There are very few Australian politicians who have bothered to do the slightest bit of homework on Australia’s energy policy, and even fewer still have taken the time to understand how Australia’s ridiculous renewable energy targets have destroyed once reliable grids and driven power prices through the roof. One who has managed to get to grips with Australia’s energy debacle is Western Australian Liberal Senator, Chris Back.
Here’s Chris being interviewed on 2GB radio just before Christmas last year.
Renewable Energy Costs
Mike Williams interviews Senator Chris Back
21 December 2016
Mike Williams: Now look, I thought we’d return to this issue of renewable energy because when I mentioned it on Tuesday morning, the board went into meltdown. It’s now apparent, governments across Australia are attempting to move towards renewable energy through wind farms and solar panels. But as you heard, many issues remain with both forms of energy. Look, there is research coming out of Europe, that wind farms can cause health issues and be disruptive to sleep patterns.
Then you’ve got the cost. Coal-fired power per Megawatt-hour is around $36. Wind meanwhile is between $80 and $120, so it can be three times the price. Those costs of course get passed on to you and me, yes the jolly old consumer. West Australian Liberal Senator Chris Back, has been a staunch opponent of wind farm projects, as we have here as well, right across the country. Look, he joins us now, I think we’ve got him there. Senator, welcome, and thanks for your time.
Senator Chris Back: Happy Christmas, Mike, to you and your listeners, how are you?
Mike Williams: I’m terrific, thank you. Look, just before we head in to this, I am astounded that we’ve caught you … Just tell everyone where you are and what you’re doing?
Senator Chris Back: Yes, sure, Mike. I’m in Stavanger in Norway, one of the three big oil and gas hubs along with Aberdeen in Scotland and Houston in Texas, and of course as a West Australian in a country that’s about to go past Qatar as the biggest exporter of LNG in the world, I’m very anxious that Perth becomes the next of the big oil and gas hubs. So I’m here in Stavanger, having a look at the oil and gas industry and your listeners would be interested to know Mike, it’s self-funded tour. The Tax payer is not paying.
Mike Williams: Glad to hear that, good on you. Listen, bringing back to Australia, as I mentioned, these wind farms and solar panel farms, look, they’re popping out everywhere and it’s an issue right across the country isn’t it?
Senator Chris Back: Well, it is Mike. To put it into perspective, by 2030, renewables will grow to be only 3% of the world’s energy mix, 3%. So renewables have got a place but in the overall energy mix, as the world’s population grows, and as our demand for energy grows, as obviously in low socioeconomic countries, they become more towards middle-class, Mike, the demand for energy’s enormous.
Let’s not get into perspective the fact that renewables are ever going to be anything other than something at the edges. Coal, oil, gas, for the foreseeable future will be the biggest and most reliable forms of energy delivery. So when you come to renewables, solar has got tremendous potential in Australia. We’re already seeing it.
Mike Williams: Yeah, we sure are.
Senator Chris Back: Particularly important for the end of grid, or off-grid energy generation and as of course we improve battery storage, I believe there’s a big future for solar. I don’t see that view for wind.
Mike Williams: Now, a lot of people are of the same mind, I might say to you Chris. Look, in August last year, a Senate committee put forward a range of measures to curb wind farms including recommendations to reduce support for projects of course, under the National Renewable Energy target. Now, 16 months later, have those recommendations been implemented?
Senator Chris Back: Some of them have been. There’s the wind commissioner in place now. He’s doing a very good job and there’s more scope for him to standardise the cost Australia will make recommendations to the state. I’m still disappointed that in fact, whilst planning for wind farms and approval for wind farms is a state and territory issue, Mike, the big attractant of course are these things called Renewable Energy Certificates that are handed out by the Federal government. In other words, the Australian taxpayer and consumer.
We’re just not getting value and neither are we yet satisfied that the government has responded to the extent we want them to with regards to these Renewable Energy Certificates. Mike, what people need to understand, that a 3 Megawatt wind farm, or wind turbine, and most of them are now 3 Megawatts. Before they generate one unit of electricity, the Australian consumer, read taxpayer, is subsidising them to the tune of about a million dollars per turbine per year, that’s before they generate one unit of electricity.
Mike Williams: Right. It really is crazy. Queensland, they’re talking about moving towards 80% renewable energy, but shouldn’t the situation in South Australia where they have got 40% renewable and had a complete blackout be enough for governments to realise renewable energy is fraud as you’ve been sort of suggesting there. I’ve been saying in the programme in the various states I think a lot of the goals are unattainable. They’re just absolutely crazy.
