Renewable energy and government policy: the plot thickens!

In the Spectator-on-line I address the latest developments of the energy policy, the gist of which is being selectively leaked by Josh Frydenberg.  Here is an extract

The government’s abandonment of the expanded renewable energy target that the Finkel report recommended represents a careful compromise.

The Prime Minister remains a rusted on fan of renewable energy which he considers marks the future. Malcolm Turnbull has put himself through multitudes of hoops to salvage this prospect – including the absurd plan to implement Snowy II and pump water uphill to allow it to supply more profitable time slots.

Like all renewable energy apostles, the Prime Minister is bewitched by confident forecasts that sometime in the near future advances in technology will make renewables cheaper than fossil fuels. Such forecasts have been promoted by idealists and carpetbaggers since the 1980s but the fact is that renewable energy still costs $115 per MWh and, as recent work by the Minerals Council showed, a new Australian coal power station would profitably operate at under $50 per MWh.

Tony Abbott represents the opposite pole. Now freed up from having to listen to wide eyed advice from the bureaucracy and self-serving forecasts from energy businesses which prefer the certainty of government subsidies to the risks of entrepreneurial investment, he has recognised the disaster he presided over. In several addresses, culminating with that in London, he demonstrated that the renewable energy program is busting the Australian economy and has been the key factor in domestic households’ near 50 per cent increase in electricity prices.

The last ditch supporters of the renewable program retained their faith and some found sustenance in the recently released ACCC report which assigned only 16 per cent of the recent price increases to green schemes. What such interpretations overlooked was the fact that the green schemes had also forced out low cost coal generators. This means they were directly and indirectly responsible for at least 60 per cent of the increases and, because of the dispersed nature of renewable supplies, would also have contributed to the 40 per cent of the increase attributable to network prices.

Even Malcolm Turnbull would have had to recognise that things were not going to plan when the wholesale electricity price jumped from under $40 per MWh in 2015 to $90 at present and with forward prices showing no respite. And the South Australia blackout experience together with AEMO chief Audrey Zibelman’s desperate search for band aids to shore up reliability showed a very real prospect of an increasingly unreliable system as a result of renewable requirements. Ms Zibelman’s interventions may paper over some cracks but also undermine market responses. The appointment of Drew Clarke as Chairman of AEMO is a considered step to rein in her activism.

Josh Frydenberg – probably the smartest politician in the political “swamp” – could clearly see the disaster emerging. In June responding to Finkel, he adverted to the costs imposed by renewables by ensuring the Party room knew that they require a ‘firming’ insurance premium (though he put this at a wholly inadequate $16 per MWh). Frydenberg knows that the existing program whereby we have to reach 23.5 per cent renewables by 2020 (up from 16 per cent today) means the closure of at least one other major coal generator and the associated permanent price boost and reduction in reliability.

 

The unwinding of the renewable con-job is to be welcomed. But it can at best stabilise the damage that has been created. The only way forward is to totally abolish all subsidies with immediate effect, including those that the recipients will claim have been guaranteed. We are spending some $4-5 billion a year in a vain attempt to accelerate a future based on renewable energy and as a result have lost the comparative advantage of cheap power that has been the backbone of the economy.

 

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37 Responses to Renewable energy and government policy: the plot thickens!

  1. OldOzzie

    The Stupidity of Turnbull and the Liberal Party on display with their New Energy Policy</strong

    One Comment sums it up

    “””No taxpayer subsidies for renewable energy from 2020″”””. If so, how much of OUR money is going to be spent on those programs between now and 2020???

    Tony Abbott raises issue with energy plan

  2. Irreversible

    The subsidy argument will go away. The disaster created by lack of leadership on energy policy will not. The politics of this matter are in fairyland, totally disconnected from reality. Personally, I hope a government does finance a coal fired station Soviet style. Just to show what a subsidy looks like when governments over-rule investors.

