Cheap wind power the latest furphy in support of suicidal energy policies

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.

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44 Responses to Cheap wind power the latest furphy in support of suicidal energy policies

  1. feelthebern

    Well you do make a compelling case for bicycle generation.
    I’d also add the rationing of the inter-webs.
    Making business far too efficient.

  2. sabena

    “.. we face a scaled up deindustrialisation.”
    And,unlike other countries we won’t get it back.

  3. NormaP

    Regarding Trump’s pending decision, the news is not good. Breitbart reports Ivanka is conducting a review of the Paris stuff. You know, the global warming believer, and pal of Gore. So sad. Trump’s loyalty to his family is ruining his presidency.

  4. Matthew Stevens draws from Glencore material which says we have just one year to clean up the energy mess

    Unfortunately Mr Stevens is being unrealistically optimistic. There is absolutely nothing we can do in a twelve month time frame that will materially alter where we are now headed. Even the most paltry “paper over the cracks” solutions will take at least two years to implement, probably longer. Realistic solutions are five to ten years away, and that’s assuming no red, green and black tape.

    This is why Turdbull, Xylophone, the Shortfilth and others aren’t even bothering to address the actual issues. They know there is SFA they can do now, so they are more interested in trying to lay the blame elsewhere, anywhere, before the excrement hits the oscillator.

  5. incoherent rambler

    One word for solar/wind subsidies.

    SCAM

  6. Bruce of Newcastle

    A normal contract would be to supply a certain number of MWh at $60/MWh over such and such a time period per day.

    In that circumstance the wind operators would then have to buy spot price electricity to fulfil their contract to Origin at $60/MWh when the wind isn’t blowing. Spot price right now in South Australia is $160/MWh.

    Betcha the contract isn’t like that. But it should be.

  7. Herodotus

    The nation has been badly served by various groups, not limited to politicians, media, academe, and – most disappointing of all – scientists. As of last week add Westpac to the list. Heads should roll.

  8. Dr Faustus

    Alan Finkel’s preliminary report finds:

    1. Technology is transforming the electricity sector
    2. Consumers are driving change
    3. The transition to a low emissions economy is underway
    4. Variable renewable electricity generators, such as wind and solar PV, can be effectively integrated into the system
    5. Market design can support security and reliability
    6. Prices have risen substantially in the last five years
    7. Energy market governance is critical

    He doesn’t give formal recommendations (the final report is due in June), but the clue to the future is laid out in his discussion of points 4. to 7. In summary Finkel is pointing towards:

    – Vast new expenditure on unproven technology is required to supplement and replace coal-fired generation as base load support for renewables;
    – Government needs to get more involved – and just REGULATE!!!

    This is a message that will resonate equally with Turnbull and Shorten. There is therefore no possibility of avoiding Peter Fryberg’s parting message:

    “In the end the market will work its way to balance,” Freyberg continued. “It will stabilise – but the wrong way and for the wrong reason. The inability to secure affordable base load supply means that the problem will be fixed by demand destruction.

    A disappointing way for a perfectly good country to end up.

  9. mark

    Not sure what the problem is. 79 people per MWh is awesome news for the unemployment figures. And just think, when there is no electricity it’ll take millions more people to do all the work electricity used to do. Unemployment will not just be solved, we’ll be crying our for more migration to fill all those empty spots. If things become a bit more expensive relative to wage rates (because for some weird reason spending power is linked a little bit to productivity) that’ll be fine because the government can subsidize every industry from savings from the cheap renewables. I have shown this in my economics PhD, and won a university prize for it.

  10. Zyconoclast

    Unfortunately Mr Stevens is being unrealistically optimistic. There is absolutely nothing we can do in a twelve month time frame that will materially alter where we are now headed. Even the most paltry “paper over the cracks” solutions will take at least two years to implement, probably longer. Realistic solutions are five to ten years away, and that’s assuming no red, green and black tape.

    This is why Turdbull, Xylophone, the Shortfilth and others aren’t even bothering to address the actual issues. They know there is SFA they can do now, so they are more interested in trying to lay the blame elsewhere, anywhere, before the excrement hits the oscillator.

    MV
    That is a long and complicated way of saying they don’t care what happens to the plebs because, “they don’t matter.”

  11. Dr Fred Lenin

    As I see it if the pollies increase the imposts and oenalties on coal gas and hydro to $180 per MWH renew your balls will be very competetive even cheaper. Simple solution innit ? Consumers will save $20 per MWH ( when the wind blows at the correct speed and the sun shines .and the gold plated lines still stand ) Just look at the AGL renew your balls ad ,rentseekers unite !

  12. bushwalker

    Alan Moran, you should have checked ORG’s ASX notice before commenting. It’s clearly stated therein that that ORG is getting the RGC’s, not Goldwind. So as far as Goldwind is concerned there are no Australian subsidies involved. There is now no excuse at all to maintain the LRET scheme for future wind projects.

  13. That is a long and complicated way of saying they don’t care what happens to the plebs because, “they don’t matter.”

    Yes, Zyconoclast, and unfortunately it is true.
    There’s just too many good little Textorites out there.

  14. RobK

    Thanks Alan,
    Fine work.

  15. Roger

    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.

    Believe it or not, this was the message of Christine Figueres, the UN’s most recent climate change chief.

    Asked about Trump’s threat to renege on the Paris Agreement, she said she felt sorry for Americans because it meant they would miss out on hundreds of thousands of green jobs!

  16. Fat Tony

    Dr Faustus
    This is a message that will resonate equally with Turnbull and Shorten. There is therefore no possibility of avoiding Peter Fryberg’s parting message:

    “In the end the market will work its way to balance,” Freyberg continued. “It will stabilise – but the wrong way and for the wrong reason. The inability to secure affordable base load supply means that the problem will be fixed by demand destruction.

    A disappointing way for a perfectly good country to end up.

    I used to think they were just stupid and a bunch of dickheads.
    Now I realise that they are doing this deliberately.

  17. Faye

    That’s why I say “people power” (pun) not “renewables power”.
    I am prepared, and I bet millions of other energy customers would also, CUT OUR BILLS BY THE RENEWABLES ADD-ONS and THAT’S ALL WE PAY. The politicians dare not fine a large part of the population for PROTESTING the only way available to us to make them realize we are not taking this lying down.
    Today’s VOTING doesn’t work! Most of the numbers parties here are UN sustainability criminals anyhow, hurting their people knowingly.
    We have to do SOMETHING! Our strength is in our NUMBERS.

  18. The inability to secure affordable base load supply means that the problem will be fixed by demand destruction.

    I wonder how many people understand what “demand destruction” actually means?

  19. I am prepared, and I bet millions of other energy customers would also, CUT OUR BILLS BY THE RENEWABLES ADD-ONS and THAT’S ALL WE PAY. The politicians dare not fine a large part of the population for PROTESTING the only way available to us to make them realize we are not taking this lying down.

    I agree entirely with where you are coming from, Faye. But unfortunately our power bills are payable to private distribution companies, and they will simply cut you off if you don’t pay your bill in total.

  20. Kim Howard

    Posted on Jo Nova`s blog on the same subject

    Apparently solar is a government jobs program . . .

    Milton Friedman recalls traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: “You don’t understand. This is a jobs program.” To which Milton replied: “Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.”

  21. Fat Tony

    MV:
    I wonder how many people understand what “demand destruction” actually means?

    Not many now, but quite a few will shortly.

  22. Fred

    Think how many jobs could be created by banning farm machinery.

  23. Fat Tony

    And all that mechanised stuff used for road building…..by hand with picks and shovels.

  24. LGS

    In any other industry or business, employing or using X number of people more for the same outcome would be regarded as grossly inefficient and unnecessarily expensive.
    The energy industry should be regarded no differently.

