National Energy Guarantee Spells Doom for Wind Power: Mere Threat of NEG Smashes Wind Power Outfits’ Share Prices

The wind industry in Australia is doomed, and it knows it. Power consumers who have received power bills since retail rates increased fully 20% in July, are furious; tens of thousands simply can’t pay them and have been put on ‘payment plans’, while thousands more have simply been disconnected from the grid, unable to pay their power bills, at all.

Something had to give.

With blackouts looming this Australian Summer (stinking hot December days, when the demand for power skyrockets, beckon), it was inevitable that the Federal Coalition would do something. That ‘something’ is the National Energy Guarantee.

STT gave our initial analysis of the NEG here: PM’s Reliable Power Play Spells Disaster for Unreliable & Intermittent Wind Power

In the graphic above, it appears that investors, who might have otherwise thrown their money to the wind, agree with STT.

Infigen (formerly Babcock & Brown) is an all wind power outfit, which has lost investors hundreds of millions of dollars since 2009, when it Phoenixed from the wreckage of Babcock & Brown (see our post here).

In April this year, it shares were trading at $1.06, by November they had plummeted to $0.64: a 42% haircut for its hopeful investors. Some of those who threw their money at Infigen also paid $0.89 a share for an equity raising project back in April, adding financial insult to investing injury.

Tilt Renewables (aka Trustpower) saw 15% wiped off its share price when the NEG was first floated, and Deutsche Bank placed no value on its development pipeline of more than 1650MW of wind and solar projects, because they have almost no chance of seeing the light of day.

Wind power was built on government edicts, mandated subsidies and targets: the slightest hint that governments might mess around with any part of that formula sends bankers and investors running to the hills (see above).

And it’s the threat of the NEG that is the source of their perfectly understandable panic.

Getting the NEG up and running may take some political finessing from Malcolm Turnbull and his hapless sidekick, Josh Frydenberg. Here’s the latest on that saga.

State polls risk crushing Turnbull’s power hopes
The Australian
David Crowe
25 November 2017

Malcolm Turnbull’s energy plan has cascaded into a state election dispute over whether to impose new reliability targets on electricity retailers, putting the reform at risk of a veto next year after state ministers split on the idea.

The federal government won a limited victory for the national ­energy guarantee yesterday by getting enough votes from the states to draft a preliminary ­design to boost reliability and ­reduce carbon emissions.

But the scheme is at the mercy of a meeting scheduled for April to finalise the plan and get all states and territories to agree to it. To take effect, it needs unanimous agreement because it works through state and federal regulation rather than requiring a vote in federal parliament.

Energy Minister Josh Frydenberg declared the NEG was the “only game in town” to bring certainty to the east coast power grid, promising to push on with consultations and design work.

Australian Chamber of Commerce and Industry chief James Pearson called on all governments to agree, warning that the April meeting was too far away when urgent action was needed.

Labor states split yesterday on whether to approve further work on the NEG, with Victoria’s ­Energy Minister Lily D’Ambrosio in favour while South Australian Treasurer Tom Koutsantonis and ACT Climate Change Minister Shane Rattenbury voted against.

The vote came after the meeting discussed advice from the ­Energy Security Board, the peak group of energy regulators, showing the NEG would cut $120 a year from household bills for the next decade, on top of a $280 annual cut because of policies including the renewable energy target.

Mr Koutsantonis called for more work on policies supporting renewable energy, such as a clean energy target or an emissions intensity scheme, rather than deciding on the NEG as the only way.

The fate of the policy now hangs on state contests, including today’s Queensland election and South Australia’s poll in March.

SA Opposition Leader Steven Marshall has backed the NEG as a national solution and attacked Mr Koutsantonis and Premier Jay Weatherill for power price rises and outages that have hit the state.

“We must prioritise energy ­reliability and affordability and, if I’m elected premier in March, my government will work with the federal government to deliver ­affordable and reliable electricity,” he said in a statement.

The third force in the state campaign, Nick Xenophon, said he might support the NEG. “I have an open mind on how it will work but we need to see more detail,” he said. “The key determinant needs to be lower prices as soon as possible. We need some certainty on national energy policy, and there has to be some ­bipartisanship otherwise there’ll be an investment strike.”

Renewable energy advocates are sceptical of the modelling released this week, calling for a clean energy target as recommended by chief scientist Alan Finkel before Coalition MPs ­mobilised against any policy to continue subsidies for wind and solar power. The NEG offers no subsidies to replace the RET when it is closed to new projects in 2020.

