Subsidising our path to the banana republic

The Chairman of Infigen, former senior bureaucrat Mike Hutchinson, has a letter in today’s Fin criticizing my piece last week, accessible here

In that piece I demonstrated that renewable energy, 20 years ago touted as the future of low cost supplies, remains two to three times more expensive than conventional coal gas and hydro supplies.  It is also inherently unable to provide supply when it is really needed (and most valuable) and therefore earns less on average than other sources in the electricity spot market. 

Infigen is one of the most successful rent-seeking firms in the renewables scam, being responsible for getting government grants and regulations to cover 80 per cent of its production costs. 

Hutchison writes

Alan Moran (“Renewables are just a power failure”, AFR, January 23), in his usual messianic zeal for free markets without responsibility, misses important points in his campaign for polluting energy sources.

Yes, the average financial cost of power generated by current renewable technologies is higher than that of the polluting alternatives.

But, demonstrably, the lower short-run marginal cost of renewables has been instrumental in curbing – not increasing – the wholesale price of electricity in relevant markets in this period of over-supply of generation capacity generally.

Further, the average cost of polluting generation is in effect subsidised by the free access it enjoys to the atmosphere for its gaseous waste products – products that are now scientifically proven to be harmful with highly probable damaging long-term consequences.

The parallels with historical river pollution by noxious heavy industry, and the prolonged vested interest opposition to remediation, are self-evident. Regulatory support for renewables was established with then-bipartisan political support in recognition of these externalities.

Markets have relied upon this government commitment in good faith in making long-term investments in renewables. Subsequent material adverse change to the relevant government policies would manifest significant sovereign risk – the stuff of banana republics.

Hutchinson’s naïve green left likening of river pollution to carbon dioxide emissions hardly needs addressing.

His other strand, that the subsidized power has reduced prices across the market, is less well known.

The influx of subsidized renewable power lowers prices across the market, has several effects.  It raises prices because all electricity supply faces the regulatory penalty necessary to finance the renewables through a hidden consumer charge. The higher prices do not, of course, benefit the non-subsidised supplies.

But the lower short run marginal costs of renewables do suppress prices, at least in the short term.  This is because the taxpayer/consumer has been forced to cover up to 80 per cent of the costs of the outrageously inefficient technology.  The power output of this is then offered in the market at its zero marginal cost (though operating costs of wind where maintenance is included are higher than those of brown coal power stations). 

The effect is similar to that if government subsidized Mars Bars were to be offered.  Such must-sell subsidised product would drive down the price of all Mars Bars.  It would also suppress the price of other confectionary.   But the subsidised product does not meet its commercial costs and in artificially suppressing prices makes replacement capacity unprofitable. In the electricity supply industry, this is especially so for the baseload high capital cost coal (and nuclear) plant. 

Such intervention is the real path to the banana republic.

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118 Responses to Subsidising our path to the banana republic

  1. evcricket

    Right-wing economist in not believing in pollution shock

    “Hutchinson’s naïve green left likening of river pollution to carbon dioxide emissions hardly needs addressing.”

  2. Tree food = pollution
    Tax increase = saving
    Tax cut = expenditure
    Excise exemption = subsidy
    Government censor = Press Council
    Trust fund = Slush fund

    From the Ministry of Truth style guide.

  3. blogstrop

    Until they have a product that works and is much lower in cost these rent-seekers should just bugger off. They are part of a huge climate scam and fake pollution scare that is costing us dearly and delivering nothing of value. The development of viable renewables should be pursued as a R&D project, funded by companies not on the public dollar until it is demonstrably useful instead of demonstrably a waste of money.

  4. Tel

    Forester you forgot to define “externalities”.

  5. Charles

    Excellent analysis of the way wind farm produced electricity works in destroying the industries that do actually provide a useable form of electricity. What the rent-seeking chairman of Infigen misses is that a supply of electricity must be available on demand (i.e. 24/7), having a ‘hit and miss’ supply is worse than no supply at all, so in effect renewable energy has no value (or purpose) at all.

    As Alan has pointed out it is merely a penalty the electricity users must pay in order to allow these carpet-baggers to game the system and at the same time destroy the lives of people, birds and bats who are forced to live in their proximity. They are like the worst weed in the world and should attain noxious status as soon as possible so we can remove them from our environment.

  6. Riverina Matt

    Right-wing economist in not believing in pollution shock

    Note the use of the word “believing”. Warmenism is a faith!

  7. cynical1

    “‘Hutchinson’s naïve green left likening of river pollution to carbon dioxide emissions hardly needs addressing”.

    I does when The Ministry of Truth decides that C02 is pollution, cold is heat, snow is warm, and basically
    everything is a sign of impending doom, unless you follow their wishes.

  8. AP

    ummm, I thought we had a carbon tax? Where is this “free access” to our atmosphere? The rest of his argument makes no sense either,as you point out.

  9. Baldrick

    Until the liberals (and yes I’m using a small ‘l’ on purpose) wake up and scrap the Renewable Energy Target, the more we’ll be paying for electricity and the more people like Hutchinson will keep his snout in the trough and swan around on his overpaid executive salary, taken from overpriced electricity.

  10. Bruce of Newcastle

    Further, the average cost of polluting generation is in effect subsidised by the free access it enjoys to the atmosphere for its gaseous waste products – products that are now scientifically proven to be harmful with highly probable damaging long-term consequences.

    Mr Hutchison is erroneous in this statement. The empirical data shows the effect of CO2 is small. Indeed the additional CO2 in the atmosphere may be a net economic and environmental benefit through improved biosphere productivity. But what is clear is that it has much too small an effect to be harmful.

    Therefore renewable energy is morally unacceptable, especially wind turbines which kill 100,000′s of birds and bats in this country alone. How can that be better than coal fired power stations which don’t kill anything?

  11. boy on a bike

    But, demonstrably, the lower short-run marginal cost of renewables has been instrumental in curbing – not increasing – the wholesale price of electricity in relevant markets in this period of over-supply of generation capacity generally.

    So that explains why my power bills have gone down – not.

  12. Tom

    the average cost of polluting generation is in effect subsidised by the free access it enjoys to the atmosphere for its gaseous waste products – products that are now scientifically proven to be harmful

    With Alinskyist lying and dissembling skills like that, Hutchinson can take his pick of the boards of companies that specialise in mooching off government. A special place in hell is reserved for such bushrangers of the public interest. Max Moore-Wilton, who became CEO of Sydney airport the same month that he resigned as secretary of Howard’s Department of Prime Minister and Cabinet in 2002 after overseeing the policy settings and contracts that guaranteed Sydney airport’s guaranteed monopoly, comes to mind.

  13. Bill

    not sure I’d describe Infigen as a particularly succesful rent seeker. Dividends were suspended a couple of years ago, the share price has gone from $1.40 to 26 cents.

  14. Elizabeth (Lizzie) B.

    Green-left thinking must always be addressed in any any article written or in any response to it. Green leftism is still so generally pervasive that it must be ridiculed and critiqued at any opportunity, in oder to change the prevailing zeitgeist. Sensible economic arguments alone won’t win this war. Comment one above shows why, Alan.

  15. manalive

    Note the use of the word “believing” …

    Mike Hutchinson would have to be a genuine believer.
    It is inconceivable that anyone would cynically exploit the CAGW hysteria that is already damaging his/her country’s economy with the potential to do a lot worse, merely for personal profit.

  16. JC

    His other strand, that the subsidized power has reduced prices across the market, is less well known.

    Is there anyone in the climate racket who isn’t a serial deceiver? Anyone?

    But, demonstrably, the lower short-run marginal cost of renewables has been instrumental in curbing – not increasing – the wholesale price of electricity in relevant markets in this period of over-supply of generation capacity generally.

    Well yes mike of course. However what you neglect to mention of course is the cost. The cost of renew balls is two to three times higher than the cost of conventional.

  17. JC

    What I find amazing is the attitude. They’re really aggressive in putting forward their whoring. I don’t know if they feel any shame in what they are doing as I wouldn’t show my face in public if I were helping to rip people off the way the subsidy whores do.

  18. Tel

    JC, you have to remember that during the Great Depression the US government needed to order farmers to kill piglets and destroy their own crops… destroying supply helps the economy… err somehow and gets us out of a depression, which is good for everybody. You, ahhh, don’t want to stand in the way of Progress do you? You’ll be crushed, just like the dinosaurs got crushed.

  19. boy on a bike

    Subsequent material adverse change to the relevant government policies would manifest significant sovereign risk – the stuff of banana republics.

    ??? Renewables are eating up billions of dollars in subsidies each year. Those subsidies are wreaking havoc on state and federal government budgets. Renewables are also driving manufacturing out of this country due to escalating power prices. The way to prevent this country from becoming a banana republic is to GET RID OF THEM NOW.

    As for sovereign risk – all it does is tell mooching rent seekers that they may well lose their shirts, so don’t queue up again for a government handout.

  20. James of the Glen

    Infigen, the spinoff from the infamous and bankrupt Babcock and Brown, is an offender against any sort of scientific reason or civic responsibility, not to mention its ludicrous claims about cheaper electricity.

    Let this company try to survive without the amoral RET and Renewable Energy Certificates, aka subsidies.

    It is presently threatening to build a near 100 km-long wind “farm” in the South-East of South Australia close to townships, rural residences, tourist sites and wetland wild-life areas.

    A more devastating and irresponsible project cannot be imagined.

    Naturally, it in full denial about noise levels (already landing it in hot water re its Capitol ‘farm’ near Canberra) and the subsequent unhealthy effects on neighbours and adjacent land values.
    The despoliation of visual amenity is beyond belief. In one instance a rural residence is to be surrounded by turbines each higher than the Sydney Harbour Bridge.

    Incivility and moral bankruptcy writ large.

  21. minderbinder of QLD

    This former bureaucrat, is obviously well trained in the techniques of deceits, and distortions. Only a complete cretin would claim that having an essential energy supply that has a capacity to cope with maximum demand, (a maximum demand level that has to cope with the inability of renewable energy sources to supply any reliable level 24/7), is an “over-supply”. It is a claim that reinforces that other expert in everything, Gillard’s comment that having a reliable electricity supply is unecessary “Gold Plating”! As for his dumb comments equating carbon dioxide with pollution, he has clearly strayed into another subject area to show that his ignorance is broadly based. Where do we get these idiots from? Surely they have not been trained in Oz; mmm.. well given the deathly pallor of Australian education maybe he is a typical product

  22. sabrina

    There is no shortage of rent-seekers (at least in part) in the “developed” and “developing” power industries. One will find them in coal industry particularly those developing CCS, Oxy-fuel or gasification based ones. And it is hard to find anyone in the renewables who is not a rent-seeker.
    In the long run, however, it will be necessary to develop renewables technology at a commercially viable scale to diversify the energy mix. Support through public funds is essential, as no private industries will justfiably take up the full risk. So far it seems lot of the supports have been milked.

    Alan – baseload coal plants, as we know without CCS, is NOT high cost.

  23. JC

    Lol Yea Tel..

    We had a version of that with the Lairs party telling us the much higher electricity prices was good for us. it would make us more efficient and raise productivity. That’s a version of the killing pigs schtick the American left was doing in the 1930′s.

    They’re so fucking dishonestly manipulative with the facts there’s no point in even trying to engage them. All you wanna do is close the fuckers down.

    Mike, the subsidy whore, reckons that the increased supply has brought down wholesale prices. The jerk off neglects to mention that wholesale prices are sky high anyway brought about by all the hidden subsidies the renewballers receive in ripping off the public (as Alan said). So yea Mike, on its face additional supply at already sky high prices by international standards would marginally impact prices. We’re paying 36 cents at the retail price, Mike. The average price in the US is around 13 cents. The difference is being skimmed by skunks such as your firm. Congratulations and hope you win an award for skunk of the year. In fact Catallaxy ought to run an annual skunk of the year contest.

    Bring in the Fisk Doctine now!

  24. JC

    In the long run, however, it will be necessary to develop renewables technology at a commercially viable scale to diversify the energy mix.

    Oh yea, why?

  25. Rabz

    Good work, Alan.

    The louder they scream, the more the truth is hurting.

  26. JC

    Where do we get these idiots from? Surely they have not been trained in Oz; mmm.. well given the deathly pallor of Australian education maybe he is a typical product

    Why assume he’s an idiot? Look at the way Mikey crafted his argument in order to deceive the readers. He’s no idiot. He’s a smart rent seeking skunk and knows exactly what he’s saying and doing.

