South Australia’s Wind Power Obsession Leads to Highest Power Prices in the World

By reason of its maniacal obsession with wind power, South Australia has become the butt of international jokes, and the object of plenty of sniggering from those occupying neighbouring states.

These days, it’s almost impossible to read an article about South Australia’s economic misfortunes in which there is no mention of routine load-shedding and mass blackouts – the result of total and totally unpredictable collapses in wind power output (see above and further below, the output for April, May, June, from every wind farm in SA with a notional capacity of 1,698MW, courtesy of Aneroid Energy).

In addition to a grid that could only be the envy of impoverished Equatorial Africans, its attempt to run on sunshine breezes has left Croweaters with the highest power prices in the world. The runner-up is another notionally wind powered contender, Denmark [note to Ed: coincidence?]

Once upon a time, under the careful guiding hand of its long-serving Premier, Tom Playford, South Australians enjoyed the cheapest power prices in the world and it was delivered faithfully, around the clock, rain, hail or shine. On his watch, there was no such thing as widespread load-shedding or mass blackouts (see our post here).

The following articles will have Sir Tom spinning in his grave.

State leads the world – for power prices
The Australian
Michael Owen & Meredith Booth
28 June 2017

South Australians will be slugged with the highest household electricity prices in the world from next month, energy market expert Bruce Mountain says, in another blow to a state with the slowest population growth on mainland Australia.

The director of energy and utilities consultancy firm Carbon and Energy Markets said South Australia “unequivocally will have, both prior to sales taxes and after taxes, the highest household electricity prices in the world”.

Mr Mountain told The Australian that before taxes and levies, household electricity prices in South Australia from July 1 would be about three times higher than they are in Denmark.

“My calculation is that after July 1, the representative household electricity customer in South Australia will be paying slightly higher prices, after all taxes, than the representative household in Denmark, which currently has the world’s highest electricity prices. This comparison is at market exchange rates,” he said.

He was yesterday “lost for words” after a family-owned specialist plastics recycling company in South Australia was forced to close, with the loss of 35 jobs, after its electricity bills soared from $80,000 a month to $180,000 a month during the past 18 months.

Plastic Granulating Services managing director Stephen Scherer said power price hikes, driven by the closure of the state’s last coal-fired power station and a more than 40 per cent green energy mix, were the “final straw” for a company founded by his father 38 years ago.

“I am absolutely devastated,” Mr Scherer said yesterday.

“I literally kept a close daily monitor on electricity prices and at the end of the day we were simply unable to wear the extra expense.”

Mr Mountain said it was “absolutely astonishing” to see such increases on “what is a pretty standard utility … on top of what are already the world’s highest prices”. He said politicians had lost sight of consumers in a “climate war”.

As Business SA warned other businesses were also set to go under, ripples were yesterday being felt throughout South Australian industry, with almost 200 unsecured creditors owed $5.5 million from the recycling company’s collapse.

Supplier Clare Valley Waste has closed a processing centre and sacked six staff in response to PGS’s liquidation and is owed $11,000.

Director Gavin Mills said there was no alternative buyer of his plastic waste collected from six councils and more than 13,500 ratepayers in the state’s mid-north unless he tripled the rate he charged councils for collection.

He believed those costs would be passed on to ratepayers, ­already struggling with increased power and rising living costs in the state.

Drakes Supermarkets owner Roger Drake, who operates 60 stores with 6000 workers as an independent grocery retailer in South Australia and Queensland, yesterday said power costs had increased from about 0.9 per cent of sales to 1.6 per cent “and rising”, with his only option to cap his labour budget.

South Australian Energy Minister Tom Koutsantonis blamed high power prices on the privatisation 15 years ago of the state’s electricity assets.

But opposition environment spokesman David Speirs said it was ironic the government’s “obsession” with renewable power had led to the closure of a local green business.
The Australian

What SA’s suicidal energy policy has done to businesses, like Stephen Scherer’s Plastic Granulating Services is not just a tragedy, it’s criminal.