  3. Roger

    Like all renewable energy apostles, the Prime Minister is bewitched by confident forecasts that sometime in the near future advances in technology will make renewables cheaper than fossil fuels.

    Alan, if only you watched and listened to the ABC you’d know that renewables are already cheaper than fossil fuels.

    [Seriously, there’s not a week goes by that I don’t hear this from the Green-Left’s propaganda arm. I’ve given up trying to correct their lies.]

  4. Rob MW

    Alan – just watched the press briefing on this and how complicated (sarc) producing electricity is for politicians and the assembled “Experts”, who knew. I’ve come to the conclusion that none have got a clue what they are talking about. The whole shit show can be fixed by very simply by shoving “Their” international obligations up “Their” willful arses.

  5. Roger

    Ms Zibelman’s interventions may paper over some cracks but also undermine market responses. The appointment of Drew Clarke as Chairman of AEMO is a considered step to rein in her activism.

    That really sums up the idiocy…the AEMO Board appoints an ideologue activist as CEO and within 12 months is appointing a new chair to rein her in.

  6. Yon Toad

    Seems like Mal and Josh like it both ways.

  7. Art Vandelay

    Josh Frydenberg – probably the smartest politician in the political “swamp”

    That doesn’t say much for the rest of them given that Josh thinks that imposing taxes on low value imports will somehow ‘create jobs’.

  8. OldOzzie

    Tin Eared Lord Waffles of Wentworth Turdbull and his 54 Bed Wetter Turnbull Coalition Strike again

    New targets for energy giants after Govt dumps renewables subsidies

    MALCOLM Turnbull shut down debate in the partyroom over his new energy policy when Tony Abbott tried to express concerns over the strategy.

    Mr Frydenberg has already indicated there may not be need for long-term subsidies for renewable energy. Wind and solar farms will be subsidised under the current Renewable Energy Target until 2030, but no new schemes will be entered into.

  9. Bruce of Newcastle

    The Prime Minister remains a rusted on fan of renewable energy which he considers marks the future.

    Alan – Please look at Hayward and Nelson’s analysis of wind energy in Minnesota which John Hinderaker reported on Sunday:

    “Green” Energy Fails Every Test
    Essentially the entire US$15 billion spent by Minnesota (which is a windy state) has been wasted because actual CO2 emissions have not changed. Yet electricity prices have risen steeply.

    Here we focus on how much renewable energy but not so much on the CO2e verifiably saved. I think if analysis is done it will show that wind energy saves almost no CO2 emissions here too, in a like-vs-like analysis.

    Mr Turnbull may think renewable energy is the future but if on life cycle analysis it saves no CO2 then why do it? Especially if it results in higher electricity prices in the real world. And that is even if like Mr Turnbull you do think there is a problem.

  10. zyconoclast

    The subsidy argument will go away. The disaster created by lack of leadership on energy policy will not. The politics of this matter are in fairyland, totally disconnected from reality. Personally, I hope a government does finance a coal fired station Soviet style. Just to show what a subsidy looks like when governments over-rule investors.

    It is not a lack of leadership that is the problem. The problem is the strong, vociferous and committed leadership towards the destruction of our energy supply and economy.
    Whether the politicians or bureaucracy have some direct/indirect financial benefit or favour UN SDG 2030, this is not a case of bumbling along.

    I am aware of a recent instance where a piece of research equipment was obtained via a government grant.
    They got it only because they added the words, “Study the effect of climate change on…” and then sprinkle the phrase climate change throughout the rest of the submission.
    They told me this is not relevant but it was the easiest way to get the money.

  11. Gengis

    We have a window of opportunity – GO NUCLEAR

    And Germany is spending $1.7 trillion dollars (1 trillion euro’s) on renewable energy plants and subsidies before 2020 and they are going to produce 300,000 tonnes more each year of CO2 – go figure!

  12. stackja

    Could ABC hot air be harnessed?

  13. manalive

    Desperation, too little too late, but even this would not have happened without Tony Abbott’s stirring.
    If this concession to a modicum of common sense doesn’t improve the government’s polling, what does Turnbull do next?

  14. H B Bear

    So now we have coal generators paying $85 per MWh to windmill owners to save the planet and windmill owners paying coal generators to keep the lights on. At some point these payments will reach equilibrium and they will no longer need to sell power to consumers to generate revenue.

    Must be getting close to the end game for all this bullshit shortly.

  15. OldOzzie

    Where’s the coal-fired power plant, Abbott asks

    Tony Abbott has questioned why the government’s much anticipated energy plan has not included a new coal fired power plant, claiming that it was presented as an emissions policy which failed to sharpen the distinction between the Coalition and Labor.

    Mr Abbott also accused Prime Minister Malcolm Turnbull of not honouring a promise to allow a discussion in the Coalition party room on the politics of the policy.

    “It’s good that the government has finally accepted that the Clean Energy Target was always a bad idea,” Mr Abbott told The Australian.

    “But Malcolm promised a political discussion in the party room and I’m disappointed that this didn’t go ahead.

    “The point I was going to make was that the government had brought forward a good framework but there was a lot that had been left to officials.

    Following a presentation on the National Energy Guarantee to the party room this morning, Mr Abbott challenged Mr Turnbull over whether the regulator would place a priority on reducing emissions or reducing prices.

    An exchange followed in which Mr Abbott said that according to the projections in the policy, unreliable power was going up and reliable power was going down.

    He then questioned why Mr Turnbull had placed so much focus on hydro and not coal. The Prime Minister responded by reminding the party room that the government did not own any coal fired power stations.

    At around 11.20am, Mr Turnbull tried to wrap up the party room meeting when Mr Abbott rose to his feet again and reminded the Prime Minister he had promised a discussion on the politics of the policy.

    Despite reports of a hostile exchange, the Australian has been told that Mr Turnbull simply ignored Mr Abbott’s request for further political discussion and shut down further debate by calling for a vote.

    There was an overwhelming majority in support of the policy despite deep reservations among many MPs about its ability to lift the government’s political fortunes or even deliver the savings to households promised.

    One MP told The Australian that the policy amounted to a saving of $2 a week on people’s power bills, and even then that could not be guaranteed.

    “It is not the panacea that everyone was expecting,” the MP said.

  16. Alan Moran

    The plot gets even thicker and contortions abound. Turnbull: “Coal, gas, hydro and biomass will be rewarded for their dispatchability while wind, solar and hydro will be recognised as lower emissions technologies but will no longer be subsidised.” Its just that all retailers will have goals to meet emission reductions and either they meet them from within their generation portfolios or they buy the emissions JUST LIKE PREVIOUSLY

  17. Myrddin Seren

    There was an overwhelming majority in support of the policy despite deep reservations among many MPs about its ability to lift the government’s political fortunes or even deliver the savings to households promised.

    It is not the panacea that everyone was expecting,” the MP said.“

    No wonder Turnbull’s backers were able to corral this lot in to booting TA. Absolutely useless – just sitting there and all hoping something will drop in to their laps. TA the only one standing up ?!

  18. Myrddin Seren

    The good news though is – we have a website and another costly advertising campaign to promote the same.

    So much agility. Such innovation. So not needing a /sarc tag.

  19. Andrew

    Imagine how much worse this govt would be without A666.

  20. RobK

    There’s a lot of sunken costs in experimental technologies that are irretrievable. That damage is done, along with the sterilized coal resources if we continue to turn our back on our resources (including nukes).
    Thank you for your efforts Alan.

  21. Howard Hill

    No wonder Turnbull’s backers were able to corral this lot in to booting TA. Absolutely useless – just sitting there and all hoping something will drop in to their laps. TA the only one standing up ?!

    They’re all codependant. All afraid of losing the position at the trough.
    Burn the whole stinking joint to the ground!

