While choice remains an option, the adage that ‘when you’re in a hole stop digging’ obviously applies when you find yourself in the midst of a disaster of your very own doing.
Australia’s unfolding energy calamity has turned what was once an energy superpower, into an international laughing stock.
Blessed with abundant coal, gas and uranium reserves – unequalled in the world on a per capita basis – Australia is now paying the highest prices for electricity amongst its trading competitors; in notionally wind powered South Australia, they’re lucky to get it at any price and when they do its almost double the price paid by consumers in Victoria.
Gas prices have literally gone through the roof in the space of a couple of years, leaving PM Malcolm Turnbull looking like the Generalissimo Stalin rounding up Kulaks for ‘hoarding’ grain, as he tries to prevent gas being exported and, instead, kept at home for domestic use.
If we were just a tad cynical, we might suggest that the reign of terror unleashed by Turnbull on gas exporters (one of the few remaining profitable enterprises in the country) is all about propping up wind and solar power, which depend on fast-start-up Open Cycle Gas Turbines to keep the grid from collapsing, when the sun goes down or as wind power output collapses on a daily basis.
As we have pointed out before, Turnbull, through his son Alex has more than just a passing interest in the longevity of the greatest subsidy rort of all time. You see, in late 2015, Alex Turnbull, through his investment fund, Keshik Capital threw buckets of cash at the, then near-bankrupt, wind power outfit, Infigen.
That investment was uncannily timed: Infigen shares went from $0.20 to $1.20 in the blink of an eye, during which time Alex’s dad determined to sign up to the Paris climate change accord and to announce that the Federal government would shovel a bucket load of taxpayer money at renewable energy slush funds (see our post here), which have been lately used by Infigen to resurrect a long-dead wind farm project at Bodangora (see our post here).
The model dreamt up by the wind industry and its parasites is one involving replacing cheap and reliable coal-fired plant, designed to run at their most efficient 24 x 365, with OCGTs, which can fire up in a matter of minutes, albeit at a running cost at least four or five times that of efficient coal-fired plant. OCGTs – which are little more that jet engines, run on gas or fuel oil (diesel) or kerosene.
The initial capital outlay is low, but their operating costs are exorbitant – depending on the fuel input costs (the gas dispatch price varies with demand, for example) operators need to recoup upwards of $300-400 per MWh before they will even contemplate firing them into action. For a wrap up on “fast-start-peakers” see this paper: Peaker-Case-Histories
As to the insane cost of running them, see this article: OPEN GAS CYCLE TURBINES: Between a rock and a hard place
For peaking power operators, the inevitable and total collapses in wind power output is where the greatest rort of all time begins.
Running peaking power plants is highly lucrative: their owners are able to extort prices running from $2,000 per MWh, all the way to the regulated market cap of $14,000 per MWh – for something a coal-fired plant can deliver, profitably for less than $50, all day, every day, rain hail or shine (see our post here).
So, not having a readily available supply of gas on tap to run their OCGTs – or the thousands more that they plan to build in conjunction with another few thousand of these things – stands as a tiny obstacle to their ability to extract obscene prices for power from a grid manager desperate to keep the lights on, whenever the wind stops blowing or the sun stops shining.
The same model worked a treat for Enron when it gamed the Californian power market by deliberately shutting off the power plants it controlled, waiting for the grid to reach the brink of collapse and then ‘offering’ power at prices 1,000 times the average (see our post here).
Now, AGL are publicly crowing about their opportunity to do precisely the same thing, with a run of television and print media advertising, using an obsequious, too-neatly-bearded git, touring a wind farm in his tiny battery powered buzz-box.
One line in the TV ad which smacked of pure marketing ‘genius’, was when the smarmy young hipster – having announced that AGL is “getting out of coal” and is all about delivering “sustainable” wind and solar power to your door – asserts that it all comes “with no compromises to you”.
What utter bollocks!
Ask a South Australian – where AGL led its insane wind rush, starting back in 2009 – about ‘compromises’. Or, perhaps, routine load-shedding, statewide blackouts and power prices more than double those prevailing in neighbouring states (with worse to come) doesn’t amount to any kind of ‘compromise’?
