The hearts of climate change lobbyists were aflutter recently with news that wind farms had generated 140 per cent of Denmark’s electricity demand, and local advocates contrasting this with the Abbott Government’s supposed ‘war on wind’.
What this story is really saying is that in a country with a population the size of Victoria (around 5.6 million) and less than half the geographical area of Tasmania (at 43,000 square kilometres), wind power is able at 3am in the morning, when very few people are using electricity, to generate electricity in excess of demand.
To get a sense of what 3am demand for electricity looks like, here it is this morning in Victoria:
Denmark is of course famous for having the most expensive electricity prices in the world and enjoys the luxury of being close enough to Germany, Sweden and Norway to buy their excess electricity (in part supplied by significant nuclear and hydroelectric facilities) when the wind isn’t blowing.
Wind farms turn the economics of energy markets upside down. Traditional power plants, like any other commodity, generate a product (power) that is sold in a market competing with other providers, and charging a price that is set balancing demand and supply.
However, wind farms, which are typically only economical in the first place due to significant government subsidies, which often include fixed tariffs (so much for the free market) actually rob the market of price signals when the wind blows. It can destroy the economics of electricity providers that need to stay in the market as backup for the 70 per cent of the time that the wind doesn’t blow.
Every country needs cheap and affordable electricity to build and sustain a modern economy and for its people to enjoy quality of life.
Australia has a population of almost 24 million people spread over 7 million square kilometres with an electricity demand more than 6 times that of Denmark, and no neighbouring country’s electricity to fall back on. Denmark offers no lessons for Australia other than “Don’t do this.”
Chris Berg in The Drum today wrote about the history of the Clean Energy Finance Corporation and its political genesis. The Abbott government was right to follow the lead of the United Kingdom and instruction to the Clean Energy Finance Corporation to no longer invest in wind or small-scale solar facilities.