PM Hopes to Salvage LRET & Wind Industry by Reviving Renewables Slush Fund

field of dreams

But where are the commercial power retailers?

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In Australia, the fact that the Large-Scale RET was slashed once (from a 41,000 GWh annual target to 33,000GWh) guarantees that no commercial retailer will enter a long-term Power Purchase Agreement with a wind power outfit; and, accordingly, that no commercial banker will lend money for any new wind farms (see our post here).

Faced with the inevitable fact that there will be a massive shortfall in wind power capacity as the annual target ramps up to the 33,000GWh mandatory requirement, PM, Malcolm Turnbull is acutely aware of the pending politically toxic scenario, when power consumers work out that – under the LRET – they’re being whacked for $3 billion a year as a Federal power tax, on top of their already punishing power bills: half of which will go to wind power outfits as REC subsidy; and the other half of which will be collected as a penalty, payable to the Federal government (see our post here).

Not that it will avoid the collapse of the LRET and the wind industry with it, but Malcolm has determined to rejig the various renewable energy slush funds controlled by the Federal government.

While throwing taxpayer subsidised and underwritten loans at wind or solar might result in an uptick in capacity, that does nothing to solve the buyers’ boycott, where commercial retailers have no incentive to maintain the LRET, and every reason to help kill it off.

Malcolm’s move is one of those ‘Field of Dreams’ – ‘build it and they will come’ moments, except the retailers have no intention of playing ball; and that cooler heads in the room have seen it for what it is: playing base politics, with other peoples’ money.

Malcolm the merchant banker creates a sub prime market in renewable energy assets
Catallaxy Files
Alan Moran
23 March 2016

With the announcement of the Clean Energy Innovation Fund (CEIF), Malcom Turnbull has killed several birds with a single stone.  He has

  • warmed the cockles of the hearts of the renewable rent-seekers who are such a valuable source of campaign finance
  • conned all the ABC/Fairfax/Guardian journalists into thinking he has actually increased government spending when actually, “The $1 billion Clean Energy Innovation Fund will be established from within the CEFC’s $10 billion allocation”. Though at Reneweconomy Giles Parkinson has twigged
  • Retained the subsidised $10 billion Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA) about $200 million a year but previously budgeted to more than halve; this is on top of the renewable energy subsidy for up to 33,000 gigawatt hours a year of (mainly) wind energy, plus about 12,000 GWh of rooftop solar, meaning an annual subsidy of about $3.5 billion.
  • Locked in his personal commitment to spending ever greater resources on overriding the energy market and replacing all those ever so twentieth century coal plants with twenty first century renewable energy that cannot be made reliable and cost three times as much.

But, sadly, it is not all smoke and mirrors.  Malcolm, being a merchant banker, has learned from the Goldman Sachs hymn book about how to leverage equity investments with loans.

Banking on a rock solid government guarantee to an investment, lenders will roll up to offer finance to the Clean Energy Innovation Fund.  That way the CEIF can attract loan funds of maybe four times the value of its $100 million a year in government capital.

And so we have created our very own version of sub-prime securities that, even with the renewable subsidies, could not justify loans from prudent bankers.

With the government offering a subsidy through the renewable program which trebles the price that commercial energy obtains plus a subsidy to the investment capital through CEFC and CEIF what could go wrong?

Perhaps the sheer power of government controlling the energy market as well as its preferred source of energy will mean the negative value-adding renewable investments are secure.  But we are placing a large chunk of the nation’s investment resources into venues that are unproductive.

At the very least this is a dilution of the capital productivity so essential to the better paying jobs we all seek. Add to this the penalty that businesses have to pay for the dearer energy being mandated and we will need a whole lot of Malcolm’s much vaunted high tech revolution that he announced in his Innovation Statement a few months ago.
Catallaxy Files

Vestas turbine on fire

A scene from Malcolm Turnbull’s ‘Innovation Nation’.

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In another pointed take on Malcolm’s last ditch attempt to save the LRET, the Editor of The Australian had this to say.

PM tilts at green windmills
The Australian
24 March 2016

However eager Malcolm Turnbull is to differentiate himself from Tony Abbott, the Prime Minister has limited scope to do so. His predecessor’s border protection and national security policies are essential, as is re-establishment of the Australian Building and Construction Commission — the likely double-dissolution trigger.

While Mr Turnbull will probably campaign in favour of same-sex marriage, the plebiscite to be held later this year was also an Abbott decision. Ultimately, Mr Turnbull needs to make his mark with fiscal, tax, workplace relations and federation reform. But reaching for a quick fix, he has decided to put his stamp on climate policy, reversing Mr Abbott’s plans to axe the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.

From July, the two bodies jointly will manage a new $1 billion Clean Energy Innovation Fund to spur investment in renewable energy. The fund, Mr Turnbull said yesterday, would drive innovation — his pet theme — while “delivering a financial benefit from the investment of public money”. Provided, of course, the projects it picks in a risky and unpredictable sphere are winners. If not, taxpayers could be the losers.

Mr Turnbull singled out large-scale solar storage as the kind of project the new fund could accelerate. And he might be correct in his prediction that energy storage, such as battery technology, could help commercialise solar, wind and other energy sources.

Australia’s Chief Scientist, Alan Finkel, says solar and wind energy will become commercially viable if the volume of storage can be increased and costs decreased.

If so, as we said when Julia Gillard, at the urging of the Greens, created the CEFC in 2013: “Given public and commercial demand for efficient, clean energy, there is no reason why technically innovative projects with strong commercial potential would not find investment backing. At a time of budget stringency, there is no justification in risking public money on loans that would be better assessed by the private sector.”

If Mr Turnbull had hoped to please the Greens his move failed. Richard Di Natale dismissed it as a “con job dressed up as innovation”.

The Greens want much larger handouts for renewable energy to meet what they claim, hysterically, is a “climate emergency”. If renewables become viable there is no reason taxpayers should invest in them. Decades of costly failures, at federal and state level, show why governments “picking winners” is bad policy.
The Australian

There are 3 electricity essentials – that the power source and its delivery to homes and businesses be: 1) reliable; 2) secure; and 3) affordable. Which means that wind power – a wholly weather dependent power source, that can’t be stored and costs 3-4 times the cost of conventional power – scores NIL on all three counts.

Following Malcolm’s ‘Field of Dreams’ moment, and adding another level of cost and complexity, can only make matters worse.

The only people talking in earnest about “battery technology” being able to “commercialise solar, wind and other energy sources” are politicians like Turnbull, desperate to deflect attention from wind power disasters, like South Australia; and the wind industry, its parasites and spruikers – all eager to have the massive subsidies (essential to keep these things spinning just a little longer) set in stone.

The pitch is that we should keep throwing more and more subsidies at something that is a well-established failure – at every level – and if, just if, some wizard battery system comes along, all of the wind industry’s problems will be over.

No engineer or economist believes it for a second. The mass storage of electricity in commercial quantities isn’t even close: it’s a pipe dream.

Malcolm Turnbull may have his qualities, but practical knowledge of how electricity grids and power markets work isn’t among them.

Despite his rampant ego and soaring ambitions, this is one case where political and economic reality will prevail: commercial retailers worked it out long ago; and millions of power consuming businesses and households soon will, if they haven’t already.

Malcolm’s bloody minded determination still won’t make it work.

