End of Days: Australia’s Renewable Energy Target on the Brink of Collapse

STT has been plugging away for almost 5 years, attempting to bring to an end to the greatest economic and environmental fraud of all time.

Followers might have noticed that over the last month or so, our focus has been on Australia and the politics of power.

Our overseas followers are probably getting sick of reading about the exploits of Malcolm Turnbull, Tony Abbott and Josh Frydenberg. However, events of the last few months leave STT with the feeling that Australia’s self-inflicted power pricing and supply calamity has put the policies that created the disaster on the very brink of collapse.

STT will continue doing our best to accelerate that result. Hence, our focus will remain on hammering those responsible for the disaster and encouraging those with the temerity and wit to fix it.

In this piece, Alan Moran takes a moment to reflect on the Genesis of Australia’s greatest policy debacle, and then lays out just some of what needs to be done to resurrect this Country.

Escaping the renewable energy subsidy trap
The Spectator Australia
Alan Moran
18 September 2017

An endgame is now underway in the renewable energy scam that has been responsible for destroying the nation’s electricity industry as a low-cost, efficient and self-managing sector.

Though, in Churchillian terms, countering the debilitating effect of the self-imposed cancer is beyond the end of the beginning it has a long way to go before we have anything like the market we once had.

The seeds of this malignancy were planted almost at the birth of the competitive market’s creation 20 years ago. At that time, having created a market based on some 30 suppliers, perhaps a half dozen of which were prominent, the conditions for competition to provide efficient outcomes were in place. Fundamentally coal-based, the market also had some fast start gas and hydro to allow the peak balancing required of a product with considerable diurnal and seasonal shifts in demand (and occasional disruptions in supply).

However almost most from the beginning, in 2001, regulatory requirements were placed on suppliers, particularly with requirements to include small but growing proportions of particular sorts of renewable energy.

The green concerns about global warming formed part of a troika. The second branch of this was technological hubris (the claimed inevitability of renewable energy’s march towards outperforming fossil fuels). The third branch stemmed from creating a commercial advantage, as enterprises, like moths to a candle, were attracted to the certain returns renewable energy offered, a benefit reinforced by deflections of green opprobrium of such politically correct expenditures.

Initially, these measures sought to impose upon taxpayers and consumers seemingly minor obligations to purchase renewable energy. “Two per cent of additional energy” was the first introduction of renewables by the Howard government. This was quantified at 9,500-gigawatt hours, actually over five per cent of supply. Howard later commissioned the Tambling report that recommended the total be lifted to 16,000 GWh but, sensing the destructive venom of the genie he had let out of the bottle, he placed it on the back-burner.

Although Howard stood against further incursions, within his own party others were pressing for more subsidies and state governments were augmenting the targets – Steve Bracks in Victoria declared that he would not stand by while Australia saw its opportunities for leadership in the coming green industrial revolution slip away. Other state premiers were equally vocal and Malcolm Turnbull was an eager champion.

Green energy in the form of wind and solar, though it has become less expensive, once it is required to provide the firmness inherent in fossil and hydro supplies, costs $110-150 per MWh. Coal in a new plant costs about $50 per MWh; legacy plants can survive on less but this would not justify refurbishment investment to maintain them in long-term operation.

Until the dam-burst of green energy forced the closure of major power stations in South Australia (the Northern) and Victoria (Hazelwood), the claims that renewables would augment supply and cost consumers little were credible. But that was only because the costs imposed on legacy plant by giving precedence to new subsidised supplies in dispatch were hidden and took time to manifest themselves. With high fixed and low marginal costs, legacy plant could be profitably operated by running down the capital. Eventually, this takes a toll on overall costs, especially when, in the case of Hazelwood, considerable sums were necessary to remove asbestos.

Closure of Hazelwood was tragic but it is difficult to consider any worse act of economic vandalism than that of the South Australian government, which not only encouraged the closure of its last coal station but promptly dynamited it to foreclose any chance of its resurrection.

The upshot has been a doubling of wholesale prices, from $40 to $80 per MWh. Under existing policies, these will probably increase further until they correspond to the costs of wind at $120 per MWh. In the process, system reliability is also degraded.

The costs to households are a lift in electricity bills of about one-third but the cost to commercial users are far greater and must force the closure of many factories and other activities that produce internationally tradable goods and services.