  27. egg_

    The empirical data shows the effect of CO2 is small…

    Joe Public is so over CO2 – the meeja reached saturation point years ago.
    Next.

  28. .

    evcricket
    #1169407, posted on January 28, 2014 at 7:38 am
    Right-wing economist in not believing in pollution shock

    “Hutchinson’s naïve green left likening of river pollution to carbon dioxide emissions hardly needs addressing.”

    Ev

    What about cadmium from solar panels or the sludge from rare earths, or rare earths themselves?

  29. .

    There is nothing wrong with renewables that are profitable – but the deep Greens oppose new dams.

    With proven cloud seeding (as successfully used by Hydro Tasmania), we could see river flows in mitigated areas increase by 30-50%. The issue is then fish ladders which are entirely doable.

  30. Ant

    I suppose this fool would argue that Victoria’s desal plant makes financial and practical sense because we know just how environmentally destructive dams are – not!

  31. JC

    Dot

    I’d even so far as to say there’s nothing inherently wrong with unsubsidized unprofitable renewballs as long as the people that want them are willing to pay the vig and not rifle through other peoples’ pockets.

  32. Bruce of Newcastle

    or rare earths themselves

    The rare earth metals are nontoxic and aren’t pollutants. But its bad news if you eat two neodymium or samarium supermagnets, since they are so powerful they can stick together and kill any tissue between them. That is why supermagnet toys have been banned as some kids who ate the magnets died.

  33. boof

    The most efficient green electricity comes from tidal power (not these bullshit wave power machines that like wind turbines produce zilch when there is no wind) however we are never going to build the necessary under sea facilities as it is impossible to hide the fact that they are not cost effective as the tides are predictable and the whole thing can be accurately costed, unlike the solar and wind power scams.

  34. Driftforge

    I’d even so far as to say there’s nothing inherently wrong with unsubsidized unprofitable renewballs as long as the people that want them are willing to pay the vig and not rifle through other peoples’ pockets.

    Absolutely. Feed in tariffs that match the spot price at the time, no RET, no subsidisation of purchase – at that point, how people choose to market themselves is their own choice.

  35. Driftforge

    The most efficient green electricity comes from tidal power (not these bullshit wave power machines that like wind turbines produce zilch when there is no wind) however we are never going to build the necessary under sea facilities as it is impossible to hide the fact that they are not cost effective as the tides are predictable and the whole thing can be accurately costed, unlike the solar and wind power scams

    I’ve got guys next to me working on such devices and locating the (limited) places where they can be cost effectively placed. This is a bit like geothermal – a long engineering road, but very much having a viable outcome clearly located at the end of it.

  36. Fibro

    Good to see Mike is till wearing red ties to work.

    I still like to think of infigen as Babcock just to remind myself that it all started because some twat in government handed out free money and it was gratefully accepted. No recourse when it all when pear shaped though.

    The New Idea annual report makes interesting reading when you take all the previous assumptions (that never happened) and then forecast to assumptions (that likely wont happen) and produce a beautiful set of numbers.

    The best assumption……..the floating EU Carbon Price at 5 euros/tonne in 2015??? Really.

  37. egg_

    The most efficient green electricity comes from tidal power (not these bullshit wave power machines that like wind turbines produce zilch when there is no wind) however we are never going to build the necessary under sea facilities as it is impossible to hide the fact that they are not cost effective as the tides are predictable and the whole thing can be accurately costed, unlike the solar and wind power scams.

    Ultimately driving an alternator which must be synchronised to the Grid and in a marine environment.

  38. andy

    the old babcock and brown wind,hey.

    right there we see how crap the whole thing is.

    because the profits from the wind scam were front end loaded,babcock and brown merchant bank did the low cost gaining of certificates,permits and planning. they then stripped the up front profits out,and floated off the actual wind farms into a low profit operating company that relies on legislation twisting the market to survive.

    as long as the big costs are at the far end of the project–decommissioning according to regulations is expensive–and continued reliance on taxpayer willingness to be slugged–wind farms will be handballed on by’smart operators’.

  39. handjive

    If the sun & wind is free, why does renewable energy cost so much?
    . . .
    A few well worn links for Hutchison & his ilk of mis-informed racketeers:

    In China, the true cost of Britain’s clean, green wind power experiment:
    Pollution on a disastrous scale

    Another for the ill-advised:
    The great carbon credit con: Why are we paying the Third World to poison its environment?

    But the ultimate goal of Hutchison & his people hating, freedom hating eco-loony travellers is their environmental pogrom on the poor:
    “(A) working paper published by the UK’s Department for International Development in 2010 cited the need to fight climate change as one of the key reasons for pressing ahead with such programmes.
    The document argued that reducing population numbers would cut greenhouse gases

    With officials and doctors paid a bonus for every operation, poor and little-educated men and women in rural areas are routinely rounded up and sterilised without having a chance to object.
    Activists say some are told they are going to health camps for operations that will improve their general wellbeing and only discover the truth after going under the knife.”

    I am all for Hutchison’s freedom to say what he likes, but hope the doctors are knocking on his door real soon.

  40. Driftforge

    Ultimately driving an alternator which must be synchronised to the Grid and in a marine environment.

    Yes. And significantly, cabled back to shore.

    Interestingly, the economics on near ‘disposable’ small scale units is more promising than on the big stuff. No effort to get high efficiency, just low cost dependable power for a commercial period.

  41. Patt

    Isn’t Infigen the old Pacific Hydro ? Pacific Hydro was owned by Industry superannuation funds.Anyway just have a look at the share price over the last ten years,was as high as two dollars now it’s 24 cents,says it all really

  42. johanna

    Well, well, so that’s what Hutch is doing these days.

    How the mighty have fallen. As boss of Howard’s Office of Asset Sales, he drove the first Telstra privatisation with zeal and competence (remember, it was then the biggest float in Australian history). He’s a very smart guy.

    The job market must be pretty tight if this is what he’s reduced to spouting nowadays. Absent intermediate brain damage, he cannot possibly believe this nonsense.

  43. egg_

    Absent intermediate brain damage, he cannot possibly believe this nonsense.

    And yet expects the great unwashed to swallow it, wholesale?

  44. H B Bear

    Mike Hutchinson would do well to worry about sovereign risk. When the entire industry – and your fortnightly pay cheque – depends on government largess, you might have a few sleepless nights.

