Hot of the press, The Australian is breathlessly reporting that Origin Energy has contracted to buy wind energy at $60 per MWh, a price that is comparable with contracted prices from coal. The article sees this as evidence that the gap between wind and fossil fuelled electricity is closing.
Just a moment’s hesitation would have made the journalist realise that something is wrong here. If the gap is closing why do we have the renewable energy subsidies and why are we bothering with not one but two Commonwealth reviews? After all if the gap is closing then we need no more subsidies.
The answer is that the price being paid does not include the subsidy to wind which is $90 per MWh – in other words, the wind is being purchased for $150 per MWh with most of this being provided as a backhander from other energy suppliers via their unwitting customers.
And it gets even worse. The intermittent nature of the renewable energy means it can only be worth as much as baseload or controllable supply (like hydro and fast start gas) as long as those supplies are available to balance renewables without them having to pay the premium required. Moreover, the intermittent nature of the wind and solar and its diverse locations means the consumer is having to pay much more for beefed up transmission and storage – both batteries and, the Turnbull joke of the month, pumped storage from the Snowy.
The disastrous energy policies that have been put in place since John Howard dipped our toes into the renewable con at the end of the last century is now bearing fruit with major closures of the unsubsidised plant bringing about contract prices now well above $100 per MWh, two to three times their average level 1999-2015.
Recognising one aspect of the impasse this has created and keen to buy support on other policies from Nick Xenophon, the Treasurer is said to be introducing a temporary electricity subsidy for those on lower incomes. This papers over one small crack in the price rise that ideological Green policies have created – policies for which Xenophon has been an arch protagonist. As an earlier post emphasised, far more serious damage is being inflicted by the policies shifting Australia from among the lowest to among the highest cost electricity suppliers, thereby undermining one of the compensatory advantages to our self-inflicted burden of excessively priced and inflexible labour.
Belatedly, the Financial Review is coming round to this conclusion. In a fine article this morning (paywalled) Matthew Stevens draws from Glencore material which says we have just one year to clean up the energy mess (code for stop the bias against coal and the subsidies to high cost renewables) or we face a scaled up deindustrialisation. Glencore, as an overseas owned firm with no domestic retail customers, can speak out freely without inviting the Green chorus’s attack on its share price and customer base that most other firms would attract. But is anyone in authority listening?
The level of informed comment is so low that many see this graphic as proof that it is renewable energy and not fossil fuels that generate jobs growth.
It takes 79 people to generate one MWh of green energy and only one for coal (two for gas) so the future of jobs is in renewable. This sort of idiocy would of course justify us going even further and substituting bicycle generated electricity for solar/wind power, an action that would surely treble employment!
Actuated by a cacophony of ignorant green voices our policy makers in the Parliament and the bureaucracy have willingly adopted the slogans and logical inconsistencies of the anti-fossil fuel agenda and are plumping for lower living standards.
President Trump is nearing a decision on how to leave the Paris Agreement, the current driver of Australia’s energy policy. Whether the US decides to do this is by withdrawing from UN Framework Convention on Climate Change (UNFCCC), submitting the Agreement as a treaty for the Senate’s confirmation or works from within the UNFCCC the Agreement, which Australia ratified the day after Trump’s election, is dead. This is something that I have argued in my book, Climate Change: Policies and Treaties in the Trump Era, but which an army of government analysts fear to recognise.