Senator Chris Back: Well, they’re unobtainable, simply because you wouldn’t have the land and the space for the turbines, but Mike, people understand the hip pocket very well. Let me tell you these two steps. The most expensive electricity in Australia is in South Australia, and that is because it’s dependence on wind. The most expensive consumer electricity in Europe is Denmark, because they have the highest proportion.
Mike, the unfortunate situation is this, for those who are consumers of electricity. But unlike United States where a wind farm must commit to contract to deliver, what they say they will deliver to a retailer. The unusual circumstance exist in Australia that a wind farm operator does not have to be do not have to be contractually bound to deliver the power to the retailer. What does that mean? It means that the retailer buys firstly to the wind farm operator, I’m going to buy a certain number of Megawatts of power off you at such and such a price. The retailer in turn then learns that unfortunately, the wind farm doesn’t have to generate it, doesn’t have to sell it to him. If the wind doesn’t blow, and the ship doesn’t go, of course he’s then turn going to around and buy his power from somewhere else.
That’s where the problems have been occurring in South Australia. The Victorians have now for the moratorium on gas exploration. And Mike, the most applicable form of base load energy is gas. Why? Because you can very cheaply keep your gas turbines operating, and of course you need what’s called synchronised power, Mike. That’s what makes sure you computers don’t blow and your fridge doesn’t blow and your oven doesn’t blow. But a wind farm cannot produce synchronised power. A gas turbine can and while South Australia, Victoria and New South Wales go the way they are, not only is the cost to consume is going to go through the roof, but so is the reliability.
And Mike, it was Alan Jones’ program in the week leading up to the election, I predicted two things. One, South Australia’s cost of energy was going to go up 15% to 18% on the first of July, I was wrong. It went up 20%. The other thing I predicted, was there was going to be a state wide blackout of power in South Australia. I didn’t think it was going to happen in September, I then predicted publicly that there was going to be a second one, and there has been. Remember all this Mike, I’m a Western Australian Senator. We all know what’s called a National Energy Grid, strangely enough, WA’s not part of it. So these aren’t issues for me that are Western Australian, they are issues for me as an Australian Senator, that’s worried about the cost of electricity for consumers.
Mike Williams: Amazing stuff. You’ve certainly done your homework here and I didn’t realise that WA was on the outer on that. Just talking about those dollar figures there by the way with South Australia, the electricity bills on July 7 in South Australia prices spiked from an average of $100 per Megawatt-hour to almost $14,000 per Megawatt hour. The cost is of course just passed on to the consumers isn’t it? And away we go again.
Senator Chris Back: And Mike, on that day, the spot price in Queensland, New South Wales and Victoria was $50 per Megawatt-hour, so that’s what basically happened on that day. The wind didn’t blow, you’ve got to understand again, that if you’ve got a gas-fired power station, or a coal-fired power station or even a biomass-fired power station, you are contractually bound Mike, to deliver. Whereas a wind farm there’s little quirk in the Renewable Energy Act for Australia, I could go into that in great length, is the fact that it’s called semi-contracted, Mike.
The reality is what it means is as a wind farm operator, I don’t have to deliver what I tell you I’m going to deliver. But on the other side, the retailer has got very, very strong contractual obligations to the regulator to actually deliver what they say they’re going to deliver. So that’s where the problem comes in. It’s all well and good for the wind industry to say ‘our wind farm power is cheap’. Yes it’s cheap if at a time when the wind blows, you can deliver it.
But the unfortunate thing for Australia and for Denmark, where I am in Scandinavia at the moment, is the fact that the wind blows at times of the day which are not peak demand time. Middle of the day, middle of the night. We all know peak demand occurs at breakfast time and we know that it occurs at dinner time, because you come home, you put on your cooking facilities, if it’s summer you turn your air conditioners on and in the morning, you cook your breakfast. What regulates the control of the price of electricity to a consumer Mike, is the cost of peak power. Now, that retailer is obliged to deliver, if the wind farm can’t deliver, he’s got to go buy it from elsewhere and that’s where, you quite rightly say, the $14,000 per Megawatt-hour occurred on that day in South Australia, because basically that’s what the market was allowed to move to.
We’ve got some big problems Mike, Renewable Energy Certificates, I’ve long said, are a factor that need much more careful control by government. You can trade them Mike, you can go and buy some tomorrow. In fact I got it out in Senate Estimates, it’s now publicly available information, who owns all of the Renewable Energy Certificates. They’re worth about $35 about 18 months ago. They jumped to 82 bucks and Mike they’re now moving to $93. And you’d be very interested to know who owns them.
Mike Williams: Who owns them?
Senator Chris Back: The banks.
Mike Williams: The banks?
Senator Chris Back: The banks, are big owners of Renewable Energy Certificates. Some of the big power companies are owners of them. And of course they’re supposed to be retired or they’re supposed to be surrendered, Mike. They work because you’re a polluting generator, and so the regulator says, “I want you to surrender a certain number of these certificates.” But Mike, the interesting thing is, if the generators says, “blow it, I’m not going to do it.” the regulator charges them a $65 fine per Megawatt-hour. By the time you add tax ,because you know you can’t claim a fine against tax, the $65 becomes $93. And Mike, who do you think is paying the $93, the tax or the effect of the fine? Who do you think is paying that?
Mike Williams: I’ll just have a look in the mirror, that’s what I’ll do.
Senator Chris Back: The consumer, You. The $93 of course the fine got to be a little bit under a hundred. Then you add in the actual cost of the electricity, that’s about $35, so the poor consumer is now paying, and more to the point, Mike, when you don’t surrender the Renewable Energy Certificate, neither are you getting rid of one ounce of carbon dioxide emissions.
Mike Williams: Exactly.
Senator Chris Back: What you’ve done is you paid a fine, the fine is added on to the consumer’s cost. The consumer has to wear it, because otherwise, you don’t turn the lights on and we’re not seeing a reduction in carbon dioxide emissions. And we’d pointed all that out in that Senate Inquiry we had, and so much of the conclusions of that inquiry back in 2015 are now coming to the fore and they are now becoming more obvious.
Mike Williams: Now, I notice that the New South Wales planning minister Rob Stokes announced this week, that they would be streamlining the wind farm approval process. Are you across that? And what is your reaction to that?
Senator Chris Back: Again, I’ll go back to the wind farm commissioner, Mike. Because in each state, you’ve got different sets of planning guidelines, distances from residences for example, for wind turbines. The amount of sound that’s approved. You mentioned in your introduction the concept of health effects and we don’t think it’s the sound in the audible range, Mike. We think it’s a sub-audible, what’s called “infrasound”, which human beings can’t hear.
Mike Williams: Yeah.
Senator Chris Back: But low frequency gets in to a building, bounces around inside the building and the scientists think that it’s something similar to the effect on the inner ear of sea sickness. Now you get these people say, “You don’t get ill from these things”. Well four of us go out in Sydney Harbour, off the Heads fishing, Mike; three of us get seasick and one doesn’t get seasick. Are the other three seasick or aren’t they seasick? And it’s an absolute travesty, it’s a nonsense for people to say, “Sorry, you thought you are suffering ill health effects but you’re not, it’s in your head.”
Well the simple fact of the matter is, sleeplessness leads to all of those adverse health effects, and as you know, Tony Abbott, as leader of the opposition and then as Prime Minister honoured a commitment to me that he would spend some funds, have some funds spent for the first time, anywhere in the world on independent scientific research to indicate whether or not and if so, what is the adverse health effect on humans.
And Mike, we are seeing it coming through now for many countries in the world. I have no doubt at all that we are experiencing adverse health effects. They are from infrasound, they are from sleeplessness. The become obviously depressed, et cetera, I have no doubt at all, that science will show there are adverse health effects if you’re too close to the big wind turbines.
Mike Williams: Yes, sure. Look, when all this started coming in years ago, there were people complaining about it and there were stories from overseas then of ill health and people having to move out of their house, people couldn’t get any sleep. There is backed up factual evidence that really is historical, that dates way back, that’ll have all that amongst it. I don’t think that’ll be too hard to push through.
Our last question to you by the way, how confident are you that the government lead by Malcolm Turnbull, who has different environmental views to Tony Abbott of course, will sort of implement the recommendations handed down by the Senate committee, are you confident of that?
Senator Chris Back: Yes, I am. The last of them that hasn’t yes been accepted by the government as an independent review by the Productivity Commission. And certainly others have had a look at it the AEMO, the Energy regulator, and others, are considering these issues. But Mike, what’s critically important is someone like the Productivity Commission, steps back, has a look at it all and basically, and in particularly in terms of carbon dioxide emissions reductions, we’ve got commitments under Paris, we were never committed to Kyoto yet Australia was one of the only countries that ever did meet what was to be its target. We’re meeting those well, the Direct action plan is working and so Australia will honour its commitments.
