Unwinding the renewable energy scam

I have an article in the online Spectator which addresses measures in place to correct the economic fall out now manifestly evident from green energy policies.

Escaping the renewable energy subsidy trap

It concludes

Whatever the fall-out one thing is certain: no politician will ever be called into account for retailing the now discredited renewable energy nirvana. That’s just the way things are.

The wasted expenditure involved in renewable subsidies can never be recouped; it represents a permanent and irretrievable reduction in national wealth and living standards.

Above all, in transforming the world’s most competitive electricity supply industry into one of the world’s most expensive systems it has brought about a deindustrialisation that will have a lasting effect.

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44 Responses to Unwinding the renewable energy scam

  1. BoyfromTottenham

    What if the RET applied to free range eggs instead of electricity?
    The Large Scale Renewable Energy Target (RET) is a legislated instrument that set up a generous subsidy (via the gift of ‘renewable energy certificates’ to each renewables generator, worth about $85 per MWh of energy they sold to the grid) to encourage investment in ‘renewable’ electricity. This subsidy is currently equal to about 170% of the wholesale price of traditional (i.e. fossil-fuelled) electricity, and is paid for by electricity retailers who must not only buy these certificates for up to about 30% of their sales, and give preference to the purchase of ‘renewable’ electricity versus conventional ‘fossil fuel’ electricity, but then add the cost of the subsidy to their customers’ bills.
    However, renewable energy production from solar and wind generators varies from minute to minute with the amount of wind and sun, whilst conventional energy production is stable, 24 x 7 x 365, hail, rain or shine. Incorporating this varying supply of renewable electricity also makes life difficult for the both the traditional generators, the network operators and the energy retailers.
    What if this legislation applied to say ‘free range’ eggs instead of electricity? Let’s say that regular (i.e. cage) eggs wholesale for $1/dozen, and the RET (now called the Renewable Egg Target) provides for a similar level of subsidy to producers of free range eggs to that provided to renewable energy generators, which would equate to about $1.70/dozen. Free range egg producers can then clearly sell their eggs to a retailer for either the same price as cage eggs ($1/dozen), and also pocket the $1.70/dozen RET subsidy, making huge profits compared to the cage egg producers. Or they could sell their eggs to a retailer for nothing and still get the $1.70/dozen subsidy, which is well above the current market value of their eggs.
    However, as it happens free range hens do not produce a reliable supply of eggs. Unlike their caged sisters, for some unknown reason they lay more or less (or even no eggs) each day according to whether and how fast the wind is blowing. So the retailers have to decide how many cage eggs they need to buy each day (but only up to up to 70% of total demand) depending on how many free range eggs were produced yesterday. This means in turn that the cage egg producers, whose hens each reliably produce about 6 eggs a week, may find that the retailer wants to buy more or fewer of their eggs on any day. By contrast, free range egg producers have the benefit of the subsidy regardless of how many eggs they produce, and therefore have little incentive to produce a reliable supply of eggs.
    Under the RET rules, the retailer must buy 30% of their demand from the free range producers at the wholesale market price of $1/dozen, and must also buy an equal number of ‘free range’ certificates to pay for the $1.70/dozen RET subsidy. At the very least, arithmetic says that retailers will have to raise their average retail price for all eggs by about 50 cents/dozen just to cover the cost of the buying the certificates for 30% of their sales.
    Now, what happens if the free range producers decide that because of the $1.70/dozen subsidy, they can now profitably sell their eggs for only $0.50/dozen? Well, the wholesale price will drop by about 50%, so the income of all cage egg producers will be halved, significantly lowering their profits.
    What if the free range egg producers decided to sell their eggs for nothing – after all they will still get the $1.70/dozen subsidy anyway? Well, the cage egg producers would get nothing for their eggs and would be forced to close down. The retailers would then have to buy all their eggs from the free range producers at whatever price the producers determined, and would still have to buy RET certificates at $1.70/dozen for 30% of them. But the number of free range eggs produced each day would still vary with the amount of wind, and with all the cage egg producers gone, wholesale (and therefore retail) prices would surely rise, whilst the quantity of eggs available would vary randomly from day to day. Is this the intended effect of the RET?

  2. deindustrialisation

    That is the intent of all of this.

  3. Rafe Champion

    Thanks Boy. I think AGL worked that out too. Funny the politicians and their advisors didn’t.
    Wait a minute, who were their advisors?

  4. Cynic of Ayr

    Lemme get this straight.
    My last bill was for 1.59 Mwh of power, and this power cost $368. (Plus GST, Service Fee and Meter Reading)
    The RET costs $85 per Mwh and a third of my power has to be bought with this added.
    So, the RET costs me 1/3 of $85 x 1.59Mwh which = $41.
    As the RET is included, and not itemised separately, I also pay GST on the RET tax.
    Aren’t we not supposed to pay GST on Taxes?
    Or is this too simplistic?

  5. BrettW

    Article in Oz today mentioned the subsidies AGL were going to get in relation to a wind farm (or solar) that produces 4% of the power that Liddel supplies. Was hundreds of millions.

    Insanity. It is just like the sheep following each other over the cliff and none questioning it.

    How many “Manchurian candidates” do we have ?

  6. closeapproximation

    Recognising this is Tony Abbott, again proving his formidable skills as a politician, at least when not in office…

    Ouch.

    Harsh but fair.

  7. BoyfromTottenham

    Cynic – Better still, is the RET even constitutional? What about S 51 (xxxi) ‘the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws’, or S 55 ‘Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.’. Is the RET a tax? Is there a constitutional lawyer in the house?

  8. NormaP

    Tim Blair’s column in today’s Tele (paywalled)is brilliant. Typical of Tim he gives us a laugh as well as cutting criticism of politicians, eg:
    Unfortunately, however, we also have inexhaustible supplies of idiotic politicians and deranged energy policies, which explains our current situation.

    It takes a very special form of madness to convert so much power for so few people into four-figure electricity bills and looming blackouts.
    He also tells of how the Australian Institute of Marine Science reacted to his blog post on one of their climate scientists being caught for fraud. Really weird.

  9. Dr Faustus

    Excellent article.

    Sadly, the two parties of government are both paralysed by the conflicting political need to respect AGW orthodoxy, while simultaneously duck-shoving the wholly-predictable tide of economic destruction that was always promised by subsidising ineffective technologies.

    There will be no coherent energy policy under Turnbull and no new coal fired power; even though he appears to have vaguely noticed the elephant in the room, he has insufficient time or authority time to him. Shorten is committed to causing worse damage – and has signalled his intention to blame the upstream gas industry for not investing enough to support the failure of 15 years of energy policy.

    AGL’s cynical strategy simply reflects this reality.

  10. John Constantine

    Their ABC can only see how happy people are, when the solar panels on their multi-million dollar Sydney mansions transfer the socialist millionaires electricity bills to the poor people.

    When everybody has a good government job in the services economy, everybody will be green and happy Comrades.

  11. EvilElvis

    Idiocy.

    And the divide between the wealth generators and the plebs widens with every vote.

    Dump Turnbull, run on a platform of striking out renewable energy subsidies, then let the clowns like Shorten trip over themselves by talking us into higher prices, because Gaia.

    Oh wait, Shortens already doing that..

  12. Arnost

    deindustrialisation

    That is the intent of all of this.

    Indeed…

    The Reagan / Thatcher and free market inspired fall of the 2nd world caused much anguish and gnashing of teeth amongst the socialist supporting intelligencia, academia, and artyfartia. And their hate and need to get even ever since has resulted in their nihilistic push for the destruction of the west at any cost.

  13. Rabz

    Aren’t we not supposed to pay GST on Taxes?

    We’ve been paying GST on fuel excise since the former was introduced.

  14. JohnA

    Tim Blair, via NormaP:

    It takes a very special form of madness to convert so much power for so few people into four-figure electricity bills and looming blackouts.

    Demonstrating once again that it is not the science which is dismal but the interference by governments which causes price gyrations and supply shortages.

    Paul Keating was certainly one for bon mots. As well as “banana republic” he once described his desire for the Treasury benches as a passion for “getting his hands upon the economic levers of the Australian economy.”

  15. stackja

    Left plan to destroy Australia is working.

