Australia’s Renewable Energy Target Delivers Highest Power Prices in the World

STT has been battling this for years. We have attempted to throw every sound and reasoned argument against subsidised wind power, but the single most damaging feature of attempting to rely on the weather for power is the obscene cost. In short, the headline grabber is always, and everywhere, retail power prices.

No amount of political flummery, no amount of wishful thinking about pumped hydro or non-existent mega-batteries can overcome the damage done by a rocketing power bill. Over the next few weeks Australian households and businesses will tear open envelopes to reveal an invoice from AGL, Origin and the like, fully 20% higher than this time last year (the underlying rate of inflation in Australia is around 1.5%). The damage done to the case for subsidised wind and solar is permanent and fatal.

The Australian’s Judith Sloan is absolutely on fire at the moment. Here she is with another stinging analysis of Australia’s self-inflicted renewable energy calamity.

Australia has gone from cheapest to most expensive power
The Australian
Judith Sloan
9 September 2017

If I read another press release about the millions of dollars of our money being handed over to the mendicant players in the renewable energy space, I’m going to scream. The latest was $100 million awarded to Macquarie Leasing to subsidise electrical cars. I’m not joking.

But here’s the worst bit. Environment and Energy Minister Josh Frydenberg says: “The Turnbull government’s investment in clean energy technologies is helping deliver affordable and reliable energy as we transition to a lower emissions future.”

So we hand over $100m of taxpayer money to Macquarie Leasing so it can offer concessional deals on top-of-the-line Tesla electrical cars to high-­income ­individuals, and the government justifies this as delivering affordable and reliable energy — and a low-emissions future, of course.

Pull the other one, I say. The last time I noticed, electrical cars will be drawing power from our rickety, overpriced electricity grid. That is, electrical cars — which, by the way, have a very ­uncertain ­future in Australia; just ask any tradie or farmer — will be imposing additional demands on our electricity system. Josh, there’s no free lunch out there.

Being in receipt of these press releases on a regular basis, can I just tell you that the amount of money that is being handed out to opportunistic green rent-seekers is out of control. We tend to concentrate on the implicit subsidies of the renewable energy target — at least $3 billion a year — but the country is awash with substantial grants to “green” players at both the federal and state levels.

Another example I read about recently was a taxpayer handout to a company established to provide loans to households to install solar panels on their roofs. On the face of it, you might think this could be a good idea: low-income, cash-constrained households getting access to concessional finance to reduce their power bills.

But that’s not what the company has in mind. Its business is confined to homeowners. You see, they are a better risk.

And to think that taxpayers are assisting this cynical venture — well, it simply beggars belief. Obviously the subsidies that households with solar PV installations receive from other electricity users by virtue of unjustifiably high feed-in tariffs are not enough. They need more of these reverse-Robin Hood gifts.

The crisis in the electricity market, the result of years of costly and defective intervention by federal and state governments, is only now getting the attention it deserves. We have gone from having close to the cheapest electricity in the world to among the most ­expensive. We have all the feeder stock we need — coal, gas and uranium — yet electricity prices have doubled in a decade.

The Australian Energy Market Operator report released this week on the reliability of the electricity system points to the reasonably high likelihood of demand exceeding supply in South Australia and Victoria in the coming summer, with reliability a continuing issue for the next few years in these two states. After 2022 and in the event of the closure of the 2000-megawatt Liddell coal-fired power station in the Hunter Valley, the reliability of the supply of electricity in NSW becomes ­increasingly problematic.

These predictions of the AEMO come notwithstanding a veritable torrent of investment in intermittent, renewable energy in recent years. At the present rate, we should hit the target of 33,000 giga­watts hours by 2020, although the requirement of back-up for these projects will generally be ­observed in the breach.

What has happened is a hig­gledy-piggledy flow of projects, mainly bunched in SA and Victoria and generally located a long way from the established grid. The early wind farms, which were ­encouraged by virtue of renewable energy certificates and various state government incentives ­(enabling planning approvals and payroll tax concessions), actually made the system more unstable because of their failure to incorporate the required software.

But here’s the thing: the greater the penetration of renewables, the more unreliable the system ­becomes even with the latest software being in place. This is not just about the laws of physics (which AEMO emphasises) but the fact that most of eastern Australia shares the same weather patterns, so any gains from heterogeneity (dissimilar weather patterns) are very small.