But I’ve got to say to you, that massive cost to consumers, as you say, Queensland talking 80%, Bill Shorten, talking 50%. Mike, I can tell you what, it will never happen. It’s not just a cost factor, it’s impossible to happen. And in the meantime Mike, we destroy our competitiveness. Let me give you one last example, in Germany, the cost of electricity to a manufacturer now, is three times that of an American manufacturer. And what do you think’s happened, the American’s all brought their manufacturing back into their own country because they’ve got a cheaper form of energy.
And the last message I’ll leave you with Mike, with 24 million people in the land mass of America, excluding Alaska, with the population of that of greater New York, ask yourself the question, what is the one thing that has kept Australia such a wealthy country per capita? It’s not wool off the sheep’s back, it’s not oil and gas, it’s not iron ore, it has been cheap energy.
If we are intent on destroying the one benefit we have had, I can assure you, all of the effects on manufacturing, on consumers, on employment, and particularly in a state like South Australia, where Arrium steel is questioning whether it can keep going, whether BHP says they can keep going on Olympic Dam. For heaven’s sake, people need to wake up and see the fact that cheap energy is what keeps Australia going. Destroy our energy and we’re down the gurgler, Mike.
Mike Williams: Absolutely. Look, I’ll leave you there. Thank you so much for that. The last one point on top of what you just said there is that without the coal-fired power stations, the cheaper energy that we’ve been enjoying for all this time, when the other does not operate, when the other does let us down, what are we going to be relying on to get us through? Like South Australia, where do you go? What’s the back up, basically?
Senator Chris Back: The beauty of the answer to your question is, you don’t have a sort of predict what might happen. Look at what did happen in South Australia, Mike, they had a state wide blackout. And it wasn’t just for a few hours, some of those areas in the Western parts of South Australia, we heard in evidence, at our Senate committee on Great Australian Bight just recently, they were out of power for seven days.
I mean, the Flinders Medical Centre which held all of the frozen embryos, Mike, they lost them all. They lost all of the stored frozen embryos. How many hopes and desires and aspirations of people went up because that happened. The airport closed. Lifts closed, surgery was cancelled in hospitals. For heaven’s sake, people need to understand that in today’s world you need a reliable form of sustainable, affordable energy, now that is the absolute critical point and Malcolm Turnbull understands that 100%, I can assure you. I’ve spoken to him about it, he understands it, we must deliver it as a government and so must the states and territories.
Mike Williams: Well done. Senator Chris Back, thank you so much for your time and be safe over there will you? Merry Christmas to you.
Senator Chris Back: Merry Christmas to you too, Mike, thank you.
Nice work, Chris! Happy to award a solid 9/10 for that effort – which managed to span the full scope of the great wind power fraud in seamless leaps and bounds. However, there was one slight hiccup that needs tidying up, where Chris started talking about the manner in which RECs get doled out:
Mike, what people need to understand, that a 3 Megawatt wind farm, or wind turbine, and most of them are now 3 Megawatts. Before they generate one unit of electricity, the Australian consumer, read taxpayer, is subsidising them to the tune of about a million dollars per turbine per year, that’s before they generate one unit of electricity.
That’s not quite what happens. The LRET target is set by s40 of the Renewable Energy (Electricity) Act 2000 (here) and under the Act an eligible renewable energy source gets a REC for each MWh dispatched to the grid. Contrary to Chris’s statement, unless the wind is blowing and power is being sent into the grid, the wind power outfit gets nothing. His figure of $1 million worth of subsidies per year for a 3MW turbine is, however, pretty close to the mark.
If a 3MW turbine operated 24 hours a day, 365 days a year – its owner would receive 26,280 RECs (24 x 365 x 3). Assuming, generously, a capacity factor of 35% (the cowboys from wind power outfits often wildly claim more than that) that single turbine will receive 9,198 RECs annually. At $93 per REC, that single turbine will, in 12 months, rake in $855,414 in REC Subsidy.
And that monstrous rort doesn’t run for a single year, but continues until the current LRET expires in 2031. That means Chris’s single 3MW turbine could go on to collect $11,975,796 over the life of the LRET.
But, apart from that, everything else Chris Back had to say was right on the money. As Chris once put it: “The current situation in South Australia provides a wake-up call. There should be no further subsidies paid for an intermittent and unreliable power source that can be seen as a proven failure. There are solutions to our climate challenges but wind power is not one of them.”