    Ford and Holden demonstrate that as soon as governments realise there is no political capital to be lost by turning off the taxpayer drip feed to these uneconomic basket cases they will turn off the lights overnight. Typically this follows the belated understanding that money is being taken from the many to benefit the few – highly unionised auto workers, union run industry superannuation funds or whoever.

    Unlike the Australian car industry, hopefully it won’t take 60 years to pull the plug on these subsidy thieves.

  45. JC

    Ford and Holden demonstrate that as soon as governments realise there is no political capital to be lost by turning off the taxpayer drip feed to these uneconomic basket cases they will turn off the lights overnight.

    At least the carmakers kept generally to themselves and weren’t out there with attitude like the energy subsidy whores.

  46. Andrew

    Slight problem with the subsidised Mars Bar thing:

    Some leftist fuckwit is going to report “economist reports that subsidising / giving away free Mars Bars results in lower prices across the board – it’s good for inflation, it makes the children happy and it’s good for encouraging Mars, Inc to keep manufacturing in AUS. Triple win! Yay! Building a Mars Bar Revolution” announced as policy at next election, funded by a modest and temporary Mars Bar levy on The Rich ™ who can afford to buy their own Mars Bars and share with people who can’t.” Social meeja will run memes to the effect that “Gina has had more than enough Mars Bars ha ha ha.”

    And when Abbott666 says “We can’t afford another Great Big Mars Bar tax” he will be attacked for Relentless Negativity ™. A Senior Labor Figure will coast into office.

  47. Fibro

    Andrew, sadly you have summed it all up a little too well.

  48. Yohan

    At least the carmakers kept generally to themselves and weren’t out there with attitude like the energy subsidy whores.

    Yep, at least they knew they were living off the taxpayer.
    The renewable energy industry on the other hand, have convinced themselves they are saving us with the quasi religious fervour that justifies any action.

  49. egg_

    Slight problem with the subsidised Mars Bar thing

    Just like the ACCC and subsidised petrol prices.

  50. brc

    I note he says that the wholesale price is lowered by the renwables. Watch the pea under the thimble – the wholesale price gets dropped when the wind starts blowing because of increasing supply with low marginal cost. But the retail price keeps growing, and the renewables generators get both the wholesale price plus a cut of the retail price, whereas traditional generators get the wholesale price. The retail price funds the subsidies, ad the government hides it in ‘poles and wires’.

    It’s simple to put a stake though the heart of these tax eating entities. Just announce a tail out of subsidies, reuqire them to start paying a bond towards removal of their junk when it dies, and force them work to the same environmental standards as everyone else. They will all bail within 5 years, or probably less.

    Dead windmills will become a major landscape feature of Austrlaia, until it is despoiled as the Mohave desert with the wretched things.

  51. nerblnob

    Tidal power sounds attractive because tides are regular and predictable but that’s about all it’s got going for it. In my experience of subsea installations, anywhere with strong currents (such as coastal tidal areas) takes such a heavy toll of corrosion, erosion (from waterborne solids) as to make them almost uneconomic even when producing 10,000 bbl of oil a day. However, if it’s proved to be economic, they won’t need subsidies or special feed-in tariffs. I’d be happy enough to see then get tax breaks or regulatory exemptions in order to get started – once they’ve presented a feasible economic case.

    It would need to be near a major electricity user so I hope the one (a US company and Woodside) at Portland, Vic which got a cool $66m direct grant from taxpayers in 2012 is going to be used on an aluminium plant or something. Will (i.e “might”) be able to power 10,000 homes, says the ABC. And will (i.e “might”) provide thousands of jobs in the area. Would they had been so supportive of the far worthier James Price Point LNG plant, local jobs now lost forever to Korean shipyards and future FIFO workers.

    Read more at the Standard: http://www.standard.net.au/story/2034965/lockheed-martin-partners-230-million-wave-project-off-portland/

  52. Leigh Lowe

    The most efficient green electricity comes from tidal power ….. however we are never going to build the necessary under sea facilities as it is impossible to hide the fact that they are not cost effective as the tides are predictable and the whole thing can be accurately costed, unlike the solar and wind power scams.

    Why build them under the sea?
    Why not build them in the sand dunes and wait for the inevitable 50 metre rise in sea levels?

  53. Token
    Note the use of the word “believing” …

    Mike Hutchinson would have to be a genuine believer.

    The whole article from Mr Hutchinson read like a letter to an unbeliever. So many value statemenst based upon faith.

    Markets have relied upon this government commitment in good faith in making long-term investments in renewables.

    Will the ATO take a commitment in good faith in return?

  54. Token

    Why build them under the sea?
    Why not build them in the sand dunes and wait for the inevitable 50 metre rise in sea levels?

    Is that what Carbon Kate has planned for the investment she bought for her kiddies?

  55. JD

    If there is an oversupply of generation capacity, then one would expect the price of electricity to go down.

  56. danno

    What do you reckon would happen if we insisted that the people who touted the “renewable energy sources”, tied up 100% of their own superannuation investments in said sources?

    I read on another OnlineOpinion site ages ago some self declared climate scientist who welcomed the drop in price of GeoDynamics stock, so he could buy more at a lower price (makin’ a killing he was a hopin’).

    It was a $1 a share in 2010, it’s $0.072 today.

    Tim Flannery was so enthusiastic about his involvement in it, the Rudd government at the time gave them yet another $90M of taxpayer money.

    All gone .. bye byes ..

  57. Paul

    You were very generous calling such a rent-seeker ‘naive’.

  58. andy

    the poison pill of dodgy brothers wind farms is the decommissioning.

    if owned by a big company-alright, but the little ones,handballed along,are just built shoddy to strip upfront profits. when they reach the end of life–and who knows how many will make it even 20 years,if they are owned by a bottom of the harbour company at end of life,there will be bankrupt farmers going broke to pull down according to stringent regulations the busted windmills. you cant just blow em up,or bulldoze em. last man standing is liable,if the wind company is bankrupt,the landholder is liable.

  59. gabrianga

    Not only has the wind farm industry destroyed the countryside of the U.K. , living adjacent to one apparently knocks at least 10% off the value of your house.

