Why Chris Bowen is mistaken about solar and wind power

Overview

Chris Bowen is the federal Minister for Climate Change and Energy. (Note that “climate change” precedes “energy” – this order isn’t accidental, and its implications are considerable.) He’s repeatedly insisted that intermittent (“renewable,” i.e., solar and wind) power isn’t merely the cheapest form of electricity; it’s also the cheapest form of energy. On the ABC in June 2022, for example, he declared: “renewable energy is the cheapest form of energy, and that includes transmission and storage.”

In a media release in July 2025, he also tacitly denied that solar and wind generation is innately erratic. “The latest GenCost (report) confirms what our energy experts have been saying for a long time: the most affordable path to deliver reliable energy in future is with new renewable generation and storage …” And on social media in August 2026, he reiterated: “renewables are the cheapest form of energy. The cost of solar in particular (has) dramatically decreased over the decades.”

On the one hand, reports from all government agencies and some private organisations dutifully support his claims. Critics, however, reject them.

Australia’s energy policy, including its sources of electricity, is clearly a matter of public policy. What’s highly doubtful is whether policy in this country presently rests upon a firm base of logic and evidence. Indeed, in several crucial respects it’s become the defective product of magical thinking. Considered charitably, the claim that solar and wind power are the cheapest sources of energy – and not just of electricity – resembles countless debates in financial markets: person A asserts X; person B claims Y; and X and Y are incompatible.

Somebody’s obviously wrong. Whom, therefore, to believe? In this article, I do what investors should always do but in practice seldom do: clarify competing claims and assess them dispassionately with valid, reliable, comprehensive and publicly-available data.

I acknowledge my professional and financial interest in this matter. I want to know the truth, or some reasonable facsimile thereof, because Leithner & Company seeks to benefit thereby: in the long run, investors who ignore consensus and think for themselves – that is, conduct their own analyses and draw their own conclusions – tend to generate reasonable long-term returns.

Conversely, speculators rely upon some combination of conventional wisdom, intuition, wishful thinking, propaganda and falsehood. As a result, they eventually underperform – and often produce painful losses.

Three sources of data underpin my analysis. The International Energy Agency (IEA) has largely disavowed its mandate (“to work with governments and industry to ensure reliable, affordable, and clean energy for all, centred around … energy security, economic development, and environmental protection”). Instead, it now advocates “climate action.” Yet it remains a leading source of comprehensive and reliable global and national energy data. I’ve collated IEA’s most recent (2025) electricity price data from more than 80 countries (which collectively comprise more than 95% of global GDP).

To these data I’ve matched the Statistical Review of World Energy’s latest (2025) estimate of each of these countries’ percentages of power generated from various sources. Long series – monthly observations since January 1980 – compiled by the Australian Bureau of Statistics form the third pillar of my analysis: the first measures the wholesale price of electricity; another quantifies the total price which retail consumers pay for power; and the Consumer Price Index measures consumer price inflation.

My analyses of these data conclude that Bowen and his supporters are mistaken – and his critics, such as Robert Gottliebesen, the CIS, IPA and others, are correct.

My results show that renewable power can be inexpensive – but ONLY if we’re talking about hydroelectricity in relatively rich countries like Canada. Conversely, regardless of country and considering its total system cost, solar and wind power ISN’T cheap. Quite the contrary: it’s dear. Conversely, and particularly in non-OECD nations, electricity generated from hydrocarbons is low-cost. These results are hardly iconoclastic; indeed, they’ve been widely-known for decades.

“It is time,” declared Gottliebsen in The Australian (“A home-made energy crisis,” 15 October), “to stop mincing words and face the horrible truth on renewables … Once (they) supply more than around 30% of grid demand, they are usually uneconomic.”

Bowen, as well as Anthony Albanese and Jim Chalmers, have repeatedly asserted that rising power bills in Australia are the consequence of external events such as wars between Russia and Ukraine.

That’s rubbish: I show that domestic factors (namely the growing percentage of intermittent sources of power, together with associated “green” subsidies) has been the primary cause of consumers’ escalating bills.

Among its other effects, the rising tide of solar and wind power increasingly pushes the “spot” price of electricity in the National Energy Market (henceforth NEM) towards and even below zero, and thus places downward pressure upon power’s average wholesale price. Crucially, however, “clean” solar and wind also impose negative – and cumulatively considerable – externalities (which, ironically, are forms of pollution!) upon downstream links of the supply chain; they thereby exert considerable upward pressure upon total system cost – and thus the retail price of electricity.

The result is pyrrhic: as Australia’s dependence upon “cheap renewables” has risen, so have consumers’ bills.

In Gottliebsen’s acerbic words, “government politicians and their captured official bodies keep saying that renewables are the cheapest form of energy. Ordinary Australians, via their power bills, know that these claims are simply wrong” (see “Silence as Australia’s green energy dream sours,” The Australian, 11 February).

Let’s Start by Clarifying Terms

Electricity is one form of energy; others include chemical, kinetic, nuclear, radiant and thermal. For the sake of brevity, and for my purposes without loss of meaning, I’ll use the terms “electricity” and “power” interchangeably. For the sake of accuracy, however, it’s worth noting that these terms have distinct connotations: electricity is the continuous, controlled flow of electrons through a conductor such as a copper wire; power is the rate at which the electricity is consumed. 

Electricity can be measured in several ways: like water flowing through a pipe, its amperage measures the current’s volume; like the pipe’s width, ohms gauge the resistance slowing the flow; and like water pressure, voltage quantifies the electrical “pressure” which pushes the current through its conductor.

Watts (W) measure electricity’s power. One watt equals one joule of energy per second (where watts = amps × volts). Kilowatt-hours (kWh) measure total production or usage of electricity per hour. One kWh equals the consumption of 1,000 watts for one full hour. There are several parallels with internal combustion engines:

• Electricity corresponds to petrol or diesel;
• Amperage is akin to fuel’s rate of flow through the engine;
• Power (kW) is analogous to the engine’s horsepower – the rate at which energy is being consumed/produced at a given moment;
• Finally, consumption of power (kWh) is equivalent to the number of litres of fuel consumed: in both cases, it’s over a given interval of time.

Bowen’s Confusion and Contradictory Claims

As a careful reading of this article’s first two paragraphs indicates, Bowen confuses electricity and energy. The former is a subset of the latter: all electricity is energy, but not all energy is electricity. He also advances two distinct and incompatible claims:

#1: The Cautious (“Weak-Form”) Claim

Newly-constructed wind and solar generation – backed by requisite storage and transmission – is the lowest-cost form of supply. Tacitly, this claim acknowledges that wind and solar power can’t stand on its own two feet: it requires backup (“firming”). It also concedes that existing (“legacy”) solar and wind infrastructure doesn’t invariably generate the cheapest electricity.

#2: The Aggressive (“Strong-Form”) Claim

All (legacy and newly-constructed) wind and solar power – backed by storage and transmission – is the lowest-cost form of supply. In this form, Bowen IS claiming that solar and wind infrastructure produces the cheapest electricity under all conditions.

Preliminary Assessment: the “Strong-Form” Claim

If his “strong-form” assertion is correct, the implication is momentous: solar and wind power’s effect upon the Australian electricity sector since the turn of the century should resemble WalMart’s impact upon the American retail sector and U.S. economy during the 1990s-2010s.

Over these three decades, and without receiving a penny of subsidies and growing its profitability seventeen-fold, WalMart revolutionised American retailing. In particular, its “Supercenter” format caused the market share of traditional supermarket chains to collapse from 90% in 1988 to 44% by 2019.

