Businesses Belted by Australia’s Renewable Energy Target: Power Prices Spiral Out of Control

Australia’s Renewable Energy policy is an economic suicide pact, from which there is no escape.

The result of that winning combination of greed, ignorance and downright stupidity, the Renewable Energy Target has destroyed businesses and is set to destroy whole industries.

Manufacturers, miners and mineral processors are screaming blue murder as they watch once reliable and affordable power supplies destroyed by ideologically driven lunatics wedded to the delusion that sunshine and breezes actually provide meaningful power.

Australia’s telecommunications businesses are not immune from the insanity.

Telstra, in its former incarnations as Telecom and before that the Post Master General was a government owned monopoly, that set up and ran Australia’s telephone system. More recently, Telstra has moved into the provision of internet services and digital media streaming to households.

Having been privatised in several stages, Telstra – a commercialised government business enterprise – enjoys market dominance as a result of its naturally cozy relationship with government. With that advantage, Telstra is not a business that would be considered as any kind of financial risk for investors or creditors.

However, Australia’s rocketing power prices have just delivered a $100 million increase in its annual power costs and that whopping hike in input costs has it and others calling for urgent action to prevent a wave of de-industrialisation and job losses.

The Australian’s Sarah Martin is a political correspondent who – in the article below – effortlessly demonstrates her ignorance of Australia’s energy policy and reinforces it by relying on commentary from characters who are obviously part of the problem, rather than part of the solution.

Telstra power costs up $100m as energy crisis bites industry
The Australian
Sarah Martin
27 May 2017

Telstra has warned the federal government its power costs have surged by more than $100 million in the past year, with a senior executive calling on Industry Minister Arthur Sinodinos for urgent action to address the crisis.

Speaking at a meeting between the minister and Australian Industry Group’s national council this week, Telstra’s group executive of corporate affairs, Tony Warren, is understood to have outlined concerns about the harm inflicted on the telco’s operations by spiralling power costs.

Telstra’s plea for action underlines a warning from the peak industry group that without price relief, Australia faces a “national economic security emergency” that risks triggering a wave of de-industrialisation and job losses.

The warning came as the Federal Court handed down a contentious ruling on network charges that is expected to exacerbate the energy crisis, adding $3 billion to electricity prices over three years, on top of spiralling wholesale prices.

Telstra would not confirm the $100m figure, but said it was attempting to respond to rising energy prices. “We are one of Australia’s largest users of electricity,” a spokesman said.

“Like all companies, our power costs have gone up in recent times and we have a range of initiatives in place to reduce our carbon footprint and to use technology to become more efficient in managing our energy use.”

Ai Group chief executive Innes Willox said members from a range of key economic sectors in southeast Australia reported electricity bills as much as quadrupling from one contract to the next. “A tripling of prices is commonplace and a mere doubling of bills is regarded as a perverse triumph,” he said.

“The closure of Hazelwood (power station) and its ill-thought-through consequences, the dramatic rise in domestic gas prices and a rise in network costs are contributing to massive energy cost pressures on industry.

“Given the mess that has been created, there are no clear short term fixes but at the very least industry urgently needs backing from government around energy efficiency measures.”

Mr Willox said Ai Group understood the situation was a government priority and industry was “doing its best” to adapt.

“But if the situation continues for even a year or two, we genuinely face the risk of a significant Australian de-industrialisation.

“With the steep and unsustainable gas and electricity price increases taking hold, Australia faces nothing less than a national economic security emergency.”

Energy Minister Josh Frydenberg said there was “no single reason for the higher energy prices” and “no silver bullet” for the problem. “The government is responding on a number of fronts and in particular is taking action to ensure more gas is available for the domestic market as higher gas prices have been a key factor in rising bills,” he told The Weekend Australian.

He claimed state governments should take more responsibility by reining in network costs, abolishing “unrealistic” state-based renewable energy targets and “lifting their mindless moratoria” on gas extraction.

Last month, in an attempt to address the spike in gas prices, the government announced it would impose export controls on energy companies when there were domestic shortfalls.

However, Andrew Richards, chief executive of the Energy Users Association of Australia, which represents large energy users, said government action so far had not addressed the problem, and further intervention might be needed. He called on the government to release a national plan for energy and climate change, which is under review by Chief Scientist Alan Finkel.
The Australian

Innes Willox helped put me here … and Josh keeps me here…

***

The Ai Group’s Innes Willox has spent years promoting subsidised wind power, with the kind of zealotry one naturally expects from crony capitalists, in on the deal.

A former journalist and PR master, Willox has plenty of skin in the game – as a director of union super funds, including Australian Super which is headed up by former Labor/Union heavyweights.

