Addicted to Other People’s Money: Wind Industry Howls Whenever Its Massive Subsidy Stream Threatened

 

Way back in 1984, wind cultist Christopher Flavin’s told us that “in a few years’ time wind energy will not need to be subsidised.” 34 years on, the subsidies just keep on flowing and, without those subsidies, the so called wind ‘industry’ would disappear like a snowflake in summer.

No matter where they ply their trade, the wind industry, its parasites and spruikers will never be accused of running a consistent theme when it comes to wind power’s (supposed) ability to compete with conventional generation sources.

Whenever the political brains trust start challenging the true and hidden costs of wind power to their constituents, these boys start babbling about the wonders of wind being “free”; their “technology constantly improving”; their costs coming down all the time; and – in their more fantasy-filled moments – making the wildest claim of all: that wind power is already truly competitive with coal and gas fired generation (see our posts here and here).

That drivel lasts for just as long as it takes for the political conversation to turn to chopping the massive stream of subsidies directed by government mandate to wind power outfits. At which point, they sober up really fast – and start whining like spoilt brats about threats to investment and jobs (read their “own investments and their own jobs”).

In this December 2014 post, we threw down the gauntlet – challenging the Australian wind industry’s spruikers to pin their colours to the mast.

Is wind power REALLY competitive with conventional generators?

Or is it just a perpetual infant, that would die a natural death in a heartbeat in the absence of massive subsidies filched from power consumers, under the threat of whopping fines that get levied against retailers that fail or refuse to play ball?

While that story will shift like the desert sands – and continue to be delivered with the all the persuasion of Little Britain’s vacillating Queen of Darkley Noone, Vicky Pollard, whenever she’s put on the spot – the one constant is that the “future” of the wind industry will be just as it always has been: one entirely wedded to corporate welfare on a mammoth scale.

Peel away a few layers of this little onion and all that’s left is a ‘business’ model wholly dependent upon mandates, renewable energy certificates, production tax credits and fines on retailers for refusing to tolerate the chaos delivered by wind and solar power.

In Australia the direct and immediate cost of subsidies to wind and solar power outfits will exceed $60 billion over the life of the Federal government’s Large-Scale Renewable Energy Target. Largesse that has left Australia with among the highest retail power prices in the world (wind powered South Australia, tops the list).

No other industry in Australia’s history has enjoyed subsidies on that scale, ever.

Little wonder that the likes of Bloomberg – a ‘news’ organization dedicated to ensuring that the greatest wealth transfer in history rolls on to doomsday – and their rent-seeking clients squeal like stuck pigs whenever the subsidies look like they’re about to run out or, worse still, politicians threaten to remove them, altogether.

Here’s Alan Moran exposing the current state of Australia’s perverted energy market, which looks more like a jungle full of ravenous leeches.

Renewable Energy: the mad saga continues
Catallaxy Files
Alan Moran
17 January 2018

Bloomberg New Energy Finance (BNEF) lobbies hard for renewable subsidies and estimates global “clean energy” investment at $333 billion. This excludes hydro-electricity other than Politically Correct “small hydro”. Some 85 per cent of expenditure is in wind or solar with the rest including biomass, electric vehicles and waste-to-energy.

In a press release of 16 January, BNEF includes the following graphic of Australian renewable investment trends.

To recap, in Australia electricity from subsidised renewable energy – and wind is the cheapest of those sources – costs three times as much as energy from coal. It is viable only because the government requires increasing proportions of energy it designates as renewable to be incorporated in our supply and therefore in our bills.

This results in a subsidy, which at present is $85 per MWh for wind and large scale solar, and $40 for rooftop solar. Those sums are on top of the market price all energy receives. That market price used to be around $40 per MWh but, as a result of closures caused by subsidised wind forcing increased costs on coal and gas generators, it is now around $90 per MWh; research conducted by the Minerals Council puts new build for coal at under $50 per MWh, costs that are consistent with those estimated for the thousand plus coal generators being built, mainly in Asia.

The upshot is a double whammy – we replace low cost highly reliable electricity with supplies that are three times as expensive and which are highly unreliable – and we call that progress!! The $9 billion of subsidy-induced malinvestment in renewables last year alone would have been sufficient to finance over 4,000 MW of new coal plant – more than double the capacity of the now closed Hazelwood station, even if it is in fashionable but high cost low emissions plant. That would have returned prices to their 2015 level, half those now prevailing, and given us the reliability that is now a wistful nostalgia.

At present one of the man energy regulators, the AEMC, estimates renewable subsidies increase electricity prices by 10 per cent directly (p.10). That would be increased by another 20 per cent due to the subsidies boosting the overall generation cost and perhaps more due to them requiring increased transmission investment.

The lobby industry has taken to interviewing itself to raise the ante for new subsidies. BNEF in response to Reneweconomy notes that the capacity of renewables driven by existing schemes, which focus on the Paris Agreement’s 26-28 per cent reduction in emissions by 2030, will soon be met. Hence they are calling for further expansion of subsidies (existing ones, unless terminated, will live on for decades). BNEF argues “So what’s required is a more ambitious emissions reduction target under the National Energy Guarantee (NEG), or for state governments to continue to develop policy to ramp up investment.” And the hope of the industry is that Mr Turnbull will exercise his influence and “States should be throwing their weight around the COAG table and only signing up to a NEG if it ups ambition on a pathway to net zero emissions by 2050”.

The industry also claims renewable energy is already competitive, pointing to recent contracts struck by AGL and Origin Energy  for renewable power at around $60 per MWh. But public information of these contracts’ details is missing, including about what happens to the subsidy (which on forward markets remains above $50 per MWh). It is difficult to square claims made by many lobbyists on the back of such contracts that renewables are now competitive with coal especially since the same lobbyists say investment will dry up without more subsidies.

Meanwhile we have politicians swallowing the propaganda of the renewable industry or too timid or committed to renewable energy to stand up and tell it as it is.

Only a couple of minor players in Europe and the great Donald are resisting the madness. The USA is benefitting immensely from Trump’s energy policies with waves of new investment – including from Australia – announced almost weekly.

In time the success of Trump’s policies will surely remove the blinkers from the eyes of politicians but in the interim we can expect to lose considerable wealth, energy-dependent investment and face trying times in the reliability of the electricity supply system.
Catallaxy Files