The 35 employees who will receive nothing more than a pink slip and their last pay packet, have almost no hope of obtaining employment in a state where crippling power prices have all but destroyed industry in general and manufacturing in particular.

The story is so incredible that it’s worth repeating, if for no other reason than to satisfy yourself that your eyes are not playing mean tricks. Here’s Adelaide’s local rag, The Advertiser.

Recycling firm to shut, 35 jobs lost, as SA government ignores plea for help over soaring power bills
The Advertiser
Jade Gailberger
27 June 2017

A FAMILY business in Kilburn has made the “heartbreaking” decision to close its doors after 38 years, leaving 35 employees out of work, because of higher costs and soaring electricity prices.

In the past 18 months, Plastic Granulating Services managing director Stephen Scherer said his electricity bill of about $80,000 a month had spiked to $180,000 a month.

“It was totally unsustainable for a business our size,” he said. “It was heartbreaking.”

The specialised recycling company converted industrial and consumer waste back into raw materials that could be used to build irrigation pipes and flowerpots, and manufacture new automotive batteries.

The business wanted to evolve and take lower-grade waste using new technology it developed over two years to make its operations more efficient and use less power.

Despite no drop in demand, rising costs meant the company wasn’t making sufficient profit to borrow the $1.3 million it needed to implement the new technology. It applied for grants and won $300,000 from Green Industries SA but was unable to secure the other $1 million in time.

“We did get half the money offered to us a few days ago, which was too little, too late,” Mr Scherer said.

In the past 18 months, Plastic Granulating Services managing director Stephen Scherer said his electricity bill of about $80,000 a month had spiked to $180,000 a month.

“We are also bitterly disappointed that our approaches to the State Government for financial support to restructure and expand the business have failed.”

Business SA Industry and Government Engagement executive director Anthony Penney said he would not be surprised if more businesses closed, especially with energy prices set to rise from July 1.

“We’ve got pages and pages of businesses that are struggling to pay or to cope with the exorbitant costs of electricity,” he said. “We want to make sure government is fast tracking any (grant) application that they do receive.”

SA Council of Social Service chief executive Ross Womersley said jobs lost in this situation had big flow-on consequences for jobs in other industries.

“We’re extremely hopeful this ends up being a limited number of businesses. If it turns into a massive number, then our employment statistics are going to skyrocket,” Mr Womersley said.

Energy Minister Tom Koutsantonis said the business closure was extremely disappointing news, and the Automotive Transformation Task-force was working with management to ensure displaced workers were aware of available support.

“Many Holden supply chain businesses have been hit hard in recent months and our thoughts are with the business owners and the workers,” he said. “We are doing everything we can to bring down prices for business.”

Opposition environment spokesman David Speirs said households pay for recycling through the solid levy waste that flows onto their council rates.

“They will be furious that as a result of the Weatherill Government’s failed energy policies an important recycling business is going bust,” he said.

“If the Weatherill Government allows this local company to close then we will have the disgraceful situation where plastics that SA households want recycled are shipped overseas for processing before being shipped back to Australia.”
The Advertiser

Once PGS closes its doors, there will be nothing to replace it: no one in their right mind will open another equivalent business in South Australia. The same goes for every business on the brink in SA. The gormless cynicism of Weatherill, Koutsantonis & Co must leave South Australians gobsmacked.

Whether or not SA’s electricity generating assets were in state or private hands, the Federal Large-Scale RET would apply, just the same.

All retailers, even if part of a vertically integrated state-owned enterprise, are liable to suffer the $65 per MWh ‘shortfall penalty charge’, for every MWh they fall short of the mandated annual target: 26,000,000 MWh this year, progressively rising to the ultimate target of 33,000,000 MWh in 2020, and running at that level until 2031.

