As if the example set by South Australia’s disastrous attempt to run on sunshine and breezes could somehow be avoided, Labor Premier Annastacia Palaszczuk is hell-bent on following SA back to the Dark Ages.
The Queensland government is packed with wannabe wind cultists (Queensland has only a couple of tiny wind farms to its name), who are simply dying to follow the lead set by South Australia.
In the light of what is already known about the effect chaotic wind power has on the security of supply and the price of power, what Judith Sloan lays out below can only be described as a suicide pact drawn up by certifiable lunatics.
Palaszczuk’s power play off-the-grid insanity
17 January 2017
Everyone remembers the slogan: Queensland — beautiful one day, perfect the next. I have to inform you there has been an update: Queensland — beautiful one day, insane the next.
The idea that the state could achieve a target of 50 per cent of electricity generated by renewable energy by 2030 is bizarre, unachievable and mischievous — in a word, it is insane. And it is not just because such a target would drive up electricity prices for households and businesses to the high levels of South Australia — probably higher. It also would destroy the value of most of the electricity assets held by the Queensland government. Talk about shooting yourself in the foot.
Given Queensland’s extreme level of government debt, there is no doubt that, in due course, most of the government-owned corporations will be sold, particularly if the cost of servicing the debt were to escalate. The tragedy is that it is likely the value of most of these assets will have fallen through the floor by then.
In the meantime, the flow of dividends that the government is relying on to create the appearance of fiscal rectitude will dry up, even if the present unconventional directive of ordering a payout ratio of 100 per cent of profits of the government-owned corporations continues.
An important question is: why would the Palaszczuk government opt for such an economically harmful and foolish policy? We should not forget that Queensland has the lowest percentage of electricity generated by renewable energy — at just more than 4 per cent.
So the policy involves an increase of 46 percentage points in the penetration of renewable energy as a source of electricity generation in the space of 13 years. Pull the other one.
To provide cover for this madcap policy, the Queensland government appointed a “renewable energy expert panel” to provide a veneer of credibility to the feasibility of the target.
With carefully chosen panel members, the draft report — unsurprisingly — concluded that there were no problems with reaching the target and that electricity costs to households and businesses in Queensland would probably stay steady. Again, pull the other one, but I am running out of other ones.
We should just take a look at the figures. There will need to be between 4000 megawatts to 5500MW of new large-scale renewable energy capacity between 2020 and 2030, something that has not even been achieved for Australia as a whole across the same period. The consensus view is that 1500MW of additional renewable energy a year is the top of the range for Australia and Queensland is only 15 per cent odd of that total.
And don’t you just love the prediction of the panel that electricity prices will remain steady for households and business in Queensland as a result of the government’s bold, go-it-alone policy? The background to this, as noted by the Queensland Productivity Commission, is that “since 2007, Australian residential retail electricity prices have increased faster than any other OECD country and Queensland prices have increased faster than any other state or territory”.
Mind you, it is clear why the Palaszczuk government didn’t simply ask the Queensland Productivity Commission to analyse the feasibility of the 50 per cent state renewable energy target. That would be because it wouldn’t be seen as “reliable”, having made the wholly rational suggestion last year that the state government withdraw the generous and unjustified subsidies to households with solar panels on their roofs.
Premier Annastacia Palaszczuk was not having a bar of that idea. How could she continue to conflate small-scale solar panels with large-scale renewable energy, thereby buttressing the support of the public (well, the better-heeled part of the public that can afford solar panels) for anything called renewable energy? If X is good, 2X must be better and 12X must be a blast. Continuing to subsidise households with solar panels is part of the political game, hang other electricity users.
So what does that “independent” panel conclude about the impact of the 50 per cent renewables energy target on electricity pricing? The answer is “broadly cost neutral to electricity consumers where the cost of funding the policy action is recovered through electricity market mechanisms”. (This is code for: we could always skin taxpayers or ask Canberra to chip in.)
But here’s the rub: “This occurs as a result of increased renewable generation placing downward pressure on wholesale electricity prices, which is projected in the modelling to offset the payments to renewables.”
Mind you, the point is added that “the pricing outcome is not guaranteed and could differ, for example, if existing generation capacity is withdrawn from the market, especially coal-fired generation”.
Think about this. What the panel is saying is: if existing generators, which are owned by the government in Queensland, are driven out of the market, which is likely because of the renewables energy target — see the South Australian and Victorian cases as live examples — then prices will rise. And the capital value of these withdrawn government-owned generators will be close to zero, having probably experienced years of underinvestment in maintenance.
This leaves the question: why would the Queensland government decide on such a dimwitted, self-defeating and economically damaging policy position?
In keeping with the rule of following the money, it is clear that the lobbying efforts of the clean energy rent-seekers have been directed at the Queensland government, in particular.