  60. gabrianga

    I thought it was good news for the residents of Elizabeth Bay that they would not be inundated by the tidal rising predictions of Flannery/Robyn Williams when “Our Cate” bought a $2 million pad for the kids right on the waterfront.

    That’s Vanuatu and Elizabeth Bay now free of threat.

  61. egg_

    nerblnob
    #1169612, posted on January 28, 2014 at 12:22 pm

    Looks like the higher powered 500kW PB500 tethered buoy- is experimental.
    Guinea pigs, much?

    Up to 28 buoys will be in the water by 2017, producing 62 megawatts.

    Not at 500kW ea. they wont.

    19-megawatt wave energy generation project c/- Lockheed Martin.

    Rubbery figures, indeed.

  62. Bruce of Newcastle

    Not only has the wind farm industry destroyed the countryside of the U.K. , living adjacent to one apparently knocks at least 10% off the value of your house.

    That’s within 17 km…seventeen kilometres away!

    The ones 2 km away from turbines lose a lot more. But no one except people like Booker are saying this because the population would tear the things down in fury if it was ever made official.

    It makes perfect sense. If you are going to buy a house in the country are you going to buy one near turbines or as far away from them you can get? Prices reflect the desirability of a location not the house’s replacement cost. After all house prices in parts of Detroit are $1 for exactly this reason.

  63. Mike Hutchinson

    Alan,
    I will wear your appellation of “green left” with pride alongside Quentin Dempster’s suggestion some years ago that I might favour privatising the ABC… But I take (mock) offence at the label of “bureaucrat” with its implications of process at the expense of product. Your commentators are apparently well into defamation, I note…is this the intellectual company you really wish to keep?

  64. cohenite

    For fuck’s sake the cost of renewables is not the issue.

    The issue is renewables do not work; period. Miskelly and Quirk’s paper clearly shows this.

    Wind and solar and every other renewable energy except hydro is intermittent and therefore unreliable. And when wind and solar do produce energy they does so in such an uneven fashion that no transformer capacity can manage it.

    Hutchinson strikes me as a prime target for litigation on the basis of misrepresentation.

  65. gabrianga

    Forgive me cohenite but I have been an opponent to solar, wind, wave and cow fart energy since day one when Hanson launched the “man made global warming” scam during an American Senate hearing (with the air conditioners deliberately left off)

    I was only trying to inform that you pay at the start, the operation time and then lose a bit if you stay in your house which has inherited a recently built wind farm next door.

    The cost is an issue with all the “incentives” being on offer over the past years to make solar and wind more attractive.

    Nothing wrong surely with a little bit of correction surely?

  66. cohenite

    Let me clarify; the cost is an issue because every cent spent on the stupid things is a cent wasted.

    The point I was trying to make is that some commentators focus on the relative costs based on such standard measurements as Installed Capacity and Capacity Factor with the former being the amount of energy the installation, of any kind, would produce if it were running at full capacity 24/7.

    Capacity Factor is the amount of energy actually produced as a % of the Installed Capacity as averaged over a period usually a year. Renewables usually are quoted as having a Capacity Factor of between 20-30%

    The lie with renewables is their Capacity Factor may be achieved in a week or month of good steady conditions and effectively nothing for the averaging period.

    In addition even when producing because both wind and solar can go to maximum output from nothing and then to nothing again from minute to minute their power comes in surges which cannot be transformed into usable grid electricity.

    So effectively they don’t produce anything. Therefore a comparative cost analysis is both pointless and deceptive. But I agree any cost of renewables, however measured is a waste; if that is your point.

  67. johanna

    The other evil thing about windmills is that they have priority on the grid. So, on the odd occasion that they are actually working, the many times more efficient gas or coal plants have to power down while they have their moment of glory.

    This is the equivalent of the Ford or Holden plants producing cars at unreliable intervals – but on the days that a batch does happen to come out of the factory, no-one is allowed to buy an imported car until they are all sold.

    In the UK, the increasing percentage of subsidised “renewable” power coming into the grid at unpredictable intervals is affecting the viability of gas-powered plants, which never know when they are going to be ordered to ramp down or up.

    Madness.

  68. gabrianga

    A deliberate waste of money Cohenite with Governments chucking our hard earned cash at so called “alternative energy” proponents to “save the planet”

    Interesting to note Lord Wentworth’s old mob still have a big slice of the pie. Must be coincidence?

  69. wazsah

    I think I will live long enough to see wind turbines abandoned and there will be no funds allocated to remove them.

    Just like a failed wave power project left this mess near Port Kembla. Note how GreenLabor kept on paying the company responsible more multi-$millions in grants despite the manifest failure.
    $7m handout as Port Kembla eyesore rots
    http://www.illawarramercury.com.au/story/1632813/7m-handout-as-port-kembla-eyesore-rots/

  70. gettingwarmer

    Just pointing out some general ignorance in the comments…it would be nice for the contributors to respond with evidence of these assertions

    “In addition even when producing because both wind and solar can go to maximum output from nothing and then to nothing again from minute to minute their power comes in surges which cannot be transformed into usable grid electricity.”…simply not true

    “The other evil thing about windmills is that they have priority on the grid.” Evil – come on? This is not true in Australia.

    “Wind and solar and every other renewable energy except hydro is intermittent and therefore unreliable.” – To be fair during period of drought hydro is fairly intermittent too….for that matter a lot of coal fired capacity is offline too during droughts due to low water availability for cooling.

    “We’re paying 36 cents at the retail price, Mike. The average price in the US is around 13 cents. The difference is being skimmed by skunks such as your firm.” – eh, renewables account for about 1% of your bill. It’s interesting that most US states have far greater RE targets than Australia yet still manage to deliver electricity at 13 cents.

  71. David Brewer

    But, demonstrably, the lower short-run marginal cost of renewables has been instrumental in curbing – not increasing – the wholesale price of electricity in relevant markets in this period of over-supply of generation capacity generally.

    You mean to tell me the full cost of these monstrous turbines STILL hasn’t fed through to power prices?

  72. cohenite

    The most irritating waste in respect of ‘renewable energy” is Flannery’s Geodynamics

    Geodynamics was a group using ‘technology’ to extract electricity from water turned to steam by hot rocks many kilometres below the surface. They got a $90 million grant and then basically folded.

