Clueless: Australia’s Renewable Energy Disaster Deepens as Energy Minister, Josh Frydenberg Fudges & Fumbles

So, like, my RET only adds $3bn a year to Australian
power bills and they still go up, huh? I just don’t get it?

 

On the battlefield for Australia’s wealth and future economic prosperity, the forces have been divided between those pushing for the retention of the suicidal renewable energy policies that have all but crippled Australian business – particularly energy hungry businesses, like mining, manufacturing and mineral processing – and those hoping to bring an end to the lunacy, keen to save what’s left of industry and the meaningful jobs and wealth thus created.

As with any historic battle, the words and puroprted wisdom of the protagonists become etched in stone: pored over by analysts, critics and historians for eons to come.

The battle for Australia’s economic future is not yet lost. However, with power costs to businesses tripling in just on two years, year-on-year retail power increases of between 16 and 20%, and the chaotic delivery of wind and solar power placing its grid on the very brink of collapse, those advocating for more of the same have chosen their side; and they will be judged.

Should renewable rent-seekers and their baggage train of wind and sun worshippers prevail, Australia can kiss goodbye to its status as a prosperous, energy superpower. ‘De-industrialisation’ might not be their primary objective, but it will be the result, should they be left unchecked and unchallenged.

Of those set to destroy Australia’s first world ranking, it’s the Federal Energy and Environment Minister’s efforts that beggar belief.

A member of the once conservative Liberal Party, Frydenberg sounds more like the leader of the Greens. Mouthing platitudes to wind and solar and laying on plaudits to mythical grid-scale battery storage, Frydenberg repeatedly demonstrates an intellect better suited to high school debating.

Frydenberg could – at the stroke of a pen – place a cap on Australia’s Renewable Energy Target; rewrite the electricity market rules to prevent wind power generators from flooding the market with heavily subsidised wind power, at the expense of reliable, based-load generators; thereby, reducing power costs and giving Australian businesses a fighting chance.

Instead, he has simply strapped himself to the front of a runaway train, on which Australian industry, workers and families are hurtling to the precipice.

If Frydenberg understands what he is doing and the consequences thereof, he will be judged for considered malfeasance. If he does not know what he is doing, he will be marked out as a dangerous fool. Either way, history will not judge this man well.

Here’s Judith Sloan chronicling Frydenberg’s repeated fudges and fumbles.

Sorry Josh Frydenberg, but it’s a three-point plan to nowhere
The Australian
Judith Sloan
11 July 2017

Once upon a time, there was a view that rising petrol prices were political death to a government. These days, rising electricity prices have a similar effect, contributing to the demise of a government unless something is done.

The background to this dilem­ma for the Turnbull government is obvious: after years of rising electricity prices, the latest round of price increases is a whole new ball game. Rises of between 15 and 20 per cent in household electricity prices are now taking effect in the eastern states.

South Australia has the dubious distinction of having the highest retail electricity prices in the world, bumping out Denmark for the top spot. This gold medal position does little for the political standing of the state government. Neither will it help a federal government keen to retain seats in that state.

So what can federal Energy and Environment Minister Josh Frydenberg offer by way of electricity price relief? He claims to have a three-pronged strategy, although there is no discussion of changing or suspending the renewable energy target, which has been one of the main drivers — arguably the main driver — of higher electricity prices.

The three prongs are: removing the appeal rights of the transmission/distribution companies; imposing export restrictions on gas companies; and construction of extra pumped hydro storage in the form of Snowy 2.0.

It’s hard to see the public getting too excited about any of these, particularly as their immediate impact on electricity prices will be imperceptible.

The public is crying out for the federal government to do something now and the best it can do is list three arcane and feeble actions.

Let’s take each of them in turn. The federal government is of the view that the companies responsible for the poles and wires blatantly game the regulatory system, leading to higher charges than would otherwise be the case. While this may be so, the features of the regulatory system themselves, as well as ill-advised government decisions, have driven the big increases in the charges that are added to the wholesale price of electricity.