The full cost of that penalty is $93 per MWh (it is not tax-deductible): the alternative is to purchase a Renewable Energy Certificate (aka LGC) in order to avoid the fine.

The fine was designed to guarantee that RECs would trade at $93 each, a level sufficient to make wind power outfits permanently profitable.

Between now and 2031 retailers will be recovering from their retail customers (or so many of them that remain in business and/or connected to the grid) the full cost of either RECs purchased or the shortfall penalty paid to the Federal government, adding more than $42 billion to retail power bills over the remaining life of the LRET (see our post here).

Moreover, the publicly owned power generator/distributor/retailer that Tom Koutsantonis believes would have avoided SA’s power disaster, would still suffer the consequences of daily wind power output collapses.

Given Labor’s obsession with wind power, it was inevitable that SA would end up carpeted with a couple of thousand turbines: putting them in State hands, even with the constant hot air emanating from Labor’s ramparts on North Terrace, is unlikely to have improved their pitiful performance. When the wind stops blowing, the power has to come from somewhere; and that somewhere is coal-fired power from Victoria, delivered via interconnectors.

The criminal element of all this, is that it was all totally unnecessary and totally avoidable.

The fact that these idiots persist with nonsense arguments, obfuscation, propaganda and downright lies, in the face of an obvious social and economic disaster, must leave South Australians wondering what they did to deserve such punishment.

Plenty point to the fact that South Australians keep voting in Labor. However, the notionally ‘conservative’ Liberals, that are referred to as “the opposition”, are as witless and gutless, as Labor is cynical and malicious. In short, South Australia is headed on a one-way trip to social and economic oblivion.

Demonstrative of Labor’s cynicism is its plan to throw $550 million of taxpayers’ money at diesel generators (immediately); a gas-fired peaking plant, either Open Cycle Gas Turbines or gas fuelled ‘reciprocating’ (ie piston) engined generators (in a few years time); and a $150 million, 100MW battery that will ‘power’ SA for all of 4 minutes (when the vapours go from the sublime to the ridiculous).

The diesel generator plan is all about preventing more (inevitable) blackouts this coming summer, whenever wind power output collapses. Sitting in a home without power, and therefore without air-conditioning, on a 42C° day tends to sour the moods of voters.

Blackouts and load-shedding have a political cost. In a State wedded to the delusion that it can run on sunshine and breezes, avoiding them isn’t cheap, either. To save the furniture at the next election, Weatherill & Co have signed up to squander a few hundred million dollars of taxpayers’ money, just to stay in power.

Interim power generation to cost SA taxpayers $100m a year
The Australian
Michael Owen
30 June 2017

A plan by the Weatherill government to ship in a fleet of temporary diesel generators to prevent pre-election blackouts in South Australia will cost taxpayers up to $100 million a year.

The news comes after The Australian revealed that, from tomorrow, South Australian residents pay the highest electricity prices in the world, according to calculations by energy market consultant Bruce Mountain.

Mr Mountain told The Australian on Tuesday that “the representative household” in South Australia would overtake Denmark to “unequivocally” have the world’s highest power prices before and after taxes.

The state’s Labor government remains under intense pressure on the cost and relia­bility of power, after its green-energy policies led to the closure of the state’s last coal-fired power station. The next state poll is due in March.

The government has contracted privately owned South Australian electricity distribut­ion company SA Power Networks to obtain and install 200 megawatts of back-up generation across the state before summer.

But despite promising a “detailed costing” would be provided in last week’s state budget, Treasurer Tom Koutsantonis did not offer any such details.

The opposition said the budget had allocated $114m for operational costs in 2017-18 from the $550m energy plan, “indicating the diesel generators are going to be very expensive”.

“Eighteen months ago the Tasmanian government spent $64m in leasing, site establishment and operational costs for 220MW of diesel generation for three months when a combination of drought and repairs to the Basslink left it short of electricity,” energy spokesman Dan van Holst Pellekaan said.

