To recap, the present arrangements on renewables are ramping up to require 41,000 GWh of electricity from large scale facilities (wind mills) and 4,000 GWh from small scale Rooftop PVs) to be supplied by 2020. Electricity from windmills costs 2-3 times the price of conventionally supplied fossil fuel plant while solar PV cost 2-3 times the price of electricity generated by windmills.
The Warburton report on renewable energy, released yesterday, calls for a canning of the roof top solar PV systems and grandfathering existing facilities and not creating others (it has two options for this which amount to the same thing).
The rent-seekers” support group are spitting chips at seeing future opportunities for consumer plundering being cut off. Giles Parkinson notes, “If the government accepts either of the recommendations, Australia would become the first country to either ditch a renewable energy target, or wind it back – in much the same way as it was the first to scrap a carbon price.” The AFR reports, the Warburton proposals, “would kill billions in investment, put thousands out of work and bankrupt the industry”. In The Australian Graham Lloyd puts the prospective investment at $15 billion. Of course, as the report notes, this is investment and work with negative value that cannibalises funds and employment that would otherwise be directed to productive ventures.
The Warburton recommendations did canvass but in the end excluded the best option: abandoning the scheme entirely in view of the waste it brings. However the report did scotch the myth that to do so would impose “sovereign risk” which the rentseekers had been claiming would shut out future investment in Australia across the board. Warburton argued that immediate abandonment would simply represent “regulatory risk”. This is faced by any investor who suddenly finds environmental standards more onerous or, for that matter, motor vehicle manufacturers who, facing a reduced level of privilege are pulling out with a write-off of investment of at least $6 billion. Unlike the highly organised renewable industry, these firms did not receive on going rorts as compensation for government creating conditions whereby their investments failed, in spite of assurances from successive ministers that the requisite support would always be forthcoming.
If existing wind farm investments continue to receive three times the price of commercially supplied electricity, the cost to the consumer will be $6 to $13 billion. Not a bad return on the treasure poured into lobbying but a cost that household consumers will pay and from which businesses will suffer in loss of competitiveness.
The Warburton review’s recommendations need not be accepted and there is still room to wind back totally the excesses of this spectacularly profligate scheme which has done so much to corrupt the political system as well as imposing crippling costs on electricity users.