It’s the Subsidies Stupid: Wind & Solar Go Nowhere Without Bags of Other People’s Money

 

Time and time again we’re told that wind and solar power are not only competitive with conventional generators, but they’re practically free, and getting cheaper all the time.

That myth in the mouth the protagonists lasts about as long as it takes their antagonists to retort, that if wind and solar power really are competitive, then there’s no further need for government mandates, punitive targets and massive subsidies.

The pesky paradox for wind and sun worshippers is that without subsidies that continue from now until kingdom come, there would be nothing for them to venerate, at all.

The wind and solar ‘industries’ are always and everywhere the product of subsidies paid directly from taxpayer’s pockets and/or drawn from power consumers, via renewable energy certificates, tax credits, guaranteed feed in tariffs and the like.

In the video above and the pieces below Alan Moran targets the only meaningful solution to undoing the damage done to Australia’s power market: killing off the policies that caused and continue to cause that wholly unnecessary damage.

How to turn cheap power back on
The Spectator Australia
Alan Moran
21 August 2017

Energy Minister Josh Frydenberg claims that renewable energy is a disruptive force in the energy market in the same way as the iPhone was to landlines and cameras. There is, however, a major difference: iPhones, like Uber, Kindle and eBay have disrupted previous commercial systems by force of technology. Renewables everywhere in the world have required government subsidies.

Electricity prices in Australia, having been perhaps the world’s lowest at the turn of the present century, are now among the highest.

This is a national catastrophe which has been forged solely by political interference. Subsidies to intermittent renewables, mainly wind and solar, have been the chief cause. Those subsidies are currently around $85 per MWh. And even if they fall to $50 per MWh, as forecast by Minister Frydenberg, this compares with the average total price of electricity, prevailing until 2015, of around $40 per MWh. That price has now doubled and reliability of supply has been impaired because the subsidies have caused the closure of coal power stations.

In the light of the meltdown of the South Australian market last year Malcolm Turnbull set up an inquiry headed by Dr Alan Finkel a former green entrepreneur, whose company, Better Place, being unable to command sufficient subsidies, went bankrupt.

Predictably, the Finkel report called for more of those same renewable subsidies that had forced the closure of low-cost coal power stations thereby undermining the previous cheap, reliable supply. Equally predictably, the report called for an increase in the electricity market’s “governance” – more of the political tinkering that has brought the industry’s demise – and yet another institution (the Energy Security Board) has been now been added to the dozen or more already in place.

Finkel commissioned dodgy economic modelling that showed future lower prices would result from the substitution of wind/solar for lower cost coal. It did so by using two mechanisms.

First it marries subsidised renewables to existing coal powered stations that are forbidden to close even if they are operating at a loss. This is an untenable solution, especially for power stations like Hazelwood, starved of capital by owners unwilling to pour money into loss making plant.

The second mechanism relied upon forecast cost reductions of wind and solar. This fabled onset of cheap renewables has been an ever-receding mirage imminent for the past 30 years. It is envisaged that renewables’ inherent unreliability will be shored up by batteries, a costly means of (expensively) smoothing out the troughs of renewables’ intermittency.

In June, Finkel released his findings, which forecasted a negligible price rise for households in 2017. Within days, electricity tariff increases of 20 per cent were announced.

Unenviably, in spite of having the world’s cheapest energy sources, Australia is now the world price leader. It is easy to estimate that household energy bills, even under an optimistic view of the Finkel proposals, would be between $600 and $800 per year more than would be the case under an outcome that returned the market to one where coal supplied ninety per cent of electricity.

Though the political edge of electricity prices is their immediate effect on households, more injurious is the effect the Finkel recommendations would cause in vastly increasing the costs of electricity to commercial users. By more than doubling electricity costs, the Finkel proposals would force the virtual cessation of production in energy intensive, trade-exposed industries; these account for one fifth of manufacturing and include some of the nation’s most productive activities including metals and smelting, pulp and paper, sugar and confectionery. Competitiveness and future growth would also be adversely impacted across most agricultural and mining sectors.

Coal power offers more reliability and is half the cost of wind. That said, recent contracts have been signed by AGL and Origin for substantial future wind supplies at prices excluding renewable subsidies of $60 per MWh. That is less than the Finkel report estimated coal to cost.

All this provides compelling reasons for the total rejection of the Finkel proposals.

