Wind Power: The Mother of All Taxpayer Subsidised Scams

STT has likened it to the great corporate Ponzi schemes, pointing out, just once or twice, that the wind industry is little more than the most recent and elaborate effort to fleece gullible investors, in a list that dates back to “corporate investment classics”, like the South-Sea Bubble and Dutch tulip mania.

In the wind industry, the scam is all about pitching bogus projected returns (based on overblown wind “forecasts”) (see our posts here and here and here and here); claiming that wind turbines will run for 25 years, without the need for so much as an oil change (see our posts here and here and here); and telling investors that massive government mandated subsidy schemes will outlast religion (see our posts here and here and here).

The story is the same, the world over: wind power doesn’t run on wind, it runs on subsidies. The merest threat to which has the wind industry, its parasites and spruikers howling ‘blue murder’ .

The concept of rorting power markets by way of self-engineered power ‘outages’ began with Enron in California. Out of which the wind industry was spawned.

Enron’s renewable division ‘Enron Wind’ became ‘GE Wind’.  And Babcock and Brown was born the bastard child of Enron. Check out the CVs of the characters in these links here and here and here – a fair number of them brag of ‘solid’ backgrounds with Enron, lobbed at Babcock and Brown and – when it went into melt-down – scurried off like indestructible cockroaches to hide elsewhere in the wind industry. No surprises there. Babcock & Brown, after its spectacular financial collapse in 2009, was rebadged as Infigen.

These days, however, the ‘outages’ are engineered by Mother Nature, on a daily basis, allowing the owners of peaking power plants to make out like bandits: charging anything from $2,000 per MWh and all the way to the market regulated cap of $14,000 per MWh.

That the whole system is the product of deliberate government policy turns what is obviously criminal into a virtuous corporate endeavour.

In this rip-roaring piece, Judith Sloan roves the globe as she tackles the most outrageous economic and environmental fraud of all time.

Taxpayer support for renewable energy simply cannot be justified
The Australian
Judith Sloan
7 October 2017

The waste taxpayer money has gone on long enough; we must stop this nonsense

Move over, Ponzi; forget Bernie Madoff; ignore Enron; and dismiss collateralised debt obligations associated with subprime mortgages. Without a doubt, the biggest scam perpetrated against taxpayers and consumers is renewable energy.

And if you think this scam is just an Australian phenomenon, think again. With very few exceptions, governments all over the world have fallen into the trap of paying renewable energy scam­mers on the basis that it is neces­sary, at least politically, to be seen to be doing something about climate change.

But let’s take the Australian figures as an example of the vast sums of moneys being redistributed from ordinary consumers and taxpayers to the renewable energy rent-seekers. It is estimated that more than $2 billion a year is handed over to renewable energy operators by virtue of the operation of the renewable energy target and the associated renewable energy certificates.

But this is just the start. The Australian Renewable Energy Agency shovels out hundreds of millions of dollars annually to subsidise renewable energy companies, many of which are overseas-owned. Then there is the Clean Energy Finance Corporation, which was given $10bn in equity by the Gillard Labor government to lend or grant money to renewable energy companies. Evidently the long-suffering taxpayer might receive a return on this “investment”, but I wouldn’t suggest you hold your breath.

Then we have the actions of deluded state governments and their absurd renewable energy targets. Using the dubious technique of reverse auctions, state governments are effectively providing guaranteed cashflows to renewable energy companies for intermittent power using taxpayers’ money. Think Victorian and the ACT here, but Queensland is about to get in on the act.

It would be a worthwhile exercise to add up the value of all these subsidies, grants, concessional loans, guarantees and the like so we can get an appreciation of the size of the scam. There is no doubt the aggregate amount dwarfs any other government industry assistance aid, including for the now defunct automotive industry.

In point of fact, the amount of direct and indirect assistance given to those international car companies through the years looks like small beer compared with the renewable energy scam. But here’s the thing: people finally appreciated that the high levels of assistance to the car industry did not benefit consumers. Exactly the same point applies to subsidising renewable energy.

Consider what has happened in Germany. In a fit of panicked madness, Chancellor Angela Merkel decided the country’s nuclear power plants should be shut down, to be replaced with renewable energy. The plan is that by 2050, between 80 per cent and 95 per cent of electricity will be generated by renewables. The target for 2030 is 50 per cent — the same as our Labor Party’s target for Australia.

The last nuclear power plant is due to close in 2022 but Energiewende, the name of the plan to transition electricity generation, has hit serious hurdles, not least the extraordinary cost of the investment in renewables, now totalling about €650bn ($980bn).