At first, attempts to resolve the price and reliability shocks stemming from renewable policies were to seek out smart ways of absorbing the damage they were creating. People were recruited: Professor Finkel as Chief Scientist, Ms Zibelman as market manager and latterly Kerry Schott as head of a new acronymous regulatory agency. Their solutions: batteries, pumped storage, demand response, smart meters may have some palliative benefits but fail to comprehensively address the damage.

Recognising this is Tony Abbott, again proving his formidable skills as a politician, at least when not in office, he is setting the Coalition’s agenda and now has wide support for his view of the folly of renewable energy subsidies.

Energy Minister Josh Frydenberg clearly recognises the unfolding disaster. But he has a Prime Minister who is a firm believer and constituents who are unready to recognise the nakedness of the renewable king enclosed in non-existent invisible fabric.

Frydenberg sees his task as being to “fool enough of the people enough of the time” to extricate the nation from its perilous self-inflictions. In doing so, he promotes renewables while seeking to have a new coal plant built. Facing the terrifying prospects of the policies he has promoted, the PM is forced to acquiesce but will likely insist on unnecessary costs of low carbon emissions plant from any investment that receives government support.

Labor has been more active in supporting green energy and has a further problem. The Party is reliant, directly and indirectly, to the tune of about $5 million a year upon funding from the industry super funds, the directors of which are largely ALP appointees and union affiliates. The government claims that some $23 million a year accrues to unions from these superannuation funds.

Without this, the political campaigns the unions pursue, largely to the benefit of the ALP, would not be possible. Union superannuation funds have invested heavily in subsidised renewable facilities, attracted by the “certainty” of a government guarantee and the predispositions of many board members towards the technology. Loss of support from the industry superannuation funds would be a difficult blow to the ALP.

Even for the Coalition, extraction from the renewables policy will not be easy. The first task is to remove the poison as soon as possible and rectify the most serious damage that is being done.

It is no longer possible for the government to simply disengage. The optimal approach requires four programs:

  1. Terminate all subsidy payments with immediate effect. It is not sufficient to allow the existing program to run its course bringing about 33,000 GWh of subsidised large-scale renewable energy by 2020. That would involve some 17 per cent of the market being subsidised; already with just over half of this in place, catastrophic consequences – doubling of prices, deterioration of reliability, an investment freeze on low-cost new plant – are apparent. The promoters of renewable energy misled the politicians, media and the public into believing their subsidised power would soon be able to stand on its own feet and provide low-cost, reliable electricity; now is the time to face the consequences.
  2. Call for tenders for a government contract for low-cost despatchable (i.e. coal) energy from a new plant equivalent in size to the 2,500 MW that has been scrapped as a result of the renewable program; like all market interventions, this involves risks including the penalty it imposes on all existing generators who do not have the benefit of such long-term contracts.
  3. Penalise via Commonwealth grants those states which have and intend to continue with excessive increases in coal royalties and which maintain major restrictions on gas exploration and development.
  4. Terminate all payments from the budget that involve energy subsidies.

Some $7.4 billion of spending or committed expenditure was “invested” in subsidised renewable plant in 2017 alone. That expenditure was in response to regulatory incentives and direct government disbursements (some $5 billion last year alone) to foster a form of investment that is not only twice as expensive as the production it displaces but also prevented commercial investment in plant.

Unless those “malinvestments” are allowed to unwind with attendant costs to their owners, the burden others are bearing will, at the very least, hamper recovery from their effects.

The fall-out will be felt elsewhere. The nation’s biggest energy company, AGL, not for the first time under incompetent management, is becoming recognised as a pariah firm contributing to the market destruction by propagandising and subsidising anti-coal activists while reaping super-profits of some $1 billion a year from the forced closure of rival plant. EnergyAustralia has taken a lower profile but it too propagandises the green myth.

Moreover, its owners, the conservative Hong Kong business CLP, ruthlessly acts against managers of overseas subsidiaries only when profit forecasts are missed; EnergyAustralia is a beneficiary of coal power at Yallourn (1450 MW) in Victoria and Mount Piper (1,400 MW) in NSW and will see a profit surge masking its wasted renewable energy spending.

Whatever the fall-out one thing is certain: no politician will ever be called into account for retailing the now discredited renewable energy nirvana. That’s just the way things are.

The wasted expenditure involved in renewable subsidies can never be recouped; it represents a permanent and irretrievable reduction in national wealth and living standards.

Above all, in transforming the world’s most competitive electricity supply industry into one of the world’s most expensive systems it has brought about a deindustrialisation that will have a lasting effect.