However, the demonisation of coal and threats by a future government to destroy the value of any new coal power station means a return to an autonomous market-based new investment regime is impossible. It may be that the Commonwealth is preparing to commission new non-intermittent power stations –- inevitably coal based — to shore up reliability. While providing a patch-up, this would complete the dismantling of a national electricity market and place us on the path to the high-cost electricity regime that prevailed prior to the market reforms under Hawke, Kennett and Howard.

A preferable outcome would be for the Canberra to guarantee that a future federal government would not adopt policies that expropriate any new investment (as governments already do with roads, ports and other long-lived infrastructure) and:

  • Abolish the commonwealth’s Renewable Energy Target (RET) and the subsidies, presently about $75 per MWh, it creates for wind and large-scale solar;
  • Eliminate the Small-Scale Renewable Energy Scheme (SRES) under which electricity users in general are forced to provide a subsidy of $40 per MWh to roof-top photovoltaic installations.
  • Cease all government subsidies through the budget including guarantees to bodies like the Clean Energy Regulator and the Clean Energy Finance Corporation (CEFC).
    In addition, state government should remove subsidies like the Queensland Solar Bonus scheme and preferential feed-in-tariffs for PV generated electricity.

With such policies, Australia would once again benefit from the cheap electricity that government market interventions have caused.

The Spectator Australia

Liberal, Green and ALP politicians conspire to destroy the economy
Catallaxy Files
Alan Moran
24 August 2017

Yesterday, Malcolm Turnbull, unveiling the plans by Pratt for new investment in containers said, “You know everything my government does is designed to encourage Australian businesses to invest.”   The absurdity of this was underlined by Anthony Pratt informing us, “Our cost of energy in America is 2½ times lower than Australia.’’

One fifth the costs of the Pratt business’s production is energy and the facility is only possible by providing subsidies to the in-house production of this.  Here is how our political leaders tell us that we now build wealth: tax energy consumers and re-allocate the funds only to the most expensive energy sources.

Like a saboteur chastising the owners of the facility he has destroyed, the PM is said to be going “to eyeball the energy companies over bills”.  He will doubtless say, “how can it be true that prices are rising so savagely when Finkel, assorted blood-sucking subsidy-farmers and I myself say we have fabulous renewable resources and are seeking to incentivise more of them with the outcome being cheaper prices?”

Yesterday also saw yet another paragon or rationality, the imbecilic Victorian Premier, announced more subsidies for price-busting renewables, Mr Andrews said his plan would bring $1.3 billion in investment and 1250 construction jobs. That is more spending to generate higher costs.  The doubling of energy prices that such existing measures have already caused is pigeonholed with the pretence that this is nothing to do with wind.

Untouched by economic reality, here are the fantasy figures that the Victorian government is claiming as the outcome:

Naturally, environment groups said the new Victorian measures would “turbocharge” the growing sector with the Andrews Government measures bringing an increase in windmills from about 600 to more than 2300.  This will also require unnecessary new spending on transmission within the state – like filling and re-digging holes, this too will doubtless be claimed as job-enhancing investment.

Although Victorian Energy Minister Lily D’Ambrosio hand-picked some firm to provide her soporific modelling answers to the question of how much this costs, she declined to release the data.  Here is a rare case of wisdom, since even she might have been slightly embarrassed in the past by claiming green-oriented policies would cost only tuppence a head, only to see the evidence of doubled energy prices and surging household bills.

Even the socialists at the left wing taxpayer financed Grattan Institute found the Victorian policy over the top.  While doffing his hat to the “inevitable” renewable future, its energy spokesman Tony Wood, said the policy was a “nasty dog’s breakfast”, with dodgy modelling of energy bills based only on wholesale prices.

It is very difficult to think back to history for examples of when governments engaged so fully and comprehensively in acts of vandalism to destruction the economy of a nation whose prosperity they were charged with promoting.
Catallaxy Files

These days, it only takes a couple of Vandals to destroy an entire Nation.

About stopthesethings

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

Comments

  1. I will say it again, when has there ever been any private investment in any base load power station construction in Australia. All the coal fired power stations were built by state governments as was the transmission and distribution systems and then given to private enterprise to make huge profits off of. There has never been a base load coal fired power station built by a private company using private money any where in Australia. This is the main reason that the State Governments took over the power industries in the first place because private companies couldn’t get the money to build the 1000Mw power stations that needed to be built in the 1960’s,1970’s and 1980’s. Even if Australian governments came up with a 100 year water tight policy no bank in the world would finance the building of a $2 Billion Coal fired power station or a $10 Billion Nuclear Power Station without a State government guarantee for the loan. The problem is that the company that was given the loan would have to run the power station until the loan was paid off and where in the corporate world of take overs,amalgamation, change of company management and bankruptcy that happen regularly is there a guarantee a company is even going to exist in twenty years time to finish paying the loan off.
    Like everything in this argument the PC left think it’s as easy as putting pen to paper to solve all the problems when most of these clowns can’t even run their own lives without government and taxpayer support.