  25. Fred

    In the old days, it used to take 2 employees in a British car plant to fit a windscreen. In Germany the same task could be accomplished by 1 employee.

    Clearly the British car industry was the future in job growth.

  26. Oh come on

    There is so much deceit in the power generation debate. Hazelwood had to close because it was uneconomic compared with renewballs. So why are power prices sky-rocketing after Hazelwood’s demise? Oh gee, it wouldn’t have anything to do with renewballs being subsidised to the hilt yet requiring expensive gas-fired backup generation for the occasions when the sun doesn’t shine or the wind doesn’t blow (or blows too hard)?

    I see the ABC is shifting its position on the matter and pointing the finger of blame at the lack of a carbon tax (and, how convenient, whose fault is that? But of course the ABC isn’t partisan). 4 Corners tonight is going to attribute surging power bills to the lack of a carbon tax. It’s weird, though. Why did power bills jump markedly the first time a carbon tax was introduced? Why were additional payments made to all welfare recipients (which they still receive despite the carbon tax’s demise, well done Tony) openly compensating them for the price increases they would experience due to the carbon tax? Why did Western Power bills explicitly single out the portion of every power bill they sent that was due to the increased production costs caused by the carbon tax?

    We know what happens to power bills when a carbon tax is introduced – we’ve been down this road before. For the ABC to suggest the opposite will happen is just bizarre.

    We also know what causes power bills to rise uncontrollably and for supply to become erratic – we have “world-leading” SA and its 40% renewballs energy mix. We have the flow on effects to the eastern states’ power grid that came from the closure of baseload power producer, Hazelwood, and its replacement with transient, unreliable, renewballs and the sudden gas shortage emergency that’s cropped up because the politicians have decided gas-fired power plants will make up for renewball shortfalls. The sudden gas demand spike results in – OMG – much higher gas prices!

    Now, to contrast these insane energy policies with some energy supply sanity, we have WA, where no such madness has taken place (yet – McGowan is just getting started), our base load power is predominantly coal-fired and I believe there is a requirement that gas producers in WA reserve a small proportion of their production for local consumption, keeping gas prices manageable.

    I clearly remember it – the first time the lights went out in SA and Turnbull and Frydenberg went on TV the morning after thundering that a government’s first priority is keeping the lights on, I thought yes!! They have finally, finally, finally found an election winning issue to campaign relentlessly on. Turnbull’s Tampa, if you like. Uninterrupted cheap power for homes. Cheap, thoroughly reliable energy that attracts foreign investment in energy intensive sectors and generates jobs. Hammer this relentlessly. Tar the Greens blacker than coal. Make the ALP the party of unaffordable energy bills and the offshoring of what little manufacturing base still remains here.

    But no, Turnbull and Frydenberg got caught up in the green tape, the complete fools. They could have won the next election on cheap power alone.

  27. Faye

    “I agree entirely with where you are coming from, Faye. But unfortunately our power bills are payable to private distribution companies, and they will simply cut you off if you don’t pay your bill in total.”

    memoryvault, I thank you for straightening me out.
    Question: Who gets the renewable add-ons amount? The private distribution companies or another entity? I know that government policy has skewed the energy market to subsidise renewables. If I thought that the loser would be the government or the renewables industry, I would be happy with that.
    I hark back to “numbers”, if the protest was huge enough – there’d be a lot of people without electricity and the government might stop and rethink the mess they are getting the country into.
    If anyone can think of a practical way to stop this insanity, let us know.

  28. Gab

    It’s utterly stupefying how ignorant people are about energy prices and the climate scam in this country,

  29. Ubique

    Judging by the comments, the readership of The Australian is giving the author, Origin and everything to do with the climate science scam an absolute hammering.

  30. john constantine

    Being on the right side of the Bollards, means never having to get hit with rolling blackouts.

  31. john constantine

    When the proles can simply go to bed at sunset, why would they whinge about being blacked out?.

    The deplorables earned their dusk til dawn curfew through racism, so they might as well be “Earth-Nighted” to save the planet.