About stopthesethings

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

Comments

  1. Jackie Rovensky says:

    ‘Despite his rampant ego and soaring ambitions’, this is the problem with Turnbull, he has no idea how to secure his soaring ambitions to feed his rampant ego. He is trying the industry’s trick of ‘hide and seek’ telling little and deny everything.
    As a party leader and as the Nations leader he should be looking at what is good for the Nation not boosting his own ego.
    The Nation and its people are not his playthings and he should not treat us as such.
    If that’s what he thinks we are then he is working with the right people – the wind industry and its maudlin followers.
    The sooner honesty and common sense returns to the Government and they stop this industry from sucking us dry and start to support programs which will both reduce emissions and support a well functioning and affordable economy with jobs for now and the future, only then will they be considered they are working for us the people.
    Turnbull along with his sidekicks in Government should support a moratorium to stop any further installation of inefficient and dangerous turbines which in turn will stop the spending of our precious public funds on useless ventures.
    Mr Turnbull may believe he is clever but he is showing himself as he is, a tweet-aholic going through withdrawal and making mistake after mistake as he try’s to recover from his addiction which appears to have given him a false sense of his own importance.

    • Peter Pronczak says:

      Unfortunately Jackie the same problem remains, as long as we are not a Sovereign Nation State any of our leaders do not lead, they follow.
      To have the authority of control over our economy and finance is impossible when it is controlled by the Reserve Bank, being independent of government is double-speak for them being private international bankers. As well as that, members of APRA are appointed by the Governor General, the Queen’s, not our representative. His decisions, just as other orders of proceedure, finance and governance, are issued at the ‘non-obligatory’ attendance at CHOGM or by decree.
      Take a cold hard look at the evidence: Turnbull ‘ordered’ the Senate to remain in session until ‘his’ changes to the Electoral Act were passed making it harder for independents and small parties to be elected. And then he had the gall to say it was a ‘win for democracy.’
      What democracy? Do the voters choose the ‘authorised party’s’ candidate to stand for election? NO! But you are allowed to vote for whoever has been selected by the backroom for their allegiance to the party system.
      Is that what you call democracy?
      The IMF, World Bank, BIS all check our financial books, just as the Reserve Bank, to see how much profit can be extracted from the financially enslaved by the ‘casino economy.’
      That’s right, the economic system is based on gambling, and as everybody knows ‘the house’ always wins.
      STT is fulfilling an exemplary role, in destroying something that is not worth anything to the ordinary peoples’ economy but costs us billions of $’s.
      The ‘T’ in ETS stands for ‘Trading’ can it be said any more explicitly it is for gambling on stock exchanges – preferably the London one from which the UK derives 17% of it’s required finance to support this usury financial system.
      Many people say that ‘they’ should wake up to themselves and stop making the same repetitive mistakes. The oligarchy in control are wide awake thank you very much. 5 star luxury is a down grade for these people – go ahead, explain the exact nature of the work they do.
      If you want to see how nasty it can get, apart from things like Oxitec and Zika, take a look at the history of Cyprus just since 1960. There, the fox is in charge of the hen house, is it any wonder that the Republic as an EU member, and not Turkey, underwent the ‘Cyprus solution’ coming to a bank near you.
      Is it more cowardly to hide behind a bully, or to create a bully to hide behind? If you can answer that question you’ll know more about who is doing what to who and, that Geo., Bush, Henry Kissinger and Alan Greenspan were all made Knight Commanders of the British Empire for being traitors to the original ideals and principle on which America was based.
      As we still live under Bertrand Russell’s MAD system, then what do you call someone or group, who threaten murder and suicide, unless everyone does what they’re told?

    • Keith Staff says:

      You nailed M.T big time Jackie.– agree 100 per cent.

  2. Peter Pronczak says:

    Further info on how Goldman Sachs operates internationally see CEC Weekly Video Report 28/03/2016. cecaust.com.au

  3. All correct STT, expensive electricity such as wind and solar remains expensive electricity even if it could be stored it at no cost. Cost effective forms of generation such as coal or combined cycle gas plants remain far less expensive than renewables and require no large scale pie-in-the-sky energy storage.
    Adding the cost of energy storage to the renewables equation would simply make the cost differential even greater.

  4. I just want to thank all of you. The more I read, the more sick at heart I get, at what is being done the world over. I have always said: “follow the money.” I share your site and Facebook posts regularly. People are waking up to dark side of it all, but is it too late? I fear that in Canada, this may be the case. Carry on with informing everyone, that this is NOT the way to go.

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