealand? Papua New Guinea? Indonesia? Without backup from reliable sources, Australia will need to import power, but can’t. Hence the rising risk of blackouts.

How significant is this risk? According to The Australian (“State’s Key Energy Grid ‘Headed for Disaster,’” 20 February), “a former director of Western Australia’s state-owned energy retailer, says the state’s key energy grid is headed for disaster under the McGowan government’s plan to shutter its coal plants by the end of the decade. Mark Chatfield, a former CEO of Queensland utility CS Energy appointed to the board of WA retailer Synergy by the previous (Liberal) government, told The Australian that blackouts were inevitable under the ambitions outlined by the state government last year. ‘The path we are on, of the simple retirement of coal and its replacement by wind and solar, is destined to fail,’ he said.”

Chatfield’s modelling “showed that delivering enough renewable and batteries to keep the grid stable after the coal plant closures would cost tens of billions of dollars and be impossible to (complete) by 2030.”

Given Australia’s inability to import power, backup from reliable sources is the only viable means to mitigate the rising risk of blackouts. According to the Australian Energy Market Operator (21 February), Australia faces an “urgent” need to construct backup capacity to avoid “energy shortfalls” (that’s a euphemism for “risk of blackouts”) during the next couple of years. “Investment in firming generation ... is critical to complement our growing fleet of weather dependent renewable generation to meet electricity demand without coal generation,” AEMO’s CEO said. “Reliability gaps” (another weasel-phrase meaning “risk of blackouts”) “begin to emerge ... from 2025 onwards. These gaps widen until all mainland states in the NEM are forecast to breach the reliability standard by 2027 onwards ...”

It’s important to understand that these “shortfalls” and “gaps” are emerging as a direct consequence of the percentage of intermittent energy in the power mix. Without adequate backup, as “renewables” share rises, so too does the risk of brownouts and blackouts.

AEMO’s update also tacitly confirms that the government probably won’t reach its intermittent energy target (e.g., that the grid source 82% of its power from “renewables”). To do so requires approximately 28 gigawatts (GW) of additional solar and wind generating capacity by 2030. According to AEMO, just 6 GW is ready to construct; another 3 GW is mired in various stages of the approvals process. 

That’s just one-third of what the government’s target requires; what about the other two-thirds?

Given the glacial speed of the current approvals process, as well as the government’s commitment to slow it further (by toughening the Environmental Protection and Biodiversity Control Act), “it seems highly unlikely that enough new projects (to meet the target) can move from proposal to completion (by 2030)” (see Nick Cater, “Locals at Mercy of Labor’s Renewables Vanity Project,” The Australian, 27 February).

Got that? The government’s policy will evict enough base-load power from the grid, and replace it with sufficient intermittent power, to increase the risk of load-shedding and blackouts. But it won’t induce the creation of enough intermittent capacity to attain its target – never mind become a “renewable energy export superpower.”

It’s much the same in the U.S. According to The Wall Street Journal (“S.O.S for the U.S. Electric Grid,” 26 February), “the warnings keep coming that the force-fed energy transition to renewable fuels is destabilizing the U.S. electric grid ... Another S.O.S. came Friday in an ominous report from PJM Interconnection, one of the nation’s largest grid operators.”

“The PJM report forecasts power supply and demand through 2030 across the 13 eastern states in its territory covering 65 million people. Its top-line conclusion: Fossil-fuel power plants are retiring much faster than renewable sources are getting developed, which could lead to energy ‘imbalances.’ That’s a delicate way of saying that you can expect shortages and blackouts.”

The report forecasts that enough to power 30 million households and approximately 21% of PJM’s current generation capacity are at risk of retiring by 2030. Many states have established ambitious renewable goals, and the Inflation Reduction Act lavishes enormous subsidies on wind, solar and batteries. But PJM observes that the “historical rate of completion for renewable projects has been approximately 5%,” in part because of challenges to the issuance of permits. In an optimistic case, it estimates that the wind, solar and battery storage capacity to be added to the grid by 2030 will be just half as much as the expected fossil-fuel retirements (the less optimistic case is significantly less than one-half).

WSJ concludes: PJM’s “report doesn’t say it, no doubt owing to political reticence, but the conclusion is clear. The left’s green-energy transition is incompatible with a growing economy and improving living standards. Renewables don’t provide reliable power 24 hours a day, 365 days a year, and the progressive campaign to shut down coal and gas plants that do will invariably result in (power) outages.”

Even Chris Bowen, who’s probably Australia’s most powerful zealot of unreliable energy, finally seems to accept reality. According to the front page of The Australian (“Bowen Steps on the Gas in Race to Avoid ‘Recipe for Disaster,’” 23 February), he “says gas will play a key ‘fallback’ role in Australia’s renewable transition, providing a flexible fuel option to help shield the nation from blackouts when coal-fired power stations exit the National Electricity Market. In an interview, ... (he) said shutting off coal and gas overnight and exposing the power grid to blackouts was simply not an option.”

“Gas will play a role in the system for the foreseeable future,” Bowen vowed. (He didn’t enlighten us how far into the future he purports to foresee.) “For the entire grid,” he added, “having gas there at least as a fallback (and at most, presumably, as a backbone) is pretty important for the foreseeable future.” Gas will be crucial “for peaking and firming (of) renewables.”

I agree – and hasten to add that Bowen’s prognosis is effectively a confession that the aspiration to become “renewable energy export superpower” is a delusion. How can you credibly aspire to this status if, like “world-leading” Denmark, you don’t export “renewable” energy – and, without backup from hydro (Denmark) or gas (Australia), can’t sustain the grid and thus maintain – never mind lift – living standards?

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