After all, the large energy providers generally have a foot in both camps — conventional electricity generation plus renewable energy assets.
But they don’t stand to lose anything in Queensland by virtue of the astronomical state renewable energy target because the conventional electricity generation assets are all owned by the government. If these generators are driven out of business, it’s a big plus for them, not a negative.
Silly estimates of the gains in employment and billions of dollars of investment, mainly in the regions, associated with renewable energy make gormless politicians simply salivate. The sad thing is that it will be lose-lose for Queenslanders down the track.
The challenge for federal Energy Minister Josh Frydenberg is to convince state governments to junk their vacuous, go-it-alone renewable energy targets that will lead to even higher electricity prices and further threaten the reliability of the grid.
Yet again, Judith Sloan spells out the bleeding obvious. Obvious at least to those gifted with our good friends logic and reason. Thankfully Judith is not on her own, as these letters to The Australian attest.
Renewables adopted without proper assessment
Letters to the Editor
18 January 2017
You reported that Tony Abbott has proposed the renewable energy target of 23.5 per cent be dropped and not replaced (16/1). This follows last week’s report by Chief Scientist Alan Finkel that “really high” usage of renewables make an electricity system subject to propagating failure, as happened in South Australia. Finkel’s comments confirm that the federal and state targets for usage of renewable sources were adopted without a proper assessment of the risks and costs.
It also comes at a time when the appointments made by US President-elect Donald Trump on environmental policy are almost certain to adopt a policy of no renewables and further increase the competitive advantage of US businesses.
You reported adverse comments by some, but these just confirmed the need for an urgent review of policy on renewable and gas. We should not wait for the policy review set for publication later this year.
The commentary by Judith Sloan on Queensland’s absurd renewable target of 50 per cent adds further weight to the need for urgent review (“Palaszczuk’s power play is off-the-grid insanity”, 17/1). That should include an examination of possible reductions in federal grants to those states which do not play ball. Why should the federal government provide financial assistance to a state government that is wasting money on renewable sources?
Des Moore, South Yarra, Vic
Judith Sloan rightly points out that the Queensland government’s renewable energy target of 50 per cent by 2030 will be lose-lose for Queenslanders. But it will also be lose-lose for the rest of us connected to the eastern electricity grid because Queensland eventually relies on its connection to NSW to stabilise its fluctuating electricity supply and voltage.
Eventually it will be the NSW population who will also be paying for the reckless electricity policies of the SA, Tasmanian and Victorian government. This is unreasonable.
The NSW government should immediately put a heavy toll on electricity being supplied through its poles and wires leading to the interstate boundary connectors. Such a toll should be in the vicinity of 100 times the cost of producing the power to be transferred interstate. This would ensure that interests of NSW residents and industries are not being eroded by irresponsible interstate governments.
Brent Walker, Killcare, NSW
Thank you, Judith Sloan; it would appear the renewable energy thinkers have taken this ideology to a new level so that it’s more like a religion.
My understanding is that Australia is responsible for 1.3 per cent of greenhouse gases yet we are on the pathway to lower it in a short space of time at the expense of our citizens. The increased prices on industry and businesses flows on to all of us with increases in goods and services across the board, not just our local power bills. It surely is madness to try and reduce even further what is already a low figure in relation to many other larger countries.
L. Boyle, Tewantin, Qld
The nuclear option is a possibility, but we have the most obvious one right under our noses — gas (“Think nuclear to solve energy crisis”, 17/1). Gas produces half the emissions that coal produces when used in electricity generation. Our problem is that high spending politicians have failed to garner 10 per cent of gas production for local use and have allowed it all to be exported.
We now pay the highest price for gas in the world despite being the biggest producer.
Chris Squelch, Townsville, Qld
Government inertia on sustainable low-cost energy for Australian consumers is matched by double-speak. Energy Minister Josh Frydenberg asserts that Labor-Greens’ 50 per cent renewable targets are the real threat to our energy sustainability, when prices continue to rise and blackouts are occurring now under existing renewable energy policies.
Meanwhile, Resources Minister Matt Canavan backs new coal technology to cut carbon emissions. Confused consumers watch and wait while governments spend billions to subsidise expensive renewable energy targets to lower emissions and nothing to either modify existing low-cost coal plants or build new ones to lower emissions and energy costs.
Meanwhile, more consumers are sitting in the dark while jobs are being driven from our shores.
Kevin Begaud, Dee Why, NSW
The observation of L Boyle that “it would appear the renewable energy thinkers have taken this ideology to a new level so that it’s more like a religion” is spot on. But, in fairness to the recognised faiths, wind worship is really an off the wall cult. Pictures like this tell the story: