Weird times in the energy market

Recent electricity contracts

AGL have announced a contract for electricity from the Queensland 453 MW Coopers Gap Wind Farm at an offtake price of less than $60/MWh (real) for an initial five years, with an apparent option to extend this at the same or a lower price for another five years.  The suppliers are a consortium of the Future Fund, QIC and AGL (which retains 20 per cent ownership). AGL originally owned the project (which is to cost $850 million and is scheduled for completion in 2020) and had spent $22 million on it.

This comes after Origin agreed to buy all of the power generated by the 550 MW Stockyard Hill wind farm and the associated Renewable Energy Certificates (RECs) for a “price of below $60/MWh”.

The price of $60 per MWh is difficult to understand since:

  • It is lower than the commonly understood cost of wind – Minister Frydenberg in his presentation to the Coalition Party Room put the price at $92 per MWh plus $16 per MWh to pay for intermittency (see this P. 18)
  • The renewable program, by forcing the closure of baseload powers station, particularly the 550 MW Northern Power Station in South Australia and Victoria’s 1,600 MW Hazelwood facility, has boosted wholesale prices of energy; for the past year and a half, average prices were around $90 per MWh compared with under $40 previously.
  • RECs presently give wind an additional $85 per MWh, meaning at present it would be worth $175 per MWh less the intermittency insurance; forward prices place a value in 2021 of the RET at $48 per MWh and for energy $78 per MWh.

Minister Frydenberg’s estimated intermittency insurance is too low in view of the RET programs’ increased quantities of wind.  But assuming the real number is $25 per MWh, the AGL and Origin projects earn a net $150 per MWh (90+85-25) in today’s market, or $101 per MWh (78+48-25) in the expected market of 2021.  And the price of electricity is, if firms’ statements of intent are correct, likely to continue to be boosted by the future anticipated coal generation closures (AGL has said it will close the 2000 MW Liddell station in 2022).

Another way of looking at the two contracts in view of the 2021 $48 forward price for large scale certificates, the $60 price AGL and Origin are paying for wind energy and their ability to sell the associated certificates means they are therefore buying the energy at a net cost of $12!

This complexity is absent with the South Australian Government’s purchases of the Tesla batteries, and the solar thermal plant using molten salt to offer some storage.

The latter, with a nominal capacity of 125 MW, is to cost $650 million, with $110 of this paid for by a Commonwealth grant courtesy of an unrelated deal done with Nick Xenophon.  It is to provide electricity to government users at $78 but the supplier, SolarReserve would also receive a contribution from the renewable certificates worth $48 per MWh.  Even so, the price seems too low given the poor performance of its first plant near Las Vegas.

Developments under the National Market

Government intervention in the wholesale market (chiefly the Renewable Energy Target (RET) for windfarms and large solar and the lesser subsidy for rooftop solar) has destroyed the market as a means of signalling the appropriate investment. From the mid 1990s at the outset of the National Energy Market, we had privatisation and corporatisation that resulted in massive labour shedding from the previously state owned and essentially union run electricity generators.  The Victorian generators were manned by less than 15 per cent of those previously employed and lesser but still significant reductions in excess labour use were made in other states.

At the same time the generation facilities were made to work more efficiently, sometimes with some refurbishment, with the result that the de facto production capacity was lifted by about one fifth.  In the six years to 2005 prices in NSW, Queensland and Victoria averaged under $37 per MWh, probably half the level of the (notional) price that applied under the previous integrated supply system.  Prices moved upwards after that as a result first of the drought and then with the introduction and rescinding of the carbon tax.

Subsidised wind and solar has an initial price depressing effect as the subsidy brings these sources to bid into the market all their availability, with a guaranteed return; any energy earnings are a bonus. In 2015, energy prices were below $37 per MWh.

But then we saw the culmination of wind depressing the price bringing generator closures, most importantly the 550 MW Northern Power Station in South Australia and Victoria’s 1,600 MW Hazelwood facility.  The stations had been starved of capital by their owners as a result of the poor price available.  In the case of Northern, the facility, which at only 30 years old was relatively modern, was destroyed by the State Government to prevent any possible rescue.