  22. Roger

    There was an overwhelming majority in support of the policy despite deep reservations among many MPs about its ability to lift the government’s political fortunes or even deliver the savings to households promised. “It is not the panacea that everyone was expecting,” the MP said.“

    The moral corruption of the political class illustrated:

    Their main concern is retaining their seats, not the plight of electricity consumers.

  23. herodotus

    Josh Frydenberg – probably the smartest politician in the political “swamp” …

    Not going by the way he’s allowed himself to be the public face of denial.

  24. gabrianga

    Perhaps a current puclic disclosure of Federal politicians (and their wives) pecuniary interests in “Alternative Energy” companies would paint a clearer picture of how they vote?

    A former P.M. was chairman of one of the world’s biggest investors in “renewables” with his wife on the Board.Could they have retained a container load of shares.

    Even one of Mal’s predecessors was and still is up to his neck in pushing wind and solar as a regular “expert” for SKY and ABC

    Drain the swamp!

  25. Yohan

    The government is trying to regulate their way out of this mess. But unless all renewable subsidies are dumped, there is no way traditional fossil fuel generators will enter back into this market or build new coal plants.

  26. Infidel Tiger 2.0 (Premium Content Subscribers Only)

    Imagine how much worse this govt would be without A666.

    Frightening.

    When Tony is your best player you are in big trouble.

  27. RobK

    ” and, because of the dispersed nature of renewable supplies, would also have contributed to the 40 per cent of the increase attributable to network prices.”
    This includes not just beefing up and extending conductors to pickup and carry surging erratic supplies from all corners of the grid but complex refitting and recalibrating of tripping circuits, power conditioning, increased instrumentation and monitoring including new boards and committees to oversee this wasteful experiment, as outlined by Finkel. On top of that, the old bidding system is now buggered.

  28. Norman Church

    I had always thought that forcing ordinary members of the public to pay higher energy costs was not a flaw but an inherent part of the design of the response to CAGW.

    The fact that we also got grid instability, the threat of blackouts and the loss of energy intensive industries was just a bonus for the hair-shirt brigade.

  29. Aynsley Kellow

    This outcome is much the same as the same enthusiasm has inflicted on both Germany (where prices often turn negative, but at least they have built some coal stations) and Ontario.

    One statistic is damning: the current global average efficiency of coal stations is 33%; HELE (ultra-supercritical does better than 45%; each 1% gain in efficiency reduces GHG emissions by 2%.

    If we simply replaced the existing coal stock with HELE, we would mitigate GHG emissions from that source by 24% – with reliability and at low cost.

  30. Rob

    Alan, if only you watched and listened to the ABC you’d know that renewables are already cheaper than fossil fuels.

    [Seriously, there’s not a week goes by that I don’t hear this from the Green-Left’s propaganda arm. I’ve given up trying to correct their lies.]

    Roger,
    This is great news. The ABC can switched completely to solar and wind power and because renewables are cheaper than reliable power, its budget can be reduced by something like 90%. The quality of news coverage and journalism will be dramatically improved.

  31. egg_

    [Seriously, there’s not a week goes by that I don’t hear this from the Green-Left’s propaganda arm. I’ve given up trying to correct their lies.]

    Ruinables and especially battery storage getting cheaper, they enthuse!

  32. metro70

    Alan Moran…

    Saying Tony Abbott ‘has recognized the disaster he presided over’ is just yet another slur against him.

    Are you telling us you really think the man who’s been unmercifully pilloried as a sceptic for a decade at least …took all that flak…is actually a true believer in the UNIPCC-the Paris Accord and the RET?

    YOU MUST KNOW TA was under vicious attack by just about every MSM person in Australia throughout his short fifteen months before the great pulsating Whiteant brought on his first spill motion against TA in Jan 2015….after TA’d had ONLY 16 LOSING NEWSPOLLS…not 30!

