German Energy Giant E.On says: It’s Time for Wind Power to Grow Up

The wind industry is a lot like Peter Pan – the eternal child, who will fight, kick and scream to avoid the stark reality of adulthood.

How often have we heard the yarn about wind power needing a fat pile of subsidies (filched from taxpayers and power consumers) for just that little bit longer to help it “mature”? And how, if the subsidies are cut off just now, we will snuff out a “brilliant, clean, green” renewable energy future?

In the week just gone we’ve had Infigen’s Miles “Boy” George doing the rounds on “friendly” media outlets like the ABC and Fairfax Press.

Miles – seemingly confused about what hat he was supposed to be wearing – was out touting on behalf of the Clean Energy Council and his employer – the near bankrupt all wind-power-outfit – Infigen (aka Babcock and Brown).

The “message” was more than just a little mixed: was it a plea to the RET Review Panel for mercy?; or a veiled threat to the Coalition government?; or a pitch to garner public support for his beleaguered company? Hard to say, really.

But Miles had a couple of clear-ish “themes”. One was the current drivel about wind power being so competitive with conventional generators that it’s driving down power prices (as to which we’ll return below); the other was a desperate pitch to save the mandatory RET. The internal inconsistency in Mile’s case would be obvious to a 9 year old: if wind power is now so cheap to deliver, why does it need a mandated target to force retailers to purchase it – backed up with the threat of a $65 per MW/h fine for failing to meet the target – and the promise of a Renewable Energy Certificate that should be worth more than the fine?

Actions belie words. The wind industry – Infigen in particular – know full well that without the mandatory RET and RECs (at a price greater than $90) there will never be another wind farm built in Australia – and those that have been, will be left to rust in the paddock as a testament to the collective stupidity of our political betters. The current media blitz by Infigen is all about keeping the gravy train rolling for that little bit longer.

For Infigen, however, Mile’s media-storm is a case of too little, too late. Over the last few months, fewer than 10,000 of Infigen’s shares have been trading on a daily basis: in the week just gone, that figure has soared to over 11 million.

Infigen’s shares are being dumped by institutional investors – during the week, British outfit, Leo Fund Managers offloaded close to 4 million shares (see this notice); and we hear that Macquarie Bank issued a warning to all brokers and investors on Friday to keep well clear of what it sees as a looming corporate collapse.

Market insiders tell us that Infigen’s share price is being kept artificially stable (at around $0.20) by Infigen (and/or its management) buying its own shares. If the share price falls below $0.19 Infigen’s banker will consider it in breach of its lending agreement (on the basis that the company’s equity value is less than permitted under the agreement); entitling the bank to call in the loan and appoint a receiver. Remember, this is an outfit that backed up a $55 million loss in 2011/12 with an $80 million loss, last financial year (see our post here). And those considerable losses were racked up when all the regulatory cards were firmly stacked in Infigen’s favour.

Infigen’s collapse is, surely, just a heartbeat away?

Anyway, back to the perpetually “infant” wind industry. Just as here, the German renewables sector is bemoaning the fact that the subsidy stream is all set to dry up.

German energy giant, E.On has called for the infant to grow up, demanding an end to subsidies and, quite rightly, calling for wind and solar power to stand on their own two feet. Here’s the Telegraph on the German effort to wean wind power from the public teat.

Stop feeding renewable energy beast, urges E.On
The Telegraph
Emily Gosden
3 June 2014

German energy giant’s chief says technologies such as wind and solar are no longer in their infancy so must not be given special treatment.

European governments must stop handing generous subsidies to green energy technologies, the head of energy giant E.On has warned.

Johannes Teyssen said that renewable power sources, such as wind and solar, were no longer in their infancy, so to continue to hand them special treatment had a distortive effect.

Speaking in London at the annual conference of Eurelectric, the European electricity industry body of which he is president, Mr Teyssen said: “10 years ago renewables were in an immature state and needed to be nurtured.

“Today they are the biggest animal in the zoo and if you continue to treat them as imbeciles and feed them baby nutrition you will just get a sick big cat.”

He claimed the only people blocking debate about ending financial aid for renewables were those who “just want to harvest subsidies without accountability”.

Mr Teyssen has argued that Europe must scrap all “green levies” that are used to subsidise renewables. He has said he supports such technologies but that the funding model is wrong and Europe should instead install a proper carbon price to drive the market to find the most cost-effective ways of going green.

E.On, like most European utilities, is losing money from its gas-fired power plants as expansion of renewable energy and cheap coal prices mean they are only called upon to run for short periods of time. It has already mothballed some plants and experts warn more closures could leave Europe at risk of power cuts at times of peak demand when the sun doesn’t shine or the wind doesn’t blow.