The present position

The upshot of the government policies is 2017 and 2018 wholesale prices averaging around $90 per MWh.  That level has become the new norm, compared with a price of around $55 for a system, like that prior to 2002, which is fundamentally coal based with hydro and gas for peak loads.  This has a crucifying effect on industry competitiveness and means the economy’s future structure must become less productive with lower living standards.

That aside, the renewables cannot provide the continuously despatchable certainty that is needed for reliable supply. The Finkel solution to ensuring baseload by forcing coal stations to stay on line even when they are unprofitable cannot work.  What the government will be forced to do is conduct an open tender for baseload power with a guaranteed future price.  This will see new (coal) power stations conforming to some politically correct and over-expensive design, thereby preventing a catastrophe without returning us to the low prices that a market-driven system would provide.

But returning to the wind power contracts that have been written.  At $60 per MWh this is electricity cheaper than the Finkel claimed cost of fossil sourced supply.  The obvious question is, in that case why do we need the forced subsidies from consumers to wind that the RET brings? On current prices, abolishing the subsidies (see this P. 20) would bring annual savings to the consumer of $2 billion from the renewable schemes plus a further similar amount from other subsidies on and off budget.

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44 Responses to Weird times in the energy market

  1. BoyfromTottenham

    Of course the Coopers Gap wind farm can afford to sell its (crap non-dispatchable) electricity to AGL for peanuts – they make far more money from selling the certificates than from selling electricity. Example: the Hepburn Wind Co-Op in Victoria Annual Report FY 2016 Annual Report figures:
    “2016 Revenue:
    Electricity Sales $437,210
    Renewable energy certificate sales $743,674”
    Here is the revenue per MWh and Certificate:
    “Electricity generated (per MWh) $42.73
    Certificates created $74.54”
    But for the huge subsidy (paid for by a hidden tax on domestic and small business electricity consumers) the Hepburn Wind Co-Op would be totally uneconomic, as would presumably all their ilk. Meanwhile the baseload and gas generators have to reduce their output to make way for ‘renewables’. What a %$&#* scam!

  2. duncanm

    (confused) – who gets the REC? The (subsidy) farm or AGL?

  3. RobK

    Re: Stockyard Hill Wind Farm.(from the company link)
    Under the terms of agreements executed with Goldwind, Origin will sell Stockyard Hill Wind Farm, Australia’s largest wind development, for $110 million and sign a long-term PPA from the commencement of operations in 2019 to 2030. Origin will agree to buy all of the power generated by the wind farm and the associated Renewable Energy Certificates (RECs) for a market leading PPA price of below $60/MWh.
    That does seem cheap but there is the $100mil sweetener. The company presents it as if it’s getting into wind but actually it is selling the farm and buying back the certificates at a fixed price.. and a bit of electricity thrown in. This is to happen in 2019, all going well. By this time certificates could be around $50, or not, depending on what the RET% is. (according to the government’s whim). There may also be imposts on the farm from Finkels recommendations to add short term buffering for stability.

  4. Bruce

    As always: FOLLOW THE MONEY!

    Who initiated the “decisions”?

    What are THEIR “interests” in the “game”?

    What are the names of the individuals and organisations pressing for “more of the same”?

    Sunlight is a great “disinfectant”.

    “Base-load electricity source”: Not so much.

    All of this did NOT happen in an environment of “sweetness and light”.

  5. Bruce

    Further to my last:

    “All of this did NOT happen in an environment of “sweetness and light”.

    Nor anything resembling scientific or, ENGINEERING rigour.

  6. Power prices have basically only risen from the 2005 levels. If coal was making a dollar then and even able to refurbish a few plants, why are they crying poor while they have been getting higher prices since?

    Given that coal is still the pre-dominant player in the market, they should still be able to dictate prices. They have not acted competitively as a proper functioning market should. So I’ve no sympathy for them.

  7. jonesy

    BfT , in one post!

    A tax paid by consumers direct to a non government entity enforced by government regulation…
    Isn’t that unlawful?

