Wind Industry Demands End to Subsidies: Wind Power Now Cheaper than Coal & Gas-Fired Power

Admit it, we had you there for a moment.

No, our headline is definitely fake news. However, if the wind industry was taken at its word (unlikely) then the subsidies would have ended years ago. The likes of AGL, the Clean Energy Council and a whole band of wind worshipping lunatics have been telling us for years that wind power is free and getting cheaper all the time.

At the moment, the biggest hypocrite in the house is AGL: an outfit that has declared that it is “getting out of coal”, despite being Australia’s largest coal-fired power generator and having every intention of maintaining its coal-fired power plants until at least 2050. AGL’s business model involves wallowing in renewable energy subsidies, while using its coal and gas-fired power plants to benefit from the chaos delivered on a daily basis by weather dependent wind and solar (see our post here).

But its claims to have weaned itself off the black stuff, fall just a little hollow. Here’s another couple of crackers from Judith Sloan, the first of which targets AGL’s rank hypocrisy.

How AGL is having its cake and eating it
The Australian
Judith Sloan
12 September 2017

Thanks to the Yanks, I say. We owe a debt of gratitude to energy company AGL and its loquacious American-born chief executive who has come here on a 457 visa.

The good thing is that AGL is a household name and so when the CEO tells us the company is changing and moving out of coal, we tend to sit up and listen. And some of us ask questions.

So how come our new American pal can tell us that the company is changing when it so recently bulked up on big purchases of coal-fired electricity assets? Recall that AGL was the successful bidder for the NSW government-owned power stations in the Hunter Valley, Liddell and Bayswater, in 2014. That’s right, three years ago.

Note also that AGL owns a very big (brown) coal-fired electricity plant in the Latrobe Valley in Victoria.

In fact, AGL is the biggest provider of coal-fired electricity in the country and more than 90 per cent of its (rising) profits is sourced from fossil fuels.

But we are still told to believe that the company is changing by moving into that rent-seeking space: renewables. But if you look at AGL’s profile of production, renewables are small beer and will remain so for a considerable period of time.

Now some might think hypocrisy by having to put up with the company’s marketing messages, egged on by a bunch of staffers some of whom have been trained by none other than Mr Inconvenient Truth himself, Al Gore.

But where you think hypocrisy, I think misleading and deceptive. I can’t believe that the Australian Competition & Consumer Commission hasn’t launched a case against AGL for using false information to attract customers. Surely a company that derives over 90 per cent of its profits from coal and gas can’t portray itself as green as grass.

And don’t think that AGL as a retailer — arguably such vertical integration should never have been allowed — is saintly in its behaviour towards customers. It is up there with the others in ditching discounted offers without telling customers and acting in a self-serving way.

So why do I say that we should be grateful to AGL? Its recent behaviour, its stated intentions to close Liddell (all 2000 megawatts) and comments from the Yank have all belled the cat for the public by exposing the distorted Australian electricity market as an expensive and unreliable racket. It is now clear that the government must act and this does not involve doling out even more favours to the unreliable renewables sector.

Let me be clear: the clean energy target is just another subsidy swindle that will favour AGL but also Origin, Energy Australia and assorted other renewable energy companies, many of them overseas owned.

The CET is perfect for AGL. It can bulk up its renewable assets with the obscene subsidies handed out by electricity consumers and directly by taxpayers (think Victoria and the ACT) while cashing in big time on its large legacy coal and gas assets. It just doesn’t get any better for the company.

Wholesale prices will continue to soar, particularly after Liddell closes. But if the Yank is still around, we will be bombarded with the message that the company is undertaking the journey to the green world of renewables — with expensive firming capacity, of course — and we should all hold hands and join him in this wonderful path to the future.

Indeed, by 2030, if the Chief Scientist has his way, 42 per cent of all electricity will be generated by renewable energy and our electricity prices will be even higher by world standards.

But we won’t have to worry about meeting our Paris emissions commitments because all our energy-intensive industry will have closed and relocated to countries with cheaper and more reliable electricity. It won’t do anything for global emissions, but we will be able to feel good about ourselves — or not, as the case may be.

While I’m in the game of thanking Yanks, we should also extend a hand of appreciation to the new head of the Australian Energy Market Operator. Her experience in the game was based in New York, which is the size of a handkerchief compared with our eastern states electricity grid. Her schtick is demand-management.

This involves bribing consumers and businesses to use less electricity when told to do so and in exchange receive some monetary compensation. It’s a bit like BHP telling its customers to demand less iron ore and BHP will pay its customers for doing so. Oh that’s right, BHP would never do that because that’s not how market economics works.