  2. Jackie Rovensky says:

    What are they feeding these politicians with?
    We are compelled to vote at elections but we don’t have access to the candidates medical and mental health records. So how do we know we are voting for people with stable, rational thought processes.
    What we are being presented with from at least the two major parties is obviously that they have now combined and each is now a faction of the other and they are both working for the same end – to see the demise of Australian Democracy and Wealth, to see the people of this Nation so demoralised they will walk into the voting booth with no conviction they will ever see a prosperous country where even the most humble can live a life free of debt and a life with access to the most basic and important commodity of a modern society – electricity.
    I can understand this scenario coming from Labor, but from the Liberals!
    It’s time the Liberal Party across the Nation took stock of their position and turned around and stopped this Socialist take-over of their Party, they need to return to the position of ensuring a Democratic Government that works for everyone and ensures the people are looked after and that when they vote they know exactly what they are voting for.
    We need a return to sanity and a stable Government that does not fold to a simplistic ideology which has been shown to destroy the prosperity and future of this Nation.
    We need to return to a Nation where ‘a fare go’ for all is still the catch cry, a Nation where a business can flourish without being strangled by Socialist mandated subsidised businesses which disadvantage others that provide the same product.
    All this is doing in respect to the energy market is making it possible for Renewables such as Wind to become so powerful they are dictating policy to our Governments.
    I for one am sick of hearing that ‘certainty’ – as long as its certainty for Wind – will bring about lower prices when it has been shown now for years this is untrue all it does is give them more power to dictate their desires to OUR Government.

  3. Rosemary Howe says:

    See the PM is meeting with energy groups, again!

    Just watched Rosemary Sinclair interviewed on ABC News. (9.20am).

    Barely touched on the real issues except to say the RET issue has to be settled, whatever that means.

    If there was a sincere concern, the PM, his cohort and this body would be reading, publicising and acting upon the advice of “Stop These Things”.

    http://energyconsumersaustralia.com.au

  4. Any chance that a verb, ” to finkel” will become part of our language?

  5. Crispin Trist says:

    The Victorian and South Australian Governments are gambling with the lives of their citizens.

    YOU are now THEIR hedge fund!

  6. I stupidly went down the Solar panel road.
    It saved me very little.
    5 years the inverter has died
    So
    $4399
    New inverter $1200 to replace
    So I turned it all off.
    Rip Off

    • Funny you say that! As my solar sytem at Waterloo lasted 5 years and then shits itself just a few weeks after guarantee ran out. The replacement was a “NOT New” $1200, reconditioned unit, and I had to give back the old one as exchange (I would have liked to have passed the old one onto a friend of my to check out the mother board). I wouldn’t be surprised if they have a chip in them to make them useless after the guarantee finished, as I been saying for years, “It’s always about the almighty dollar $$$$$$$$$$$$.
      The facts are … There is no safe distance for wind turbines, they are NOT GREEN, NOT CHEAP, NOT RELIABLE, and come with a very BAD side EFFECT on people and the ENVIRONMENT. There is Nothing GREEN about WIND TURBINES. SAY NO TO WIND TURBINES, and it’s just as bad with Solar.

    • anectdotes arent really meaningful unless backed with specfics, there are plenty of cheap and cheerful solar systems about. Cheap and longevity/quality

  7. Terry Conn says:

    Perhaps like ‘early’ man that may not have linked ‘having sex’ with ‘having babies’ it is so very clear that Australia’s political class and sections of the academic class do not and apparently cannot make the link between wind farms and unreliable electricity supply at unbelievably high cost – the normal modern Homo sapiens is otherwise quite adept at linking ’cause and effect’.

    • Oh, they are aware of the links. However, in political circles all over the world, there’s a guaranteed source of income by subsidising renewable energy and seeing a good percentage returned through political donations. I don’t suppose Australian politics is all that different. Stop the subsidies and they stop the political donations. Additionally, if you want a nice, cushy job in the UN or other form of international diplomacy after your demise from regional politics, it helps to get with the program.

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