“You won’t get federal Labor support for an energy policy that is deliberately designed to strangle renewable energy. That is what this policy is,” ALP energy spokesman Mark Butler said yesterday.

The Queensland Labor government did not vote yesterday.

Federal Greens MP Adam Bandt rebuked Ms D’Ambrosio for backing work on the NEG, saying “you can’t trust Labor on climate change”.

Ms D’Ambrosio hit back, reminding the Greens they voted against a carbon pollution reduction scheme in 2009.

“To be clear — from someone who was in the room — no NEG was agreed to,” she tweeted.
The Australian

Nick Xenophon: hates the wind industry, with a passion.

 

STT hears that the third force in Australian politics, Nick Xenophon is likely to back the NEG. South Australia’s favourite Greek, hates wind power with a passion, so any policy that puts wind power outfits out of business will get Nick’s tick of approval.

Another player that the wind industry is right to fear is Federal Liberal MP, Angus Taylor.

Here’s what Angus had to say about the NEG a few weeks back.

Energy Guarantee to deliver affordable, reliable electricity
Tuesday, 24 October 2017

Federal Member for Hume Angus Taylor says the Turnbull Government’s new National Energy Guarantee will deliver more affordable and reliable electricity while meeting our international commitments.

“Our plan will help keep the lights on by putting in place a reliability guarantee. This will ensure that Australian families and businesses can access the reliable baseload energy they need – when they need it,” he said.

“We are putting the obligation on the retailer to keep enough reliable and affordable energy in the system.

“We will also meet our international commitments as emissions will be reduced over time, consistent with our Paris target.

“It is not a trading scheme, it is not a carbon tax, it does not subsidise any particular technology – this levels the playing field, there are no subsidies.

“We don’t need a Clean Energy Target because the National Energy Guarantee will ensure reliability, while lowering emissions, without costly subsidies.”

He said the National Energy Guarantee – a recommendation of the Energy Security Board (ESB) – would give certainty to investors and encourage investment in all forms of power.

“This means electricity bills will be lower than currently forecast and lower than they would have been under a Clean Energy Target,” Mr Taylor said.

“I under understand many families and businesses in Hume are doing it tough and this Guarantee will provide cost-of-living relief.”

The Guarantee is made up of two parts that will require energy retailers across the National Electricity Market to deliver reliable and lower emissions generation each year:

  • A reliability guarantee will be set to deliver the right level of dispatchable energy (from ready-to-use sources such as coal, gas, pumped hydro and batteries) needed in each state. It will be set by the Australian Energy Market Commission (AEMC) and Australian Energy Market Operator (AEMO).
  • An emissions guarantee will be set to contribute to Australia’s international commitments. The level of the guarantee will be determined by the Commonwealth and enforced by the Australian Energy Regulator (AER).

“Unlike previous approaches, we are not picking winners, we are levelling the playing field,” Mr Taylor said.

“Coal, gas, hydro and biomass will be rewarded for their dispatchability while wind, solar and hydro will be recognised as lower emissions technologies but will no longer be subsidised.”

The National Energy Guarantee built on the short and medium term plans already in place.

“The Guarantee builds on our existing energy policy which involves the retailers offering consumers a better deal, stopping the networks gaming the system, delivering more gas for Australians before it’s shipped offshore and the commencement of Snowy Hydro 2.0 to stabilise the system,” Mr Taylor said.

Mr Taylor said Labor had no plan for reliable energy and can’t break free from the world of subsidies and taxes.

“They want to impose reckless and irresponsible renewable energy targets that would drive up prices and undermine reliability,” he said.

“They’ve given no thought to the reliable energy needed to keep the lights on when the sun isn’t shining or wind blowing.  Their plan to give billions of dollars of subsidies will only leave you and your family paying more.”

Angus Taylor
Assistant Minister for Cities and Digital Transformation
Federal Member for Hume

Like we said above, the mere mention that a government might mess with the legislation that created the greatest economic and environmental fraud of all time, not only rattles investors and bankers, it crushes the prospects of every threatened wind power project in the pipeline.

With Angus Taylor pushing the NEG and Nick Xenophon about to do the same, the wind industry’s days in Australia are well and truly numbered.

Angus Taylor: the man the wind industry fears most.

About stopthesethings

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

Comments

  1. Funny comment today at the grand battery turning on today. SA Treasurer talking about Tesla’s “investment” in SA. Bit worrying when a Treasurer thinks being sold something is an investment by the seller.