But let’s get back to this Yank’s you-beaut idea. I’m assuming she has never actually experienced an Australian summer heatwave, but let’s leave that to one side.

The idea is that you ask households to turn down or off their air conditioners when it gets really hot — you know it makes sense — and they will receive some small discount on their electricity bill.

Think this one through. Those on low incomes are most likely to be attracted to this type of offer, including older people on the pension or on low fixed incomes. Sitting in their small dog boxes, because the government thinks it is selfish for older people not to downsize (thanks for that tip, Scott Morrison), they will be able to endure seven days of 40C-plus heat happy in the knowledge that they will save a few bob on their bill. It’s a form of voluntary load-shedding.

And then there are the factories that will be ordered to power down and receive a few bucks. But the physical constraints and loss of efficiency for many of factories mean this is not a good deal. Rather than power down from time to time, the owners of these factories may take the rational course and power down permanently rather than put up with expensive, unreliable electricity.

So let’s all doff our caps to the Yanks. They have shown us the future. But if you don’t like the look of it, my advice is to campaign for cheap, reliable electricity we can all access when and where we need it.
The Australian

Andrew Vesey: AGL’s hypocrite-in-chief.

  

Judith beautifully maintains the rage in this next piece, where she lifts the lid on the myth that Alan Finkel’s Clean Energy Target (42% RET in disguise) is the solution to Australia’s self-inflicted power pricing and supply calamity.

We must put the CET in the Not For Implementation file
The Australian
Judith Sloan
13 September 2017

The Turnbull government would be completely bonkers to commit to a clean energy target. Such an intervention is simply a dressed-up version of the renewable ­energy target that has so distorted our electricity system that all we can now purchase is high-priced, unreliable power.

Don’t believe all the drivel about a CET allowing clean coal or gas. It is much less about the benchmark that is set — CO2 per megawatt hour — than about the emissions reduction target.

Under the Finkel model, we will move from 22 per cent renew­ables in 2020 to 42 per cent in 2030. Virtually all new ­investment will be in unreliable ­renewables.

But, you say, the cost of renewables is coming down and there is scope for the intermittent nature of renewable energy to be resolved through back-up solutions, including gas peaking (expensive), pumped hydro (inefficient) and untested batteries.

While one accepted recommendations of the Finkel ­review is to require renewable ­energy companies to provide full back-up, there has been no progress on how this can be implemented in the context of the RET or CET.

Wind farms happily continue to bid into the electricity market knowing someone else will pick up the tab when the wind don’t blow.

Here’s the real rub: if renewable energy is now cheaper than coal and gas, and the back-up requirement can be made to stick, there’s no need for a RET or a CET or any other cute acronym. The market will sort it out.

Doubting Thomases and Thomasinas may ask: will it? Will the renewable ­energy rent-seekers go away ­quietly and forgo their beloved RET or CET and the billions of dollars funnelled their way through the Clean Energy Fin­ance Corporation, the Australian Renewable Energy Agency and the rivers of gold handed out by state and territory governments. When you have right on your side — saving the planet — you are unlikely to give up that easily.

Don’t get me wrong. I’m not commercially naive on these matters. As government policy stands, a new, long-living clean-coal plant is unbankable in this country. Ditto most gas-fired plants. Without some sort of government backing, these reliable forms of electricity generation will simply fade from the scene over time.

I don’t believe AGL’s estimates of the levelised costs of different forms of generation; they are there principally to serve the company’s courageous shift of ­direction.

But note that when it comes to investment in coal-fired electricity overseas, things are going gangbusters. Japan has no problem finding private investors to fund coal-fired power stations. They are also being built in China, other parts of Asia, in Germany and in Africa. (Thirty new nuclear plants are also being built in China.)

We are pretty much Robinson Crusoe, the stupid version, when it comes to turning our back on coal for generating electricity, particularly as we have some of the largest reserves in the world.

So what should government do? The first thing to ­acknowledge is electricity ­accounts for just one-third of all emissions. Leave it alone now. It has done enough. Take away the subsidies and handouts. (It may need to consider support for new dispatchable power ­because of the state we are in.)

Second, the direct action plan, contrary to criticisms of left-leaning commentators (who weirdly think direct grants to renewable energy players are great), has worked well as a low-cost form of abatement — the best thing previous environment minister Greg Hunt achieved during his tenure.

So direct action could be extended as long as the government remains stubborn in its commitment to Paris, with the extremely high per capita emissions ­reduction targets it has agreed to.