    Dry geothermic energy, unlike its wet equivalent in places like Iceland and New Zealand, is a joke. The water has to go so far down to the hot rocks that it recondenses on the way back up and requires imported energy to turn it back into steam to turn the turbines. In addition the heat from the steam and hot water causes great amounts of CO2 to be released from the bedrock.

    Noone is held accountable for this bullshit and Flannery and dickheads like him continue on their merry way feted by a media that has its collective head so far up its collective arse it could power itself.

  73. blogstrop

    Zulu spear got evcricket?

  74. If this two-bit rag keeps making sense I’m going to have to re-evaluate coming here… it is far easier to comment about something you disagree with… as opposed to sitting and nodding in agreement…

  75. Major Elvis Newton

    It’s worth taking a stroll through Infigen’s ASX announcements circa 2008-09. A name change from the laughably bankrupt Babcock & Brown Wind did little to mask the incompetence and opportunistic carpet-bagging from the environmentally pious Rudd government.

    Of particular interest is the cost per megawatt capital cost of the company’s Capital Wind Farm against the various subsidies and feasibility studies of similar projects. Look it up…it’s a hoot.

    The project was never designed to make money. Board and management were told by those that did the feasibility study that the cost of construction alone would dwarf any ‘revenue’ (never mind profit) generated even after including generous federal government subsidies and ACT kickbacks.

    A certain glory-holing NED (and future Chairman) along with a clearly incapable CEO dismissed these reports summarily and pursued his naked green agenda regardless determined to enshrine his name anongst the so-called ‘vanguards’ of ‘renewable’ energy in Australia.

    Such naked personal ambition has cost shareholders and taxpayers dearly. The Chairs legacy is underscored by his pathetic ad-hom attack in the pages of the largely unread AFR.

    The facts of his tenure at Infigen are there for all to read.

  76. blogstrop

    Seditionary: (yeah, man what an edgy handle!)

    If this two-bit rag keeps making sense I’m going to have to re-evaluate coming here… it is far easier to comment about something you disagree with… as opposed to sitting and nodding in agreement…

    Do you come here often? What’s a dufus like you doing in an upscale place like this?

  77. Blogstrop,

    I am always here, I am always everywhere, I never sleep, I just sit here and read the Catallaxy Files over and over again…

    Take a joke, dumbass!

  78. Tel
    externality = surcharge on the poor’s cheap power to subsidise wealthy greens expensive power

  79. JC

    If this two-bit rag keeps making sense I’m going to have to re-evaluate coming here… it is far easier to comment about something you disagree with… as opposed to sitting and nodding in agreement…

    As against leftwing sites, sludge pack? Keep peddling renewballs, as it’s very funny.

  80. JC, where did I peddle anything? Point out where I even disagreed with the article?

    Once again you’ve read what you’ve imagined, which wasn’t there…

  81. JC

    Where did you peddle renewballs? How about the previous thread on the subject where you were linking to astroturf sites as authoritative evidence, you fucking moron.

  82. You may be confused JC, I don’t recall ever posting an external link on any post I have made here. In-fact, this is the first environmental thread I have posted on as far as I can recall.

  83. JC

    Oh I had you confused with that moron Cricket.

  84. All good, was pretty sure that was the case.

  85. Jim Rose

    Alan, he did not dispute the facts. At best, he is changing the subject to a carbon tax.

  86. wreckage

    Have a look at the massive pollution issues caused by solar panel manufacture in China. Solar and wind are not “non polluting” by any definition, and the companies pushing them know it all too well.

    Do they care to comment on the permanent groundwater contamination in Chinese provinces, or the rare and toxic metals mined, refined, and used in solar panel manufacture?

  87. nerblnob

    Geodynamics was a group using ‘technology’ to extract electricity from water turned to steam by hot rocks many kilometres below the surface. They got a $90 million grant and then basically folded.

    I was urged to invest in GeoD by people who knew this grant was coming. I didn’t; they did; and since the share price went up at the $90m announcement, I assume most of them cashed in. It soon went down again, in a fairly obvious “profit-taking” way.

    One of the problems with generating expensive electricity in Central Australia is that it’s too far from any customer to deliver without unacceptable power losses (I’m told). Supposedly they were going to get Google to set up a server farm there , since data over fibre optic is relatively lossless compared to electricity but Google &c have requirements that are not fulfilled, to put it kindly, by Central Australia.

    I believe GeoD have powered the Innamincka pub which is an absolutely ace top grouse ROI.

    Hot Dry Rock as they call it, comes within drillable distance of the surface in very few areas of the world, the GeoD location being one. There are opportunities for geothermal power from hot aquifers (which may be in contact with HDR, I don’t know) around Geelong and elsewhere . However, despite the fanfare I’m not aware of any serious drilling going ahead. Putting together a grant application seems to be one of the essential skills required. Of course it will require fracking but I’ve never seen a Greenie protesting at a geothermal well yet.

  88. Alan Moran

    Mike H
    Catallaxy is an excellent blog and would certainly inform you well if you were to become a regular reader. You might say that some of the comments are a bit intemperate and some a bit salty but a great many, as you will have seen, offer excellent insights on this and other matters that appear.

    Regarding the “bureaucrat” appelation, this I think is appropriate and one you have worn with distinction in a career that has encompassed promoting proliferation of new regulation when that was the wish of your political masters and privatisation when the wind changed.

    You are the only one who knows what your real views on solar are but you are prosecuting the case for them with all the aplomb you learned and practiced as an “apolitical” bureaucrat!

  89. MT Isa Miner

    Tel

    #1169455, posted on January 28, 2014 at 9:07 am

    JC, you have to remember that during the Great Depression the US government needed to order farmers to kill piglets and destroy their own crops… destroying supply helps the economy… err somehow and gets us out of a depression, which is good for everybody. You, ahhh, don’t want to stand in the way of Progress do you? You’ll be crushed, just like the dinosaurs got crushed.

    Good one, Tel. I’d like to see progress try and crush this dinosaur. Or Hutchinson try to crush Alan Moran. Ha!

  90. MT Isa Miner

    Moran should title the post: A leftist looser. Come to think of it I do like JC’s subsidy whore.

    Thanks, Major Elvis Newton and Bill for the company facts. It’s like Elizabeth says until the leftist position is made clear in the MSM so normal people see them for what they are, they will get away with lies and our money.