  16. egg_

    There will be no coherent energy policy under Turnbull and no new coal fired power; even though he appears to have vaguely noticed the elephant in the room, he has insufficient time or authority time to him. Shorten is committed to causing worse damage – and has signalled his intention to blame the upstream gas industry for not investing enough to support the failure of 15 years of energy policy.

    It wouldn’t surprise me that Labor do have the political courage to do an about turn on coal-fired power – with the requisite window dressing – blaming Lord Waffleworth’s ambiguity on all matters as the root cause of all our woes.

  17. stackja

    egg – RGR now forgotten?

  18. egg_

    stackja
    #2500838, posted on September 18, 2017 at 5:46 pm

    All had bigger balls than Turnbuckle.

  19. In my younger days, I had a boss who said that fear and greed are the only two motivators of people. In everyday life, I think this is broadly true. But I struggle to see how politicians enamoured with RETs etc are acting out of fear or greed. I could classify their behaviour as stupidity/unthinking/virtue-signalling more easily. Do I need to go back to my (now retired) former boss and ask ‘please explain?’ Is there a third way?

  20. JC

    Does Telstra know or even care about the massive destruction their Philippine call center is causing to their franchise?

    You can’t even yell at them, as they are too stupid to get angry at them.

  21. Michel Lasouris

    This conclusion make me unutterably sad. My only consolation is that I’m making every endeavour to insulate/isolate myself from the effects of this maladministration. And indeed with some success. But I do feel sad for all those worker bees among us who have no choice but to suck it up. I would urge everybody to really read and comprehend AC Grayling’s latest work “Democracy, and it’s Crisis”. It certainly does prompt one to consider just how the ” Least worst of all possible political systems” CAN develop and serve us well.

  22. Irreversible

    Yet again, Moran ignores the absence of real policy. And the changes in demand that have made large scale continuous base load plant less economic. And the commercial limitations of marginal old power stations. Not to mention the reality that capital programs in power produce a step change in cost every generation – usually because the incentives in the system do not reward progressive depreciation.
    If we had strong policy intervention it should be to restore a market and supply in gas. (And certainly not pumped storage or base load coal.) The rest will take care of itself.

  23. Dr Fred Lenin

    Simply abrogate any treaties signed up without consent by referenda, abolish subsidies entirely ,remove imposts inflicted on power generators by polititical fiat ,without consent of the people. Freeze assets of carpetbaggers to ensure enough to pay for proper removal of eyesore windmills ,and restoration to pristine conditions of sues when windmill is uneconomic ,Remove solar from system ,not worth the effort and expense to keep it . Help build new coal fired stations ,and subsidise clean coal research ,begin nuclear-r station building and hydro on rivers locked up by gangrene legistlation ,brought in to gain gangrene preferences by career political maggots . Cleanse a.g,l of gangrene communist infiltrators ,then start on the career political lawtrade failures in government . There’s a start comrades .

  24. zyconoclast

    In my younger days, I had a boss who said that fear and greed are the only two motivators of people. In everyday life, I think this is broadly true. But I struggle to see how politicians enamoured with RETs etc are acting out of fear or greed. I could classify their behaviour as stupidity/unthinking/virtue-signalling more easily. Do I need to go back to my (now retired) former boss and ask ‘please explain?’ Is there a third way?

    Greedy, I suspect many politicians and advisors have direct or indirect investments in the scam. Others will be setting up jobs with the energy scammers in due course.

    Fear? none of them actually believe this crap. That’s why it’s called a scam.

    You can probably add two other motivators such as stupidity and treason.

  25. Tator

    Irreversible,
    changes in demand that were driven by this clusterfuck of an energy policy driving energy intensive industry out of Australia for the warm and fuzzy feeling of doing good for the planet, even though the ACC case is fraudulent and crap.
    Windpower cannot do anything to the grid except destabilise it as its peaks and troughs of production on a daily basis are the antithesis of the normal demand curves for power. ie it produces when there is no demand like between 2000 hrs and 1200 hours and bugga all between 1200 and 2000 hours.
    Solar peaks at around 1100 hours due to degradation due to heat build up.
    Gas is still far too expensive and too portable with large export markets leaving the very small Australian market to the vagaries of commodities traders so we get back to coal, of which we have over a hundred years worth of supplies at current extraction rates. The Energy in Australia 2011 report shows miners have identified 539 years of brown coal reserves (359,870 petajoules), 111 years’ worth of black coal to fire power stations (987,064pj, almost 11 per cent of global capacity), and 42 years of LPG supplies (4399pj). On top of that, the same report claimed there was 141 years of uranium left to fuel overseas reactors too.

  26. Dr Faustus

    If we had strong policy intervention it should be to restore a market and supply in gas.

    Let there be gas. And, lo, there was gas.

    Discovering, proving up and developing gas on the scale imagined by the political bubble would require huge exploration commitment, technical success in tight and basin centred resources, further large scale CSG in NSW (limited prospects in Victoria), massive gas pipeline infrastructure and/or LNG receiving facilities on the East Coast.

    Time scale of something like 10 to 15 years of intensive effort and vast capital expenditure – to deliver gas that would be considerably more expensive than the current $8 to $12/GJ.

    A risk profile dominated by politicians promising confiscation and a return to $4/GJ is probably not going to achieve this sort of market response.

  27. Garry

    Why on earth would politicuans worry about giving the proles cheap and reliable power when they have such important issues to consider such as

    * the fact that many of them are going to lose their seats at the next election. Oh what a great loss!
    * the fact that homosexuals can’t marry
    * the amount of damage our emissions are causing the rest of the world
    * providing compensation for the poor refugees in detention.
    * importing more and more immigrants that really, really want to embrace our culture an lifestyle
    * finally outlawing two stroke mowers, leaf blowers, boat motors ect. In the interests of the environment
    * providing really rich people with subsidies to buy electric cars in the interests of the environment
    * the RET. In the interests of the environment.
    * the barrier reef that is being damaged by naughty emissions.
    * proving AGL with massive taxpayer subsidies in the interests of the environment.
    * passing new laws to ensure that the naughty Yes campaigners can’t vilify us No campaigners.

    I could go on but you probably get the picture. How on earth can we expect politicians to address issues of interest to mainstream Australia when that have so many other and more important things to consider. For god sake Australia get of their back and give them a fair go while they get on with actively working against you!

  28. Defender of the faith

    Tatus: the demand change in terms of large users was mostly to do with Russians buffeting the aluminium market.
    Faustus: there is in fact a very large amount of known gas reserve in victoria and adjacent to existing operating reserves linked to the main east coast distribution. The market problem was identified about 18 yeas ago and this shortage forecast by a coag report whose author now heads the competition policy bureaucracy. The thing is: small producers get screwed in Australia and the market is owned by a few big companies.

  29. Crossie

    Article in Oz today mentioned the subsidies AGL were going to get in relation to a wind farm (or solar) that produces 4% of the power that Liddel supplies. Was hundreds of millions.

    Insanity. It is just like the sheep following each other over the cliff and none questioning it.

    How many “Manchurian candidates” do we have ?

    This shows that Malcolm is not so much a Manchuria candidate but an inept egomaniac. He is too lazy to look up anything for himself and accepts only the advice of his staff who are all Greens, not Liberals.

    When AGL refused to the government’s request continue running Liddell Power Station all Mal had to do is withdraw the subsidies. Not threaten to withdraw the subsidies but actually do it so that AGL would be forced to generate profits the old fashioned way by making something people would pay money for. At present their profits come directly from taxpayers while they scheme to kill the opposition by pricing them out of the marketplace.

    Saying that Mal is an ignorant nong does not absolve the rest of the Cabinet of responsibility unless of course they are even more ignorant than their leader.

    We must have the worst government in living memory and yet nobody is making a move.

  30. Crossie

    Their ABC can only see how happy people are, when the solar panels on their multi-million dollar Sydney mansions transfer the socialist millionaires electricity bills to the poor people.

    The ABC types don’t see them as people who matter since they don’t meet any at a dinner party or an art gallery opening. And anyway, the poor are rednecks who will vote No in the gay marriage plebiscite so they deserve everything they get.

  31. Myrddin Seren

    We must have the worst government in living memory and yet nobody is making a move.

    Again, because everything continues to validate his observations:

    Geoffrey Greene has worked as Liberal Party state director in both South Australia and Queensland and was one of the architects behind John Howard’s successful election campaigns between 1996 and 2007.

