The Gorillas start beating up the Monkeys

A little while back we posted a video where Origin Energy’s Chief, Grant King laid out the demise of the RET.  Well – King-Kong-King is back beating his chest and letting the whole energy jungle know who’s boss.  This time – though – he’s brought a few other heavies with him.

gorillas

Why is Miles George looking so worried? We’re a harmless bunch, really.

****

And these mountain giants have started beating up on the little-monkey – Infigen.

STT favourite – Infigen is the phoenix that rose from the ashes of the corporate debacle that was Babcock and Brown – you’ll remember them as the crowd that fleeced investors and creditors to the tune of $10billion the last time they went belly-up.

To the apparent horror of yes2ruining-us, ruin-economy and the Climate Speculator – Origin and Co have just made public what STT readers have known for months now.

The RET is UNSUSTAINABLE and – therefore – it simply has to go.  And when it does – as it inevitably must – Infigen will be one of the first corporate-cowboy victims.

Now that’s not without some regret on STT’s part.  True it is – that we’ve had more than our fair share of sport with the infinite-Infigen stream of material popped up by whipping boys and girls like Miles George and Jonathon Upson – and Laura Dunphy.

We’ll miss them in a – “thank God our weird foreign cousins won’t ever be coming back” – kind of way.

awkward-family-photos

He really was a bit wooden – let’s just hope he meets a
lumberjack when they get back to their home in Canada.

****

Here’s the Fin Review’s take on the slaughter.

Costs mount for renewable target
Financial Review
Angela MacDonald-Smith
25 July 2013

The looming reduction in Australia’s carbon price means the federal government needs to wind back the 20 per cent renewable energy target, energy industry leaders have warned.

Origin Energy managing director Grant King and EnergyAustralia managing director Richard McIndoe on Wednesday took aim at the Renewable Energy Target legislation, labelling it unrealistic and blaming it for needlessly pushing up energy prices and adding to sovereign risk in Australia.

Mr King said the carbon legislation was supposed to work side by side with the laws for the 2020 target for renewable energy.  But the latest decision to drop the fixed carbon price next year meant the two had completely diverged.

As it was originally designed, the carbon price would gradually rise, eventually making the subsidy to meet the renewable target redundant.  Now with the carbon price set to fall the required renewable subsidy increases.

“You can’t tamper with one without having to open up the other, and that just exacerbates the uncertainty,” Mr King said at The Australian Financial Review & Macquarie Future Forum on Energy in Sydney.  The policies “have to be reconsidered”, he said.

Mr McIndoe said the knowledge that the 2020 target couldn’t be met just “adds greater repeal risk” to the legislation because it would fail unless it was changed.

“I would prefer to have legislation that is sensible and you can actually see it being sensibly implemented over time, rather than legislation that we all know is not going to be achievable in the timeframe,” he said.

STEP-UP IN CRITICISM

The comments represent a step-up in the criticism previously voiced by both CEOs over the RET legislation, which locks in a target for renewable energy in 2020 that, because of weak electricity demand, will be well ahead of the originally intended 20 per cent of total electricity supply.

Until now, they have been lone voices in attacking the RET.  Others in the industry, particularly renewable energy companies, want the legislation retained as is.

But on Wednesday, one of the strongest defenders of the current RET scheme, AGL Energy chief executive Michael Fraser, for the first time also expressed doubts the target can be met.

Mr Fraser told the Financial Review that the 2020 target would be “particularly challenging” because the in-built two-yearly review in the legislation creates too much uncertainty for the industry to invest the billions of dollars required to build new wind farms.

Wind power companies such as Infigen Energy have rejected the suggestion that not enough wind farms can be built in time to meet the renewable target.

Infigen investor relations manager Richard Farrell on Wednesday said Origin and EnergyAustralia were partly to blame for making the target more difficult by holding off on new renewable energy purchase contracts.

He accused the companies of “playing the waiting game and hoping that regulatory uncertainty will benefit them in the long run”.

Infigen also took issue with Mr King’s comments that green charges have risen to such an extent that they now account for 30 per cent of the electricity bill for a small business in NSW.  Mr Farrell pointed to figures from the NSW pricing regulator IPART that cites total green costs for a business using less than 100 megawatt-hours a year of less than 5 per cent.

