Unwinding the politically induced crisis in Australian energy

More grist! From an article of mine in The Australian on the politically induced crisis in Australian energy, its causes and its solutions

The catastrophic outcome of government energy market interventions is palpably clear. As the latest new regulatory body, the Energy Security Board, diplomatically puts it: “Fifteen years of climate policy instability … (have) left our energy system vulnerable to escalating prices while being both less reliable and secure.”

Australia has seen electricity prices double since 2015 and the once reliable supply is now suspect. From enjoying the world’s lowest cost electricity a decade ago, Australia now has among the most expensive.

The main cause has been subsidies and regulatory favours to renewable energy — chiefly wind — that have forced the closure of reliable coal-fired generators, particularly Northern in South Australia and Hazelwood in Victoria. Without these subsidies, costing about $5 billion a year, there would be no wind or solar. Not only are customers and taxpayers slugged with the subsidy costs but the outcome also has been to raise prices and reduce reliability.

The ESB has been tasked with creating an electricity market blueprint that marries lower carbon dioxide emissions with lower costs and greater reliability. This is an impossible task and would require massive new regulatory interventions.

The ESB’s proposals would add new dimensions of complexity to electricity supply, bringing a further proliferation of administrative resources within the bureaucracy and the industry.

We can restore our latent competitiveness in cheap energy only by abandoning all the intrusions and distortions that are in place. Donald Trump has achieved success from such an approach and we may have to await full recognition of this before our politicians adopt similar deregulatory policies.

In the same issue, Rupert Darwall has a very fine piece today in Quadrant.

 

This entry was posted in Uncategorized. Bookmark the permalink.

27 Responses to Unwinding the politically induced crisis in Australian energy

  1. struth

    We can restore our latent competitiveness in cheap energy only by abandoning all the intrusions and distortions that are in place. Donald Trump has achieved success from such an approach and we may have to await full recognition of this before our politicians adopt similar deregulatory policies.

    Alan I support you 100% and especially this plain speaking article.
    But you gave them a stupidity “out” right here in this last paragraph.

    As if they don’t know……
    You don’t really believe this do you?
    They know and always have.
    They can’t and won’t do anything about our electricity except make it worse as decreed by the U.N. socialists intent on destroying the west, that they are subservient to, unlike Trump.
    Please don’t give these traitors , who well know what they are doing, this sort of excuse.

  2. Davefromweewaa

    No RET.
    No Paris…
    & No Malcolm!
    We need a prime minister who says climate change is crap.
    Davefromweewaa

  3. RobK

    You have in a nutshell Alan. Well done.

  4. RobK

    “….blueprint that marries lower carbon dioxide emissions with lower costs and greater reliability. This is an impossible task …
    Correct. Which is most important to enable the others:
    Allowing all forms of energy production an even regulatory footing, so they can best find their economic niché will result in opitization of resources, prosperity, economic resilience and a broad range of knowledge and capacity to adapt. It will also supply the cleanest and cheapest energy in the long run.

  5. BoyfromTottenham

    Thanks again for some unvarnished truth about our energy policy mess, Alan. One further bit of analysis that I would like to see is about the genesis of this whole mess – from where exactly did the treacherous ideas underlying the RET originate and how did they get waved through parliament? Was it simply a lazy cut and paste from the previous UK or EU renewable energy legislation (with some of the more sensible restrictions deleted IIRC), or did some local boffin claim to have dreamed this up? And why are all the major parties so supportive of it still, despite its obvious failure – because their fingerprints are all over it?

  6. David Bidstrup

    We are screwed until politicians untie themselves from belief in climate change. Classic example: South Australia.
    I have written many letters/articles with analysis of the proposed “solutions” and none of them stand up technically or financially. No one seems to bother to look because I am not saying what they want to hear.
    A centralised generation system in public hands worked before and will work again despite those who have a naive belief in “markets”.
    The damage done will take years to correct and cost even more money but at least the outcome would be a system based on sanity, with some chance of pulling prices down.
    It goes without saying that the system should be built around coal fired power stations and bugger the emissions.

  7. armchair spaceman

    Winter is coming
    (I’ve just bought a wood heater)

  8. BoyfromTottenham

    David B – I agree, this is a classic example of ‘the madness of crowds’ at work. Maybe if someone with deep pockets started to sue some of the perps…?