And here’s another strange feature: renewable energy producers in Germany are paid more than €1bn a year not to produce because the stability of the system can be imperilled if there is too much ­renewable energy at certain times. It’s so European to pay an outfit not to do something — just think farmers.

Because the nuclear power plants were largely in the south of the country and the wind farms are in the north (where the wind blows), there is a need for substantial investment in new transmission lines. As a result of public objections to these unsightly new pylons, the decision has been taken to put the lines underground — at eight times the cost of the above-ground versions. It is now estimated the required new infrastructure will take much longer to complete, well beyond the 2022 deadline. The costs to the consumer of the German government’s radical policies are substantial. There is a specific levy paid for green energy, and retail electricity costs in the country are second only to Denmark within the EU.

Cunningly, the government has largely exempted large industrial users from the cost of Energiewende. And the absurdly high and long-lasting feed-in tariffs for households with solar panels — does the sun shine much in Germany, you ask? — has underpinned support for the policy.

But the real kicker is this: Germany will fail to meet its emissions reduction targets of 2020, set at a 40 per cent reduction from 1990. The actual figure is likely to come in at 32 per cent. Note that the ­decommissioning of highly inefficient, rust-bucket factories in east Germany in the early 1990s was a boon to meeting the target set by the government.

Then there is the issue of intermittency that plagues renewable energy around the world, including in Germany. Late last year, the wind simply didn’t blow for several days and a thick fog surrounded many parts of the country. The output from renewables fell to just 4 per cent of total demand. Battery back-up is of little use in this scenario.

That Germany’s electricity system is connected to neighbouring countries meant demand could still be met. Poland, with its black coal-fired electricity plants, in particular was able to fill the breach. But here’s the thing: Poland is now questioning if it will continue to accept wind-powered electricity from Germany because the profitability of its electricity plants is being undercut. There is talk of a block being imposed.

Of course, it’s not just the Germans who have fallen for this expensive scam. In Britain, the cost of renewable energy is still off the charts, although the cost of wind farms, now virtually all offshore because of local opposition, has fallen recently. But the figures are quite staggering.

In what is the mother of all subsidy schemes, the government holds auctions to award long-term contracts to companies on the basis of megawatt hours produced. There are now contracts in Britain whereby producers are paid £150 a megawatt hour (more than $250/MWh) for wind power produced.

The most recent round has still produced figures of more than £100/MWh, which is insane. And note that Britain continues to burn woodchips imported from the US to produce electricity because of the supposed environmental benefits. You know it makes sense.

In 50 years — hopefully sooner — my successor commentators will look back and wonder what the world was doing.

As the Australian government contemplates where to go next in terms of energy policy, the best approach involves acknowledging that enough is enough when it comes to subsidising renewable energy. The sector has been showered with favours, including volumetric guarantees courtesy of the RET. It is time it stood on its own two feet without any preferential treatment or financial assistance.
The Australian

Another great effort from Judith! Proving, yet again, that she is one of the few mainstream journos that actually gets it.

Judith identifies the latent hypocrisy which fuels the renewables rort.

If there was a shred of substance in claims peddled by the wind and solar industries that their products were truly competitive with conventional generators, then they would happily tear up the government mandates that force retailers to purchase their skittish wares, hand back the subsidies worth $billions they’ve already pocketed and refuse to take a penny more from power consumers and taxpayers. Don’t hold your breath.

However, Judith let’s the wind industry off the hook with this:

It is estimated that more than $2 billion a year is handed over to renewable energy operators by virtue of the operation of the renewable energy target and the associated renewable energy certificates.

This year alone renewable energy certificates worth $2.2 billion will be issued to wind and large-scale solar generators, and purchased and surrendered by power retailers, with the full cost added to retail power bills.

The maths is pretty simple.

Assuming those certificates were purchased at the current spot price of $85, with 26 million of them required to satisfy this year’s mandated LRET target, the amount transferred from power consumers to wind and solar power outfits via retail power bills is $2,210,000,000.

However, as the LRET target ratchets up over the next two and a bit years to its final destination of 33,000 GWh in 2020, power consumers will be slugged for subsidies worth $2,805,000,000 each year; at a minimum, assuming a REC price of $85 (33 million RECs @ $85).

If the REC price reaches $93 (as it is designed to do under the LRET) then the figure will top $3,069,000,000 (33 million RECs @ $93) – each and every year from 2020 to 2031.

The total cost of the subsidies alone between now and then will exceed $42 billion. The full analysis is laid out here: Sheik-Down, Down-Under: Saudi Billionaire Pockets $300m in Renewable Subsidies

Judith makes a comparison between the subsidies thrown to the wind and sun in this country, and the taxpayer generosity directed to Australia’s motor manufacturers.