But Mr King argues that the full costs of the RET have not been taken into account and says consumers are unaware just how much the legislation is costing them.

The flare-up of the debate over the renewable energy target comes just over a week after the Rudd government announced that the price on carbon pollution, instead of being fixed at $25.40 a tonne in 2014-15, would move to the European Union floating price a year earlier than planned.  It will then be reduced to about $6 to $10 a tonne.

The fall in the price will increase the subsidy needed for renewable energy to compete, raising the cost of meeting the 2020 target.

Origin calculates that were the carbon price to drop to $6, the wholesale power price would fall to about $37 per megawatt-hour, from about $55 now.

That means a large-scale renewable energy certificate, which compensates for the difference between that price and the cost of renewable power generation, would need to be about $53, compared with about $35 now.

CONCERN OVER LEGISLATION

“Those policies were designed to be complementary and converge but they are diverging,” Mr King said. “You can’t tamper with one without having to open up the other and that just exacerbates the uncertainty.”

He said it was “illogical” for the carbon price to be reduced because of concern about to the community, without the cost of renewable energy being addressed as well.

Mr McIndoe said that while he was concerned about the added cost burden for energy customers from the RET, his principal concern was the inability for the 2020 target to be met, meaning the legislation would ultimately fail.

“I don’t think that the social licence is there, I don’t think it’s a practical target, and ultimately I therefore see that we will be paying a fine as opposed to seeing these projects built,” he said.

Mr McIndoe said that meant the legislation would have to be changed in the future, meaning more uncertainty for the energy supply industry.

He also blasted the government for changing the carbon rules “on the run” after such lengthy negotiations to put them in place in the first place.

Mr McIndoe said such a move was very difficult to explain to overseas investors such as EnergyAustralia’s parent, Hong Kong-listed CLP Group, which had been “absolutely shocked.”

“A change in the rules overnight on the run is an extremely difficult thing, with assets that are long term assets and hugely capital intensive assets,” Mr McIndoe said.

“There’s a real sovereign risk issue here around the perception of Australia changing the rules on such an ad hoc basis,” he said.

“If you don’t have the confidence that the goalposts are going to stay there, then that is going to affect appetite [for investment] and that’s going to increase costs.”
Financial Review

Well – from that little piece it seems the boys at Infigen are running scared – VERY SCARED.  Bleeding cash and unable to sell their 6 Australian wind farms – this crowd is in REAL trouble.

They bought the worst designed and built turbine in the world – the Suzlon S88 – which has an operating life shorter than the attention span of a Gen-Y greentard.

Infigen’s fans are falling apart and are out of warranty.  This means its operating costs are spiralling out of control.

But not only is Infigen struggling to keep a dilapidated fleet of fans spinning – it can’t get power purchase agreements (PPAs) for its backlog of planned wind farms.  Without a PPA they’ll never get finance to build any single one of them.

They’ve got a stack in NSW and Victoria – where they’re desperate to get planning approval so they can flog the plans on to some poor sucker.  It’s a dilemma – to be sure.

If you have to lay out $millions to get development approval – all those glossy “expert” reports don’t come cheap – you need a return – and FAST – or a very patient Banker.  But with retailers refusing to sign PPAs the house of cards is on the brink of total collapse.  Hence the whiff of fear and the tinge of panic from Infigen’s front man Richard Farrell in the piece above.

The fan makers have got problems of their own too.  Danish outfit Vestas are laying off hundreds with thousands more to go – a fair hint that they’re in serious trouble.  Which figures – at the minute there are only around 90 fans being built in Australia: 30 in stage 1 of the extension at Snowtown, SA; 27 at Mt Mercer, VIC; and 30 at Crookwell, NSW. Despite approved plans for over 1,200 giant fans to go up in Victoria alone. The RET has to go – and the money men know it – why lend fat piles of cash to swindlers like Babcock and Brown – oops, we meant Infigen?