Clive and Trina Gare know all about ‘compromise’ and AGL’s business ethics.
The Gares are South Australian farmers – who receive over $200,000 a year from AGL to host turbines on their property near Hallett. Clive and Trina gave evidence in June 2015 to the Federal Senate Inquiry into wind power, explaining that the noise from the turbines on their property is “unbearable” and continues to prevent them sleeping in their own home, even after the installation of sound-proofing and double glazed windows, paid for by AGL.
They called signing up to host turbines for AGL “the worst decision” of their lives and detailed how AGL’s tactics involved bullying, lies and deceit in order to get them into their contract in the first place – starting with lies about the impact of turbine noise, Clive pointing out:
One of their little tricks is to take people right up to the towers and say, ‘This is how noisy they are.’ But that is not so.
The further you get away from the tower the noisier they are. That is a funny thing, to a point I guess. When you are right underneath them and they are 80 metres up in the air there is very little noise. There is just a bit of wind noise. As you go away one or two kilometres it actually gets worse.
And that type of skulduggery was being pulled amidst the usual inordinate pressure applied to unwitting farmers by developers, described by Trina as a process that:
began with high-pressure consultations, negotiations for weeks on end, numerous phone calls and face-to-face meetings with the developers. We seemed to be under constant pressure to agree to their wishes and, if we wanted any changes, it took a lot of negotiation.
All tricks, all traps, and all to AGL’s advantage. For more on AGL’s ‘compromising’ style with its contracted farmers, see our post here.
And for AGL’s ‘compromising’ style with those who aren’t being paid one red cent to suffer the kind of misery experienced by the Gares, look no further than the way it treats the community at Macarthur in Victoria (incidentally the biggest wind farm in Australia and the one bragged about in its TV ad). Since its turbines swung into gear in 2012, it has destroyed the ability of dozens of families to live in, sleep and otherwise enjoy their very own homes; doctored acoustic reports to claim compliance with the noise conditions of its planning permit and constantly lied about the noise impacts on its long-suffering neighbours (see our post here).
Here’s Alan Moran tackling AGL’s latest effort to convince people that, not only is black white, but that what has occurred in South Australia is all a figment of its beleaguered power consumers’ torrid imaginations.
The way out of energy crisis is reliable coal plants, not renewables
The Australian
Alan Moran
27 April 2017
AGL claims it has “a plan to get out of coal as smoothly as possible — embracing cleaner, more sustainable sources of energy like solar, wind and hydro”. This, it says, will be an “orderly” process beginning five years from now and finishing in 2050. Now that’s planning.
While anxious to promote its green credentials, 90 per cent of AGL’s actual generation is fossil fuel based, mainly coal from Bayswater and Liddell in NSW, and Loy Yang A in Victoria.
With more than a quarter of the nation’s major coal and gas plant, AGL has benefited enormously from the closure of South Australia’s Northern and Victoria’s Hazelwood power stations. Although those two power station closures represented only about 4 per cent of the national market capacity, they constituted a far greater share of baseload supply.
Together with the scarcity of gas as a result of state government exploration bans, the tightening of supply from their withdrawal of capacity has resulted in skyrocketing wholesale electricity prices.
Compared with average spot prices prevailing in 2015, the forward price has trebled in NSW, Victoria and South Australia, and doubled in Queensland.
Although all suppliers and retailers buy most of their electricity on contracts that cover them a year out, the elevated forward prices will be those that retailers and therefore customers have to pay.
At the current year’s spot price, as forecast by the Australian Energy Regulator, AGL will see an increase in revenue at no extra cost of $3 billion. On the company’s estimated profits for the year ending in June of less than $1bn, this is a colossal bonus to the shareholders. Other major producers — Origin, China Light and Power, and the Queensland government — also will see $1bn-plus benefits. In Origin’s case this is on top of an underlying profit of less than $400 million. Perhaps the biggest winner is ERM/Sunset, which bought the Vales Point Power Station for a knockdown $1m in November 2015 and has since seen the NSW spot price rise from $35 to $110 a megawatt hour.