Alan Moran’s latest book, Climate Change: Policies and Treaties in the Trump Era, is published by Connor Court Publishing.
The Spectator Australia

Jay Weatherill: South Australia’s Premier economic vandal.

About stopthesethings

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

Comments

  1. It’s all to late to fix the electricity industry mess and the fools pushing for nuclear generation are going to add to the folly of some nirvana where Australia can salvage some sought of last minute miracle fix for the disaster that will ensue in the coming years. Australia, a supposedly first world country with unaffordable intermittent unreliable electricity supply and without a doubt the highest paid moronic useless politicians in the world.

    • We see nothing foolish about nuclear power. France gets 75% of its power from nukes and enjoys prices fully half that suffered in South Australia, and doesn’t suffer statewide blackouts and routine load shedding. What were you saying about fools?

  2. Crispin Trist says:

    Even before the wind turbines went up at Cape Bridgewater, effectively turning one of the most beautiful locations on the Planet into a toxic industrial no go zone, it was often stated that no coal fired power station had closed down due to the construction of a wind farm.

    Well in South Australia, they did just that!

    What an unmitigated disaster.

    • The residents of Cape Bridgewater deserve to have their safety, security and pleasure of their homes restored. These turbines need to be dismantled.
      In Ontario, Premier Kathleen Wynne could be called an ‘economic vandal’.
      It’s all documented in ‘Energy Perspectives’ by Parker Gallant.

      • Thanks Sommer.

        At a community council meeting in Cape Bridgewater to discuss the foreshore redevelopment, which in my opinion is about as useful as rearranging the deck chairs on the Titanic, a local spoke up stating that the wind turbines should be taken down. Another added that there had been talk about creating an artificial reef for diving. I’m afraid I couldn’t resist the opportunity to add, well that is what you do with the wind turbines! Take them down and use the towers as an artificial reef. There appeared to be support for the idea among the residents in the room.

        However, the council were not amused and would not be drawn on the issue of wind turbines. No surprises there.

        I do fear for western Victoria. The Global Wind Industry sees it as one gigantic wind factory with turbines up to 220m in height currently proposed. That is twice the height of the Cape Bridgewater wind facility. But the region has a fight on its hands if it wants to drive this ugly mob out of town. And it doesn’t help that there are people out there who are willing to sign up to this master plan to destroy their own ‘so called’ community. The Ararat wind farm is a case in point. It is obscene. Congratulations Ararat. You are once again Australia’s biggest loser.

        A shame really when they worked so hard to get rid of that title.

  3. Frank Campbell says:

    “Politicians will never be called to account” for this fiasco, says Moran. True. Same applies to journalists who ignored the disaster until recently. They never bothered to learn the basics- merely repeated the banal lies of the renewables scammers- for 15 years.
    Everything we see today was perfectly predictable 15 years ago. And it was predicted.
    Engineers like Etherington were ignored. Greens who saw through the fraud were vilified and ridiculed.

    When will the likes of Bob Brown, one-time genuine hero, admit that he’s been an absolute fool.
    At least Lovelock had the grace to apologise…

    • I agree Frank Campbell..but I think the most culpable in this and the ones who must be made accountable if we’re ever to know the truth about ANYthing are the journalists…almost all of whom…except for a tiny handful…are of the LEFT. I don’t believe they HAVE seen the light at all.

      It’s been made compulsory in Australia for a politician who aspires to any high office…to proclaim…and sustain under viperous questioning…a total belief in CAGW.

      No politician can survive without that adherence as we saw with Tony Abbott…and the LW journalists have the absolute whip hand….they are the ENFORCERS.

      Journalists have the overarching power…they groom the Australian people to think as they want them to think…and they do it by selective release of information on every issue of contention…along with selective propagation of ‘expert’ opinion…almost every ‘expert’ interviewed being of the LEFT.
      LW MSM will never question the hitherto trusted and revered institutions that have now been taken over by the LEFT…no questions re balance at the CSIRO or why researcher Clive Spash had to leave after he tried to publish his research that showed that an ETS wasn’t viable…no questions of Macquarie Univ about its treatment of Prof Murry Salby when conclusions in his research dissented fundamentally from the CAGW ‘settled’ science….no questions of other unis about their shunning of Bjorn Lomborg.
      With regard to CAGW…that underpins ALL of the mad ‘transformation’…journalists have never questioned warmist scientists on our behalf re how it could be legitimate to have declared a consensus…the ‘science closed’…on this ‘greatest scientific and moral issue of our time’…when almost zero research had even been done on the largest part of the earth system…the 70% that is ocean…almost no research done on clouds….their effects and feedback mechanisms unknown—when the sensitivity of earth’s climate to doubling of CO2 was [still is] unknown….when ocean temperature could not be reliably measured until the advent of ARGO floats in 2005 etc etc…NO QUESTIONS…NO ANSWERS…just propaganda.