Julia Gillard, when prime minister, for instance, set an unduly high standard for reliability and then deemed the rate of return that the companies could earn on their investment. The result was a large degree of gold-plating of poles and wires around the country. Having said this, the shift to renewable energy has inevitably entailed more expenditure by the poles and wires companies as the sources of generation become more decentralised.

Mind you, the impact of this gold-plating has largely worked its way through the system. The federal cabinet’s decision to disallow any appeals by the companies in relation to the regulator’s pricing decisions flies in the face of the accepted norms of government involvement in regulated markets. Both Malcolm Turnbull and Frydenberg know better, but let’s face it, they are desperate.

Will the loss of appeal rights make any real difference to electricity prices? The short answer is no. And in the future, the companies are likely to pre-game the system because of the absence of any appeal rights. It would be a brave person who thinks this avenue is a solution to high and rising electricity prices.

What can we expect from the Coalition government’s decision to limit the export of gas by companies that had legitimately entered into export contracts with the consent of the previous government? In normal circumstances, this sort of action would be regarded as anathema to any political party that believes in the operation of free markets and avoiding action that could be construed as sovereign risk. The conclusion is that the government doesn’t regard these as normal circumstances.

The argument here is that the wholesale price of electricity is more and more being set by the marginal price bids of gas-fired power stations. The retirement of coal-fired capacity, particularly the Northern power station and Hazelwood, means that there is simply insufficient coal-fired capacity to set the price.

Now because gas prices are so high — two to three times their historical level — the wholesale price of electricity is rising in tandem with gas prices. The government’s hope is that the restrictions on the export of gas will mean more domestic supply, leading to lower gas prices. Throw in some changes to the regulation of pipelines and hope for the best is the federal government’s approach.

The best outcome is that domestic gas prices in the medium term will settle at the netback level of the equivalent of international prices minus the cost of liquefaction and transport. But in the short term there can be no assurance that domestic gas prices will fall significantly. Note also that there is a risk that gas companies will cut back their drilling and ­exploration activity in the context of the new export restrictions.

And then there is Snowy 2.0. Apart from offering the opportunity for the Prime Minister to sketch out diagrams of the scheme for the benefit of unwitting primary school students, let’s face it, Snowy 2.0 is way down the track, will cost many billions of dollars, and this government will be long gone when the first drop of water gushes through the tunnels.

Having realised that these three options are unlikely to capture the imagination of the public or have any impact on electricity prices in the short term, the next step of Frydenberg is to blame the states.

South Australia jumped the gun by overinvesting in renewables and allowing its last coal-fired power station to shut down. Queensland has allowed its government-owned generators to cash in on the volatility of the market. NSW and Victoria have moratoriums on gas exploration and exploitation.

The reality is all paths lead back to the RET, which has driven the investment in intermittent energy and sent coal-fired power stations out of business. The Turnbull government had the chance to buy Hazelwood and keep it running, but the Prime Minister showed no interest in doing so.

In the context of an unchanged RET and the possibility of more subsidisation of renewables using a clean energy target that will knock out new coal-fired electricity, the message is clear: get used to sky-high electricity prices and the loss of energy-intensive manufacturing. And the world’s biggest battery in South Australia won’t make a jot of difference to this outcome.
The Australian

But, like, the modelling said power bills would only go up this much?

About stopthesethings

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

Comments

  1. Jim Hutson says:

    It’s simple. They know it’s a recipe for disaster, but they will let it happen rather than admit they were wrong. In the meantime it’s the blame game, not us, it’s someone else.

