Subsidised Wind & Solar Driving Australian Power Prices Through the Roof

Power prices matter: and they matter most to society’s poorest and most vulnerable.

In less than a dozen years, Australia went from enjoying the cheapest power in the world, to suffering the world’s most expensive.

In the last three years power prices have risen at double-digit rates: 20 to 24% last year and 13 to 20% the previous year in those states chasing renewable energy Nirvana: Subsidised Wind & Solar Driving Out-of-Control Power Prices: Business Hit With 24% Hike

It’s not just the $4 billion a year in subsidies and grants to wind and solar that are sending power prices through the roof – the subsidies in the form of Renewable Energy Certificates are added directly to retail power bills: Ticket to Oblivion: Australia’s $60bn Wind & Solar Subsidy Gravy Train Rolls Until 2031

The chaotic and intermittent delivery of wind and solar wreaks havoc to the orderly marketing of electricity, allowing the owners of fast-start diesel and gas generators to extort rates 140 times the average wholesale price of power: Generators Game Power Market Around Wind & Solar Output Collapses: Spot Prices Routinely Hitting $14,000/MWh

At a time when PM, Malcolm Turnbull and his gormless Energy Minister, Josh Frydenberg are struck with crippling inertia, those in the political sphere with the temerity to tackle the causes and consequences of Australia’s self-inflicted power pricing and supply calamity, stand out.

Among Liberal ranks the absolute standout is NSW Federal MP, Craig Kelly.

Craig heads up the Monash Forum, a group of around 30 Liberal and National MPs devoted to restoring Australia’s reliable and affordable power supply.

What impresses STT about Craig Kelly, is not just his deep understanding of the policies that have caused the disaster, it’s also his genuine compassion for the voiceless victims: those on low, fixed incomes, pensioners and the elderly, living alone; the hundreds of thousands that simply can’t afford power: Australia’s Self-Inflicted Renewable Energy Crisis: 200,000 Families Can’t Afford Power

For the elderly and infirm, not having the ability to heat their homes when temperatures plummet presents as a serious mortal threat. Not that those pushing an all RE future mind. That’s left for decent characters like Craig Kelly. Here he is being interviewed by Michael McLaren on 2GB (Podcast below and transcript following).

Michael McLaren: Well, I know one man in government who does listen is Craig Kelly. He’s the member for the Sydney seat of Hughes, of course. He’s one of the few government MPs prepared to stick his head up on the issue of power prices in particular. He talks about the issues that you’re talking about, even if some of his colleagues don’t. Now, I mentioned the temperatures we’ve experienced over the weekend. Craig’s, I think he’s in about 21 layers. He comes from a part of Sydney that was a bit cold. Yesterday, in the words of one report, vast parts of the country woke up to the coldest day of the year. In Sydney, in Olympic Park, it was 1.2 degrees at 6:30 in the morning. Brisbane, 5.2. In other places, like Orange, according to a soil temperature reading, -14 degrees at Sunday morning.

And of course, what happens when it gets cold? We put on the heating, don’t we? But with power bills going through the roof, there’s a growing number of people that simply can’t afford to do it. There was a letter to the Sydney Morning Herald the other day, someone writing saying simply and eloquently, “I’m cold, and I’m in bed.” It was an old woman. This is Australia, energy-rich Australia. As I said to the Resources Minister last week … and as we’ve discussed, the performance wasn’t that flash … we have 7% of the world’s black coal reserves, 24% of the brown coal reserves, 257 trillion cubic feet of gas, 34% of the world’s uranium. Do we use them? Not much. Do we export them? You bet.

And with an environment like that, we have some of the highest power prices in the world. It would be like the Eskimos having some of the most expensive ice per kilo bag at the service station, ridiculous. Like the Saudis having the world’s most expensive petrol, ridiculous. And here we are in Australia. Well, you know the story. Over to Craig Kelly. He’s joined me in the studio. Good morning, Craig.

Craig Kelly: Yeah, good morning, Michael. Great to be here with you on this rather cold Sydney morning.

Michael McLaren: Could do with a bit of that global warming, Craig. Good grief. It’s cold.

….