  8. RobK

    About Goldwind, from goldwind Australia website:
    Goldwind has been recognised for its pioneering work around the world

    Awarded the Cross- Border Investment Award at the 24th Annual AustCham Westpac Australia-China Business Awards
    Twice selected as one of MIT Technology Review’s 50 Most Innovative Companies
    Placed 3rd in the Most Innovative Chinese company category by Fast Company
    One of Intellectual Asset Management’s Intellectual Property Champions of China (IAM magazine)
    2011 African Wind Project of the Year awarded to Goldwind’s Adama Wind Farm in Ethiopia by Terrapinn
    2013 Goldwind is ranked in the Top-500 New Energy Companies by the China Institute of Energy Economics
    Chinese Government’s Pioneer Enterprise of National Quality Control Award”

  9. RobK

    DJR96,
    If only it were so simple. Refer to the Finkel Report on price bidding. The bidding is in 5 minute blocks, the highest bid required to fill demand sets the price, not just for the 5 minutes but for a half hour block of 5minutes. Coal needs to find certificates for a % of it’s production. If the RET is at 30% then coal needs to find certificates to cover 30% of it’s output. A certificate is currently worth about 2.5 x the cost of 1MWh so it effectively almost doubles it’s costs. The generators that can’t find cheap certificates go broke, the ones such as Qld government that have their own certificates remain in very high demand but coal has trouble tracking demand due to the variable nature of renewballs. Renewballs bid low so they always get in but still pickup the price of a peaker generator. It is very far from a level field.

  10. Myrddin Seren

    But then we saw the culmination of wind depressing the price bringing generator closures, ….. The stations had been starved of capital by their owners as a result of the poor price available.

    AGL has said it will close the 2000 MW Liddell station in 2022

    I will be willing to bet that increasing wind energy pushed in to the grid will wreck the economics of the old Liddell station, and AGL will declare that to due to their fiduciary duty to the shareholders the plant will be closed ahead of its useful lifetime.

    Unless of course, in the interests of stabilising the grid, the government ( read ‘taxpayers’ ) would care to ‘incentivise’ AGL to keep Liddell running, much like the government used to ‘incentivise’ GMH and Ford to run their ‘make work’ car plants.

    AGL will rake in huge amounts of money on the back of the renewballs scam, right until the ALP-Greens-CFMEU Coalition government nationalises the power sector in about – oh – 2022.

  11. BoyfromTottenham

    jonesy, a very good question, but I’m no lawyer. I did start to look into this but it all got too hard. Hello! Are there any tax law experts out there who can answer this?

    IMO the whole ‘renewables’ circus is doing nothing good for Australia, and a lot of bad. Why this all got lumped on us is beyond reason, but it all started as a dreaded ‘EU Directive’ in the late 1990s which magically . FYI, last year there were nearly 20 million of these certificates created, i.e. a hidden subsidy to the renewables industry and a hidden tax on domestic and small businesses of about $1700 million per annum. This will increase this year to about $2200 million, and so on until about 2030. To make it worse (see my previous posts here over the past 2-3 weeks) I believe the formula that the Clean Energy Regulator uses to determine eligibility for these certificates has a gross error – it overstates the number of certificates for each MWh sent to the grid by about 80%. That equates to a $700 million annual overpayment to the renewables! No small beer. Why do we put up with this crap?

  12. BoyfromTottenham

    Whoops, jonesy, I got interrupted. Insert after ‘which magically’ the following: ‘got copied by dim-witted governments around the western world, to their eternal regret.’

  13. Myrddin Seren

    What the government will be forced to do is conduct an open tender for baseload power with a guaranteed future price.

    What government ? The East Coast States where power stations get built are either Labor and won’t touch coal or might as well be Labor ( NSW ).

    The Feds ? Shorten and DiNatale will hold a presser and promise to kill any Federal coal fired power station in Shorten’s planned First 100 Days March through Old Australia. ( Which will make Sherman’s March to the Sea look like a cakewalk culturally ).

    This will see new (coal) power stations conforming to some politically correct and over-expensive design, thereby preventing a catastrophe without returning us to the low prices that a market-driven system would provide.

    Built where ? Even if the Feds find a piece of Federal land to try and build a coal fired power station, the States will refuse to build connecting roads, allow rail lines or conveyor belts for coal supply, probably refuse permission to build the power lines to connect it to the grid.