  91. Bruce of Newcastle

    Here is a warning for our local ‘renewables’ energy sector:

    Green Dream Turns to Nightmare for German Workers

    Let’s call a spade a spade: Germany’s Energiewende is an unmitigated policy disaster. The Frankfurter Allgemeine Zeitung (FAZ) reported this morning that one in three workers in Germany’s solar industry lost their job last year. By November, there were a mere 4,800 employees left in the sector, the first time in four years that number has fallen below the 5,000-mark. That’s less than half 2012′s levels, when there were still 10,200 solar jobs. These revelations come hard on the heels of news that the $30 billion German taxpayers shuffled into green subsidies last year didn’t actually make the country any cleaner, and that more brown coal was burned there in 2013 than in any year since 1990.

    If the subsidies didn’t do anything to reduce CO2 emissions why would taxpayers continue to fork out? That argument certainly applies here for our wind energy sector.

    RTWT

  92. boy on a bike

    Bureaucrat:

    An official who is rigidly devoted to the details of administrative procedure

    or

    an official in a government department, in particular one perceived as being concerned with procedural correctness at the expense of people’s needs.

    or

    a person who is one of the people who run a government or big company and who does everything according to the rules of that government or company : a person who is part of a bureaucracy

  93. egg_

    boy on a bike
    #1170408, posted on January 29, 2014 at 7:56 am

    “The flak is thickest over the target”, eh, what?

  94. egg_

    Defamation
    Any intentional* false communication, either written or spoken, that harms a person’s reputation; decreases the respect, regard, or confidence in which a person is held; or induces disparaging, hostile, or disagreeable opinions or feelings against a person.

    *”Malice’ being the operative word, non?

  95. JC

    I will wear your appellation of “green left” with pride

    Well of course you do Mike. You’re a climate botherer.

  96. Tom

    Mike Hutchinson
    #1169759, posted on January 28, 2014 at 3:37 pm

    I will wear your appellation of “green left” with pride …

    So you rely on government handouts for 80% of Infigen’s revenue and you publicly declare your political allegiance to the greens and the ALP at a time when there is an LNP national government and just three out of nine state/territory ALP-Green governments — two of which will be gone in March.

    You rely on government mooching for Infigen’s existence and your are a declared enemy of the governments of the day. Which business school did you learn that from?

    In case you didn’t know, Catallaxy Files is a publication, where everything is inscribed in cyberspace forever. Your customers and shareholders are reading this post as we speak. So, just in case …

    Your commentators are apparently well into defamation, I note…is this the intellectual company you really wish to keep?

    Implied threats of defamation litigation should be judged against their near flawless record of failure, especially at Catallaxy Files. Just wishing we would shut up isn’t going to get the job done.

    If you really are not as stupid as you have portrayed yourself, you should take up Alan’s suggestion that you become a regular reader: whether it’s government policy, business or the economy, read it here before it hits the mainstream media.

  97. brc

    Tom…..zing

    Seriously, why would any honest business person want to get involved in subsidy mining? What a hollow existence….sitting around a business leaders lunch…’so, what innovations has your company come up with this year?’…’well, we have increased the ratio of subsidies to actual revenue 3:1, we’re practically a government department now, but they can’t call us beauracrats, and we don’t have to publish our salaries in the gazette!’ Chortle!

    Fleecing taxpayers as a business model while ramming BS through the media. I would be ashamed to associate with such an operation, much less try and defend it. What a bunch of talentless hacks.

  98. nerblnob

    Seriously, why would any honest business person want to get involved in subsidy mining?

    Most business people will consider putting in for a grant if there’s one available. We once put in for a US govt grant to develop a certain technology (not defence) there but the process was hardly worth the reward and as it became clear that the technology would not be a viable – “sustainable” – business we dropped the application. It’s no good getting money to build something that then comes to a dead stop, because there’s no market for it any more by the time you get it to market, although we have observed less ambitious industry colleagues doing just that, time after time.

    It was an interesting insight into government dealings with engineering and I began to appreciate the wisdom of the saying “Governments don’t/can’t pick winners” .

    You find the assessment and monitoring committees are stuffed with well-meaning wafflers who are always seeking to review yesterday’s good idea.

    Some of the bigger corporations involved were quite cynical and practised at it than we were and really knew how the milk the system. They really knew how to schmooze those waffling civil servant academics and had a few of their own wafflers just for that purpose.

    To this day (12 years later) nothing has come of the project.

  99. brc

    It was an interesting insight into government dealings with engineering and I began to appreciate the wisdom of the saying “Governments don’t/can’t pick winners” .

    You find the assessment and monitoring committees are stuffed with well-meaning wafflers who are always seeking to review yesterday’s good idea.

    I went through the EDMG process as a friend-of-a-friend was working in it, and they thought I might be able to get some grant money to help with product development. A couple of waffle sessions filled with rent seekers later and I declared I would never get involved with that again. My time was far better spent on actual product development and talking to customers about what they need, which always leads to ‘good enough’ (simple and effective, hence profitable). The turkeys giving out the grant money think business is all about flowery business plans and whiteboards – as seen on TV. They sincerely believe the next Apple can be created in Australia if only the would-be founders could write a snappy business plan, tick all the right boxes on the form and get some taxpayer money so they can do away with the whole working-from-a-garage thing. They don’t realise the garage thing is instrumental to proving a business / product has legs precisely because it can survive such shambles. The customers want the thing so bad they don’t care it was built in a garage.

    Meanwhile, real fixes that would cost taxpayers nothing but remove barriers to business creation like making it easier to form companies, grant equity options, hire employees at will- these are all ignored.

    And so the farce goes on. The subject of this thread thinks they are a big shot because they cart taxpayer money off with a front end loader, but wouldn’t know real innovation and business building from rent seeking. As long as the presentations are flash, and the right boxes are ticked, it must be great business. Right?

  100. Pedro

    “Seriously, why would any honest business person want to get involved in subsidy mining?”

    As a shareholder I would certainly hope that manager goes subsidy mining if that looks like being profitable to the company. I went subsidy mining when I bought solar panels with a high feed in tarrif and I don’t regret it at all. I would happily vote for a politician who would abolish all subsidies for the future, but seeing such a person does not exist I’ll just have to muck in and get the money I can.

  101. .

    As a shareholder I would certainly hope that manager goes subsidy mining if that looks like being profitable to the company.

    No you wouldn’t. They can be dominant in an industry and end up operating unsustainably.