By consistently providing the lowest prices to consumers, Walmart also acted as a disinflationary force across the U.S. economy. Multiple studies (including major ones by economists at the National Bureau of Economic Research and Federal Reserve Bank of Minneapolis) attributed to WalMart’s rise the reduction of the prices of American consumer staples by 10%-25% during these years. The “WalMart effect” measurably abated America’s overall rate of consumer price inflation.

If Bowen’s right, then the impact upon Australian consumers’ electricity bills of solar and wind’s power’s rising market share should parallel the impact upon American consumers’ grocery bills of Walmart’s rising market share. In particular, retail power prices should grow more slowly than – and thus exert downward pressure upon – the overall rate of consumer price inflation.

A second point is obvious: if the “strong-form” claim is true then today’s subsidies of “renewable” energy are unnecessary. The implication is sobering: over the years Australian governments have squandered vast amounts of taxpayers’ money.

Direct federal, state and territory subsidies of intermittent sources of electricity currently total ca. $4.6 billion per year. Adding regulatory mandates, direct transfers to consumers and broader “climate initiative” spending, independent estimates range as high as $18 billion per year.

Given ever-changing and increasingly complex regulations, governments’ extensive use of off-budget and off-balance-sheet vehicles (such as special investment funds, public-non-financial corporations and joint ventures, etc.) to finance the so-called (and mis-named) “energy transition,” it’s very difficult to quantify exactly how much money has been squandered. However, data compiled by the Centre for Independent Studies estimates it. Over the past decade, various federal schemes alone have lavished approximately $29 billion upon the “renewable” sector (see in particular Michael Vu, Counting the Cost: Subsidies for Renewable Energy, 6 June 2024).

Taking states’ programs into consideration and extrapolating historical averages, it’s reasonable to infer that the past decade’s largesse rises to ca. $35-$40 billion. Yet it’s likely that I’m grossly understating current and future subsidies.

Robert Gottliebsen has repeatedly estimated that over the next ca. 35 years the total cost of Australia’s “renewable energy transition” (which doesn’t exist; it’s actually an electricity transition) will reach $1 trillion. This staggering sum includes investments as well as subsidies; clearly, however, given intermittent power’s high cost, the latter will be considerable.

Gottliebsen has called this transition “by far the biggest financial disaster since Federation” (see, for example, “Australia’s renewables plan on track to become one trillion dollar financial disaster,” The Australian, 7 April). Guess who’s going to foot the bill?

Together with Aidan Morrison of the CIS, he’s disaggregated his projection into several components:

1. Initial Generation Assets: he estimates that capital expenditure thus far has totalled ca. $300-$350 billion.
2. Subsequent Generation Assets: he budgets roughly $160 billion for additional wind and solar generation facilities;
3. Transmission: he reckons that the Australian Energy Market Operator (AEMO) has massively underestimated the future cost of transmission infrastructure (at $8.5 billion in 2020). His expects that it’ll certainly be at least $120 billion, will likely be ca. $150 billion and could even explode above $200 billion.
4. Financing and Debt: the remainder ($300-400 billion) derives primarily from high borrowing charges and interest costs over the next ca. 35 years.

More recently, Gottliebsen has adjusted his projection to “at least $900 billion.” Advocates of intermittent power reject it: they contend that it double-counts some costs and relies heavily upon worst-case scenarios (which, it seems to me, given the magnitudes of the blowouts of the Snowy 2.0 and New England Renewable Energy Zone and other schemes, might eventually become underestimates).

For what it’s worth, I strongly doubt that anything like $1 trillion will be expended. That’s because most of this solar and wind infrastructure will never see the light of day: compared to viable alternatives, it’s simply too expensive (see, for example, “Origin dumps massive NSW wind farm over soaring costs,” The Australian, 2 October).

Preliminary Assessment: the “Weak-Form” Claim

Bowen’s “weak-form” claim offers cold comfort to long-suffering households: not until the allegedly cheapest state-of-the-art wind and solar infrastructure replaces supposedly inferior and dearer coal-fired (as well as “legacy” solar and wind) power, a process which will take years, will prices finally abate.

This process recalls the phrase “waiting for Godot” – the title of an absurdist 1953 play which described a seemingly endless wait for an event that’ll likely never arrive (see, for example, “Wind project ‘drought’ puts Australia’s green energy targets in doubt,” ABC News, 25 August).

The average age of existing large-scale wind farms in Australia is now approaching 15 years; that of utility-scale solar infrastructure is ca. 6 years. The lifespan of modern wind turbines is ca. 25-35 years. Their operating and maintenance costs generally increase as they age, which typically means ever higher per-unit costs of output as time passes. Solar panels lose ca. 2% of their capacity in their first year, and ca. 1% per year each year thereafter. And they fare poorly in hail storms and cyclones.

Solar and wind’s advocates also routinely ignore its costs of decommissioning and disposal – unlike coal-fired power plants, whose costs invariably include retirement, removal and land rehabilitation. Moreover, advocates overlook the fact that wind turbines’ blades and solar panels are composed of composite materials which can’t readily be recycled, and that wind towers and foundations can’t be reused.

By 2050, Australia’s existing wind farms will have become obsolescent and been replaced. At what cost? Does Bowen’s estimate of solar and wind power’s cost take into consideration depreciation and replacement? Decommissioning and disposal?

Bowen’s Critics

It’s an oversimplification, but for the sake of brevity it’s reasonable: Bowen’s claims derive ultimately from the GenCost reports produced annually since 2018 by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in cooperation with AEMO.

For Bowen and supporters of intermittent power, GenCost is an unimpeachable benchmark. To his critics, its methods are fatally flawed; therefore, its conclusions are deeply misleading. For my purposes, the easiest way to assess Bowen’s claims is to itemise the major criticisms of GenCost.

Criticism #1: Flawed Measurement

GenCost relies upon the Levelised Cost of Energy. Yet LCOE is invalid: it measures power’s cost only at its point of generation – and ignores consequent costs (transmission, distribution, hedging, depreciation, decommissioning and disposal) further down the supply chain.

LCOE is highly sensitive to assumptions, and doesn’t consider the extra costs which intermittent power necessitates elsewhere along the supply chain.

According to Scott Hargreaves, “LCOE does not recognise the real value of baseload generation from gas, coal or nuclear, which is able to consistently produce electricity on demand, whereas renewables simply cannot.” Relatedly, LCOE ignores the much longer life expectancy of other forms of generation: coal and gas is typically twice solar and wind, and nuclear and hydro typically last three-four times longer.

He elaborates: “LCOE simply cannot explain the rising costs of (electricity) endured by Australian families and businesses. Despite repeated GenCost reports predicting the contrary, as more wind and solar has come into the system, costs have continued to rise, and blackout warnings are becoming regular” (see “GenCost Misleads Australians with Flawed Energy Cost Model,” Institute of Public Affairs, 22 May 2024).

Criticism #2: Exclusion of Total System Costs

GenCost greatly understates the true cost of wind and solar power because it fails adequately to consider their integration (and thus whole-of-system) costs. These understated or omitted costs include, but aren’t limited to, the expansion and improvement of large-scale transmission network infrastructure, back-up (“firming”) generation, and distribution network upgrades.

GenCost thus overlooks performance and system reliability. By treating all megawatt-hours equally, it fails to recognise the premium value of continuous, uninterrupted power – and the considerable costs (loss of production, etc.) which intermittent (because, among other things, it’s weather-dependent) and variable power generation imposes upon consumers.

Total System Cost (TSC) methodology takes into account costs across the supply chain. It’s common sense: system-wide decisions must be made on a TSC basis in order to ensure that all costs have been considered. On a TSC basis, according to Hargreaves, “any system built on baseload generation, like gas, coal, or nuclear, will always be significantly less expensive than one reliant on variable renewable energy.”