  9. Peter Greagg

    David Bidstrup
    #2643193, posted on February 22, 2018 at 1:57 pm

    It isn’t markets that have caused this mess. Note that the worlds lowest cost electricity a decade ago was largely as a result of market forces.
    It is the RET and all the other interventions that have caused this trouble.

  10. struth

    A centralised generation system in public hands worked before and will work again despite those who have a naive belief in “markets”.

    Somebody just may have a naïve view of governments these days.

  11. RobK

    DB,
    Markets are fine. It’s the regulations that are presently the problem. Publicly owned can work ok if management is capable and not some cronny jobs for the boys mentality that often creeps in.

  12. manalive

    A centralised generation system in public hands worked before and will work again despite those who have a naive belief in “markets” …

    The ideal solution is for governments to get out of the way, walk away from Paris and stop favouring some energy sources over others and let the market work.
    Politically, government intervention may be the only way out of this disaster caused by government intervention.

  13. testpattern

    Markets at work – Lithium to rule the waves

    South Australian commercial fisherman is building an electric hybrid, 24m, lithium batteries, to work both Gulfs. 500 KW hours batteries, 400kw gen for backup. Based on the Karoline in Trondheim.

    Karoline

    ‘During the the Karoline first 30 days of service its operators caught some 58,000 kg of fish, but it consumed only 0.04 liters of diesel per kilogram of fish, representing an 80-percent reduction in fuel consumption compared to conventional diesel-powered fishing cutters.
    The new technology doesn’t just save fuel, it also reduces operating costs, because electric motors need much less maintenance than diesel engines. The batteries can be used for around 30,000 charging cycles.
    Battery operation offers another benefit during cold winters when the boats have to be heated in port. This heating is generally provided by the onboard diesel engines, meaning that about 70 percent of the heat is lost through the vessel’s hull. The Karoline’s heating system, in contrast, is supplied with energy from the batteries or directly from the grid. It operates much more efficiently than the conventional approach and does not consume diesel.

    In addition to the Karoline, Siemens has also been involved in the development of the world’s first all-electric car ferry, the Ampere. The vessel has been running the six-kilometer ferry route across Norway’s Sognefjord since the spring of 2015’

    https://www.siemens.com/innovation/en/home/pictures-of-the-future/mobility-and-motors/electric-mobility-cutting-emissions-with-electric-fishing-boat.html

    http://corvusenergy.com/corvus-energy-powers-the-worlds-first-electric-commercial-fishing-vessel-karoline-designed-and-built-by-selfa-arctic-as/

  14. egg_

    “Take the sugar off the table”.

    The same as with all parasites.

  15. egg_

    In addition to the Karoline, Siemens…

    fvcked up the diesel engines in our diesel-electric aircraft carriers.

  16. RobK

    TP,
    Diesel electrics have been around a long time. The low fuel use quoted is because its a short cycle run using Norway’s hydroelectric grid to charge the battery . I think Siemens made an error with the 30,000 battery discharge cyles (generally 3000 is the norm) unless only very shallow states of discharge are allowed before recharge.
    I note further down the article Siemens says;
    “The results of the study demonstrated that electric solutions were profitable on routes that could be completed in less than 35 minutes. Longer routes are more cost-efficiently operated by ferries with hybrid propulsion systems. “
    In Australia essentially its a diesel electric because grid power isnt cheap. Not much news here.

  17. Dr Fred Lenin

    We need to change the constitution to eliminate career politics nd political parties of all kinds . Surely the damage these idiots are wreaking in the name of u.n.communism is not sanctioned by our constitution ,I am sure the founding Fathers never meant to create a bureaucratic unelected communist aparat to rule as they wished . The career pollies. Corrupt bureaucrats and profiting carpetbaggers should serve life in a strict regime gulag with their families reduced to penury , losing homes and all assets . Digging a canal from Spencer gulf to Lake Eyre , by hand ,would keep them busy for a few years then they could start on the Rockhampton to Port Hedland ,we will keep them digging , after all pollies and lawyers are good at digging , them of course $2 a day. Less food etc .

  18. Myrddin Seren

    The ESB has been tasked with creating an electricity market blueprint that marries lower carbon dioxide emissions with lower costs and greater reliability. This is an impossible task and would require massive new regulatory interventions.

    I assume this latest government boondoggle has been tasked with scrupulously avoiding the word ‘nuclear’ ?

  19. Alan Moran

    Boy from Tot
    Not sure there is a consistent means whereby antinomian ideas emerge. In housing they started from elites saying half sensible things like we should pay a bit of attention to infrastructure and this went to hostility to “urban sprawl” and land rationing that brought blocs from $100 to become +$200,00.