      Journalists have kept Australians in the dark and fed them propaganda on the Climategate emails issue…refused questions and attempts to discuss….we’re told there had been several inquiries but not told that all were fake…headed by people with huge personal vested interests in the CAGW hoax prevailing…scientists at the centre of it not even asked questions…the same happening with similar inquiries in the US….at Albany State into GW claims based on unverified information about temperature over the last century in China…on and on it goes …so much dodgy unscientific behavior and methods….so many vested interests.

      LWMSM are totally silent on Malcolm Turnbull’s family vested interest in keeping the RET subsidies….imagine if it was Tony Abbott with a similar secret vested interest! He would be eviscerated!

      And now …with Australia on the cusp of energy catastrophe…LW MSM sneers and jeers at the idea that weather-dependent windmills and solarPV [ large and small] are not reliable enough to power industry…tourism…transport….subs build….other ship-building-….smelting….steelmaking…other heavy industry…military…border security….as well as commercial ventures and Australian homes.
      Neither LW MSM nor any of the Green groups like Australia Institute…..Climate Council…..ACF etc …will answer any questions about why Australia has to ….or even could….lead the world in displacing baseload with subsidized weather-dependent and unreliable RE. They sit for an hour on Q&A panels and are never asked.

      They are never asked to name ANY other first world country that’s without massive hydro power or nuclear ….that can survive as a modern industrialised country without COAL.

      I have to believe the LWMSM KNOWS no other country in the world survives without baseload COAL or more expensive GAS-fired electricity …even when they HAVE nuclear and connectors to other countries like Germany…so I have to believe they want 3rd world subsistence living in Australia…with no Medicare…no PBS lifesaving drugs…NDIS…welfare etc…no security…

      So I can’t trust any but a tiny handful of journalists…and it’s the rest …the LW journalists and those in the institutions, business and government who enjoy their protection regime … that I hold responsible for the disaster they’re all inflicting on Australia.

      • Jackie Rovensky says:

        Well said. The journalists of this nation and others have turned their backs on the ethics of their profession. Most are now nothing more than stooges to the industry and its smooched and suckered in adherents.
        Its seems few Journalists and MP’s are immune from the destructive money grab of the industry.
        There has been a massive destructive period where people have been more interested in filling their back pockets than in what is happening to our societies, where people with influence have made a decision that false environmental concerns are good money spinners. Lies are the goal of the day – the reporting, spreading, utilising them to make ‘policy’ is now the basis of our governments and media.
        We only exist to feed their greedy constant need for money – our money. All we see is it being used to further their dreams of power and that is not electrical power it is personal power.
        However what they forget is throughout history every debauched power hungry leader and their adherents have come crashing down as the people rise up and overthrow them.
        At that point they find those they relied on to support their desires disappear back to whence they came (in this case from foreign countries where they may themselves have become pariahs).
        They find themselves without those ‘friends’ they sought to please and realise they themselves have been plundered and left out to wallow a bath of their own crocodile tears.
        At the present time we still have the power of our vote, we can give it to whom we want and we can deliver to this nation a Government reliant on smaller parties or a Government made up of a coalition of smaller parties, that the ‘ruling’ party has to listen to and accept their support for every single thing they want to do.
        Neither Labor or Liberal at present appear to be able to understand the damage they have done to this nation by their desire to achieve personal goals instead of goals for the peoples benefit..
        This also goes for State governments such as the SA one which has shown no leadership but only a very deep despising of the voters of their State and a belief they have a right to ‘lead’ and to further their aim they have and continue to reduce the rights of the people of SA to have a decent life with good prospects for them and their families future.

      • I still overestimate the intelligence of the msm from time to time and assume they intentionally mislead people. The fact is that most of them are just useful idiots. Clueless about most of what they report on. Lacking capacity for logical, analytical and critical thinking. Brainwashed sheeple regurgitating the garbage they are fed. It applies to all subjects.

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