Hargreaves concludes: “(TSC) modelling demonstrates that basing a system on variable renewable energy, solar and wind, will result in a cost four times the one we had with secure base load energy (i.e., coal-fired power), and is in fact the most expensive form of electricity service.”

Similarly, Stephen Wilson concludes: “the TSC of a renewables-based system (greater than 80% share) may be two or three times as expensive as one premised on baseload (whether current or with new build nuclear), and a ‘renewables only’ system is likely to be five or six times as expensive” (see “The Ruinous Cost of Free Energy: Why an Electricity System Built on Renewables Is the Most Expensive of All Options,” Institute of Public Affairs, 1 July 2024).

Recent Developments

CSIRO’s Final 2025-26 GenCost Report, released on 15 July, revised its LCOE methodology. According to Hargreaves, the new measure, System Levelised Cost of Electricity (SLCOE), is “better able to capture how increased wind and solar penetration actually drives up system costs. The attempts to finesse a flawed model to recognise system costs are a step in the right direction, but the damage has been done. Flawed CSIRO modelling has already been weaponised by policy makers to justify an unachievable objective of 82% renewable energy by 2030” (see “CSIRO concedes net zero means higher prices,” Institute of Public Affairs, 15 July 2026).

Accordingly, “the IPA remains of the view that attempting to transition the grid to wind and solar leads to a total system cost for electricity three to four times greater than that with existing traditional baseload supply.”

Are Renewables Really Cheapest? An Analysis of Data from 80 Countries

If Bowen’s “strong-form” claim were true – in his words, if “renewable energy is the cheapest form of energy” – then globally we’d observe a clear relationship: the higher is renewables’ percentage share of a country’s electricity output, the lower, on average, will be its price of electricity. On the other hand, if his critics are correct, the opposite relationship will exist: the higher is renewables’ percentage share of a country’s generation, the higher, on average, will be its average price of power.

From data compiled by the IEA I’ve extracted the most recent (2025) average price of electricity (expressed as $US per kWh) in more than 80 countries; to these data I’ve matched the estimate, contained in the 2025 edition of the Statistical Review of World Energy, of these countries’ percentages of electricity generated from renewable sources (the sum of biomass, hydro, solar and wind). Figure 1 plots the results.

Figure 1: Percentage Total Renewables by Price of Power, 80 Countries, 2025

Many factors explain the price of power from one country to another: these include geographical location and geological structure, level of development and access to technology, market structure, competition and regulation, taxes and subsidies, etc. Hence the wide dispersion of the observations in Figure 1.

Yet the global trend is unmistakeable; it’s also substantively as well as statistically significant: as renewables’ percentage share of a country’s output increases, its price also rises. This result contradicts Bowen – and supports his critics.

When renewables’ share of the total output of power is less than 20%, prices in 2025 averaged $0.07 per kWh; when their share exceeds 80%, the price averaged $0.24 – more than three times as much. (In Australia, according to these data, the price of power in 2025 averaged $US0.25 per kWh. That’s well within the top quintile (20%) of nations.)

The results in Figure 1 should surprise nobody; they’ve been conducted annually by numerous people over the past quarter-century (see, for example, Bjørn Lomborg, “Solar and wind energy increase electricity costs,” 3 April 2025).

For Bowen and his supporters, related data are even more damning. I extracted hydrocarbons’ (the total of coal’s, gas’s and oil’s) share of electricity production in these countries and matched these data to the price of electricity; Figure 2 plots the results.

Figure 2: Percentage Total Hydrocarbons by Price of Power, 80 Countries, 2025

When hydrocarbons’ share of generation is less than 20%, prices average $0.24 per kilowatt-hour; when their share exceeds 80%, the average price is $0.10 – less than one-half as much.

The trend in Figure 2 is stronger than in Figure 1: as hydrocarbons’ share of a country’s output of electricity rises, its price tends to fall. This result strengthens critics’ – and further undermines Bowen’s – claim.

Solar and Wind Power

Bowen and his supporters will likely (and not unreasonably) object: “we’re saying that solar and wind power are cheapest. But the independent variable in Figure 1 measures all renewable generation – including biomass and hydro-electric power. If you distinguish solar and wind, you’ll get a very different result.” I therefore matched each country’s combined share of solar and wind power as a percentage of total electricity production to its price of electricity, and then did the same for hydro-electric power. Figure 3 plots the results; they’re indeed different.

Figure 3: Percentage Hydro and Solar + Wind Power by Price of Power, 80 Countries, 2025

The trend is still stronger: as solar and wind power’s combined percentage of a country’s output of electricity rises, its price also rises. This result more strongly substantiates critics’ claim – and more emphatically refutes Bowen’s.

Rich Countries versus Others

It’s easy to anticipate another objection: “your analysis considers incommensurate countries. It includes all of the 38 members of the Organisation for Economic Cooperation and Development (the “rich countries’ club”); yet it also includes nations like Azerbaijan, Bangladesh, Cambodia, Georgia, Kenya, India, Nigeria, Pakistan, etc. These latter countries are poor, and few of them have embarked on the renewables crusade; it’s therefore absurd to consider them together with rich nations.”

Figure 4: Percentage Solar + Wind Power by Price of Power, Members and Non-Members of the OECD, 2025

I’ve distinguished the OECD’s members from its non-members, and on that basis re-run the analyses in Figure 2 and Figure 3; Figure 4 and Figure 5 plot the results. They further bolster the critics’ position – and even more forcefully undermine Bowen’s.

It’s hardly surprising that electricity is generally cheaper in non-OECD nations and dearer in member states. Members are much richer than non-members; hence although power is objectively dearer it’s subjectively more affordable. Yet for both members and non-members, an increase of solar and wind’s percentage share of electricity output is associated with an increase of power prices (Figure 4). The relationship isn’t as strong in OECD nations as in all nations; hence it’s stronger in non-OECD nations than overall.

Probably as a result of taxation and subsidy regimes, and their generally anti-hydrocarbon stance, among OECD member nations the price of electricity doesn’t vary significantly according to hydrocarbons’ share of production; in non-member nations, however, the relationship remains negative: the highest reliance upon hydrocarbons begets the cheapest power (Figure 5).

Figure 5: Percentage Total Hydrocarbons by Price of Power, Members and Non-Members of the OECD, 2025

Sharp-eyed readers will have noticed that I’ve neglected to mention one aspect of Figure 3: the seeming invariance of power’s price to hydro-electricity’s share of total output. In fact, there IS a relationship – but it depends upon the nation’s wealth (Figure 6): in relatively wealthy nations, which are members of the OECD, the relationship is negative; but in non-member nations, it’s positive.

The implication is clear: if you want the cheapest possible electricity, don’t petition Bowen for more solar and wind power; instead, move to an OECD member which relies upon hydro-electricity (Canada’s average price ($0.12) is less than one-half of Australia’s ($0.26)) – or to a non-OECD nation which relies upon coal-fired power!

Figure 6: Percentage Hydro-electric by Price of Power, Members and Non-Members of the OECD, 2025

Let’s Now Focus on Australia

It bears repetition: critics contend that Bowen, AEMO, CSIRO and others discount or ignore total system costs. What are these costs? Consumers’ power charges comprise two elements: (1) fixed supply (which covers connection to the grid, etc.) which doesn’t vary according to the quantity of power which has been consumed); and (2) variable usage (expressed in cents per kWh).

These charges thus reflect the costs incurred at each of the electricity supply chain’s four major stages.