    For water on Murray the elites (Wentworth Group) started big seeking to return of two thirds of irrigation water and farmers engaged (seeking as usual subsidies). Incrementally they now are at a one third return.
    Global warming activists started saying ban all fossils, this struck something of a cord with doctors wives and we started on the path that nobody knows where it will end.

    Similar patterns seen on flora and fauna – half decent notions adopted and transfermed into Frankenstein

  20. Is it too much to ask for a PM with a brain that has at least 3.5% of the synaptic activity of Alan Moran?

    Keep at ’em Alan.

  21. Rob

    No emissions nuclear power – it’s a no brainer yet rarely mentioned.
    Long after all the current windmills, solar panels, and batteries are life expired, nuclear power stations built today would still be performing at faceplate output 24 / 7.
    Where are the saviours willing to lead us in the nuclear direction?

  22. Chris M

    Without these subsidies, costing about $5 billion a year, there would be no wind or solar.

    Well solar PV is at a point that it is now viable without subsidies, albeit in our climate of high power prices. So as you say ditch all the subsidies and let people use the power source they desire!

  23. I’m really shocked to hear that we now have a new Energy Security Board that published a report that is absolutely contrary to the policies of all Australia’s major political parties
    Apparently it does NOT believe that high energy costs and unreliable power supplies will save the world from either burning up or from drowning?
    I am amazed that such a report was allowed to be printed this day and age, I mean think of the children etc. (sarc.)
    Meanwhile the new Energy Security Board is just what Australia needs today to counter the endless, mainly taxpayer funded, pro ruinable energy propaganda. Let’s hope it will survive the inevitable, vicious backlash that will come from all the vested interests.

  24. flyingduk

    A centralised generation system in public hands worked before and will work again despite those who have a naive belief in “markets”

    I beg to differ, I live in SA and what we have now is a ‘centralised generation system in public hands’ and its so bad I have had to spend 10k on generators. As for a ‘naïve belief in markets’, I wouldn’t know: we have not had a free market in electricity here in decades.

  25. David Bidstrup

    Some interesting comments about this.
    My comment about centralised generating systems was more about the technicalities rather than whether the “market” could do it better.
    The “distributed generation with widely dispersed wind farms and solar farms have a couple of inherent problems. The first is the extra transmission infrastructure needed to get their electricity into the grid and the second is the fact that the wind turbines are flimsy in comparison to a properly engineered thermal plant and sit atop 170 metre towers needing large cranes to remove bits for maintenance where concentrated thermal plants have the means to do maintenance readily at hand. There is also the inherent intermittency that is just part of the weather and beyond anyone’s control.

    SA once had a good example of a publicly owned electricity system which served the state well for many years. It was the foundation of the state’s industrialisation, sadly gone now, but the provision of cheap reliable power coupled with an administration that provided cheap land and infrastructure like public housing and ease of doing business got the state industries like Holden, Actil, Philips and a number of white goods manufacturers amongst many others.

    These are all gone as emerging economies started to provide these goods at lower cost, as we see today with the current emerging economies.
    Perhaps the big mistake was not recognising that times were changing and we needed to change as well.

    A couple of points that I think need to be made: first, there was nothing inherently wrong with ETSA. It provided cheap reliable electricity; people planned ahead for growth and built power stations like Port Augusta and Torrens Island. The first is now scrap metal in China and the second is owned by the mob that “are getting out of coal” and is underutilised and poorly maintained because there is more to be made by screwing the people with renewables.

    ETSA was sold to get some fast cash to pay off Labor’s State Bank debacle and for no other reason.

    Second, the Victorian interconnector was first proposed because Victoria had surplus power and SA could buy it from them instead of building the next power station. History shows the folly of this decision.
    People in the industry advised against it but were ignored-as usual. These people also advised against the introduction of “renewable” energy and ignored again, just as they are today when they comment on the stupidity of “pumped hydro, batteries and large scale solar.

    The current “market” is deeply flawed and permits generators to bid up to $14,000/MWh and in some cases negative prices to manipulate their spot in the market. January 18 and 19 should show the consequences where daily total wholesale prices reached 20 time the monthly average.

    There is nothing wrong in principle with private companies providing electricity but they need to operate in a rationally regulated environment where they are able to sell electricity at their cost rather than the price set in a market that is a circus and skewed to subsidised renewables which are basically useless.

Comments are closed.