However, Judith overlooks the fact that until General Motors Holden and Toyota pulled the plug on their Australian operations this month, motor manufacturers (which also once included Ford and Mitsubishi) had employed tens of thousands directly and tens of thousands more, indirectly.

None of which can be said for the wind industry.

Apart from fleeting construction work, collectively the wind industry employs a few hundred maintenance workers across the country; the turbines and their components are all manufactured overseas: India, China, Denmark and Germany. Adding insult to injury, the companies that operate wind farms in this Country are almost all foreign-owned, with their fat subsidised profits repatriated to places like New Zealand (Trustpower and Tilt), Thailand (RATCH), Spain (Acciona and Epuron), France (Engie and Neoen) and China (Goldwind and Energy Australia).

Throwing a few hundred million dollars at motor manufacturers over the last 50 years, in exchange for the hundreds of thousands of manufacturing jobs generated over that time may not have represented pure economic efficiency. But at least Australian taxpayers got something back in return.

Not so with subsidised wind and solar.

No, Australian taxpayers and power consumers are expected to give until it hurts; to suffer the highest power prices in the world; and to keep calm and carry on, during statewide blackouts and mass load shedding events (when the wind stops blowing, blows too hard and/or the sun goes down).

Welcome to your wind powered future!

So this is what a South Australian Summer evening looks like!

About stopthesethings

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

Comments

  1. Hamish Cumming says:

    The environmental cost of bad energy policy and poor state planning laws is also massive. Could your readers please check out my Change.org petition asking for AGL to be held to their planning permit conditions for their Macarthur energy generation site.

    http://www.change.org/p/richard-wynne-parliament-vic-gov-au-make-agl-adhere-to-permit-conditions

    AGL’s reports show that they are likely to be killing nearly 2,000 birds and bats a year at their Macarthur generation facility alone (many of which are raptors), which is many times more than their planning application documents estimated. Please demand that the Moyne Shire and DELWP enforce planning permit conditions before it is too late.

    PS I’ve approached the Greens, Greenpeace and Friends of the Earth, but so far the silence has been deafening…

    • Peter Pronczak says:

      It’s not suprising Hamish.
      Be aware that behind change.org is the WWF formed by big game hunter Prince Phillip, ex-Nazi SS officer Prince Bernhard of the Netherlands, and then President of the British Eugenics Society Julian Huxley.
      With former King Juan Carlos of Spain breaking his hip on an elephant hunt in Botswana in 2012 (the ivory may have paid for his new yacht) being President of WWF Spain.

      The Greens originating stronghold of Geelong, Victoria, had very merry euphemistic ‘green’ parties. Notice that Di Natale MD, MP, has nothing to say against wind turbines in the Geelong area.

  2. Jackie Rovensky says:

    A great piece, pity our so called National and State ‘Leaders’ are inhibited on the power topic.
    All this yak about needing storage – which in the main refers to battery storage – all the Governments are doing is allowing the industry to lie again and letting them get away with US having to pay for what they have promised to provide – cheap, efficient and sufficient wind energy for all our needs – just how many houses do all these turbines actually power?
    Why should we pay for battery’s to be provided, installed and connected to the grid to shore up the promises of the wind industry?
    They also lie when they want to change turbines, even before approved ones have been installed. They seek to change approvals so they can install larger blades spouting that these monsters are new technology – where is the new technology, just making them bigger is not new technology it can at the very best be considered as improvement on the existing technology but it sure ain’t new technology.
    More money, more pain to the end user while the industry and no doubt those who have one hand stitched to their back get fat bank balances.
    Mr Turnbull stop looking at your navel and start working for this Nation and ITs people, this industry does not need unfettered support from any Australian Government, it does not need the constant financial support of this Nations public purse to survive, it has made promises that it has not kept and never can keep. At every turn it seeks assurances from Governments that they will continue to pay subsidies, change planning regulations, and make it easier for them to fulfil obligation to themselves to lie through their teeth until they destroy our way of life and that of future generations.

  3. Zebilman seemed to be warning us in her rambling speech at the Energy Summit today…that electricity prices are going to go a lot higher yet….and suck it up…or that’s how I read it.

    She warned that we had to ‘value reliability’…that the market has to reward generators for the FCAS and firming costs they’ll have to pay to make wind and solar reliable and dispatchable.

    Of course we know it will be consumers who’ll pay… so that can only mean …that if we expect RE to be reliable it will cost us massively.

    Everyone who preceded Zebilman at the Summit had emphasized that there’s no turning back…that RE’s here to stay…baseload’s an ‘archaic perspective’ according to AGL’s Vesey…so she felt safe to tell us… the cornered lab rats…that it will cost us big time.