    Or wind up building the thing at Jervis Bay or Shoalwater Bay, adding a coal jetty and buy Indonesian coal to run the thing, just like AGL is going to clip the ticket big time buying imported LNG to keep the renewball-wobbly grid from collapsing because Swampies will die-in-the-ditch before anyone can drill for gas.

    thereby preventing a catastrophe

    Time’s Up

  14. Bushkid

    I’m familiar with the Coopers gap area, and wonder that there’ll actually be enough wind to drive the infernal machines. It’s not much of a gap, and the wind really only blows a bit in winter (apart from the odd gusty storm and the gentlest of zephyrs of spring and summer). Some of those winter days could even be too windy for the big blades, so a further possible limit. The winter westerlies do generate some nice wave over the nearby Bunya Mountains for gliding enthusiasts in particularly strong winds, but certainly not constantly or even too regularly.

    Is it stretching the imagination to wonder if a contract to supply, at whatever rate, also includes being paid for potential production whether it’s produced or used or not? The rate they’re quoting can surely only be at the enormous cost of subsidies – already paid for by us, the tax-paying public. I really abhor paying excessively high prices. I further abhor having topaz them twice – especially in the name of a world wide con.

  15. Oops – I further abhor having to pay them twice –

  16. RobK

    My comment at 1.08 should have said a RET certificate has to be bought for each MWh coal produces not 30%…sorry.
    From the environment.gov website:

    Reforms to the Renewable Energy Target

    The Australian Government has settled on reforms to the Renewable Energy Target, following careful consideration and extensive consultations.

    The new target for large-scale generation of 33,000 GWh in 2020 will double the amount of large-scale renewable energy being delivered by the scheme compared to current levels and means that about 23.5 per cent of Australia’s electricity generation in 2020 will be from renewable sources.

  17. H B Bear

    With the NBN resurrecting the old PMG why not re-create the old SECV and the rest at double the cost? Everyone is a Fabian now.

  18. test pattern

    In 10 years the plan is to export power from the Kimberleys and Pilbara to Indonesia via subsea solar power cable.

    ‘The State Government last week announced a plan to give third-party providers access to Horizon Power’s network on the North West Interconnected System grid, creating competition and giv-ing consumers more electricity supply options. ‘

    https://thewest.com.au/news/pilbara-news/power-reform-to-benefit-customers-ng-b88563249z

    ‘This is the world’s first high-penetration solar-diesel hybrid power station and is already setting a positive precedent for the future of remote area generation. Managing Director of Horizon Power, Rod Hayes commented that projects of this nature “will replace ageing power stations with modern, efficient and more environmentally friendly power stations that will be able to meet the needs of local communities for the next twenty years.” Combined, these two power stations will generate 1 Gigawatt of renewable energy per year, providing clean energy to the region and saving 1100 tonnes of greenhouse gas emissions per year by reducing diesel usage by 35-45 per cent.’

    https://www.sunpower.com.au/solar-power-plants/case-studies/horizon-power/

  19. herodotus

    IMO the whole ‘renewables’ circus is doing nothing good for Australia, and a lot of bad.

    All the flubberised figures cannot change this. It is a national scandal.

  20. Myrddin Seren

    …providing clean energy to the region and saving 1100 tonnes of greenhouse gas emissions per year

    Not a glitch in Testy’s cut-and-paste.

    It actually says 1100 tonnes – of plant food.

    Too stupid to survive as a nation.

  21. duncanm

    RobK’s info explains it all – its just a money shuffling operation.

    The thing cost circa $900M to build.

    They then sell it at a ~$800M loss (for tax purposes no doubt) so they could ‘buy’ the energy back at a ‘discount’.

    Then the useful idiots can tell us all how cheap wind power is – here’s the example.

    FMD.

  22. Bob in Castlemaine

    What the government will be forced to do is conduct an open tender for baseload power with a guaranteed future price. This will see new (coal) power stations conforming to some politically correct and over-expensive design, thereby preventing a catastrophe without returning us to the low prices that a market-driven system would provide.

    Yes Alan in the crazy regulated mess that the NEM has become an Alice in Wonderland style stop-gap like this would perhaps allow the power industry to stagger, on becoming ever more unaffordable to electricity users. The next log jam, likely not far off, would be when the CFMEU’s political servants (the ALP/Greens) come to power, when doubtless the loony tunes, wrecking ball would be put through whatever reliable coal generation remains.

  23. Myrddin Seren

    In the not-too-distant future, post the next Federal election, we are REALLY going to know what it means to be a ‘power broker’.

    This will be when you desperately need reliable power for your small business, farm, frail or elderly relatives – whatever.

    And then you will go on bended knee and open chequebook to someone – a literal power broker – who will facilitate your plea for survival with the Keepers of the Kilowatt, Big Government, Big Crony Capitalist and Big Union.

  24. And then you will go on bended knee and open chequebook to someone – a literal power broker – who will facilitate your plea for survival with the Keepers of the Kilowatt, Big Government, Big Crony Capitalist and Big Union.

    And around about that time the politicians shouldn’t be surprised if they see pitchfork-wielding mobs pushing tumbrils up Constitution Ave (or whatever it is) a la late 1790s France. You really can only push people’s faces into the dirt for so long before they begin to take a dim view of the matter.

    There is no sensible or logical reason for Australia to be in the position it currently is, none at all, apart from (probably wilful or creative) political and administrative incompetence and total lack of common sense.

  25. Rob

    The sidelined solution to this horrible politician led disaster is nuclear power.

  26. Dave Wane

    How anyone in Australia who claims to believe in free and open markets can ever call the current electricity fiasco a “market” is way beyond me.
    Put simply: Australia’s so-called “energy market” is nothing like a market. Instead, it is no more than a highly-regulated dog’s breakfast of massive subsidisation for uneconomic “renewables” giving rise to obvious price penalties for efficient electricity producers, causing those producers to be forced (artificially) out of business – simply because they cannot compete with electricity producers that are propped up by the ever-suffering Australian taxpayer.
    The United States has about the closest one can find to a free and open energy market. They still believe in freedom. Of course, states like California, are similar to Australia in some respects, believing in all kinds of silly socialist rules, regulations, subsidies and other unnecessary interventions.
    However, the US is marching onward with abundant energy and more prosperity.
    Meanwhile, back in Whitlamesque, semi-socialist Australia we dream on about taxpayer-funded windmills and acres of taxpayer-funded solar panels that at the end of the day create nothing more than a warm-inner-glow for those that need one.

  27. cohenite

    Great work Alan but this is still not at crash test dummy level which it needs to be for the media and the politicians.

    Wind gets the proceeds of RET sales based on their actual electricity sold with the coal paying for the RET certificates at about 2 to 3 X the actual cost electricity supplied by coal. This allows wind to bid under what coal can bid thus continually increasing the amount of electricity wind can supply (when it is producing) and therefore the number of RET certificates it can issue.

    It’s a giant circular process. Is that right?

  28. RobK

    Duncanm,
    I wonder if Goldwind will do Origin a mate’s rates on Origins next wind farm…see how cheap it is.

  29. RobK

    Cohenite,
    “It’s a giant circular process. Is that right?”

    Limited only by:
    The new target for large-scale generation of 33,000 GWh in 2020 will double the amount of large-scale renewable energy being delivered by the scheme compared to current levels and means that about 23.5 per cent of Australia’s electricity generation in 2020 will be from renewable sources.
    As determined by our overlords.

  30. David Brewer

    A true cost comparison of wind vs. coal would require both easy and difficult adjustments, e.g.:

    A. Easily calculable

    – RET certificates – wind plants generate them, fossil fuel plants have to buy them. They are an artificial, government-imposed scheme to favour one source over another, and have nothing to do with the inherent cost of generating power. They must be both added to the cost of wind and subtracted from the cost of fossil fuel electricity before any comparison is made. Ditto for any other artificial measures that subsidise or penalise generating costs.

    B. Less easily calculable

    1. Cost of upgrading transmission equipment to cope with surges and other characteristics of poor quality variable wind power.
    2. Cost of new rapid-start generating equipment to plug sudden drops in wind-power output.
    3. Possible costs of storage facilities if these are cheaper than B2.
    4. Opportunity cost of land given up to wind turbines and associated roads, tracks, etc.
    5. Costs of deaths and injuries from each form of power – generally higher for wind.