    YOU MUST KNOW that the LW MSM Made it compulsory in Australia for a leader or politician aspiring to high office to be or pretend to be and act as…. a true believer in CAGW….and that the LWMSM who wanted his job for Turnbull…enforced it in Turnbull’s interests.

    The LW MSM were just daring TA to show his scepticism and refuse to toe the UN line…the punishment for that crime being political death by their powerful hands.

    Tony Abbott did what he could in the hope Australia would survive…by signing up to modest cuts and cutting the RET back as far as he could when Hunt and McFarlane ‘persuaded’ him he couldn’t survive doing the right thing for Australia.

    So he went as far as THEY and other Turnbull plotters would allow…and they topped him anyway.

    There was no crime in trying to stay in power and try to do what was right for Australia within the constraints of THE POSSIBLE…in the knowledge Turnbull was going to destroy Australia….as he has since done.

    It’s hard to take anyone seriously when they can’t or won’t understand the vulture watch and extreme duress Tony Abbott was under then.

    But I thank you for all the work you do on this subject anyway….there’s not much sanity around these days….so I do appreciate it …as I know others do.

    By the way isn’t Drew Clarke a full-on Lefty Green as are many of the people Turnbull’s surrounded himself with in the PMO….one of them even a Greens candidate?

    I think Clarke would be a really bad influence on Audrey Zebilman who’s bad enough as it is…her schtick is demand management and ZERO COAL-having come to Australia espousing a policy absolutely identical to Labor’s and nothing to do with that of the government in power that she’s surely supposed to serve.

    But then that’s probably why Turnbull approved her—knowing she wanted to transform Australia …a giant experiment that she spelt out—Australia leading the world in burning all its COAL bridges to become a fully RE country with the greatest emphasis…as with AGL’s Andy Vesey…on solarPV and demand management .

    I think Freydenberg’s sold us out in order to keep his portfolio too…and not nearly as smart as I used to think he was.

    Kerry Schott of the Energy Security Board has the same plan as Zebilman ..for Australia to be run on wind/solar and demand management…so Turnbull has it ALL SET UP.
    We’re all just the hapless lab rats.

  33. EvilElvis

    Enthuse, they certainly do, egg!

    And then enthuse about how the oppressed workers in manufacturing are losing jobs…

    Up the workers, up the Eveready’s!

    Fuckwits the lot of them.

  34. duncanm

    renewables are cheaper than reliable power

    I keep hearing this from deluded friends — then I ask them ‘so why are we subsidising them?’. That usually ends the conversation with a look of confusion.

  35. gbees

    “renewable energy still costs $115 per MWh” – on top of this add the $80 per MWh subsidy provided by Australian taxpayers.

  36. Mother Lode

    Drain the swamp!

    Sirrah! Avaunt!

    I say we build a fence around it, pour in water, and then throw in piranhas.

    And televise it.

    For most of them screaming in agony as they watch the ravenous little fish-of-justice make off with chunks of living flesh in their razor sharp teeth would be the only worthwhile thing they have ever done.

  37. Rayvic

    “The unwinding of the renewable con-job is to be welcomed. But it can at best stabilise the damage that has been created. The only way forward is to totally abolish all subsidies with immediate effect, including those that the recipients will claim have been guaranteed. We are spending some $4-5 billion a year in a vain attempt to accelerate a future based on renewable energy and as a result have lost the comparative advantage of cheap power that has been the backbone of the economy.”

    Moran’s claim that the ‘new’ energy policy can at best stabilize the damage that has been created, appears overly optimistic, given that the policy calls for renewables to increase by about 50% by 2020 – that is, from the present 16% to 23.5% by 2020.

    How this can be achieved without increasing the average production cost of electricity and without causing blackouts is pure fancy.

    Perhaps Turnbull and Frydenberg have a rabbit they can pull out of a hat, such as, declaring mandatory switch-off of all airconditioners when the temperature exceeds 20 degrees Celsius, and mandatory switch-off of all heating when the temperature falls below 15 degrees Celsius.

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