In the UK, the Conservative party has pledged to end subsidies for onshore wind power if it wins the next election. However, it appears committed to offshore wind, which is a newer technology but still significantly more expensive.

The Government has already announced it is closing a subsidy scheme for large-scale solar farms two years early and take-up exceeded expectations.

Mr Teyssen also warned that the energy industry must do more to attract employees at a time when some companies were seeing “whole management teams leaving” and it was “difficult to attract young people to this industry”. “We have been under fire for years and years,” he said. “We need to rebuild confidence.”
The Telegraph 

The constant apology heard from the wind industry and its parasites challenged about the insane cost of wind power is that the wind industry won’t need subsidies for much longer, because it’s just about to “mature”.

Piffle about the wind industry being able to (one day) reach “maturity” has been peddled for over 30 years. When will it be mature? When the wind starts blowing 24 x 7? When turbines have an economic lifespan of 50 years instead of 10? When?

Of course, the wind industry and its parasites are quite happy to continue leaching from us – playing us for suckers – while telling us that “maturity” is just over the horizon.

Wind power has been wet nursed with mountains of subsidies from the beginning and requires babysitters like extra “spinning reserve” held by gas and coal thermal generators and fast start-up peaking power plants (ie Open Cycle Gas Turbines and diesel generators) just to keep the lights on.

Fortunately, the RET Review Panel isn’t the least bit interested in helping the wind industry to “mature” – its stated aim is to analyse, model and forecast “the cost impacts of renewable energy in the electricity sector” (see our post here).

With Australia’s wind industry gasping its last breath, as noted above, Miles George (as both head spruiker for the Clean Energy Council and as Infigen’s hopeful saviour) has been peddling the incredible tale that wind power has led to a REDUCTION in our power bills. A claim of such stupendous nonsense that even Humpty Dumpty would have had a hard time keeping a straight face in telling it.

Wind power generation (the product of the mandatory RET – which has been in operation since 2001) has been a key contributor to Australian household electricity costs rising 110 per cent in the past 5 years. South Australia – Australia’s wind power capital – has the highest retail power prices in the world as a result of its great wind rush (see our post here). Although, the way the Miles George plays it, it’s as if we hadn’t noticed.

But step back a moment. Let’s take Miles George at his word.

If it were true – as Miles asserts – that wind power was in fact delivering power at prices equal to or less than conventional generation sources – so as to lower retail power prices – then why the need for the mandatory RET?

Why the need for Renewable Energy Certificates? Why the need for the shortfall charge (fine) of $65 per MWh for every MW the retailer falls short of the mandated RET, which “encourages” (we mean “forces”) retailers to enter Power Purchase Agreements and, thereby, purchase RECs from wind power generators? Why the need for unsecured, taxpayer underwritten loans from the Clean Energy Finance Corporation or ARENA Fund?

If there was a shred of substance to the Mile’s story then, surely, wind power generators wouldn’t need any extra pennies from hard pressed power punters – in the form of RECs, or at all; nor would they need to have inbuilt legislative threats to retailers to purchase RECs; and there would be no need for “soft money” to back their projects.

In an unfettered market, retailers and power consumers would be knocking each other over in the rush to get the cheapest power around; and, what with all those willing customers for wind power, there wouldn’t be any need for taxpayer subsidised loans from the CEFC or ARENA Fund – commercial lenders would be piling in to wind power projects, ready to reap the returns.  But, funnily enough, that just ain’t happening; and nor will it.

Instead, we get “die in a ditch” media efforts by the likes of Infigen’s/CEC’s Miles George to ensure the government retains the mandatory RET at its current 41,000 GWh annual target – and to, therefore, preserve the REC price, at all costs.

So which is it, Miles?

Is wind power really competitive with conventional generation sources? If so, then there’s simply no need for a mandated target at all – this stuff will sell itself.

Or is wind power simply the product of ideological nonsense – a power generation source which can only ever be delivered at crazy, random intervals – requiring 100% of its capacity to be backed up 100% of the time by fossil fuel generation sources, including ridiculously expensive OCGTs (with that exorbitant, additional and unnecessary cost borne by power consumers) – and which, for wind power generation to be commercial, has to be sold to retailers at guaranteed rates 3-4 times the cost of conventional sources, as stipulated in Power Purchase Agreements with retailers?

The wind industry pitch is like the slacker school student – perpetually failing, but always promising to do better next term: full of “excuses” and always ready to cut a bargain in order to get that one, final chance at redemption.

And, like the lazy student, the wind industry’s pleas for mercy are falling on increasingly dry and barren ground; the audience has heard it all before. The only proper response to the perpetual infant is: “grow up”.

With the Coalition itching to scrap the mandatory RET, the Australian wind industry is finally about the get the chance to prove its maturity. However, from Miles George’s desperate media pleas, a chance at maturity is the very last thing the wind industry wants, now or ever.