    “The Turnbull government is at war with the people. This is a government which hates their own constituents”

    “Generally speaking, the whole malaise of this government is due to inept advice, ministerial and organisational,” he said.

    “I have never seen a set of government ministers more captured by their departments,” he said.

    Absolute.Window-licking.Morons.

  32. Dr Faustus

    Faustus: there is in fact a very large amount of known gas reserve in victoria and adjacent to existing operating reserves linked to the main east coast distribution.

    DoF: My comment about the limited potential in Victoria was in relation to CSG. That is modest.

    There are certainly significant remaining conventional gas reserves in the Bass/Otway and Gippsland basins, however these are not nearly sufficient to double the Eastern Australian gas market – which is the implication of both Coalition and Labor RET policy.

    You appear to be confusing gas resources with gas reserves; as I suggest above, converting potential resources into deliverable reserves will take time, application and a huge bunch of risk capital.

  33. Nerblnob

    Otway Basin and Bass Strait gas is not (yet) affected by the Andrews govt’s , and probably the “opposition” too, mania to ban gas development. Bass Strait gas & oil is mature and declining but still plenty to be had from there.

    Onshore gas, CSG and shale potential in Vic is relatively small but still, no sane government in any country would attempt to suppress its development. A drilling rig is far less of an environmental threat than a wind farm. In the case of CSG, one could argue that they’re making old coal fields safer by dewatering and producing the gas in controlled manner.

  34. mareeS

    To my utter shame, we are shareholders in AGL via our SMSF, and benefit from all the lovely capital appreciation and dividends that this rent-seeking crowd are returning to us after leeching off our taxes and those of our fellow Australians.

    It’s a bit of a circle with AGL, like the banks, better to be an owner than a customer.

    My husband says we should sell on principle, but I say, better to get something back and be able to vote out these venal bastards at the next AGM if enough shareholders can unite.

    Vesey and Co remind me of the three amigos at Telstra, who eventually got shown the door.

  35. RobK

    Thanks again Alan,
    The sooner we stop our loss the better, as you say. In the interest of maximizing the value of our resources, all forms of electricity and other energy need to be on an even footing (no ongoing subsidies). The more diverse our base, the better our future is hedged for comming generations. We export coal; we should continue practicing its best use, same goes for nuclear. The leg-up given to renewballs is way over the top, we lead the field in solar hot water and PV, even in agricultural windmills but all that advantage is lost now to foreign interests because of the lure of a gubsmacking subsidy industry. It will be difficult to shake off the leaches but the sooner the better.

  36. OneWorldGovernment

    Apart from wanting to punch John Howard in the face I want every scum bag Australian inner city, including CBD’s, to operate with wind and sunshine.

  37. bollux

    David, there is fear, greed and virtue signalling.

  38. cohenite

    Whatever the fall-out one thing is certain: no politician will ever be called into account for retailing the now discredited renewable energy nirvana. That’s just the way things are.

    I wonder.

  39. Another old bloke

    Saying that Mal is an ignorant nong does not absolve the rest of the Cabinet of responsibility unless of course they are even more ignorant than their leader.

    Correct. And to prove it, the cabinet want to solve the problems arising from subsidies for wind and solar by providing new subsidies to coal. This from a government that pretends to be pro-free market.

    There remains only the delicious anticipation of Turnbull’s concession speech. Let’s just hope it’s not to Shorten.

  40. Senile Old Guy

    In some countries, such as the Maldives and the United Arab Emirates, possessing a codeine-based drug without an authenticated doctor’s prescription can potentially lead to deportation or imprisonment. In Greece, any amount of codeine is illegal.

    What good company we are in!

  41. Tel

    This shows that Malcolm is not so much a Manchuria candidate but an inept egomaniac. He is too lazy to look up anything for himself and accepts only the advice of his staff who are all Greens, not Liberals.

    If I had a selection of options to choose from, an inept egomaniac would be moderately easy to control without them ever suspecting they were being manipulated. Just saying.

  42. Senile Old Guy

    “We know that many of our customers get really excited about Christmas and a number of customers like to co-ordinate their home Christmas decorations. In order to assist our customers co-ordinate their Christmas trees and decorations we label packaging with key Christmas themes.”

    Pull the other one, it plays a a seasonally appropriate tune.

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