Overall, generators are estimated to increase their revenues, at no extra cost of production, from a little over $7bn in 2015 to more than $22bn in the present 12-month period. Of course, the flip side of this bounty to the electricity generators is distress for customers. Households are the customers at the political frontline and prices are shifting upwards. But household distress is less significant than the impact on business competitiveness.
For much industrial plant, a trebling of the wholesale ex-generator price, once line charges are included, becomes a doubling of the price at the plant. Many firms will go under in the face of such an impost. Others will see the cost of expansion in Australia leapfrog compared with costs of alternative overseas investments and make the appropriate investment decisions.
This translates into a deindustrialisation process with profound consequences for all our living standards. Such unfortunate outcomes from the upsurge in prices are further aggravated by the deteriorating reliability of the system. A harbinger of this was the South Australian blackout last year followed by a near miss this year. Deteriorating reliability stems from subsidised wind replacing more dependable fossil supplies and because of the tighter supply resulting from the forced closure of the coal stations, reducing the amount of spare capacity to cope with breakdowns and weather events.
The only reason Australia is confronting this detrimental economic situation is because of the energy policies being followed, primarily the subsidies to wind. The situation remains retrievable partly by salvaging mothballed plant in Victoria and NSW (South Australia having already destroyed its closed coal generators). We may also see the building of new plant. AGL may have turned its back on fossil fuels but there are dozens of other enterprises around the world and locally that would seek to exploit the profit potential from supplying a market that is overpriced.
And such potential is readily available. The last major coal generation power station built in Australia was Kogan Creek owned by the Queensland government and commissioned in 2007. At that time the power station could operate profitably by selling power at under $45/MWh. The cost, taking into account the preference given renewables, is now said to require $70/MWh, though this seems excessive as inflation since 2007 has been only 24 per cent. What is certain is that the price of coal-based electricity is a fraction of that available from renewable sources — which costs $110/MWh — and well below that available from gas plant.
To maintain living standards, Australia needs to prevent premature closures of low-cost electricity generators and to build new ones that take advantage of our abundant coal supplies and the expertise of the workforce. The only thing stopping this is government regulations forcing subsidies to renewable energy.
The Australian
… and here are two obstacles to solving Australia’s energy calamity.
About stopthesethings
STOP THESE THINGS 
Hi,
I started a PETITION “SA PREMIER JAY WEATHERILL : Demand the RESIGNATION of the Energy Minister for HIGH POWER PRICES CAUSING SA’s JOBS CRISIS and 15,000 household POWER DISCONNECTIONS, frequent POWER BLACKOUTS and the JULY 2016 POWER CRISIS” and wanted to see if you could help by adding your name.
Our goal is to reach 200 signatures and we need more support.
You can read more and sign the petition here:
https://www.change.org/p/sa-premier-jay-weatherill-demand-the-resignation-of-the-energy-minister-for-high-power-prices-causing-sa-s-jobs-crisis-and-also-15-000-household-power-disconnections-frequent-power-blackouts-and-the-july-2016-power-crisis?recruiter=135406845&utm_source=share_petition&utm_medium=email&utm_campaign=share_email_responsive
Please share this petition with anyone you think may be interested in signing it.
Thankyou for your time.
STT It seems to me that you are very hard on the OCGT operators. They must cover their costs and make a profit as they are not charities but businesses, if they are to continue operating. They don’t manage to run very often and must hold off until the spot price is very high in order to make ends meet or they will be shutting down their operations which will not help at all. The high price of natural gas doesn’t help.
Making them out to be the opportunistically taking advantage of the system is wrong. The Federal Government with its RET and State governments with their 50% renewables aspirations has created this situation and are at fault. Blame should be allotted in the right place or you cannot address it correctly. Without the RET, competition would iron out some of the faults now evident,
Forcing base load operators to shut down has made the situation much worse.
You seem to consistently attack the OCGT operators. Do you have more evidence of their profiteering.