  102. Pedro

    “They can be dominant in an industry and end up operating unsustainably.”

    What? The job of management is to make money for the owners. If govt money is available then the managers ought to look at getting some. If the price of that money is not worth the earned amount then don’t, otherwise, do. It’s no different to any other investment decision.

  103. brc

    As a shareholder I would certainly hope that manager goes subsidy mining if that looks like being profitable to the company.

    No you wouldn’t. They can be dominant in an industry and end up operating unsustainably.

    Right. Subsidy mining is, in the language of the day, not Sustainable. It also re-orients the leadership of the business toward political favors and away from innovation. It builds the wrong culture, one that is not able to adapt. It is as short sighted as possible. One change of political whim, and you’re dead. While that risk applies to many businesses, those based around subsidies operate in an extreme risk environment.

    I doubt most people who have solar panels will come out far in front in the end, if they are ever honest enough to add up all the costs including removal when they are dead.

    Subsidy based businesses are the mummy’s-boy of industry. Wet sooks unable to cut the apron strings and succeed on their own.

  104. .

    The turkeys giving out the grant money think business is all about flowery business plans and whiteboards – as seen on TV. They sincerely believe the next Apple can be created in Australia if only the would-be founders could write a snappy business plan, tick all the right boxes on the form and get some taxpayer money so they can do away with the whole working-from-a-garage thing. They don’t realise the garage thing is instrumental to proving a business / product has legs precisely because it can survive such shambles. The customers want the thing so bad they don’t care it was built in a garage.

    Brilliant. Bravo. I could not have said this better myself.

  105. .

    Pedro
    #1170687, posted on January 29, 2014 at 1:34 pm
    “They can be dominant in an industry and end up operating unsustainably.”

    What? The job of management is to make money for the owners. If govt money is available then the managers ought to look at getting some. If the price of that money is not worth the earned amount then don’t, otherwise, do. It’s no different to any other investment decision.

    You want to be like the TCF industry in Australia?

  106. Pedro

    “You want to be like the TCF industry in Australia?”

    Sure, if you mean that in the transitional period during which increases in wages made the business more and more unsustainable, the govt handed over money that dragged out the death-throes and I go some of that money and so didn’t go broke as quickly. How would that not be a good decision if the subsidies meant that I got a return on my capital for longer than would otherwise have been the case? Bad policy is still good for some people.

    OTOH, if you are trying to say that the subsidies caused the TCF industry to become uncompetitive then I don’t see how you can make the case.

  107. brc

    How would that not be a good decision if the subsidies meant that I got a return on my capital for longer than would otherwise have been the case?

    Opportunity cost. Making friends with a condemned prisoner means you can’t make friends with one with many years left to live. Same goes for any subsidy taking- the immediate up front can be easily calculated (hey, free money!) but the opportunity cost isn’t always apparent. It’s not that taking cash is always unprofitable – clearly that cannot be true – but the long term and opportunity costs are often ignored while reaching for the cash. Something any insulation installer will tell you.

  108. nerblnob

    Another problem I’ve found with government funded or subsidised enterprises is that they are policy driven rather than customer or market driven. They are unable to change direction quickly when circumstances change.

  109. .

    You are seriously limiting your potential capital gains, Pedro.

    Even if you are there for the vig. you want to protect your captial.

  110. Pedro

    “You are seriously limiting your potential capital gains, Pedro. ”

    I think there’s a bit of point missing here, ideological blindness at work.

  111. Evcricket

    Hi everyone,

    Maybe you should look to what the US Military are doing as an example of what renewables can do.
    http://www.bloomberg.com/news/2014-01-29/enlightened-power-new-eco-warriors-are-really-well-armed.html

    They are pursuing renewables to reduce costs and manage energy security risks. But yeah, Australia is backward in pursuing renewables.

  112. .

    Pedro #1171060, posted on January 29, 2014 at 6:10 pm
    “You are seriously limiting your potential capital gains, Pedro. ”

    I think there’s a bit of point missing here, ideological blindness at work.

    Preservation of capital (as a minimum goal) is ideological? Who manages your super, Friedrich Engels!?

  113. .

    Ev – they are cutting peak and shoulder use and making systems redundant.

    The ROI on this for civilians may only ever be marginal and limited to that. The subsidies have to go for this ever to feasible. They’re also only setting a strategic goal, there is no guarantee it will work.

    They probably won’t just whack on solar or wind, I see they’re using biomass (makes sense for a base and reduces waste haulage costs) and they’ll probably cut costs for bases in the south (heating) by use of the Ice Bear or another similar industrial scale distributed energy storage/heat rejection system.

    They’re trading an endowment in renewables or biowaste for more to spend on conventional and nuclear fuel or ammunition at the front in war.

  114. boy on a bike

    Unless a biofuels plan involves soldiers carrying camelina seeds and refinery blueprints into battle, the biofuels would still need to be transported the same way as petroleum-based fuel—only it is worse.
    In a great irony, the lower energy density of biofuels would require even more of the costly and dangerous convoys than the petroleum-based fuels. To match the energy delivered by petroleum-based diesel, convoys would have to transport 12 percent more biodiesel.[2] Replacing gasoline with ethanol is worse yet, as that swap would necessitate roughly 50 percent more tanker trips.[3] Clearly, transporting biofuels in place of petroleum-based fuel increases cost and exposure in hostile environments.

  115. boy on a bike

    Cheap?

    When the Navy put a Pacific fleet through maneuvers on a $12 million cocktail of biofuels this summer, it proved that warships could actually operate on diesel from algae or chicken fat.

    “It works in the engines that we have, it works in the aircraft that we have, it works in the ships that we have,” said Ray Mabus, secretary of the Navy. “It is seamless.”

    The still-experimental fuels are also expensive — about $27 a gallon for the fuel used in the demonstration, compared with about $3.50 a gallon for conventional military fuels.

    Investors, however, have been leery of the enormous amounts of cash it can take to bring the fuels from the lab to the gas tank. Industry officials say that having a large, steady customer like the military could attract other investors to help finance large refineries that would bring costs down through economies of scale. Military officials say that their purchases of small amounts for testing has already helped reduce the cost. In 2009, the Pentagon spent roughly $424 a gallon on algae oil from Solazyme.

  116. .

    Ah…military contractors…I do love the 1980s.

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