Energy Market Gorillas Beat Up on the Wind Power Monkeys

gorillas

AGL joins the pack – much to the horror of the wind power monkeys.

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The opportunity to make submissions to the RET Review Panel ended last Friday. The Panel’s mailbox has been stuffed with cracking submissions from Australia’s leading energy market economists, business groups and, more importantly, the really BIG players in Australia’s energy market (let’s call them the “energy market gorillas”).

Two of the biggest – Origin Energy and Energy Australia – have been calling for the mandatory RET to be scrapped since July last year. Origin and Energy Australia are both major power generators and also run huge retail power businesses.

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).

No prizes for guessing what their submissions to the Panel say concerning the fate of the RET.

At the time Origin and Energy Australia came out swinging against the RET, the other 400lb energy market gorilla – AGL – decided to sit quietly on the fence. Its position of apparent indifference, no doubt, due to the fact that it is a major wind power player.

Since then, AGL has clearly reconsidered the “merits” of its foray into wind farm development and as a retailer in the “market” for wind energy. It’s just worked out that it’s paying around $32 per MWh more than it needs to on the 25 year PPAs it entered as a retailer – which will see it paying $40 million more each year for power than it otherwise needed to – with a direct hit to its bottom line. Oh dear, how sad, never mind.

Despite its earlier indecision, AGL has now lined up with Origin and Energy Australia and has, effectively, called for the mandatory RET to go. AGL has sent a submission to the Panel that has the wind power monkeys howling in fits of terror.

The third gorilla to join the pack has told the RET Review Panel that:

AGL believes that there is a material risk that the Large Scale Renewable Energy Target (LRET) cannot be achieved. A convergence of factors is making future investment in renewable energy intractable. These factors include: policy uncertainty, associated barriers to exit (due to policy uncertainty); declining electricity demand; and the design of the National Electricity Market (being an energy-only market).

In the short term, it is clear that the existing policy will not be able to achieve its objectives … Investment has become intractable. There is little point continuing with higher targets for the LRET in the future if the underlying economic fundamentals prevent investment in new renewable capacity. In this context, it is critical that existing investments be appropriately recognised as having been made due to legal obligations to invest in new renewable energy projects or enter into Power Purchase Agreements (PPAs).

When AGL says that “it is critical that existing investments be appropriately recognised” it’s running much the same line pitched by Infigen’s, Miles George: that wind power companies should automatically be compensated (by Australian taxpayers) for the “losses” sustained, in the (highly likely) event that the government decides to withdraw the most generous subsidy ever paid to any industry in the history of the Commonwealth (see our post here).

The “protection” of existing investments that AGL is looking for has been loosely referred to as “grandfathering”. Let’s put some meat on that expression, shall we?

Infigen (or Babcock and Brown as it then was) has been collecting a pile of Renewable Energy Certificates since 2005 (from Lake Bonney 1) and AGL has been stuffing its pockets with them since 2005, too (from Wattle Point): from 2005 both of them have developed numerous wind farms and, between them, have collected millions of RECs since then, cashing in at prices of up to $60 per REC.

So, when the term “grandfathering” is used, what’s really meant is that the $millions worth of RECs – which wind power operators have already pocketed (at power consumer expense) – are not enough and they want MORE. And by MORE, these thieves want the RET/REC gravy train to continue unabated (to their complete and unbridled advantage – and at power consumer expense) until 2031.

Now, why didn’t they just come out and say so?

From the noises coming from within the Coalition, AGL will get precisely what it wants when it comes to scrapping the mandatory RET. However, with the Coalition in its very first budget signalling an end to the “age of entitlement”, AGL’s plea for its existing investments to be “protected” is likely to fall on deaf ears. And so it should: this is – as Angus “the Enforcer” Taylor described it – “corporate welfare on steroids” (see our post here).

Joining the growing band of energy market gorillas calling for the mandatory RET to be scrapped is Queensland’s largest power generator, Stanwell Corporation. Stanwell have already described the RET as a perverse market distortion which has led to spiralling power prices (see our post here).

Stanwell have delivered a submission to the RET Review Panel that – in no uncertain terms – calls for the mandatory RET to be scrapped outright. Here’s The Australian’s take on Stanwell’s submission.

Renewable Energy Target ‘at odds with Libs vision’
Annabel Hepworth
The Australian
20 May 2014

THE renewable energy target is subsidising technologies that are already widely used around the world and is at odds with the Abbott government’s crackdown on corporate welfare, according to Queensland’s biggest electricity generator.

The demand by Stanwell Corporation for the RET to be abolished to cut power prices comes as major energy users say they have been hit with significant electricity price rises because of the subsidies for rooftop solar panels.

The Stanwell submission to the RET review panel chaired by businessman Dick Warburton points to Joe Hockey’s budget night speech, where he declared that instead of corporate welfare the government wanted to focus on letting business create more jobs.

“Through the RET the government has intervened in the efficient operation of the electricity market in order to subsidise certain electricity generation technologies,” the submission obtained by The Australian says.

“In most cases, these technologies are already established and widely deployed around the world. As well as adding to electricity prices, this behaviour is inconsistent with the government’s desire to end corporate subsidies.”

The submission also warns rooftop solar is causing voltage fluctuations and “power quality issues”, while the volatile nature of wind farms has meant excess capacity has to be kept in reserve to meet the demand for power when there is little wind.

Instead of multiple federal and state green schemes, the electricity generator says these should all be rolled into the Emissions Reduction Fund, the centrepiece of the Coalition’s climate change policy.

Meanwhile, the Energy Users Association of Australia says in its submission it is sceptical that large-scale renewable industry would be able to “scale up” capacity to meet the RET targets by 2020. “Energy users may face a significant impost to meet undeliverable targets. This is the worst of all worlds,” EUAA chief executive Phil Baressi says.
The Australian

When a government policy is unsustainable it will either be scrapped or simply fail.

In Australia, the wind industry is a “dead man walking” and – when it comes to paying attention to the growing roar of the energy market gorillas – is like the wise monkey – refusing to hear any word on the “evil” that’s about to befall it. Well, boys – listen up – the gorillas are angry and they’re after you!

three wise monkeys

There’s no escaping it – the great wind power fraud is all but over.

About stopthesethings

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

Comments

  1. It is great to see grown up adults are taking control of the power industry again, not fraudulent wind weasel and greentard goons, who have been fleecing the nation for a long time.

  2. Keith Staff says:

    Thousands of us little possums ‘out there’ would agree with the heavy weight Gorillas!

  3. That these “gorillas” were once prepared to go along with ideological fantasies that gave rise to the RET scam has to be seen as something of a black mark against their moral integrity. They cannot credibly claim that they didn’t understand that the introduction of a RET would result in massive economic and social damage. So while they may be entitled to say “we didn’t start the fire” (apologies to Billy Joel) it’s well documented that they were more than happy to pocket the ill gotten gains promised by the arsonists.

  4. Terry Conn says:

    The reports that STT refers to in this post make it clear that the business world that deals with electricity generation and its sale and distribution are absolutely fed up with the nonsense of ‘wind power’ and all the consequences of being forced to deal with it. One thing they all seem to overlook is that ‘wind’ (and solar) power fail to meet the legal obligations very clearly set out in the ‘National Electricity Law’. Section 7 of that Act is the starting point. It says very specifically that AEMO and other bodies ‘must’ provide the cheapest and most reliable power to the market’s consumers. The evidence is now quite well settled – time to see the law enforced! Every State and Territory and the Commonwealth are signatories to this law.

Trackbacks

  1. […] The wind industry and its parasites argue that the REC Tax/Subsidy will lead to “investment” in renewable energy (ie wind power) capacity sufficient to satisfy the current 41,000 GWh mandated annual target. However, satisfying that target by 2020 is economically and practically impossible: a matter which Australia’s biggest generators and retailers all agree upon (see our post here). […]

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