Michael McLaren: Well look, the ACCC report came out last week. It’s been described as a game changer, but I’ve had a look through some of the executive summary anyway. To me, it seems to state the bleedingly obvious. Why do we need the ACCC to tell us what thinking people already know?

Craig Kelly: Well, I think it was good the ACCC came out with this report. We’ve had previous reports from the chief scientist, from the Australian Energy Market Operator, and they’ve all bypassed the issue of reducing the subsidies for renewables. This year it’s $3.6 billion that gets added onto people’s electricity bills, directly to subsidise renewables. Now, the ACCC has called for at least 1.2 billion of those to come off almost straightaway. And Michael, why this is important, you were talking about the temperatures before. The World Health Organisation recommends that you should have your home heated to at least 18 degrees, and if you don’t, you’re at risk of adverse health outcomes.

Now, we have excess winter mortality in this nation. It’s about 6,000 to 7,000 more people die in winter than they do at the other times of year. The World Health Organisation estimates that 30 to 40% of those deaths are the result of cold homes. That’s why we are facing a national crisis with the cost of electricity. We’ve got to forget this ideological path that we’ve gone down to, subsidising these renewables, because people have been hypnotised by looking at wind turbines, and we have got to do everything we can to get those electricity prices down. And that, Micheal, in the long term, requires us building new base load coal-fired power stations.

Michael McLaren: Yes, I don’t disagree. I mean, you mentioned the subsidies to renewables, I mean, this will come as a education shock to some people who think these things are the cheapest form of energy out there, they just sort of spring up because the quote-unquote “market” demands that they come up. And here’s dinosaurs like you and me talking about the government being the lender of last resort or the buyer of last resort for new coal-fired stations to make them financially viable in the modern environment. But I mean, it’s important. You need to repeat this, Craig. The wind turbines and solar cells haven’t just sprung up like mushrooms by chance. They have been heavily subsidised by taxpayers.

Craig Kelly: That’s right. It’s actually not so much taxpayers, it’s electricity users. That $3.6 billion worth of subsidies that this year will be pocketed by the purveyors of renewable energy, that goes on top of everyone’s electricity price. So it’s not something we pay through our taxes, it’s what we pay when we get the electricity bill in the mail. Built into those prices is $3.6 billion. Now, that’s $150 for every man, woman, and child in the country, or $600 for the average family of four.

Michael McLaren: Take that subsidy away. How economically viable, how competitive is a gigawatt of energy from these sources, as opposed to the traditional ones like coal?

Craig Kelly: Firstly, you’re not comparing apples with apples. When you’re trying to compare intermittent generation from solar or wind, the power only comes on when the wind’s blowing or when the sun’s out. You can’t compare that against base load dispatchable power we get from our coal-fired power stations. They don’t have the same economic value. But even when you do, remember, we are subsidising. The subsidies for wind turbines at the moment is $85 a megawatt hour. That is the subsidy that they get paid on top of what they get.

A few years ago, the cost of coal-fired generation in this nation was around $30 a megawatt hour, and that’s the cost today. It’s about 30 to $35 a megawatt hour for coal-fired generation from our existing power stations, and it’s like 80, 90, $100 plus, plus the $85 subsidy that the renewables cost.

Michael McLaren: Yeah, I mean, I mentioned to your colleague Matt Canavan, the Resources Minister no less, on the show last Thursday, and I rattled through those numbers. I think they’re accurate. 7% of the world’s black coal reserves, 24%, I think I’m right in saying, brown coal reserves, although that’s sort of not used much these days, 257 trillion cubic feet of gas, 34% of the world’s uranium in Australia, and yet here we are with some of the world’s highest power prices. It is completely unacceptable situation, isn’t it? As I said, to use a frivolous example, it would be like Eskimos having the most expensive ice per kilo at the service station.

Craig Kelly: We are the largest exporter of black coal in the world, and there are today hundreds of black-fired coal power stations under construction around the world that will pay a premium to import that Australian black coal.

Michael McLaren: But you say that, Craig, but all the people that comment on this say, “Oh, but China are going green, and India are going green, and no one’s going to buy coal. The price will collapse.”