However, the kicker is the fact renewable energy, with its preferential dispatch status and low operating costs, sends ­dispatchable power plants into early retirement and kills off the incentives to build new ones. Note that since 2011 nearly 6000 megawatts of coal-fired plant capacity has been withdrawn from the ­market, or close to 12 per cent of total capacity.

Now the point is often made that we have reached this appalling position — high-cost, unreliable electricity affecting, in particular, the competitiveness of our heavy industries — because of very poor government policy.

But whether the outcome was entirely unintended is not so clear-cut. From the time John Howard introduced the first version of the renewable energy target, it was a one-way street to more subsidised, intermittent renewable energy and an investment strike in dispatchable energy. This was the aim; it could not have been otherwise.

To be sure, there has been plenty of toing and froing in the policy space. The carbon tax, at the ludicrously high figure of $23 a tonne of carbon dioxide-equivalent in 2012-13 (rising to $24.15 the next financial year), was a high water mark of stupidity. Don’t forget this tax, which was nearly three times the EU price, was imposed in combination with a ludicrous RET of 41,000 gigawatt hours.

That the tax was abolished and the RET wound back by the ­Abbott government meant that imminent disaster was averted, but the future possibility was not removed entirely.

Sadly, most of the expensive apparatus attached to the carbon tax policy, such as the Clean ­Energy Finance Corporation and the Australian Renewable Energy Agency, survived, chowing down taxpayer money at the rate of knots to be handed out to the green panhandlers that have flourished in this environment. We also have to put up with the pointless but prejudiced Climate Change Authority.

There have been some major porkies told about energy policy, such as the one about wholesale electricity prices falling upon the renegotiation of the RET in 2015. The assumption there was that there would be no retirement of coal-fired power stations until 2040. Yes, pigs might fly; it’s just unclear why the politicians didn’t cotton on.

So where does this leave the government? It was a mistake to think AGL is on its side. The company is more than happy to use misleading advertising — we’re getting out of coal and the like — while securing more than 90 per cent of its profits from fossil fuels. Its aim is to milk these assets for all they are worth while pretending to be greener than Kermit.

Whether it will sell the Liddell power station is anyone’s guess: the company may regard its exit as being in its commercial interest, and hang Australian businesses and households. Let’s face it, AGL (or any other energy company) doesn’t really care how high are electricity prices.

And then there is the consideration of the clean energy target. Forget all that tosh about needing investment certainty: this is just code for a continuing subsidy arrangement for renewable energy.

The most pressing need of the government is to secure the future of dispatchable electricity generation and to do so at reasonable prices. Everything else is a side-show.
The Australian

Judith almost appears to fall for the ‘software glitch’ story fed to the media by the wind industry and its parasites.

That furphy started after the 28 September 2016 Statewide blackout in South Australia. After wind farms automatically shut down en masse, as wind speeds increased above 90 km/h (25 m/s), SA enjoyed one of its many wind-related ‘system blacks’. Thereafter, claims were made that the ‘ride through’ settings were not properly set. The reality is that wind turbines are automatically programmed to shut down when wind speeds exceed 25m/s.

What Judith gets right is that it would not matter how many wind turbines are clustered across the Eastern Grid, when the wind stops blowing, the power stops flowing (see above).

What appears above is the combined output of each and every wind turbine connected to the Eastern Grid during June. Those turbines have a combined capacity of 4,395 MW

As depicted below, on the Eastern Grid Australia’s wind farms are located in 4 States – Tasmania, South Australia, Victoria and NSW –  and spread from: Jamestown in the Mid-North, west to Cathedral Rocks on lower Eyre Peninsula and south to Millicent in South Australia; down to Cape Portland (Musselroe) and Woolnorth (Cape Grim) in Tasmania; all over Victoria; and right up to Cullerin on the New South Wales Tablelands.

Those wind farms have hundreds of these things spread out over a geographical expanse of 632,755 km². That’s an area which is 2.75 times the combined area of England (130,395 km²) Scotland (78,387 km²) and Wales (20,761 km²) of 229,543 km².

On something like 13 occasions during the month of June, the total output from all turbines was less than 200 MW (or less than 4% of total capacity); and on at least 6 occasions, less than 100 MW (or 2% of capacity). None of which has anything to do with ‘software glitches’ – unless Mother Nature’s operating system needs an upgrade?

For grid managers charged with delivering more than 26,000 MW across the Eastern Grid every day, 200 MW is more like a rounding error. In fact, the grid manager does not even factor wind power into the long-term supply equation.

The last thing Australia needs is another wind turbine. The last thing Australian power consumers need is more of the same. The Renewable Energy Target must go now.