    C. Barely calculable

    1. Increased cost of electricity from baseload plants that operate less efficiently because intermittently available cheap wind takes part of their revenue.
    2. Further increased costs from shutdown of existing baseload plants, or decisions not to build new baseload plants, leading to further need for high-cost B2 alternatives.
    3. Relative costs of losses of amenity from both sources, including noise nuisance and visual pollution – much higher for wind.
    4. Costs of pollution deaths and illness from coal plants (probably zero, despite claims to the contrary).
    5. Cost of blackouts as share of unreliable wind power increases.
    6. Cost of insuring against blackouts by buying own generating equipment.

    D. Essentially incalculable

    1. Net effect on world climate of reduced CO2 emissions.
    2. Costs of deaths and injuries to birds, bats etc. from wind turbines.
    3. Costs imposed by disfunctional price mechanism due to wind being sold by MWh in advance instead of at spot price when it is available.
    4. Cost of disinvestment, or avoidance of new investment, due to increased electricity cost and blackout risk.
    5. Cost of knock-on effects through the whole economy due to all of the above.

    Upshot:

    1. Based on Alan’s figures, before any adjustments, the cost comparison is now line-ball, although this is after the effects of C1 and C2 above, i.e. increases in coal power prices caused by wind power.
    2. After adjustment A, wind would be more expensive.
    3. The combined effect of B to D would make wind more expensive still.
    4. Many issues in B to D arise because coal and wind are not comparable products. Neither of them is the final good demanded by consumers, i.e. a continuous reliable supply of electricity that copes with the full range of demand conditions. Each is an intermediate input. However, coal-fired power is much closer to the final good, and much easier to trim into that final good. It therefore has a much higher value and should command a much higher price.
    5. 4. confirms 3. – wind is likely to be more expensive in the end, because more effort is required to use it as an input to the final good of a reliable electricity supply.

    Alternative method

    However, trying to calculate the exact effect of B to D on the relative prices of coal and wind would be a fool’s errand. There are far too many effects, and far too many subjective choices to be made in handling them. Fortunately, we don’t have to. We have run the experiment, and we have the data. Ceteris paribus, we can find out what wind has cost us per MWh by simply attributing the change in the observed price of electricity to the introduction of wind.

    As a first approximation, from here we see that the price rose 70% between 2005 and 2015 while the share of intermittent power went from zero to 17.5%. Each 1% of intermittent power therefore pushed up the price of electricity by 4%.

    Sure there are caveats and side-issues. Solar is in there too, and it has been bought at higher prices than wind, but on the other hand it is more predictable and therefore less disruptive to the market. The price of coal went up, but so did the efficiency of coal-burning technology, and so on. But these issues would not move the needle very far, and may largely cancel each other out.

    Bottom line: wind has cost four times as much as coal would have…

    …not counting the costs of increased blackouts, noise nuisance, wildlife deaths, loss of arable land, visual pollution and other uncosted disadvantages of wind.

  31. John Constantine

    All essential public servants to get a pay rise to reflect the increase in power prices.

    They can then put Tesla batteries in their houses so as not to be without power in the blackouts, like the poor people.

    Or pay up for green power schemes, which just mean the smart meters supply continual power to the elites, while browning out the proles.

  32. Up The Workers!

    Two degrees in Melbourne overnight.

    I wonder if Bull Shitten from the Australian LIARS’ Party and all his expert intellectual and meteorological consultants and “deep finkers” from the Brown Movement can advise us of precisely how many elderly and homeless citizens were cruelly WARMED to death by gerbil worming overnight?

    Quick – pay more taxes in order to REDUCE the temperature from these killer heatwave levels!

    Perhaps they can also give us the names of the latest dozen or two Pacific nations to have been totally submerged by galloping sea-level rises?

    Hello…Bull Shitten…are you there?

    Crickets chirping…

  33. RobK

    David B,
    I agree with your summary above. You could add; the added cost of instrumentation and control for modifying the grid to a high proportion distributed supply, quite a more complex machine than the traditional centralized supply from baseload. It is a major reconfiguration at high rates of renewables.

  34. JC

    Alan

    Is it possible to untangle this mess without costing the country more billions of dollars?

  35. RobK

    JC,
    Is it possible to untangle this mess without costing the country more billions of dollars?