Stage #1: Wholesale (Generation) Costs

These include the costs of producing electricity from some combination of coal-fired, gas-fired and hydro-electric power stations, solar and wind farms, of building and maintaining this infrastructure and hedging price risk.

All electricity supplied to the NEM is sold through a centralised, real-time pool managed by AEMO. Generators submit bids every five minutes; AEMO selects the cheapest mix which matches demand. (Electrical energy can’t be stored in quantity; hence its supply and demand must always perfectly balance in real time. Even a minor, uncorrected mismatch between supply and demand can trigger a grid’s collapse.) Every generator whose bid is accepted is paid the market-clearing “spot” (that is, for immediate delivery) price for that interval.

For reasons I’ll detail below, spot prices can and often do swing wildly – from negative values up to thousands of dollars per megaWatt-hour.

For this reason, reliance upon spot trading can be very risky: if the revenue generators receive from selling power into the spot market is considerably lower than their cost of generating it, they incur a large loss. In order to mitigate this risk, they enter into agreements (like futures contracts) parallel to the NEM. They enable generators to receive a fixed price (and thus a predictable stream of revenue) over the agreement’s term, and thus act as insurance against spot prices’ volatility.

Stage #2: Intermediate (Network) Costs

These include the cost of long-distance transmission and distribution of power from generators to retailers, and of erecting and maintaining this infrastructure (“poles and wires”).

Stage #3: Retail Costs

Retailers purchase wholesale power from producers and sell it to consumers. Their costs include managing customers’ accounts, marketing, and risk management. From the NEM’s common pool, retailers buy the quantity of electricity they need to match consumer demand on a second-by-second basis.

The prices which retailers receive from consumers are regulated (typically in the form of retail price caps) and in the short term are thus fixed. Yet the wholesale prices which retailers pay generators in the “spot” market fluctuate wildly from day-to-day, hour-to-hour and even minute-to-minute. Retailers thus face the potentially catastrophic risk that the extremely volatile wholesale price they pay exceeds the fixed retail price they receive.

Accordingly, retailers resort sparingly to “spot” purchases; instead, they rely upon futures contracts, etc., to receive a predictable, fixed price (or price range) over months or years.

Stage #4: Environmental Levies

These include Commonwealth and State imposts such as Large-scale Generation Certificates (which subsidise wind and solar farms) and the Small-scale Renewable Energy Scheme (which subsidises the adoption of rooftop solar and associated infrastructure and technology). It bears repetition: if Bowen’s “strong-form” assertion is correct then the environmental imposts on consumers’ power bills are absurdly incongruous and utterly unnecessary.

These four sequential sets of costs of provide a consumer-level analogue of TSC.

From various sources (submissions to Parliament, data compiled by the Australian Energy Regulator and the Australian Competition and Consumer Commission, etc.), I’ve quantified these four components and expressed them as percentages of power’s total cost to consumers since 1980. Table 1 summarises them.

Table 1: Household Power Bills, Percentage Shares of Four Components, 1980-2026

Since the 1980s, Generation’s share has almost continuously fallen; since the turn of the century, it hasn’t been the biggest component of power’s total cost to consumers; today, it comprises just one-third of the total.

Since 2000, Network’s share of its total cost has been largest, Generation’s has been second-largest and the others have been much smaller but rapidly-rising. Generation’s share has fallen most, Network’s has fluctuated but remains roughly unchanged, Retail’s has trebled and Environmental’s has increased from 0% to almost 10% of total costs.

The reforms of the electricity market which commenced in the mid-1990s structurally separated (“unbundled”) vertically-integrated utilities into three sets of separate businesses: generators, distributors and retailers. In particular, state governments separated competitive (“contestable”) sectors (generation and retail) from natural monopolies (long-distance transmission networks).

As part of these reforms, state-owned electricity commissions transitioned into commercial entities operating under corporate law. Several states – most notably Victoria, SA and NSW – partially or fully privatised their generation, distribution and retail power assets.

Before the reforms which commenced in the mid-1990s, it wasn’t possible to disaggregate electricity’s total cost into each of its major components. Clearly, however, during these years costs of generation comprised ca. 51% of the average consumer’s annual bill; hence Network’s and Retail’s combined percentage was 100% - 51% = 49% (during these years the environmental levies didn’t yet exist).

The percentages allocated to Network and Retail for 1980-2000 are thus estimates based upon their percentages in 2001-2008.

ABS Data

Since 1980 the Australian Bureau of Statistics (ABS) has distinguished electricity’s wholesale cost of production from its total cost to consumers. These data, plus assumptions derived from Table 1, allow us to disaggregate its total cost to consumers into its four major components. Table 2 summarises these data.

Table 2: Comparing the ABS’s Electricity Data 

Electricity’s Wholesale Cost of Production (ABS Cat. No. 6427)

This series, a component of the ABS’s producer price index, tracks power prices from the perspective of producers. It includes the wholesale costs of generation only; it therefore excludes downstream costs of transmission, distribution and retailing, taxes and subsidies to consumers (such as the federal and state rebates from mid-2023 to the end of 2025).

Electricity’s Total Cost to Consumers (ABS Cat. No. 6401)

Australia’s Consumer Price Index (CPI) comprises 11 major groups, 33 sub-groups and 87 expenditure classes. “Housing” is one of the groups, and household electricity prices (along with gas and water prices) form one of its sub-groups. These series measure how consumers’ utility costs change over time.

ABS’s CPI-based electricity index measures power prices from consumers’ point of view. It measures the total cost of electricity paid by its consumers. It includes both fixed supply and variable usage charges; it therefore combines costs of generation, network charges, retail costs and environmental levies.

These data measure consumers’ actual (“out-of-pocket”) costs. They therefore reflect nominal (current) prices, i.e., track market prices over time without removing or adjusting for consumer price inflation. Also, if a government provides a subsidy or rebate which lowers power bills, these data record the lower cost to consumers. From mid-2023 to late-2025, federal and state governments subsidised consumers’ electricity bills; these data therefore incorporate these subsidies.

As a brief aside, ABS treats households with solar panels as small (unincorporated) businesses; the power which they produce and consume is counted as part household final consumption expenditure, i.e., in other ABS data.

How the ABS’s Power Price Indexes Incorporate Derivatives and Hedging

Its wholesale and retail indexes take into consideration these instruments’ impacts upon prices. However, they don’t track them directly; instead, they capture their effects through the NEM’s “realised transactional pricing” structure. The mechanism differs at the wholesale/producer and the retail/consumer levels.

Households don’t hedge, but retailers use hedging strategies to smooth their revenues. Because the ABS tracks retail electricity tariffs, market offers and regulated baselines (such as the Default Market Offer), the smoothed, contract-backed prices set by retailers flow into its retail power index.

As a result, when wholesale spot prices spike or plunge, this index doesn’t immediately fluctuate. Instead, it reflects the gradual, lagged adjustment of fixed-term contracts and regulated tariff updates.

The ABS samples wholesale data from the actual transaction prices of electricity generators and major suppliers. Because most wholesale power is sold or cleared through long-term commercial contracts, PPAs and over-the-counter commitments rather than the spot market, ABS’s measure of wholesale power prices absorbs these contract values. When a generator delivers power under a pre-agreed contract price, the wholesale index captures it.

The index thus tends to reflect longer-term electricity futures trends and the structure of broader contracts rather than day-to-day market volatility.

Results for Australia

Wholesale Power Prices

I recalculated the ABS’s wholesale electricity index on a CPI-adjusted basis (the CPI series is quarterly rather than monthly; I used linear interpolation to create monthly observations of CPI). I then rebased it so that it commences with a value of 100 in January 1980. I also rebased the nominal (unadjusted for CPI) index. Figure 7 plots the results.

Figure 7: Wholesale Power Prices, Nominal and CPI-Adjusted (January 1980=100), January 1980-June 2026

For our purposes, two results are most consequential. Firstly, in nominal terms the wholesale power index rose from 100 in January 1980 to 618 in June 2026; that’s a compound annual growth rate (CAGR) of 4.1% per year. On a CPI-adjusted basis, it rose to 151; that’s a CAGR of 0.23% per year. Wholesale power prices have only slightly exceeded the rate of consumer price inflation: since January 1980, CPI has increased at a compound rate of 3.8% per year.

Secondly, and notwithstanding the first result, over the past decade and particularly since 2019, despite occasional, modest and temporary upward moves, the CPI-adjusted wholesale price index has fallen (Figure 8).

Figure 8: Wholesale Power Price Index, CPI-Adjusted (June 2016=100), June 2016-June 2026

The index zoomed from 98 in April 2022 to 132 in June of that year. That’s an increase of 35% over those months, which followed Russia’s invasion of Ukraine on 24 February. Equally, however, during the four years to June 2026 the index fell to 92; that’s a total decrease of 30% and a CAGR of -8.5% per year. The hostilities between Iran, Israel and the U.S., which commenced in late-February of this year, haven’t significantly impacted CPI-adjusted wholesale prices: they fell from 114 in February to 111 in June.

Figure 9, which expresses prices as CAGRs over various intervals, reinforces these points. Over no interval have CPI-adjusted prices risen more than 1.5% per year – and since 2020 they’ve decreased more than 3% per year.

Figure 9: Wholesale Power Prices, CAGRs over Various Intervals, January 1980-June 2026

The results in Figure 8 and Figure 9 toss into the rubbish bin the major reason offered by Anthony Albanese, Jim Chalmers and Chris Bowen to excuse consumers’ rising power bills over the past few years.

They’ve attributed rising power prices in Australia NOT to their own actions and policies – nothing is ever their fault! – but to “global pressures” beyond their control. Specifically, they’ve repeatedly blamed rising power prices on volatility in international energy markets caused by geopolitical disruptions. Following major events such as Russia’s invasion of Ukraine and Middle East conflicts this year, they’ve claimed that Australia is “not immune to global impacts.”

That last sentence isn’t false. Equally, it’s a furphy: since 1980, global upheavals have barely and only temporarily affected the CPI-adjusted wholesale power price index. A crucial point escapes their attention: coal and gas for power stations are purchased mostly under long-term contracts – and not at “spot” market prices.

In December 2022, Albanese alleged: “we know that the Russian invasion of Ukraine has had a massive impact on global energy prices, and that has flown through to Australian families and to Australian businesses.” At the National Press Club late-2022, Chalmers asserted: “the primary cause of these spikes in electricity and gas prices is the war in Ukraine. It has caused a massive shock to global energy markets, and Australia is not immune from that. What we are seeing is the impact of global prices washing through our domestic economy.”

Bowen has joined this inept cabaret. He’s continually defended the government’s energy policies by claiming that domestic power bills have risen as a direct consequence of an “international energy crisis.” On 7 December 2022, in his second reading speech for the Energy Prices Support Bill 2022, he stated: “what we’ve seen since the invasion of Ukraine is … unprecedented pressure on global energy markets … This international energy crisis has driven up the wholesale cost of gas and coal, which in turn has driven up electricity prices for households.”

Figure 8 and Figure 9 disprove these allegations. The war in Ukraine, and global events more generally since 1980, are NOT the primary reason that consumers’ power bills are rising. Nor, more broadly, is electricity’s wholesale cost of generation. The source of Australians’ power price pain lies closer to the consumer along the supply chain.

Retail Power Prices

Like the ABS’s wholesale electricity generation index, so too its retail (consumer) power price index: I rebased it so that that it commences with a value of 100 in January 1980; I also adjusted it for CPI; Figure 10 plots the results.

In nominal terms, it rose from 100 in January 1980 to 1,110 in June 2026; that’s a compound annual growth rate (CAGR) of 5.4% per year. On a “real” (CPI-adjusted) basis, the index rose to 200; that’s a CAGR of 1.5% per year. Power prices paid by consumers, in other words, have materially exceeded the rate of consumer price inflation: since January 1980 the CPI has risen at a compound rate of 3.8% per year.

Figure 10: Total Consumer Power Prices, Nominal and CPI-Adjusted (January 1980=100), January 1980-June 2026

Call it a “reverse WalMart” effect: consumer power prices disprove the contention that solar and wind power is so cheap that that it places downward pressure upon CPI. Quite the contrary: power prices have risen faster than, and thus placed upward pressure upon, consumer price inflation.

Figure 11 disaggregates this 45.75-year CAGR into shorter intervals. Since 2020, consumer power prices have risen at the fastest nominal rate – 6.3% per year – since 1980. That’s partly because over this interval CPI has risen relatively rapidly (4.2% per year) than during any of the others. It’s therefore cold comfort that on a CPI-adjusted basis prices have risen relatively modestly (1.9% per year).

Figure 11: Consumer Power Prices, CAGRs over Various Intervals, January 1980-June 2026

Why Have Retail Prices Risen Considerably More than Wholesale Prices?

From Table 1, we have one or more of three possibilities: network charges, retail costs and/or environmental levies. How to identify the culprit(s)? For each month since January 1980, I’ve used the weights derived from Table 1 to partition the consumer electricity index into its four segments.

“Weighting” data means adjusting individual observations so that they utilise known population totals and satisfy specific mathematical rules. By expressing the wholesale power price index as a percentage of the consumer power index, for each observation I’ve derived Generation’s actual weight; then, using Excel’s forecast.linear function and a process of numerical optimisation using the percentages in Table 1 as starting values, I’ve calculated each observation’s imputed Generation, Network, Retail and Environmental weights.

Figure 12: Wholesale (Producer) Power Price Index, Four Variants, January 1980-June 2026

In January 1980, for example, Generation’s imputed weight is 0.4658, Network’s is 0.4412, Retail’s is 0.0578 and Environment’s is 0.0352. Note that these weights sum to 1.0. I then disaggregated the consumer power index for January 1980 into these four components by multiplying its value (43.56) by each weight; I then did the same for each month to June 2026, adjusted for CPI and rebased each series to June 1980 = 100.

How plausible are the resultant imputed components? There’s one easy way to check – namely to compare the imputed wholesale prices to their actual values (Figure 12). Their correlation is very strong (nominal = 0.76; CPI-adjusted = 0.96).

Figure 13: Components of Total Consumer Power Prices, CPI-Adjusted (January 2000=100), January 2000-June 2026

Figure 13, which plots actual and imputed values, shows that the actual wholesale price index has risen from 100 to 111; that’s a CAGR of 1.2% per year. The imputed network index has risen from 100 to 182 (2.3%), the imputed retail index has risen to 495 (6.4%) and the imputed environmental levy index to 487 (6.3%).

As a rough rule, retail charges and environmental levies have contributed most to rising power bills, network charges much less and costs of generation least.

Figure 13 thus shows that power generation and network costs have risen much less than total (consumer) power prices, and thereby placed downward pressure upon total consumer power prices. Conversely, retail charges and environmental levies have generally risen considerably more than total prices, and thereby placed upward pressure upon households’ power bills. The impact of each category upon total consumer prices depends upon the interval of time under consideration (Figure 14).

Figure 14: Components of Total Consumer Power Prices, CPI-Adjusted, Various Intervals, January 2000-June 2026

Solar and Wind Power’s “Pollution” and Hidden Costs

Figure 15, which takes into account both prices and weights, plots a crucial development of which many and perhaps most consumers are unaware: since the 1980s, the wholesale price of power has comprised an ever smaller – and network charges, retail costs and environment levies an ever rising – percentage of their power bills.

Figure 15: Generation versus the Rest as Percentages of the Total (Retail) Cost of Electricity, January 1980-June 2026

In mid-2026, for the first time, the sum of transmission charges, distribution costs and environmental levies exceeded generation costs. Today’s “power” bills are actually transmission, retail and environmental levy bills.

Recall the major weakness of GenCost: its principal metric, Levelised Cost of Energy, measures power’s cost only at its point of generation – and ignores the resultant costs further down the supply chain. The generation of intermittent (solar and wind) power thus imposes negative externalities – a form of pollution – upon other links of the power supply chain. LCOE ignores these costs, and thus underestimates the cost of intermittent electricity.

In the previous section I found that retail charges and environmental levies have generally risen more than total (retail) prices, and have thereby placed upward pressure upon households’ power bills. In this section I show that intermittent power imposes negative externalities disproportionately on the supply chain’s Retail link.

Hence my major conclusion: the rising percentage of intermittent sources of power – together with associated negative externalities and environmental levies (“green” subsidies) – has been the primary cause of Australian consumers’ escalating bills.

A negative externality is an (un)intended cost imposed upon a third party, i.e., a person or group who’s not directly involved in an economic transaction. If, for example, a pub hires a band which plays loud music until closing time, the band emits noise pollution which disturbs local residents. Neither the pub nor its patrons compensate locals for the disturbance.

More generally, when companies don’t consider – never mind reimburse – the inconvenience, damage, etc., which their output of goods or services cause, they produce more of these goods and services than is optimal for the community as a whole. If they absorbed these externalities’ costs, they’d finance them either through lower profits or higher prices; higher prices, in turn, would decrease demand for the offending goods and services.

Intermittent power in Australia generates significant negative externalities. That’s a telltale sign that not just that solar and wind generators are over-producing: it’s an indication that “clean” solar and wind is a form of pollution!

What are these negative externalities? A major one includes fluctuations of frequency. (Electricity’s frequency, which measured in hertz, counts how many complete cycles an alternating current wave completes in one second.) Sudden cloud cover or drops of windspeed causes the grid’s frequency to sag; when these fluctuations cross critical thresholds, they threaten its stability. Who pays for this externality? Certainly not the generators of wind and solar power.

Another set of problems includes transmission: the rapid growth of inverters to tamp fluctuations also strains transmission lines. Accordingly, and thirdly, solar and wind boost transmission costs. Who pays these costs? Certainly not the generators of wind and solar power.

Solar and wind are also very low density – that is, they occupy far more land than coal- and gas-fired power plants – and geographically they’re often remote. Transmission losses, and thus costs, increase with distance. Again, neither solar nor wind generators pay these costs. And because solar and wind typically produce at just 25-30% of their rated capacity, their demands upon transmission infrastructure vary between zero and their rated output.

Overbuilding of solar and wind infrastructure is thus necessary – and higher costs are thus inevitable.

According to Robert Gottliebsen (“A home-made energy crisis,” The Australian, 15 October), “to avoid blackouts, expected demand must not only be covered twice by renewables, but a further system of a similar rates capacity must be installed – including batteries, gas, hydro and coal – to cover those difficult periods (when the sun doesn’t shine and the wind doesn’t blow) … In other words, if you want to supply 100 units of power, renewable capacity needs to be around 200 units.” You must also anticipate sharp and extended decreases of output from wind droughts, etc.

“So,” he concludes, “three times the actual or forecast level of demand must be installed. That is a key reason why renewables are so expensive.”

Increasingly Extreme “Spot” Volatility

What are these negative externalities? I’ll focus upon a fourth major one: the intensifying volatility of “spot” prices in the NEM. Over recent years, the rising percentage of solar and wind power has triggered a sharp rise of the frequency of zero and negative wholesale prices. More generally, the lurches between extreme highs and lows are becoming wider and more common.

Why has volatility risen? The integration of intermittent power into the grid is the major culprit: the rapid shift toward wind and solar causes sudden and drastic changes of output; these fluctuations, in turn, impact real-time pricing.

During the day, oversupply increasingly prevails: high output coupled with low demand frequently causes spot prices to crash. In particular, during hours of peak sunshine solar electricity flood the grid with extremely cheap (because it’s produced at near-zero marginal cost) power. During these off-peak hours, demand is relatively low; hence wholesale spot prices plunge – often into negative territory.

According to the Australian Energy Regulator (AER), negative prices across the NEM accounted for 15% of all pricing intervals in recent years – versus just 3.5% in 2020.

Conversely, when the sun sets solar generation ceases – yet at the same time household demand for power spikes. The system must therefore rely upon “peaking” (typically gas) generators. This transition from daytime gluts to evening peak demand creates further – and typically sharp – price swings.

Finally, “renewable” power is intermittent because it depends upon the weather; and Australia’s weather, to put it mildly, is variable: in particular, cloud cover, sudden (and sometimes extended) drops of wind output, and heat and cold snaps can quickly tighten supply, creating upward price spikes of prices.

These risks aren’t merely hypothetical.

As The Australian recently reported (see “Renewables’ fault line exposed,” 5 October), “a plunge in wind generation (in South Australia) in June has exposed the limits of batteries of back up Australia’s renewable energy transition.” The result, detailed in a report by the Australian Energy Regulator, “amplifies price volatility when supply becomes tight.”

Cold weather over two days was a major contributor. On the morning of 22 June, “demand reached 2188 MW, equivalent to 83% of SA’s winter record … At the same time, the state’s wind farms were producing remarkably little electricity. Wind generation averaged just 85 MW (3.1% of its registered capacity) across the two days, … and fell to a record low of just 3 MW (a mere 0.1% of registered capacity) on the afternoon of 21 June.”

Further, “the exceptionally low wind generation left batteries with little opportunity to recharge overnight.” As a result, comparing the mornings of 22 and 23 June, batteries’ output collapsed from “326 MW to just 1 MW.”

What happens when supply plunges at times of peak demand? Prices skyrocket: “the price of electricity exceeded $3,000/MWh on five occasions (over those two days), reaching $20,300/MWh – more than 200 times the state’s quarterly average” (see also “Trouble down under: Australia’s electricity market is the most volatile in the world,” Rystad Energy, 23 October 2023).

According to UNSW Newsroom (“Energy crisis: Why are electricity prices set to rise?” 6 June 2022), “there is an increasing share of intermittent renewable energy generation (which means energy sources that are not dispatchable or continuously available due to their state, such as solar and wind power), the shut-down of major coal-fired power plants, and … extreme weather conditions.”

“All of this,” it concludes, “means we can expect even larger price spikes and blackouts in the near future.”

How Energy Retailers Manage Rising Wholesale Price Risk

The details are immensely complex but the broad outlines are straightforward: in order to protect themselves against spot prices’ rising volatility, retailers rely ever more upon three mechanisms (for details, see Jonty Flottmann, et al., “Derivatives and hedging practices in the Australian National Electricity Market,” Energy Policy, vol. 189, June 2024):

1. Wholesale Hedging Contracts: retailers enter into financial contracts (such as swaps, caps and forward agreements) – possibly but not necessarily with generators. These contracts establish wholesale electricity prices over fixed timeframes; they thereby shield retailers from spot market extremes.
2. Power Purchase Agreements: retailers also contract directly with solar and wind power developers and generators for fixed or structured pricing.
3. Government and Market Contracts for Differences: retailers’ participation in these “structured risk-reduction mechanisms” can also help them to mitigate the effects of extreme fluctuations of wholesale prices.

