Aiden, "Australia owns the Reserve bank" - the RBA is independent from government.

"therefore has unlimited credit in Australian dollars" - actually, the RBA is limited in the printing capacity of money. In late 2008 it increasing the production of cash, released banknotes in reserve, and halted the destruction of cash which resulted in $5 billion (12% of cash) being released in the economy at the time. This isn't sustainable (only so many notes held by the reserve and not on issue). Furthermore, there is no mechanism to create electronic currency as you are alluding to, so it is very much limited.

"we do have to watch out for inflation" - if in order to invest in something overseas we print the cash, the most likely scenario is that the exchange rate will fall relative to the cash printed. Therefore, it is all relative, you may have more money on face value, but the real value will be the same (give or take)

Peter Lang, I'm not surprised that Germany's renewables have led to lower wholesale prices. Indeed that's one of the reasons I support more renewables (though not Germany's inefficient way of encouraging them).

However, I am very surprised that "A lot of gas-fired capacity has been closed and cheaper coal-fired plants are being built" as I'd have expected the increased price volatility to favour gas over coal due to its greater responsiveness. Any idea why that's not the case?

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Luciferase, a few decades ago when renewable energy technology was far less advanced than it is today, EROEi was crucial as it struggled to even reach 1, so was only suitable for specialist applications. But those days are long gone; with the more efficient systems we now have, there is no doubt that we get much more energy out than we put in, so EROEI is a minor consideration. I am baffled by so many seemingly intelligent people accept the impossible proposition that an advanced society requires EROEI to reach some arbitrary figure. And then they try to demonstrate that RE's not reaching that figure by using the fudged figures from P&H that rely on the FALSE ASSUMPTION that financial inputs are energy inputs.

If you want to see whether something is financially viable, you should use a financial analysis, not an EROEI analysis distorted to the point of uselessness by financial factors. And at the moment, it is likely that some sort of subsidies or inducements will be needed. As I have consistently said, I think concessional loans are the best solution; funding renewable energy this way would benefit nearly everyone.

Spencer Wright, the RBA is independent from government in its day to day operations, but it's not completely independent and it would never deny credit to the government if it needed it.

There is a facility to create electronic money (by lending it to banks). But currently there's the general opinion that this should only be regarded as the source of last resort. There's enormous potential to improve this, both by making it more attractive compared to other sources, and by lending directly to public sector businesses.

You are correct that "if in order to invest in something overseas we print the cash, the most likely scenario is that the exchange rate will fall relative to the cash printed." Indeed it's similar with investing in Australia, particularly when expensive equipment needs to be imported (as is usually the case with solar cells). However, a fall in the exchange rate won't cause prices to rise by anywhere near the same amount. And right now there's a general consensus that our dollar is overvalued. Its long term value, which is what we should be trying to maximise, depends on the competitiveness of our industry.

Aiden, "There is a facility to create electronic money (by lending it to banks)." - Purely from a legal point of view, they don't have the ability to create electronic currency out of nothing. However, they can buy and sell securities, international currency and a few other things to increase or decrease the amount of electronic currency in the banking system. It's not creating electronic currency per se. Though you may be referring to a different thing entirely so I can't be certain.

"(the RBA is) not completely independent" - considering the Treasurer has the ability to pick the board members and choose where the profit goes, I have to agree with you. It is far less independent as many think. I was speaking quite broadly regarding its independence.

"concessional loans are the best solution; funding renewable energy this way would benefit nearly everyone" - of course the government could always borrow more and lend it to Australian renewable energy, the benchmark bond rate would increase only marginally over time as the risk of default would increase by an increase in risk. However, the problem I still have is that all the evidence points to coal that would have otherwise being used in Australia being exported and burned overseas when renewables are built. That is why I lean towards financing renewables in countries with growing demand - to minimise the need to construct new fossil fuels. I think there is enough investment opportunity at commercial rates internationally - well into the trillions by 2030.

What really needs to happen in the short term is the internationally community pledging not to build new coal and diesel power plants.

Preferably in the short to medium term some sort of home electricity system, be it nuclear or solar + battery, could be developed that isolates each home and can be done for an economical price.

Spencer Wright,

<"What really needs to happen in the short term is the internationally community pledging not to build new coal and diesel power plants. "

There is virtually no chance of that sort of policy succeeding. Surely 25 years of failed attempts at top down policy should have convinced most people to give up on that approach, or any other centrally controlled approach.

What will succeed is appropriate deregulation to remove most of the very large impediments to low cost nuclear power (see the example from Sweden I posted in an early comment on this thread). When you are willing to consider this alternative, then you can start seeking it out. It's not too hard - if we could educate the public. However, that is near impossible with the anti nukes scaremongering. Those who like to think of themselves as 'Progressives' are the ones stopping progress, and they have been for 50 years.

>"Preferably in the short to medium term some sort of home electricity system, be it nuclear or solar + battery, could be developed that isolates each home and can be done for an economical price."

Focusing on home electricity is not where you need to focus. It's a small component of total electricity. And off grid electricity is about 5% of total electricity and that proportions is shrinking. So, focusing on off-grid is a waste of time too.

You may want to consider applying the Pareto Principle to you policy analysis (I provided a link earlier).

Spencer Wright, there is no law preventing the RBA from creating currency out of nothing. They can and do. The fact that they also pay interest on reserves means that it ultimately nets to zero, and it's far less inflationary than the physical printing of money. But unlike commercial banks, central banks can lend money they don't already have.

See http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html#exchange-settlement-funds for an overview of how the RBA does it.

There is no risk of the Australian government defaulting. It never has, and the RBA would never deny it the credit to prevent it from doing so.

I don't think the evidence does point to coal that would have otherwise being used in Australia being exported and burned overseas when renewables are built. Or at least not to a large extent. Internationally the cost of brown coal is so low that it's not really viable for Australia to export, and demand for Australian black coal isn't unlimited. Black coal prices have fallen so much recently that it may no longer be viable to develop new coal mines for export. And a lot of what we do export is for steelmaking rather than power generation.

I'm not sure what you've got against diesel power plants; they're very efficient and very responsive. though fuel costs limit their application.

I don't know why you'd want homes to be isolated, as the grid is quite efficient.