Craig Kelly: The price of coal is currently going through … surging at the moment, absolutely surging, because of demand to get the coal for all these coal-fired power stations. China’s going gangbusters, still rolling out. We’re talking not just tens or twenties, we are talking hundreds of new coal-fired power stations today being developed, across 50 nations. And the reason why, those countries have looked at it, they’ve done the sums very carefully, because these are billion dollar investments. They’ve done the sums, and they’ve worked out the best way they can get low price power for their people is to invest in coal-fired power, and even paying a premium to import that coal all the way from Australia.

Michael McLaren: Does this ACCC report give your government, Malcolm Turnbull, the circuit breaker, the excuse he needs to change tack here and start potentially underpinning some of these base load generators in Australia?

Craig Kelly: I wouldn’t say it’s an excuse, but it’s something that needs to be done. The reason that we are not getting investment in coal-fired power stations, like they are in other countries, is because of the political risk. Now, when you build a coal-fired power station, you need to have that investment return 20, 25, 30 years. Now, the concern for any investor in Australia, you look at the political landscape, and you’ve got the crazy policies of Bill Shorten and his mates in the Greens that are likely to impose, and that’s why the investment doesn’t happen. It’s the political risk in this nation.

Michael McLaren: Yet, according to the other story, to tie the stories in this morning, again, the news poll tells a similar story, for what it’s worth, relatively accurate. Despite what you’ve said, and I agree, if an election were held tomorrow, you might well lose your seat, Bill Shorten would be the prime minister, and those crazy policies would become law.

Craig Kelly: Exactly right, and this is why. At every opportunity, everyone in the coalition has got to talk about, “We are the party that wants to drive down the cost of electricity,” while Bill Shorten, he looks at those Paris targets, which are the most onerous in the world per capita. We’ve signed up to the most onerous in the world per capita, and Bill Shorten says, “No, I want higher. I want to burden the Australian economy greater. I want to copy South Australia’s 50% renewable energy target, that has given that state the highest prices in the world.” That is what Bill Shorten and Labour want to copy, so you were right.

If we had an election on the weekend, we’d have-

Michael McLaren: That’s what we’re going to get.

Craig Kelly: … we would have Bill Shorten would have won the election, and we would have had in this nation the same policies of South Australia, those same foul policies that gave that state the highest prices in the world.

Michael McLaren: Across the nation. Across the nation. I mean, Terry McCrann makes a good point with all of this as well. Over the weekend, he said of all the underlying problem being Paris, he said, “We’ve committed to this carbon dioxide reduction to 26 to 28%, in aggregate terms, by 2030.” But this is something not many people have acknowledged, he’s right, McCrann says, “Given our equally insane mass immigration policy, the target we’re actually trying to achieve is closer to 45 to 50%, in per capita terms, greater than promised by any other country in the world.”

Craig Kelly: That’s right.

Michael McLaren: What do we do here?

Craig Kelly: As I said, our target, when you factor in that population growth, it’s actually 50 to 52% on the numbers that I’ve seen. So we’ve got the highest, most onerous Paris targets amongst any nation anywhere in the world.

Michael McLaren: Yeah, we’ll export all the stuff, to bring money into treasury, that’s apparently destroying the planet.

Craig Kelly: And the reality is, all these other countries around the world are not abiding by their Paris targets anyway. We’ve seen France, we had President Macron coming out here, lecturing us earlier in the year. CO2 emissions in France last year went up 3%.

Michael McLaren: Plus, they have a nuclear … I mean, this is another issue. We’re almost out of time, but nuclear, I know you’re not against nuclear generation.

Craig Kelly: Not at all. I’m the only MP with a nuclear reactor in his electorate down there at Lucas Heights. Look, nuclear is … I don’t say we build it tomorrow, but in the future, we should at least remove the laws that we have in Australia that prohibiting it.

Michael McLaren: Well, it’s a long-term build. It’s a ten-year programme, isn’t it?

Craig Kelly: That’s right, and there’s no doubt, in the future, nuclear power will be important thing for this nation. Not next year or next week or next year, but in the track, we’ve got to get rid of those legislations that prohibits their development.

…

Michael McLaren: Well said. Good to see you, Craig.

Craig Kelly: Thanks, Michael.

Michael: Always good to talk. Craig Kelly there, of course, Liberal MP for Hughes.
2GB

Craig Kelly: the Member for Common Sense & Compassion.