Third, we would be better served if we were to buy verified international carbon credits. They are cheap (one-tenth of the abatement cost of the RET) and can be booked as part of our commitment. It’s all very well saying the mess we are in is the result of poor government policy in the past — it’s not due to Tony Abbott, by the way, who at least made some effort to improve matters — but we are where we are. Perhaps if we had opted for a cap-and-trade scheme and it had been carefully designed and we didn’t have the RET, we would be in less of a pickle now.

Bear in mind these schemes have generally been a disaster overseas — subject to fraud and rorting, ineffective at reducing emissions because of the over-­allocation of credits — and there is every reason to think we would have fallen into the same traps.

It’s critical the CET is put in the Not For Implementation file.
The Australian

Where the LRET and Finkel’s CET both belong.

About stopthesethings

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

Comments

  1. Andy Wilmot says:

    If and when a super volcano blows up , there are five that I know of : Yellowstone , North Island of New Zealand , Sumatra , around Naples and Siberias Utzon Caldara …… No solar power .

  2. Jackie Rovensky says:

    Firstly the title of this article is not altogether wrong. An article on windwatch dated September 20, 2017 from Germany darted 19 September http://www.bloomberg.com
    Is headed “Subsidy-free wind farms risk ruining the industry’s reputation”.
    Apparently some off-shore companies are saying they can build their torture farms without subsidies!!!!
    It transpires the land based wind industry may be turning summersaults with such a claim from offshore companies.
    They consider these could be given permission but when it comes to delivering the goods they will fall short or not be able to complete installation thus giving the whole industry a bad name.
    So the industry is now fighting itself with one section saying they no longer need subsidies and the other crying foul and running scared just in case it is decided none need subsidising. Oh the poor devils now their blades are turning on each other and are willingly dicing and slicing each other with abandon.
    But back to Australia, AGL is ensuring its own future by using coal where it is accepted without question, while here in Australia they are hanging their hat on the rack which is run by the rancid renewables supporters who are still able to swing a big hammer in Government circles.
    Just watch how AGL will turn once we have a Government who says enough is enough of this nightmare and start to bring Australia back to a country that is worth investing in and living in.
    When we have a Government of some worth which works for the people and not what could be a sham ideology taken on by some just to garner personal support for a personal ambition the better this country will be.
    There is nothing more sure to cause the downfall of a Government than for them to ignore the plight of the people they are there to serve.
    There is also nothing more certain than having a Government pandering to the Opposition in times of crisis to see the downfall of our 2 party political system.

  3. Son of a Goat says:

    Radicalisation is a term often associated with the militant organisations that use the Islamic faith as a reason to inflict on society mass harm as some sort of punishment. It is often associated with youth from poor economic backgrounds, those who are searching for meaning and purpose in life and those who feel socially and economically outcast.

    I put it to you the those that push the wind industry religion with their Eco crucifixes known as wind turbines have their own radicalisation process.

    One has to look now further than the “twitter.” Those who have been radicalised into believing wind, solar and battery storage is the answer to climate change troll the twitter world in a self obsessed gang in a fervent frenzy to attack anyone who should so much as disagree with their ideology.

    Twitter jockeys such as Joshi and Holmes a court are literally permanently welded to their keypads and screen every awake hour searching in a primeval urge for their next victim to boost their egos.
    Trying to outdo their opponents by belittling their intellect and coming up with the most condensing phrase their imagination can come up with are all part of the game.

    Such childish and hurtful behaviour serve no purpose in furthering society. For the perpetrators such an existence can be only be debilitating to ones mental well being.

  4. Anthony Gardner says:

    Meanwhile, in the real world, look at the latest financial report for the Hepburn wind farm (Vic). This 2 turbine wind farm is community owned.
    Last financial year they had revenue from the sale of electricity of $437,210 and revenue from the sale of RECs under the RET scheme of $743,674. The latter, of course, is added directly onto the electricity bills of Victorian consumers, plus a margin.
    The profit for the year was $306,215 on which no income tax was paid. (not being an accountant I assume their structure pays income rather than company tax)
    So, without the subsidy, they would have made a massive loss. It’s worse than that though, as they don’t have a large interest expense, as over 90% of their capital is from community shareholdings on which they paid no dividend.
    No wonder these opportunists, foreign and local, want to build wind farms in Australia

  5. “And by 2030, if the Chief Scientist has his way, 42 per cent of all electricity will be generated by renewable energy”
    And by 2030, if the Chief Scientist has his way, we will have to have a full 42 per cent backup in fossil or nuclear power of all electricity for when it’s not windy enough or too windy and when the sun doesn’t shine!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: