Peter,

"Renewables are not economic (without govern,ment incentives)" - exactly! That's why we should invest in foreign countries with government incentives.

But you will ignore my argument and continue to decide that it is renewables vs nuclear.

But lets make it interesting.

Hypothetical - the government sells off all electricity assets, removes all incentives that favour one energy source over the next, and allow nuclear power plants to operate in Australia.

What electricity source will companies prefer to build?

Peter Lang,

Even if the private sector are reluctant to take the risk, the fact remains that it's paying off for the government, who continue to make over 8% even as the official interest rate's fallen to 2%.

But IMO the government SHOULD NOT BE trying to produce a commercial rate of return; rather they should be trying to maximise the benefits. Interest on debt is the biggest cost component for renewable energy. If the CEFC loaned it out at (for example) 3%*, it wouldn't have to make so much money to become profitable for the owners, so a lot more renewable energy infrastructure would get built. This would have the twin beneficial effects of reducing emissions and making electricity cheaper.

Risk to the government could be minimised by insisting on a minimum level of equity funding from the private sector, which would risk losing it if it defaulted on the loan.

* What I'd really like to see is economic modelling done to determine what the appropriate interest rate for each project would be. The same goes for other kinds of infrastructure, including roads, railways and the NBN.

"Even if the private sector are reluctant to take the risk, the fact remains that it's paying off for the government, who continue to make over 8% even as the official interest rate's fallen to 2%."

Who's buying the power from the renewable installation? The public is being taxed through higher prices to pay to subsidize RE into the grid and the public benefits from the profit passing to gov't (public), to subsidize RE. Doh!

Investing in Chinese RE to avail ourselves of Chinese govt subsides sounds like something outside our govt's brief. Do it as an individual, by all means, follow your heart.

"What electricity source will companies prefer to build?" The cheapest, not RE.

, and, who pays for the intermittency? Buffered or unbuffered, RE is a losing proposition.

Luciferase - "prohibiting the building of new (fossil fuels)" - This is a good plan.

Luciferase - "Investing in Chinese RE to avail ourselves of Chinese govt subsides sounds like something outside our govt's brief" - currently the governments Future Fund has a small portion of renewables in its investment portfolio, and a very wide variety of international investments. It's not totally outside the governments brief, and there is a moral argument to suggest that we are exporting emissions, and therefore we should be investing to help lower future demand for coal. It is a very on point argument though - thank you!

Luciferase - "The cheapest, not RE" - exactly. It is far more likely to be natural gas-fired plants in Australia because of the cheap access to gas. Not nuclear as Peter may have otherwise suggested. Nuclear has too much of a capital cost and a long construction phase when the company could be achieving a ROI on their money. That is potentially why the French government owns most of their nuclear power plants and provides subsidies to lower the electricity price. Therefore, Peter needs to advocate for government incentives on nuclear, which in my mind he has omitted to do.

Luciferase - "RE is a losing proposition" - of course it is commercially viable if there are government subsidies, as Peter has even suggested. This is what makes the idea I propose work. Moreover, it is at the expense of the Chinese government. However, the advantage to the Chinese people will come by way of cleaner air. The Chinese government has made it clear that they are willing to pay for cleaner air. Win for Australia, Win for China, Win for the environment. That isn't to say Australia couldn't finance nuclear to help achieve this purpose also.

Aidan - "government SHOULD NOT BE trying to produce a commercial rate of return" - this is interesting. It's a good moral argument. The only problem I see for this is that Australia has limited capital to invest in projects, so I am not sure if this would help.

"However, the advantage to the Chinese people will come by way of cleaner air."

But that's just it, it won't, unless it is done on such a massive scale as to become the major contributor to China's total energy mix. The investment to do this would limit virtually all other aspirations. The Chinese (and world) economy would completely tank before getting anywhere near the goal.

Reading P & H we find the effective EIOEI of unbuffered PV's stuck at around 2-3, without much prospect of technological advancement raising that. Buffering (energy storage) makes it even more ridiculously unviable as the world's great future hope.

Either the Chinese are as daft as other countries in failing to see this, or, they're just doing their bit to look like green citizens without breaking the bank, much like our LNP government.

Investing Future Fund money in a Chinese "boondoggle" may well have an unhappy ending that should not be risked, IMO, whatever the subsidy.