  2. John McKerral says:

    I really don’t know if the increase in the cost of poles and wires is to due with gold plating the network as you state. It is often claimed that is the case but if you think about it, much of the increase in cost of the transmission network must be to do with providing grid access for new renewables remote from the existing grid and possibly beefing up the grid between where the connection is made to the grid and the load. I feel that should be considered as costs associated with the renewables in question.
    With a capacity factor of around .25 (bit over .30 in SA) on average around the country according to an NEM document I perused some time ago, you would need the grid to be able to carry between 3 and 4 times the average output of the wind farm. That means that the grid is underutilized most of the time and that could possibly be seen as gold plating though the grid must be able to handle full output of the wind farm! The problem is even worse with solar farms as the capacity factor is lower. During the winter solar output is lamentably low.
    As far as the local distribution network goes, the money spent is either for maintenance or provision of connection of new customers in new areas/suburbs not previously connected.
    I have read about the gold plating and always thought it strange.
    Do you have anything to support this statement, I really would like to know! Reporters are very fond of making that statement but provide nothing to support it.
    On another matter, rooftop solar has a problem that is not mentioned much. The circuit breakers on the distribution system are setup to isolate the load from power coming from the grid. If there is a short in an area with a lot of rooftop solar, tripping the breaker, possibly, is not going to do much as the power sources, rooftop solar, on the side of the short will keep on putting electricity into the circuit as long as the sun is shinning similar to bypassing the circuit breaker in fact. The network was not designed to accommodate generators in that area.
    Cheers
    John

  3. Jackie Rovensky says:

    Melissa is right the end user is being blamed and told to research for the cheapest.
    What those who say this forget is as soon as you find a ‘cheaper’ alternative prices go up again and are passed on to the end user.
    What this failing Federal Government has not accepted is that every time the price of energy goes up so to does the price of everything else.
    We the end users cannot keep paying the price for Governments failure to look after their citizens, and unfortunately at the present time there seems to be very little difference between to two main Political Party’s in this country – we have lost our ability to be able to see the difference between Twiddle Dee and Twiddle Dumb.
    The more forced into energy poverty, are also being forced into poverty across the board, it’s no good saying they can work out a payment plan with their provider, as prices continue to go up they are still paying off previous bills.
    Why should citizens of this nation have to choose between warmth and food? Why do citizens of this nation have to choose between living in a home or living on the Streets?
    It’s hard enough for those with a job to meet everyday expenses, so how do those without a job manage?
    For everyone that has lost the battle to keep their power on, those who still have it have to pay more to cover the shortfall.
    I seem to remember a Liberal Government not so very long ago saying it was their position to ensure more people were working and able to look after their families without Handouts – where has that ethos gone Mr Turnbull and your backslapping fools.

  4. Reblogged this on UPPER SONACHAN WIND FARM.

  5. Melissa says:

    There is no excuse for ignorance. Rural neighbours witnessing the industry close up have been saying since wind farms were built next door that turbines don’t work half the time, that they’re noisy and costly. Senate Inquiries over the years have investigated, advised and predicted what lay ahead on the (un)-renewable path. Renewable energy certificates for large scale generation, perhaps named something else now, contributes to the mess. These Certificates, I imagine, are being stockpiled waiting for price hikes or used in large numbers for further investments. Wind energy investment is a rocky road and we cannot rely on increasing MW capacities for energy because there are always days of too little or too much wind. So stop building them and adding to the hardship. Battery back-up is a band aid solution to keep the green mob living an ignorant nirvana. They want clean green energy but won’t pay the price when wind fails to prevent factories and businesses shutting down. Ms D’Ambrosio said “there is something alarming about the number of power disconnections per year”, yet profusely promotes the wind industry contributing to the expensive mess. Our Government also points the finger back at people experiencing hardship, expecting them to research the cheapest energy providers as though it’s the publics fault they are paying high prices. Many people especially older people may not have the skills to research the best retailers. They come from an age where you made a choice and were a loyal customer for life, be it to the bank, insurer or service provider. Wind farm neighbours and local Councils have experienced first hand this fumbling and passing the buck, and laying blame and it’s frustrating. Come on Mr Frydenberg time to stop playing ignorant and act. Protect wind farm neighbours from excessive nuisance and protect Australian businesses from closure.

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