    I often wonder about that. Obviously much damage had been done and all the ways forward will be more expensive than having left well enough alone. The antagonist is the AGW conjecture. The best way forward in my book is as Alan has said, remove the RET and any other subsidies and schemes that favour one generator over another.

  36. RobK

    Oops. The antagonist is the CO2 Conjecture. (trying to keep that focus)

  37. BoyfromTottenham

    JC – a very good question. Unfortunately this whole mess IMO is due to politics winning over science (or even common sense). Even more unfortunately the LNP has been comprehensively hoodwinked by the preponderance of their ‘advisers’ who are totally indoctrinated with CAGW propaganda.
    Before anyone can start to untangle this mess they must stop believing the CAGW meme that fossil fuels cause ‘CO2 pollution’ that will ’cause global warming and we will all die’, despite plenty of evidence that a modest increase in airborne CO2 is beneficial. This is the hard bit, as it requires rational, objective thinking about a topic that has been dramatised and politicised beyond belief by the UN and its fellow-travellers since the early 1990s. To answer your question, if and when the government can think rationally, all they have to do is to reduce the Large Scale Renewable Energy Target to zero, or set the Large Scale Renewable Energy Shortfall charge (currently $65.00/MWh) to zero. This nullifies the whole LRET scheme, eliminating both the hidden subsidy to ‘renewables’ and the hidden tax on consumers, currently running at about $2.1 billion (yes, $ Billion) a year. It would also bankrupt most ‘renewables’ generators, who get about 65% of their revenue from the sale of LRET certificates, and once again allow coal and gas to reliably power the nation as it did before this madness began. Oh, and it would reduce the retail cost of electricity by about 30%. What’s not to like? Now about the LNP and common sense…

  38. Myrddin Seren

    BfT

    To answer your question, if and when the government can think rationally, all they have to do is to reduce the Large Scale Renewable Energy Target to zero, or set the Large Scale Renewable Energy Shortfall charge (currently $65.00/MWh) to zero

    And what stops Shorten, Di Natale and the Labor Premiers holding a presser saying they will reverse this regulatory change the minute that Shorten is enthroned after the next Federal election, as part of his First 100 Days run through of Old Australia ? Plus their mutual pledges to legislate 50% renewballs ( ie the death of the Australian economy and a not inconsiderable slice of the citizenry ).

    Absent bi-partisan energy policy, no private enterprise will risk capital on conventional coal-fired power generation in Australia knowing that Labor and the Greens will destroy the investment as soon as they can.

  39. gabrianga

    I the meantime, in between times coal mining and export continues to grow.

    https://www.thegwpf.com/u-s-coal-makes-a-comeback/

  40. cohenite

    David Brewer

    #2474127, posted on August 20, 2017 at 4:56 am

    +1

  41. GoWest

    Future fund investment.. similar to the CBUS investment into desal plants. Surely Public servants have not installed and approved these schemes because they make more money for their super funds. Surely public servants don’t get higher pay rises than over taxed taxpayer and higher percentage of super payment (16%). You cant be seriously suggesting that the whole political class has increased our power prices to make money for themselves…

    Brockovich where are you?

  42. David Brewer

    Actually, the cost of wind is five times coal, since the difference is four times, on the sound mathematical principle that 5-1=4.

    The general method would be to index the cost of electricity before wind to 100; then the cost of wind is

    (Cost of electicity after wind plus per cent of wind minus 100)/Per cent of wind

    Of course there could be many other factors affecting price, but this might be a useful start.

  43. BoyfromTottenham

    Myrddin Seren, I totally agree – as I said, any change to this mad policy is totally dependent on an outbreak of sanity among the pollies, for which I am not holding my breath (note the clever avoidance of the split infinitive here). The Labs and Greens will be the last folk on Earth to become sane about CAGW, so maybe my suggestion isn’t the best option, but its quick and effective. And if done early enough in our stupid 3 year electoral cycle, and all the results I predict have time to happen, including all the subsidy teat suckers going tits-up, then maybe the pro-AGW camp-followers will have second thoughts about ever investing again in this giant scam, undercutting the whole meme. As a septuagenarian, I only hope to live long enough to see such a beautiful thing! Pip, pip!

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