Developer Windlab is chasing Indian turbine outfit – Suzlon – for a huge swag of coin over their project at Boorowa.  Suzlon is in so much trouble with creditors that it’s running from its tarnished moniker and now wants to be known as the “fan manufacturer formerly known as Suzlon” – now known as “REPower”.  Or as STT likes to call it “Repo-were”.

wind_turbine_fire

For wind weasels and the parasites that leech off them – dark days indeed.

But for power punters and hard working rural people – this could just be the broad, sunlit uplands on the near-distant horizon.

Burra

A brighter – fan-free – energy future ahead.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Jim Hutson says:

    Fans falling apart, subsidies in question, house of cards in a precarious position. I hope the executives and all of those that sent us to Coventry, and laughed at our position, get their just rewards.
    It’s not over until the fat lady sings, and by …… we have a memory.

  2. annie r says:

    Thank you Angela MacDonald-Smith for your critical analysis, and STT for your insight and humour.

    The more sunlight that is concentrated on the cesspit of this industry and its networks of political mates the better. The Green ALP alliance is dead and the stench of its rotting ‘renewables at any cost’ corpse is overpowering. Tin Tin and Wind Milne are no longer friends (a marriage of convenience it always was). Vestas injection of life support into the Green Cadaver is delusional. The industry is indeed panicked, but thinks it can continue to bully its way into the black.

    A Royal Commission is the only way to the truth and justice for neighbours who have suffered or are suffering, have had to leave their homes, or worse. And to hold this abusive industry to account.

  3. Everyone should be making it publicly known that they want the RET scrapped, letters to the paper, phone calls to labor pollies and give em hell if they refuse to listen.
    The public are sick of high power costs and the RET is the main driver. It needs to be smashed. Then we will never have to worry about another windfarm being built anywhere.

  4. Woo hoo….an article like this, is like a shot of adrenalin…LOL Well done STT!

  5. S.W.A.T says:

    Excellent. Scotland supports you and we too are watching as the Blame Game plays out. The energy companies blame the government and the government blames the energy spivs. In Scotland we are ruled by the ‘Wasna me Party’ and the whole thing is in chaos. There will be a mega party across the world when this fiasco is finally stamped on and ground into the dirt and the Gigatwats who have wreaked havoc on us all will be thrown onto the dung heap of eternity!

  6. This could be the UK. Energy companies squealing; they and the governments (as we have the Scottish one as well as Westminster) laying blame at each other’s door. STT – a brilliant article – we bow down before you yet again!

Trackbacks

  1. […] The cost of the fine compares with the average wholesale price of between $35-40 per MWh. Therefore, at a minimum, retailers will be paying $100-105 per MWh (the average wholesale price plus the fine). Retailers have already announced that they will simply recover the cost of the fine from their retail customers (see our posts here and here). […]

  2. […] The big retailers, Origin Energy and Energy Australia have already said that – rather than messing around with intermittent and unreliable wind power – they will simply cop the $65 fine and pass that entire cost on to their retail customers (see our posts here and here). […]

  3. […] Origin Energy’s managing director, Grant King and Energy Australia’s managing director, Richard McIndoe have repeatedly slammed the mandatory RET as “unrealistic” and, quite rightly, blame it for needlessly pushing up energy prices. King went further and called the mandatory RET “unsustainable” (see our post here). […]

  4. […] hears that RET review team includes STT Champion, Angus “the Enforcer” Taylor – and that Origin, the Business Council of Australia and Maurice Newman will all be throwing their considerable […]

  5. […] be enough to spook already flighty investors and retailers.  The Business Council of Australia and Origin Energy are lining up to make sure the RET goes the way of […]

  6. […] also lost the argument with retailers and financiers – and that’s the one that REALLY […]

  7. […] Origin Energy and other big retailers are suggesting that they would rather pay the shortfall charge than have to muck around with intermittent and unreliable wind power. Energy Australia Chief, Richard McIndoe signalled the end of the RET and the wind scam with his comment last week that: […]

  8. […] Infigen is in dire financial straits and desperate to get development approval for the nightmare it wants to deliver to Bodangora.  It MUST have that approval so it can flog its plans (in the unlikely event it gets approval) on to some other sucker and keep its banker off its back.  This is “last roll of the corporate dice” stuff. […]

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