    The earth was a happier place before the light pollution of Western culture defaced the majesty of the night.

  32. John constantine

    Deindustrialisation is the path to dewesternisation.

    The revolution is relentless and to the death.

    Every building block that formed the foundation of Western culture must be hammered to pieces, then the pieces hammered to gravel, then the gravel hammered to sand.

  33. Pete of Perth

    F*k its depressing… I gonna get another beer.

  34. Fat Tony

    John constantine:
    Every building block that formed the foundation of Western culture must be hammered to pieces, then the pieces hammered to gravel, then the gravel hammered to sand.”

    And yet, when all is sand, the ones that orchestrated it all will have what??
    The culture of the 7th century arabs ?

  35. stackja

    Liberty Quote
    Hell hath no fury like another leftist “feel-good-idea-at-the-time” policy exposed as a failure.

    — Terry McCrann

  36. RobK

    People who think renewballs are the answer have no idea of the energy requirements of shopping centres with cold and freezer storage, nor the energy required by a sky scrapper for ventilation, elevators, water and waste pumping, lighting etc….and then some suggest transport energy well appear from the sky too. Coal and nuclear can do it, the rest is a long way off.

  37. ned

    “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” – H. L. Mencken

    “not every one should have right to vote and right to be citizen” — Ned

  38. Kim Howard

    Over here in the west we have an advertisement from Synergy the sole electricity supplier in WA and their one agenda is to push all this new green solar windy mill bulltish , forget about they do not even have to advertise they are the monopoly , its just propaganda designed to influence the masses .
    Sorry I do not have a link our WA Government does not post their propaganda on U tube , lest the rest of the world knows what our Government is about .

  39. Leo G

    the Treasurer is said to be introducing a temporary electricity subsidy for those on lower incomes.

    A subsidy to compensate for the effect of a subsidy?
    Where could this lead? A subsidy to offset the effect of a subsidy to compensate for the effect of a subsidy?
    Perhaps electricity prices will have to be increased to offset the increase in demand stimulated by each of the subsidies.
    Then, another subsidy to compensate lower income users.
    And so on.
    All temporary, of course.

  40. OneWorldGovernment

    wind and solar “power” is supported by theft.

  41. OneWorldGovernment

    Does your super fund invest in theft industries?

    Does your bank ‘lend’ money to one of these theft businesses like wind or solar?

  42. EvilElvis

    Nothing proves a greater example of progressive ineptitude than the current energy debacle. Watching Four Corners last night I had to add a little truth to each comment or narrative displayed for the benefit of my partner who understands the situation, but, doesn’t really understand the situation.

    The progressive nature of the left/greens is on full display. Continual movement forward, no real end goal I think for most, regulation and poor decision making, followed by more regulation and poor decision making, repeat ad infinitum.

    How is it possible that a lowely educated pleb like myself can work out that if you make a monumentally bad decision that achieves a monumentally bad result, you don’t continue, you return to what you know works best. Green idealogy in the halls of power has taken hold, yet all of our supposedly educated, smart leaders in public office can not think for themselves, surrounding themselves with quasi academics, scientists and economists, all fucking idiots.

    As someone mentioned above, it’s not hard to lay the argument out, it’s an election winner. It just needs someone with balls.

  43. old bloke

    EvilElvis
    #2375334, posted on May 9, 2017 at 9:51 am

    As someone mentioned above, it’s not hard to lay the argument out, it’s an election winner. It just needs someone with balls.

    And there’s the problem right there.

  44. Rayvic

    “Now, to contrast these insane energy policies with some energy supply sanity, we have WA, where no such madness has taken place (yet – McGowan is just getting started), our base load power is predominantly coal-fired and I believe there is a requirement that gas producers in WA reserve a small proportion of their production for local consumption, keeping gas prices manageable. ”

    What has McGowan said about an RET for WA? Will he be as stupid as the other Labor premiers in that respect?

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