“Rather than spend $8m a year to keep the (coal-fired) Northern Power Station operating, Jay Weatherill has chosen to spend up to $100m a year on diesel generation until the government turns on its promised new gas generator in two years’ time.”

SAPN spokesman Paul Roberts said last month the project was on track, but has referred questions to the government.

Mr Koutsantonis said potential suppliers of the temporary generators had been shortlisted and “evaluation is continuing on their proposals, with the process on track for generation to be operational by 1 December”.

SAPN has met with regulatory and other bodies to seek expedition of necessary approvals.

Mr Koutsantonis also denied there was a deadline of this month to announce the successful party of a tender the government launched last year to buy 75 per cent of its long-term electricity needs. However, the government’s tender documents show the successful bidder was to be notified this month, with a contract executed next month.
The Australian

 

STT hears from its SA Power Networks contacts that the commercial arrangements are in place to bring in 100, 2MW Cummins diesel engined generators housed in shipping containers.

Labor’s ‘election salvage team’ will be split: the bulk of them will be located in Adelaide’s northern suburbs, on the site of the (soon to be abandoned) General Motors Holden car making plant, at Elizabeth. The balance will be located in Adelaide’s southern suburbs, at the (mothballed) Port Stanvac Desalination plant, joining the existing 65MW diesel generation fleet there.

However, SAPN, the entity lumbered with the responsibility of setting up the diesel generators and running them, has hit a brick wall: the range and complexity of the regulatory approvals required is bewildering and impenetrable. STT’s source reckons it would take months to win the bureaucratic paper war, with the dozens of government authorities and agencies involved in the process.

Then there is the small matter of Australia’s so-called ‘wind power capital’ being forced to run on ‘dirty, evil’ fossil fuel – probably best captured by STT’s word of the week:

irony – noun: the expression of one’s meaning by using language that normally signifies the opposite, typically for humorous or emphatic effect; a state of affairs or an event that seems deliberately contrary to what one expects and is often wryly amusing as a result.

Weatherill, Koutsantonis & Co have maintained a code of silence about what might be seen as a monumental own goal.

On a MWh-for-MWh basis the CO2 emissions from a High Efficiency Low Emissions coal-fired plant are a minuscule fraction of what will spew forth from Weatherill’s diesel generators.

The argument (or mantra) used to justify massive and endless subsidies to wind power (and as an excuse for its Stone Age performance – see above) is that it cuts CO2 emissions in the electricity sector.

The argument/mantra goes that CO2 gas is a dangerously harmful ‘pollutant’ which, when generated by humans (read ‘essential and profitable businesses’) will destroy the planet.

Each and every one of the millions of litres of diesel consumed by Weatherill’s diesel generators will punch out 2.7Kg of CO2. That’s right: a diesel generator emits 2.7Kg of CO2 gas for every litre of diesel consumed.

But, as the TV salesman says, ‘wait there’s more’.

It’s not just mountains of the ‘dreaded’ CO2 gas that his fleet of Cummins generators will deliver as part of SA’s ‘clean green future’; as this article – ‘Estimation of carbon footprints from diesel generator emissions’ – points out:

[D]iesel engines release many hazardous air contaminants and greenhouse gases (GHG) including particulate matter (diesel soot and aerosols), carbon monoxide, carbon dioxide and oxides of nitrogen. Particulate matters are largely elemental and organic carbon soot, coated by gaseous organic substances such as formaldehyde and polycyclic aromatic hydrocarbons (PAHs) which are highly toxic. In 2001, the mortality due to diesel soot exposure was at least 14,400 people out of 82 million people living in Germany.

Someone reading what’s laid out above might think that it’s been hived off from one of Jonathan Swift’s cutting, 18^th-century satires; or that it’s the plot for Ben Elton’s follow up to his Australian comedy/fiction political-eco-drama, ‘Stark’.

Sadly, for South Australians every word of it is true. Welcome to your wind powered future!