Union super funds have poured hundreds of millions of dollars into wind power outfits, such as Pacific Hydro and Infigen. In recent times, Willox has dominated the commentary and opinion pages of Australia’s mainstream press, pushing the ‘wonders’ of renewables; and deflecting and preventing any criticism of Australia’s Federal Renewable Energy Target.

As Upton Sinclair put it: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

Although, in fairness to Willox, we expect he fully understands the benefits of being on the right side of the largest single government mandated wealth transfer in the history of the Australian Commonwealth.

Then there is the man who would be King: Energy Minister, Josh Frydenberg.

Frydenberg never ceases to disappoint, leaving STT wondering which malevolent foreign agency he is working for? Because everything he does and says is thoroughly hostile to the interests of Australian businesses and households.

No man with the power and authority gifted to Frydenberg would claim that there is no solution to Australia’s energy crisis, unless he was suffering from some congenital mental defect, rendering him incapable of acting; or there existed some kind of financial incentive, causing him not to act, due to the risk of being unable to obtain whatever it is that he’s been promised.

For Sarah Martin’s benefit, we will deal with the elephant in the room.

Australia’s Large-Scale RET is a subsidy scheme designed to transfer more than $3 billion each year from Australian power consumers to wind and solar power generators; and to do so every year until 2031: It’s Time for Frydenberg & Turnbull to Come Clean on the Cost of Subsidised Wind Power

The market perversity caused by the LRET is what led to the closure of Hazelwood, a power plant representing 25% of Victoria’s power generation capacity, and which is what also drove the closure of South Australia’s only coal-fired power plant at Port Augusta, last May – resulting in a further power price surge in SA – and plenty of load-shedding and blackouts whenever wind power output collapses.

When the wind is blowing, wind power outfits literally pay the grid manager to take their skittish wares, relying upon the guaranteed prices they receive under Power Purchase Agreements with retailers (most of which are in the order of $110 per MWh – 3 times the cost of coal-fired power), underpinned by the value of the renewable energy certificate (aka RECs or LGCs), designed to trade at $93 each: Turnbull’s Reliable Power Play: Australian PM Pushes Coal-Fired Future

The alternative for retailers is coughing up the $65 per MWh shortfall charge for each and every MWh of mandated renewable energy that the retailer fails to purchase in order to satisfy the annual 33,000 GWh set by the LRET.

When subsidised wind power is being dumped, below cost, into the grid, conventional generators (who operate without subsidies) are forced out of the market, unable to literally give their power away (as wind power outfits can and do). Conventional generators get paid nothing, unless they are delivering power to the grid and yet they will continue to burn coal or gas waiting for their chance to deliver power – incurring fuel and other operating costs, but with no revenue to cover those costs, the path to insolvency is assured. Hence the demise of Victoria’s Hazelwood and South Australia’s Port Augusta plant.

For Frydenberg to argue that there is “no single reason for the higher energy prices” and “no silver bullet” for the problem beggars belief.

The cost of satisfying the LRET, in terms of the purchase of renewable energy certificates or the shortfall penalty alone, tallies up to a cool $42 billion from now until 2031, a cost entirely born by all Australian power consumers, including Telstra.

The howling about increasing network costs also overlooks the fact that when seas of solar panels are scattered across the outback and wind turbines are speared all over the back of beyond, the electricity they occasionally produce has to be directed from the wrong end of the network (ie where the power consumers are not); or from places where the network is practically non-existent.

Moreover, as South Australians have learnt to their staggering cost, conventional grid systems are not designed to tolerate massive surges and collapses in electrical output. Meeting the strict tolerances as to voltage and frequency required by functioning grids is a doddle for coal and gas fired plant, nuclear plant and hydro. However, where, as in SA, output depends entirely upon the time of day, whether it’s cloudy or windy enough (and not too windy) maintaining grid stability is a daily battle.

The cost of building grid infrastructure to bring occasional power from remote locations is as staggering as it is unnecessary. The cost of over-engineering networks in order to cope with weather driven surges and collapses in wind power output merely adds to that unnecessary cost.

Attacking grid managers for doing what being forced to rely upon sunshine and breezes inevitably demands is just a little rich, especially coming from those who’ve engineered and/or profited from Australia’s renewable energy debacle.

Andrew Richards is right when he says government action so far has not addressed the problem. However, when he says that “further intervention might be needed”, if he means further subsidies thrown at pie-in-the-sky fantasies like grid-scale battery storage, then every Australian power consumer, including Telstra can expect even more punishment. In truth, the only “intervention” needed is to scrap the Renewable Energy Target, right now.