The rising volatility of spot prices has increasingly obliged retailers to enter into hedging contracts, PPAs and CFDs. It’s also increasing the prices and decreasing the supply of these instruments.

Wholesale prices can rise more than 150%, on average, during peak periods of volatility. Hence the cost of securing derivatives, swaps and caps, etc., has climbed substantially – and placed intense pressure upon retailers’ cash flows. At the same time, major price swings have caused clearing services and financial intermediaries to decrease their provision of hedging contracts, etc.; as a result, it’s harder and more expensive for smaller retailers to access hedges.

Indeed, the difficulty of maintaining a viable hedge book has forced several smaller retailers out of the market or obliged them to decline new customers.

Hedges are increasingly expensive, but the remaining retailers have been able to recoup their costs. They calculate their overall operating expenses – including spot purchases, hedging agreements, PPAs, CFDs, network charges and various retail costs – and submit them periodically to regulators.

Regulators take these costs into consideration when they set consumer tariffs – in other words, the total price of the power you consume.

Two crucial points follow:

1. the retail prices charged to households and businesses reflect the expense of maintaining these financial hedges, etc., which manage the increasingly extreme volatility of wholesale spot prices.
2. the generation of intermittent (solar and wind) power, by often pushing wholesale spot prices below zero, places downward pressure upon average wholesale power prices – and, as a result of the negative externalities they impose upon the rest of the supply chain, place upward pressure upon the total price (which consumers pay) of electricity.

The ACCC’s Response

The competition regulator, the Australian Competition & Consumer Commission (ACCC), has confirmed these key points. In a media release (“Electricity retailers under pressure as contract markets tighten and prices rise further,” 8 December 2022), it stated: “smaller electricity retailers are finding it harder to manage their exposure to high and volatile wholesale electricity prices, and declining competition in the retail market could further increase energy prices for consumers and businesses.”

The ACCC’s latest Electricity Market Enquiry Report “presents new analysis on electricity hedging contracts, which are the longer-term, fixed-price contracts that retailers enter with generators so they can on-sell electricity to households and businesses. Hedging contracts protect against the risk of price fluctuations in the day-to-day spot market.” During 2024, and partially as a result of issues related to hedging, “six electricity retailers have formally exited the market and others have either urged their customers to switch retailers or are no longer seeking new customers.”

As a consequence of higher spot market and hedging contract prices, consumers now have a smaller range of more expensive market offers from which to choose. “In the current environment of elevated wholesale electricity prices, it’s critical that energy retailers have continued access to hedging contracts,” the regulator said.

The ACCC’s analysis has indicated that retailers’ average margins peaked in 2016-17; in that year, the average annual retail margin per residential customer across the NEM was $145. Since then, they’ve mostly declined: in 2021-22, the margin collapsed to $35. It was $34 in 2022-23, and jumped to $110 in 2023-24. (The regulator hasn’t yet published more recent margins.)

The press release concluded: “as retailers’ hedging costs have increased significantly …, the ACCC also believes that regulated retail prices … need to accurately reflect retailers’ actual operating costs.”

“To achieve this, the Australian Energy Regulator should have the flexibility to adjust the default offer which (retailers charge consumers) in the event of unforeseen circumstances (such as extreme volatility in the NEM which necessitate higher hedging costs) outside of the annual price setting decision.”

Who’s Spreading Misinformation and Disinformation?

According to The Australian (“Global waning beckons under Bowen, and we’re stuck with him,” 11 September), Chris Bowen possesses “remarkable talents in the arts of obfuscation and dissembling, particularly in withholding public documents and citing commercial-in-confidence, as well as nondisclosure agreements, to conceal from Australians the obscene cost of his net-zero and green energy quest.”

Yet he can’t “hide the fact the cost of electricity has skyrocketed under his watch, contrary to his much-hailed modelling in 2021 of a so-called renewable energy superpower delivering lower household energy bills by 2025. Nor can he wish away the reality that, despite his having spent billions, his 82 per cent renewable electricity by 2030 target is all but kaput.”

“Regardless,” it noted, “the Bowen brain cannot revisit its fundamental premise that more renewables mean cheaper energy. That would mean entertaining a contrary argument. Its only way of rationalising policy failure is to lash out at the critics.”

The Albanese government has endorsed the UN’s Global Initiative for Information Integrity on Climate Change, an Orwellian document which denounces the “growing impact of disinformation, misinformation, (and) denialism.” It demands that signatory countries act in response to “tactics used to undermine the integrity of information on climate change, which diminish public understanding, delay urgent action, and threaten the global climate response and societal stability.”

Hence, in the words of the Climate Change Authority, the Department of Climate Change and Energy’s decision to create a “cross-agency communications and stakeholder engagement working group” which will “address climate misinformation.”

It notes: “while freedom of expression and debate are fundamental to democracy, information disorder can undermine informed public discussion and confidence in climate and energy policy.” In other words, Bowen’s department will not only continue to parrot his false claims: it will also attempt to suppress the public’s right to criticise his policies. (Never mind, apparently, that the Australian Public Service is legislatively bound to be apolitical – and that civil servants act under a statutory obligation NOT to provide false or misleading information in the course of their employment.)

“So bereft is the scientific basis for climate activism,” concluded The Australian, “that its spokespersons demand suppression of all counter arguments. As for what that means for the pursuit of knowledge and the defence of free speech, the answer is obvious.”

Conclusions

King Pyrrhus of Epirus reportedly exclaimed after the Battle of Asculum in 279 BC: “if we are victorious in one more battle with the Romans, we shall be utterly ruined.” Hence the phrase “pyrrhic victory.” So-called “cheap renewables” provide a current example: they’re driving ever more Australians into “power poverty.” According to the Melbourne Institute and others, due to high costs about 12% of Australians have skipped meals or eaten less in order to pay their power bills; approximately 20% are unable adequately to heat or cool their homes; and 25%-33% of households are experiencing some form of energy (i.e., power, petrol, etc.) stress.

If Chris Bowen is right, why are so many people struggling to keep their homes at a safe, comfortable temperature during freezing winters and scorching summers?

Pyrrhus was a pragmatist and a realist. Bowen, in contrast, is a dogmatist and an ideologue. Tom Switzer has known him for decades: they studied economics together at Sydney University in the early-1990s. According to Switzer, Bowen possesses “the mindset of the student ideologue in action: obsessive in pursuit of goals, brooking no compromise, cavalier when it comes to costs, dismissive of detail, blind to any unintended consequences, and deaf to global trends” (see “‘One reform at a time’: Chris Bowen’s ambitious policy plan,” The Australian Financial Review, 28 December 2025).

As a dogmatist, Bowen seeks information which confirms his pre-existing beliefs; interprets it so that it reconfirms these beliefs; ignores or denies conflicting facts and data – and denounces anybody who questions his ideology and outlines its invidious consequences. No logic and evidence – no matter how valid, reliable and comprehensive – will prompt him to amend his view, change his mind or alter his disastrous course.

He and his supporters will thus reject my conclusions. Yet if you’re a consumer of electricity, they’ll hardly surprise you. It’s not despite Australia’s growing dependence upon supposedly cheap solar and wind power, but because of it: people’s power bills relentlessly rise.

Robert Gottliebsen’s words bear repetition: “government politicians and their captured official bodies keep saying that renewables are the cheapest form of energy. Ordinary Australians, via their power bills, know that these claims are simply wrong” (see “Silence as Australia’s green energy dream sours,” The Australian, 11 February).