  2. Jackie Rovensky says:

    Short note: Hornsdale Wind Project (both 1 and 2) were this morning TAKING FROM THE GRID, as it appears there was insufficient wind to even keep their electronics and computers operating within the turbines. All these wind turbines require electricity to keep them operating. Not all they produce goes into the grid, they take what they need first, the greater number in one project the more they take before they ‘export’.

    • How is this different from any other power station?

      Here in the UK, currently 3 of our AGRs are offline for refuelling (in the coldest week of the year, so far!), and consuming a massive 57MW; also our only PWR is refuelling, but doesn’t dare publicise how much power it’s consuming in addition:
      https://www.edfenergy.com/energy/power-station/daily-statuses

      • The difference, obvious to all but the willingly obtuse, is that what you are referring to is pre-planned, downtime. What Jackie was detailing is the product of the weather. And it occurs every day. Anyone still attempting to compare wind power with conventional generation clearly couldn’t tell the difference between day and night. So, what’s your point, again?

      • The first point was to highlight the order(s) of magnitude difference between the parasitic consumption of different types of generation when they’re not generating.

        The second point – and I apologize if it was insufficiently clear – was that when a source of generation is lost, it’s just as undesirable if it’s scheduled as if it’s unscheduled. Or to put it more graphically: a blackout caused by a shortfall of generation at peak demand that is pre-planned is just as dark as one that happens at short notice, unplanned.

        If you’d prefer an example of an unscheduled shortfall, consider France at the moment, which is heading into a second consecutive winter with a significant number of its nuclear stations still out of action due to unscheduled safety and ageing issues. Looking at http://www.gridwatch.templar.co.uk/france earlier today, if it weren’t for the 8GW being imported from its neighbours on interconnectors and the 2GW from its own wind, it would have been struggling to meet demand with its remaining generation, just at the start of winter here.

        Ironically, for a country that prides itself on its low-carbon generation, the shortfall in France’s nuclear generation is largely being made up by imports from its neighbours, where the marginal generation used to supply it is mostly their last-resort coal-fired plants.

      • Point taken, but once these plant come back online, they will stay online without their operators having to worry about the weather. That was Jackie’s point.

  3. Does it not concern STT that these talking heads supposedly talking up the NEG still refer to Snowy Hydro 2, biomass generation, batteries and sustainability in glowing terms while deriding wind and solar generation?
    I don’t see any strategy or commitment to a viable economic power supply policy. What I see is a government trying to “fine tune” existing policies. Sort of like taking a couple of workers away from the digging to square up the sides of the hole and apply some paint to make the hole look pretty.
    The Liberal party still has Turnbull in charge with Turnbull 2 in Julie Bishop waiting in the wings as a potential backup if opinion polls indicate she could be an advantage. The shadow of the Liddell closure is looming larger and larger. Australian taxpayers are going to be on the hook for a resolution.
    Vote Labor at the next election and give them a sweeping majority to implement suicidal energy policies to get this economic suicide over and done with as soon as possible.

    • Yes, but we think the NEG will not support batteries, biomass etc, due to their exorbitant cost. The LRET is terminal, so is Turnbull after the QLD electon.

    • I hope you’re right. Cost and performance does not appear to be a barrier to South Australia’s population. I’m sure the various battery and biomass companies can swing payment plans aimed at providing enticing media grabs for supportive politicians. And as for performance…the voters don’t really care. If performance was an issue, solar and wind wouldn’t be where they are today.

      • Weatherill love strutting about talking about the worlds biggest battery unchallenged. It is a fly speck against the backdrop of the issue but it certainly has marketing power.

  4. Terry Conn says:

    But, the RET and REC system that caused this entire fiasco is still there – is it not? So AGL and Origin and other gentailers carry on along the happy subsidised path of wind turbines receiving LRET’s with which they then build their open cycle gas turbines with the usual spot prices up to $14,000 a mgwhr and all the time meeting their NEG requirements – net result thousands more wind turbines and continuing skyrocketing retail prices? Please explain (why I am wrong).

  5. Reblogged this on ajmarciniak and commented:
    The wind industry in Australia is doomed, and it knows it. Power consumers who have received power bills since retail rates increased fully 20% in July, are furious; tens of thousands simply can’t pay them and have been put on ‘payment plans’, while thousands more have simply been disconnected from the grid, unable to pay their power bills, at all.
    Something had to give.

    • People are furious, but their anger is directed towards traditional energy generation and the executives that run them. They still believe that wind and solar are free and that somehow the high energy costs are a cross to bear on the transition to a new world. Until there is a concerted effort against the green blob, the NEG is just another bump in the road for the wind and solar industry.

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