Australian power consumers might be complaining about their power bills at present, but for Telstra – and every other Australian business and household – the worst is yet to come.

With rent-seekers like Innes Willox – and the Union Super Funds he and his ilk own and control – pushing to maintain the status quo; and with gormless or disingenuous political facilitators, like Frydenberg, in charge of the policy that feeds Willox & Co, Australia’s energy crisis is guaranteed to escalate to the point of an economic and social disaster. It’s well on the way, and yet none of those with the opportunity to address it have any inclination of doing so: Nero fiddling with his home town incinerating around him springs to mind.

It’s a little like watching the same train wreck, over and over again. Australia’s power pricing and supply calamity is something that STT has been predicting for years.

Now that the disaster has been realised, major consumers are beside themselves – among business owners, large and small, there is a pervasive sense of helplessness, blended with barely concealed rage at the morally bankrupt idiots that pretend to govern the Country.

That a full-scale revolution has yet to occur is probably down the observation made by the late, great STT Champion, Alby Schultz, that:

“The only reason people are not rioting in the streets about the unjustified increase in their power bills is that they simply have no idea what is going on.”

That prescient little vignette was delivered by Alby in the Federal Parliament in February 2013, when he was the Liberal member for Hume.

With power prices doubling and even tripling on an annual basis, it won’t be long before Australians take to the streets. When they find out that they have been lied to for years by a mercenary and cynical, political and media clique they won’t just be angry, they will be furious. And rightly so.

About stopthesethings

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

Comments

  1. This line from above underscores the entire ugly reality – “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
    Also add that – “the same man will not acknowledge the truth if his job exists because of a lie”, and the extent of the hidden danger should become clearly apparent.
    The seeds of this huge looming disaster were sown when the admirable and highly competent State Electricity Commission of Victoria was streamlined then privatised by the Liberal Party Government of one Jeff Kennet.

  2. So, now Victoria announces a plan for a multi billion dollar wind farm off shore from Gippsland. They seem incapable of learning.

    • hard cell says:

      Former NSW Labor minister is now behind bars with a 10 year sentence for corruption. Perhaps that is a lesson Victorian Labor has chosen to ignore?? Oh, I forgot, that was to do with coal, so corruption and ‘renewables’ is OK then??

  3. alfredmelbourne says:

    Right now, 3PM on Saturday, Wind plus Large Solar is producing under 1% of electric demand. It is incredible how what a stupid situation our corrupt politicos have got us into.

    http://qbusters.com.au/ida/e23.htm

  4. Son of a Goat says:

    Hip hip hooray, the calvery are arriving!

    Today, that toothless tiger or watchdog (more like noisy poodle) in the Australian Competition and Consumer Commission ACCC have announced they will be looking into escalating power prices.

    Hey boys, I hate to disappoint you but I think the horse may have well and truly bolted.

    I look forward to the final report, whatever you do,don’t blame renewables and make sure you use Tom Kotsantonis’s well worn line “the market is broken”.
    You see, as someone described in today’s Advertiser, SA is like a mushroom farm, always in the dark and constantly being fed bullshit.

  5. Graeme No. 3 says:

    The Government is counting on an expansion in generation from natural gas, which used to be about twice the cost of coal fired and (roughly) half that of wind (using the forbidden equation
    Real cost of wind = selling price + subsidies).
    Were frakking allowed then this might lead to a drop in electrcity bills, but ban that and with the current high price of gas in Australia gas fired generation will be more expensive. (I’m talking about CCGT not OCGT which are far more expensive to run).

    The problem for the Government will come after July when the increased electricity bills hit households; watch for the slump in the polls.

    • Jackie Rovensky says:

      Can this Federal Government actually take anymore hits from surveys.
      Since Turnbull took over the mess has intensified, he is ineffectual and incapable of taking the step to cut the LRET and don’t forget the place the RECs play in all of this.
      Action should have been taken before now, plans for new partly or fully Nationally owned energy plants in each state should have been in the final stages of preparation – but what has he done – oh yes said it MAY be possible extend the Snowy Mountains hydro system, but that relies on there being sufficient water, what if we get a drought and isn’t that on the cards if the Climate changes suggested occur. We have seen how a drought can affect Hydro – just look at Tasmania this year.
      The other is to cry about people not wanting Fracking for gas – well lets check – oh yes if there is a failure then a whole district and even a whole water system stretching across thousands of hectares could be affected – even from a very small incident that is stopped quickly. The land is fouled, peoples health is harmed, and the environment and eco systems are destroyed. But that’s OK we and the environment don’t need water do we!
      Yes that clear thinking PM has certainly come up with some wonderful suggestions on how to kill Australia.
      High hopes were expected from the Liberals, but they have proven no better than Labor – well since they did the dirty on Abbott – they seem to be a completely different party now and its hard to distinguish them from Labor. Their ‘Climate Change’ policy has little to distinguish it from Labors with Turnbull glibly suggesting there will be no this or that without the locals being supportive – for that to happen it needs the States to go along with it and they won’t – well not here in SA anyway. He even wants them to reduce or remove their Renewable Energy Targets – as if that’s going to happen. States one-up man-ship is still alive in Australia.
      The mix of State and Federal control over energy policy and the international agreement is a complete chaotic mess. That States having their own targets looks as if each State signed that disastrous International Agreement, as well as the Federal Government.
      The whole thing has been mishandled in an alarming manner. But then signing up to something without fully assessing possible good and bad results or how best to proceed was a failing anyway.

  6. For me, it’s come to down to a quiet acceptance watching the inevitable train wreck while keeping well clear of the danger zone whenever and wherever that might be. The Labor Party was happy to be the locomotive driver. The Liberal Party is in the driver’s seat now and it’s full steam ahead. The renewable energy industry, the ABC and many other key players are shoveling fuel into the furnace as fast as they can while most of the Australian population are in the carriages cheering them on, enjoying the ride and borrowing on their increasing property values for even more fuel to make the train go faster. Warning flags – big, giant warning flags – are being ignored. It would take a brave train driver to pull the emergency brake now. Unfortunately the point at which the brake could have been activated for a gentle deceleration and change of direction is well past now. This train is going over the cliff. Watch for the train drivers to leap out.

    • Your train wreck analogy is on the ball Tony Z, perhaps just a couple of suggested additions.

      The current train driver Milkcum N. Turnlift has been told by his employers Manen Thastreit that his performance is considered unsatisfactory and that his services will not be required after this journey.

      Having long considered himself the world’s greatest train driver, going over the cliff in a final blaze of glory is starting to look attractive to Turnlift.

      The ABC of course has long believed the use of coal for any purpose including trains to be evil, so it will be happy to see Turnlift get his wish. It also wants to see Turnlift’s main competitor Bill Shortwit, a long time supporter of train wrecks, take over as Turnlift’s replacement.

      With this in mind the ABC has cunningly arranged for the carriage windows to be papered over to show peaceful, scenes with happy people frolicking in lush fields of red poppies with numerous windmills in the background, this in the hope that the passengers won’t realise they are about to go over the cliff until it’s too late.

      • Uh oh! Trump has just pulled back the curtains on the carriages. Whether the passengers want to face their impending doom or ignore what’s going outside is up to them.

  7. Reblogged this on ajmarciniak.

  8. Crispin Trist says:

    I was bemused to see renewable toilet paper in my local supermarket the other day. How does that work then?

    We are constantly being bombarded through advertising and other forms of media that the word ‘Green’ is good and therefore you should buy our products and support the concept.

    If Green is so good, how come the Greens show consistently poor polling results? Surely if 80-90% of the public support wind power, then it stands to reason that 80-90% of Australia would have voted for the Greens in the last election?

    • Jackie Rovensky says:

      Are the Greens green or Gangrene – ‘where an infection develops deep inside the body and the bacteria responsible begin releasing gas’.
      Maybe we could capture the gas they are releasing and use it to produce electrical energy.

  9. Reblogged this on Jaffer's blog.

  10. Terry Conn says:

    I would be remiss not to acknowledge this excellent summary by STT of the sorry story surrounding Sarah Martin’s article, which was extremely difficult to find on the digital media where a ‘comment’ could be made. It is quite simply a fact that Australian citizens do not have a clue as to why power prices are escalating and the national grid is collapsing – the chance they will ever come to understand the ‘truth’ is remote – regardless of this and despite the best efforts of the likes of Frydenberg and Willox to bluff their way through the crisis the fact remains that Australia’s electricity grid will collapse unless the RET is abolished and abolished now – should the current political, bureaucratic and intellectual class ultimately find themselves as decorations hanging from the trees will not surprise anyone in this country with a modicum of interest on the topic of ‘cheap, reliable generation and distribution of electricity’ that just happens to be ‘national electricity law’. The dominoes are already falling like flies but still the ‘fantasy’ of wind turbines powering the nation remains supreme.

  11. Industry super schemes have been surveying members on “ethical” investments and social engineering aspects of investments. Seems like they are starting to look at saving the planet as a priority rather than member returns. Ah well, if it saves one polar bear it will be worth it.

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