John
The OCGT operators are the same companies that built wind farms in SA – AGL, China Light & Power (aka Tru Energy) – and elsewhere, eg Origin. They knew/know exactly what they are doing. Yes, the LRET is to blame, which we have been pointing out since 2012. But profiteering is profiteering. As for evidence of price gouging, this post collects an AEMO report on ‘pricing events’ in SA around wind power output collapses:
https://stopthesethings.com/2017/04/19/south-australias-ridiculous-wind-power-push-driving-business-to-bankruptcy-power-prices-triple-again/
There is nothing wrong with firms making profits out of endeavour and enterprise, but that is not what is happening here. The market is being gamed in the same way Enron gamed the Californian power market. Are you happy with a firm that can collect $14,000 to deliver what a coal-fired plant can deliver for less than $50. You would be if you owned it, but not if your firm was, like BHP in SA, being forced to pay it:
https://stopthesethings.com/2016/07/19/south-australias-energy-fiasco-wind-power-dropout-leaves-bhp-with-whopping-2-5-million-power-bill/
Real business is being destroyed by this and governments, state and federal are oblivious to it.
The whole system has been hijacked and we will continue to do what we can to recover it before we lose productive businesses and industries for ever.
STT
No I am not “happy to see a firm that can collect $14,000 to deliver what a coal-fired plant can deliver for less than $50. You would be if you owned it, but not if your firm was, like BHP in SA, being forced to pay it”. There isn’t a coal-fired plant there to deliver for less than $50 MWh though is there? We have to live in the present. This situation has been engineered by naive politicians who have no understanding of the issues. I am certain that they were alerted to this disaster prior to their undertaking this ever so foolish course but would not listen. They knew better, didn’t they?
When the coal fired plants were available that situation would not exist.
Any investment in industrial equipment must be amortized over a reasonable period. The more time that the equipment operates, the less each unit of production costs. For instance if you buy a new car for $30,000 and drive one mile and put it in storage, that one mile costs you $30,000 + operating costs (fuel insurance etc.). If you drive it 100,000 miles, it costs you ($30,000-residual value)/100,000 = less than 30 cents/mile + O&M/mile.
They are not able to run the plant in an efficient mode the way things are and must make hay when the sun shines. I can understand that.
OCGT is peaking plant and is rarely allowed to run continuously though even OCGT requires time to fire up and start producing. OCGT operators are unlikely to leave their plant operating when the electricity not used. In the UK the operators of such plant are paid a subsidy to keep the plant running ready to take over the load if need arises, could be straight out of “Yes Minister”.
CCGT on the other hand is useful for base-load and coping with demand variation though not peaking, I assume, as a result of the steam portion requiring time to vary output.
Hydro can operate on all three levels as its O/P can be varied quickly.
I have no vested interest of any kind but do believe that allotting of blame should done accurately if we are to progress. Politicians find the OCGT operators a useful target to blame the disasters that they caused on, don’t they?
John
John,
You missed our point. The same companies who built wind farms, knowing how the subsidised power they erratically deliver would destroy coal-fired plant and CCGT plant too, built OCGT plant (550MW at Mortlake in Victoria, in one plant owned by Origin). They are the same vertically integrated companies who collect the full costs of subsidised wind/solar and what they can extract from their peaking plant from their retail customers.
SA no longer has a coal-fired plant, but draws coal-fired power every day from Victoria via its 2 interconnectors, and that is what keeps its grid from collapsing. When wind power output collapses, the interconnector(s) are prone to trip and they end up load-shedding or in large-scale blackouts.
You don’t need to explain the need for a return on capital to us (we have energy market economists on our team).
Neither coal-fired plant, nor CCGTs can run as designed and become unprofitable, leaving SA relying on OCGTs and compression diesel generators (they are adding 250MW now).
But for the distortions of the LRET none of this would be happening.
You seem to think that generating power in the most inefficient way is somehow excusable. We don’t. It is like digging the Panama canal with spoons, instead of steam shovels – possible, but ludicrously expensive. The people who suffer are those who can least afford it. But, if you want to elevate the companies helping to destroy a once reliable and affordable (for all) power supply to the status of saints, that’s a matter for you.
Neighbours at the Macarthur wind farm read with amazement AGL’s advertisements last week, no doubt thousands upon thousands of dollars worth…. but given the figures above quote “AGL will see an increase in revenue at no extra cost, of $3 billion” the massive cost of advertisement last week would just be a drop in the ocean.