    She doesn’t seem to have ANY concern for Australia’s viability..industry…prosperity…security..she’s just excited about her ‘world-leading’ experiment …she’s found a suicidal government with a vested-interest ‘leader’…and an enthusiastic fellow-American ally…PERFECT!

    • Too true Truth, the lab rats, as you aptly describe Australia's long suffering power users, should indeed be warned.  Audrey Zibelman has form when it comes to expecting power users to simply grin and bear the arbitrary imposition of costly and utterly pointless ideologically inspired renewables policy.  The callous disdain she showed for the victims of her ruthless zealotry in her previous role as chair of the New York Public Service Commission should leave people in no doubt what Australian power users have in store:

      "Get that? The unelected PSC unilaterally raised taxes by $8 billion – without any participation by the people’s elected officials in the state legislature. That’s not obnoxious at all. How very Barack Obama of them.

      All of which is terrible news for everyday New Yorkers who, you know, use energy. And would like to have their elected officials participate in policy-making every now and again.

      So New Yorkers have begun expressing their concern. Governor Cuomo and his bureaucrats – aren’t exactly concerned with their concerns: “Since the energy mandate was approved, Cuomo’s energy regulators have been dismissive of any cost concerns. PSC chair Audrey Zibelman has told members of the press that the energy mandate will actually benefit consumers.”

      New Yorkers don’t really see these supposed benefits. What they do see – is the Cuomo Cronyism kicking in: “(D)ownstate energy consumers bore a disproportionate burden of the cost of state subsidies that will support three upstate nuclear power plants.”

      Wait – who?: “(The tax) money will go to plant owner Exelon, a Chicago-based Fortune 100 company with annual revenues of over $34 billion.”

      Great news – for Cuomo Crony Exelon. And oh – it appears they’re a little behind with Uncle Sam: “(T)he company, Exelon, that owns two (and soon to be all three) of New York’s nuclear power plants was just ordered to pay the Internal Revenue Service $1.45 billion in back taxes.”

      So New Yorkers are being forced to pay a brand new additional $8 billion in taxes. Taxes for which their elected officials never, ever voted – but are instead being slammed down upon them by unelected bureaucrats.

      New Yorkers will watch their $8 billion go to Cuomo Crony Exelon – who will than use a huge portion of it to pay off an outstanding IRS tax bill.

      All in pursuit of a “green energy” fantasy that will never, ever come true"

      (my boldings)

      http://blog.heartland.org/2016/11/new-york-state-is-perfecting-governor-andrew-cuomo-cronyism/

      • Peter Pronczak says:

        Never mind, if the NY underground rail system gets any worse & completely grinds to a halt think of all the electricity it’ll save.

        Wakey, wakey, it’s a common fault throughout all the financial usury system, you know the casino economy is broke & stealing money + drugs keeps it afloat (IPO;)). The big BRICS aren’t stupid making money from exporting alternative equipment while installing a token amount; not that solar panels aren’t entirely useless, except on roofs & as farms.
        So in entirety “It’s the money stupid!” China’s using the original Alexander Hamilton system + Glass-Steagall.
        The other option is to rug-up find an off-shore wind turbine to live on & eat sashimi.

  4. Peter Pronczak says:

    So that’s where the milk lake & butter mountain went!

    No wonder Oxford Uni sees the EU continuing under Germany post-Brexit.
    Same old, same old, just follow the money trail of debt slavery.

  5. Son of a Goat says:

    I personally wish Energy minister Josh Frydenberg all the very best for his upcoming surgery.

    One can only gather that from his speech today at the National Energy Summit in Sydney where he carefully positioned his ample size butt on either side of the renewables fence, that a large number of pickets will need to be surgically removed.

    He emphasised that there was “a declining cost curve” for wind, solar and renewables storage.

    Then showing his deft touch, he did the somersault of a sumo wrestler by then declaring that “greater efficiencies can be found in thermal generation, and the need for sufficient dispatchable power in the system.”

    Perhaps there is method in his madness by declaring the govt would not make a decision on the CET until later in the year.

    As the heat waves and blackouts descend upon Australia this summer the natives tend to get a little restless as granny gets fried with no air conditioning, Uncle Joe tends to get a bit agitated with warm beer and there nothing like being stuck at a major intersection with no lights to get the adrenalin flowing.

    Alas Elon Musk may once again be the saviour of the zealots!
    As the tribe beckons for justice Koutsy, Jay, Lovely Audrey and Desert head amongst others, have to scramble for seats for Musk’s first manned flight to Mars.
    All aboard!

  6. Blood sucking leeches

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