Even worse, because there’s no reason to expect that the government will change its ways, there’s no to doubt that retail power prices’ upward spiral will continue. Major energy companies “have warned that flawed assumptions in Australia’s energy transition plan could leave households footing the bill if (major generation and transmission projects) cannot be delivered on time or on budget” (see “Households could bear cost if energy blueprint fails,” The Australian, 6 October).

Alas, the likelihood is very high that these projects WON’T be delivered on time and on budget – and therefore that, through higher power prices and bills, consumers will suffer even more.

The Snowy 2.0 pumped hydro scheme is the sharpest tip of a large and growing iceberg. Its original date of completion was 2021; it’s currently expected to start generating power in late-2027, and its final completion has been targeted for late-2028. Its original budget, when unveiled in 2017, was ca. $2 billion. Its projected final cost currently ranges from at least $22 billion to more than $40 billion (when including transmission, integration, interest on debt, etc.).

Albeit less egregiously, more than 80% of major power projects are presently late and over-budget.

The Central-West Orana Renewable Energy Zone’s cost, for example, has zoomed from its initial estimate ($0.7 billion in 2020) to $5.5-$7.0 billion today. More generally, AEMO reports that cost estimates for new transmission infrastructure have more than doubled since 2024, and that total east-coast transition costs have ballooned from an initial $30 billion towards $65-$85 billion.

Policy Institute Australia has found that households’ power bills could rise another 25%, i.e., by $600 per year, by 2030 “as the cost of energy transition projects surges beyond initial estimates” (see “Consumers face bill shock for $35b cost blowout in net zero projects,” Capital Brief, 23 March).

Bowen’s claim that intermittent power is cheapest is simply false. To continue to prosper, high-income nations require continuous and affordable electricity – and middle- and low-income nations need it in order to grow. Taking total system cost into account, this means some mix of base-load – in other words, coal-fired, gas-fired, hydro-electric and nuclear power – and no more than a modest dash of solar and wind.

Unfortunately, Australia has largely dismantled the power system which it had developed by the end of the 20^th century, and is replacing it not with one but two systems: (1) intermittent solar and wind, and (2) backup when the wind doesn’t blow and the sun doesn’t shine.

This, together with the other externalities I’ve summarised, means the actual (total system) cost of solar and wind power is much higher than Bowen claims. My results are hardly iconoclastic. One recent study shows that solar power’s real cost is, on average, twice as high as coal’s (see Shijia Chong, et al., “Cost accounting and economic competitiveness evaluation of photovoltaic power generation in China – based on the system levelized cost of electricity,” Renewable Energy, vol. 222, February 2024).

What about developed countries and regions? Robert Idel, in an article entitled “Levelized Full System Costs of Electricity” (Energy, vol. 259, November 2022), introduces a new metric, Levelized Full System Cost of Electricity (LFSCOE), to address the shortcomings of traditional LCOE and newer SLCOE calculations. He reiterates that LCOE is fundamentally flawed for intermittent renewables: it ignores the costs associated with intermittency, non-dispatchability and grid balancing, and thus makes wind and solar look deceptively cheap.

LFSCOE, in contrast, evaluates the total cost of serving an entire market’s demand using just a single generation source plus necessary storage. Wind’s and solar’s costs are significantly higher under LFSCOE than LCOE and SLCOE. Including reliability and storage requirements (which Idel tested using data from Germany and Texas), the LFSCOE for wind and solar power rises substantially – making them more expensive than any of dispatchable technologies Idel analysed.

Properly costed, writes Bjørn Lomborg (“Green Electricity Costs a Bundle, The Wall Street Journal, 1 January 2025), solar and wind power “are many times more expensive than fossil fuels. Germany, the UK, Spain, and Denmark, all of which increasingly rely on solar and wind power, have some of the world’s most expensive electricity.”

Thanks to Chris Bowen, Anthony Albansese, Jim Chalmers and plenty of others, Australia has joined this high-cost club. Apart from weakening industry and worsening a cost-of-living crisis, what have we to show for it?

Implications

What does this mean for investors? For starters, and by the mainstream’s conception, relentlessly rising retail prices, combined with growing demand for power (from data centres, etc.), exert upward pressure upon consumer price inflation; higher inflation, in turn, adversely impacts stocks’ returns (see Why inflation is and will remain high, 15 August 2022, The Risk of Higher Rates the RBA’s Overlooking, 20 March 2023 and Which stocks win and lose under higher inflation? 21 September).

Leithner & Company have incorporated this risk, which ever more people now agree is growing, into our plans and actions. Much more fundamentally, this article’s approach and results underscore the importance of “factfulness.”

“Factfulness” is a form of discipline: it upholds an evidence-based and data-driven worldview. “Factful” people only make statements, form opinions and draw conclusions which strong, verified facts and valid and reliable data support. Coined by the late statistician, Hans Rosling, in his best-selling book (Factfulness, Sceptre, 2018), it’s a method for counteracting cognitive biases (particularly overconfidence), emotionalism – and, not infrequently, catastrophism and hysteria (see, for example, Investors, prepare: Australia will abandon its emissions targets, 16 July 2024, “Net zero” isn’t a Megatrend: It’s a Mega-trap, 8 April 2024 and Why value investors should doubt “climate science,” 5 September 2023).

Rosling demonstrates that, much of the time, many people are comprehensively and diametrically wrong about key attributes of the world. He attributes this misperception to random misinformation and systematic disinformation.

Misinformation is inaccurate or false information that’s spread without the intent to harm or mislead; it’s an honest mistake or misunderstanding. Disinformation, on the other hand, is false or inaccurate information that’s been created and spread with the intention to trick, mislead or manipulate.

It’s not just ideologues: speculators who mistakenly think they’re investors are prime examples of people who reject factfulness. They’re typically overconfident, credulously accept “consensus” estimates and information, are prone drop their guards and participate in manias – and above all have been fooled by randomness.

Although Leithner & Company doesn’t use the term “factfulness” (it’s been trademarked), its principles and our approach to investment align. We ignore the market’s noise and other people’s opinions. Instead, we collect our own (or others’ reputable) data, analyse it thoroughly and dispassionately, and draw our own conclusions and inferences.

This article provides but one of many examples of our approach.

It’s vital to recognise: very few investors – and virtually no speculators – do the same. That’s partly because analyses such as ours will often generate inconvenient and even deeply unpopular conclusions. On that basis, we’re conservative-contrarian investors. A direct comparison reveals how Rosling’s conception of “factfulness” aligns with Leithner & Co.’s approach to value investing (Table 3).

Table 3: How Leithner & Co Practices “Factfulness”

By implementing a conservative, long-term approach built on thorough research and rejecting speculative trends, Leithner & Co. applies Rosling’s insights: we take calculated, reasoned unemotional decisions by checking facts and testing conjectures rather, than succumb to corporate spin, government propaganda or market hysteria.

We think independently and act accordingly. Chris Bowen, in contrast, is a prisoner of his ideology and a puppet of the environmental-industrial complex.

Does he spout misinformation or disinformation? Is he diabolical or just plain dumb? I don’t know; clearly, however, he fervently believes what he relentlessly and falsely proclaims. And that’s the fundamental problem. C.S. Lewis had in mind such creatures when he wrote: “of all tyrannies, a tyranny sincerely exercised (allegedly) for the good of its victims may be the most oppressive. It would be better to live under robber barons than ... moral busybodies.”

Lewis’ conclusion is chilling: “the robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us (supposedly) for our own good will torment us without end, for they do so with the approval of their own conscience …” (see God in the Dock: Essays on Theology and Ethics (Eerdmans, 1970).

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