But, we neighbours must object to the assertion that it all comes ” WITH NO COMPROMISES TO YOU”.
This is just another example of the spin and deceitful tactics employed by this huge Australian company to “con” the people about AGL’s warm and fuzzy plans for the future.
Unfortunately what AGL did NOT advertise was that their Macarthur wind farm in Victoria, one hundred and forty 3 megawatt turbines built far too close to homes, are absolutely destroying people’s lives, and forcing families to flee from their homes for respite, whether it be leaving their properties for good or regularly each week to get a decent night’s sleep. They can’t sleep in their own homes and they can’t function properly due to nausea, dizziness, tinnitus, extreme ear pain, constant headaches, heart palpitations, to name but a few symptoms.
So, AGL this claim is simply WRONG.
Wrong, wrong, wrong, and AGL cannot deny this, as this company knows full well what the residents around their Macarthur wind farm (the one this company bragged about in its TV ads) have been forced to endure for nearly five years now, day in day out and night in night out.
AGL, having received hundreds, possibly into the thousands now, of complaints knows full well that so many families suffer severely from sleep deprivation. AGL knows full well that so many families are being hammered with noise pollution from their turbines, be it infrasound, low frequency noise, background or a very nasty and dangerous cocktail of all three, in addition to ground borne vibration which makes one feel as their body is being “cooked” or electrocuted all night and all day.
AGL knows full well that many people have become sensitized, in that they also suffer extreme symptoms when they’re away from home, in town, in commercial buildings, shops, supermarkets, petrol stations due to acoustic emissions from air conditioners, freezers, lights etc.
Of course Moyne Shire knows this only too well also, but has done NOTHING to help their ratepayers.
But all of this noise pollution is denied by AGL, in particular with the fraudulent noise testing they’ve carried out for first of all their first Post Commissioning Compliance noise report several years ago, and just recently in their second Compliance noise testing report, which should have been carried out 12 months after the first, but somehow was only completed in 2016 and which the Moyne Shire only just released to the public fully, two days prior to the council meeting where a vote was to be taken on final Compliance, upon recommendation of a Shire Officer.
Once again noise testing, was taken NOT in accordance with NZ 6808, or the Victorian guidelines, for AGL’s second round Compliance noise testing. NZ 6808 stipulates noise data must be collected between 5 to 10 metres from a house. In 2013 noise data was collected at one home 19 metres, and another 35 metres from a home, just two examples of breach of the Victorian guidelines.
In 2015 Compliance noise testing was carried out 650 metres from one of the designated homes, with the acoustician claiming the noise in the middle of a neighbour’s paddock, with no foliage in sight, is IDENTICAL to that around the home surrounded by plantations of trees. Just another example of the fraudulent noise testing AGL carries out for their faux Compliance reports.
The Moyne Shire employed another acoustic company to supposedly “peer review” AGL’s Compliance noise data collection. However it appears this acoustic company, employed by Moyne Shire to peer review, ALSO assisted with pre-testing determining alternative sites, assisted setting up the procedure for measuring SAC’s (Special Audible Characteristics), was present for the far from adequate measuring of SAC’s, and then carried out the peer review – with yes, you guessed it – the conclusion that the Macarthur wind farm is COMPLIANT. Nothing like the same company peer-reviewing some of their own work !!!
What utter bullocks, as STT would say !!!!!
I quote a comment from an STT posting of 14th January 2017 where the reader claims “The complicity of Moyne Shire Council in the perpetual torture inflicted on residents by AGL’s wind turbines is sickening. Moyne Shire represents corporate power, instead of defending its own raterpayers.”
Hear, hear, we neighbours say at Macarthur.
The truth is beginning to emerge and AGL will just not be able to “put a lid on it” once it begins to explode.
Perhaps Moyne Shire council needs to look at itself and check if it’s really doing the right thing – looking after the people of the Shire. Or has it allowed itself to be indoctrinated and caved in to pressure from AGL ?
Can this really be Australia where so many hard working, rural farmers are forced to flee their homes and farms to get away from the constant hammering of noise emissions from faux Compliant wind farms ?
Or are we just dreaming this ? What would our forefathers have thought, and what will our grandchildren think when this whole hoax falls over and they are left to pay for it all ?
And if you visit Portland you see more and more businesses closing, you see a city that is in decline a city struggling to create a future for its residents.
Yet Cape Bridgewater Wind project with turbines now extending to the outskirts of Portland has not brought the prosperity and cheer the industry claimed it would and does.
Keppel Prince is always crying poor, even with the massive MacArthur wind project nearby and Yambuk just down the road.
Will companies invest in Keppel Prince so they can manufacture their parts, or will they wait until KP or the Government coughs up the money to refit to manufacture the components and then decide to leave. Remember KP used to have a contract with Vesta but they didn’t stay but walked.
Where is there any community that has prospered and continues to prosper with the coming of Wind turbines.
I keep asking this question and have not been given a single community that has and continues to prosper beyond the initial installation.
Oh, yes some communities receive a pittance toward sports or an annual party to celebrate the coming of the disaster but have those communities grown, are they happier and healthier?
The AGL Macarthur Wind farm has again featured in the local news here in South West Victoria, in the Portland Observer. The two articles below were carefully positioned on page 3 of today’s paper seemingly in a strategy to detract from the negative article about local wind tower manufacturer Keppel Prince. On the left side of the page was the media beat up and some might say ‘fake news’ story that misleadingly states, WIND CREATES NEW BUSINESS.
Quote…
PORTLAND OBSERVER. MAY 1 2017
WIND CREATES NEW BUSINESS
By Bill Meldrum
Portland has exciting possibilities to attract new manufacturing businesses associated with wind power components, according to Victoria’s Renewable Advocate Simon Corbell.
Mr Corbell toured Keppel Prince Engineering’s wind tower section on Thursday.
He met with Keppel Prince general manager Steve Garner, Glenelg Shire mayor Anita Rank, and chief executive officer Greg Burgoyne.
“I am impressed with Keppel Prince Engineering’s operations and there is clearly a great potential to expand and value-add, ” he said.
“There are wind power components which they currently import, and given the proposed VRET (Victorian Renewable Energy Target) legislation will see 40 per cent of the State’s energy come from renewables, mainly wind, by 2025, there is great potential for new businesses to manufacturer those components locally.”
He said that his role was as an independent advocate, and to make recommendations to Energy Minister Lily D’Ambrosio.
Mr Garner said a large number of the components associated with wind towers were imported.
“Flanges are imported from Korea and China. A set of flanges, and there are 10 in a set, is about 10% of the cost of a wind tower. When you have a look at the number of towers proposed for the future, there is opportunity for someone to manufacture them locally,” Mr Garner said.
Cr Rank said Portland was well-positioned to attract new businesses and create jobs. “It is all associated with research and development, but the fact that a number of wind tower components are imported, there is a fantastic opportunity to make those components here and export to overseas markets,” she said.
…end quote.
When you read the article, you soon discover how misleading the subject header is and is actually a non story that effectively distracts the readers attention from the ‘real news’ story on the right, FOUR-DAY TRIAL SET FOR NOSKE CLAIM.
Quote…
PORTLAND OBSERVER . MAY 1 2017.
FOUR-DAY TRIAL SET FOR NOSKE CLAIM
A bid by the liquidators of NOSKE Wind Energy Logistics to seek at least $1.235 million from Keppel Prince Engineering has been listed for a four-day trial in the Supreme Court’s Commercial Court starting May 30. This matter is listed for trial before Associate Justice Efthim.
The action stems from an application lodged in the court in September 2015 by Liquidators Nick Combis and Peter Dinoris from chartered accountancy firm Vincents.
They claim payments in the sum of $1,235,001.00 made to Keppel Prince Engineering on or about September 10, 2012 and October 10, 2012, by Leighton on behalf of Noske represented preferential payments when Noske was not in a position to pay its debts. It relates to work done on the Macarthur Wind Farm project. The liquidation of Noske Wind Energy Logistics started on October 12, 2012.
Keppel Prince general manager Steve Garner said he was waiting on further information to be supplied by the liquidators.
He repeated his comments published in the Portland Observer on December 28 last year that the action was “a ridiculous claim and Keppel Prince Engineering would fight it.”
…end quote.