Energy Battlegrounds and Furphies

I have this piece in this morning’s Australian which addresses the direction of energy and climate policy in light of Josh Frydenberg’s Press Club address.  Aside from demonstrating how the renewable program has wrecked the electricity supply industry and brought a doubling of prices, it has two main themes.

First, it demonstrates that government statements bend the truth in saying that the National Energy Guarantee (NEG) will be neutral between energy sources.

The NEG will be set to achieve aspirations for a level of greenhouse gas emissions from the electricity sector in line with the government’s Paris commitments on greenhouse gas emissions and will oblige suppliers to adjust their energy sources accordingly.  It is, in short, a mechanisms under which suppliers contract more renewable energy than they would without the NEG and less from fossil fuel generators.  This is accomplished by, in effect, the fossil fuel generators paying a price penalty and the renewables getting a price bonus.

Secondly, there’s the Liddell closure issue.  Supply security and price is uppermost in the battleground over this and has brought calls for some Coalition MPs for direct investment in new coal fired generators.  The outgoing head of the electricity industry lobby group, Matthew Warren thinks the planned Liddell closure would not be a problem but politicians and regulators are not so confident.

The government is resisting calls for direct investment

“but leaning heavily on AGL to keep Liddell open – the firm’s claims that its alternative investments will be superior just do not pass the credibility test.  AGL has said it needs policy certainty.  A prominent ALP spokesman, Nicholas Reece, made it clear on Wednesday night’s Bolt program that a Shorten Government would not permit Liddells’ closure prior to 2025.”

In other words, we have bipartisan policy that will ensure the plant is kept open – and it is a safe bet that the ALP would be more ruthless in ensuring this than the Coalition.

One important feature of the address by Josh Frydenberg was his observation that the renewable industry is adamant that it is now competitive with fossil supplies but equally resolute in demanding on-going subsidy programs to effect this.

The Minister says that wholesale prices are likely to fall a bit.  Maybe, but we won’t see the $40 per MWh level that prevailed before politics destroyed our competitive supply.  Interestingly Josh Frydenberg also says the forward price of RET contracts is falling (to $38 per MWh from $80).  What this means, even if the wholesale price for electricity falls to $70, (AGL said it had contracted wind at “$60 real” for five years) renewables need $108 per MWh to be viable. Some way from parity with the Minerals Council’s research showing even High Efficiency Low Emissions coal generators may require as little as $40 per MWh to be viable.

Meanwhile,  someone has leaked Ben Potter at the AFR (Clue? see the pic of Vic Minister Ambrosio with Al Gore) a copy of the latest officials’ NEG report.  His article misses the big picture but allows him to say that the draft “won’t require electricity contracts to specify physical sources of generation or privilege coal generation over other forms of on-demand supply that can “firm” up intermittent wind and solar energy”.

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18 Responses to Energy Battlegrounds and Furphies

  1. struth

    It’s all a croc.
    While the government bends over for the global socialist U.N. and stays in the Paris Agreement, this is all completely and utter nonsense and a waste of time listening to.
    By arguing with their little side shows it validates them.

    Until we get out of the Paris Agreement, it cannot and will not be fixed.
    Remember, our U.N. puppet P.M. has shares in a company that makes profit through the failure of Australian companies.
    If you play their time wasting game and engage in their sideshow (playing until 2030, agenda 2030) you help them.
    Activism should be concentrated on the real problem, not on the problems the government are throwing out as a diversion.

  2. struth

    I appreciate what you do Alan, but I implore you to use the power you have to wake the Australian public up to what the real problem is.
    The stark realities of what the Paris agenda means for us and doesn’t mean for Australia, etc.

    Arguing through all the finer details of this devastating attack on the west loses many people half way through your articles and only helps the people you oppose.

  3. struth

    The stark realities of what the Paris agenda means for us and doesn’t mean for CHINA, etc.

  4. stackja

    Does Josh Frydenberg have a sense of humour
    Posted on 8:20 am, April 8, 2018 by I am Spartacus
    Spartacus wonders whether the Hon. Josh Frydenberg MP, Minister for Energy and Environment has a sense of humour?

    In current political parlance, a NEG is a National Energy Guarantee which will:

    deliver affordable and reliable energy for households and businesses without subsidies, taxes, emissions trading schemes or carbon prices.

    In more common social parlance, a NEG is:

    a light insult wrapped in the package of a compliment.

    An insult wrapped in a compliment. Would that be like a government intervention in a market that results in reduced prices without subsidies.

    Hey maybe the government can intervene in the internet market to increase quality and reduce prices. Oh wait.

  5. Rossini

    Stupid Forken Liberals
    Most of those pursuing higher energy prices are on government salaries or indirectly on the generous govt’

  6. RobK

    You are doing a fine job. Thank you Alan. Frustrating as it is, please keep it up.

  7. struth

    I think Alan is doing a fine job as well, and support him 100 percent, but just trying to put another perspective into the battle for him to consider, that is all.

  8. DaveR

    Furthermore, Frydenberg’s address shows that his own politics now on the left edge of the Liberal-Coalition voter spectrum means he has a limited future in a Liberal party that re-balances back closer to average Liberal-Coalition voter politics. And that rebalancing process is underway, with various completion dates having just been announced by the agitators.

    For Frydenberg, having started his political carreer well, its unfortunate he has chosen to be firmly welded to the politically-left Turnbull, whose use-by date has expired. He could have run a more independent middle-ground position, with the occasional public skirmish on policy, and probably survived the impending blood-letting. The same can also be said for Morrison and Bishop.

  9. H B Bear

    Yep – agree with RobK. At some point this will be shown to be the greatest fraud ever perpetrated on people. I am sure I am not going to be around to see it, Big Government, Big Business, Big Uni and the UN are too fully vested in it so far.

    Sometimes it is important to piss into the wind, even it you get wet in the meantime.

  10. David

    What all you ignoramouses don’t have a clue about is “Where is the cheap reliable power going to come from when not only Liddell, but also other aging coal fired plants close”. It isn;t going to be from renewables. Because of the populations dread of nuclear, it is of necessity, going to come from new efficient coal fired generators. End of story.

  11. Excellent article in the Australian.

    The root-cause of the problem is Renewable Energy Target and the Paris Agreement, neither of which can be justified on economically rational grounds.

  12. manalive

    Ben Potter frames coal plants (~77% of generation) as being supplementary to intermittent wind and solar (~8% of generation) — very clever but gives himself away as a blatant propagandist.
    The draft NEG as described sounds like something resembling a Rube Goldberg machine.

  13. Kneel

    “Because of the populations dread of nuclear, it is of necessity, going to come from new efficient coal fired generators. End of story.”

    The only real question is: how bad will it get first?

  14. John Constantine

    Ruinables will provide all the electricity Australia requires.

    Once we are deindustrialised and decolonialised.

    Only obsolete and deplorable racists think Australia deserves a better electricity supply than any other conquered nation.

    The rulers of north Korea are content with their electricity supply, the proles live just dandy without it and tell how happy they are to every member of every State paramilitary Death squad that visits.

  15. truth

    Like Struth, I really appreciate what you do Alan…and hope you continue with it.

    I too think we’re being conned with the NEG.

    The quote from Potter that the NEG draft “won’t require electricity contracts to specify physical sources of generation or privilege coal generation over other forms of on-demand supply that can “firm” up intermittent wind and solar energy”. …seems to indicate that coal certainly won’t be dispatched …and will have to vy with batteries for ANY role in firming intermittents…so they would shut down.

    AEMC has said that the new 5 minute rule to be introduced with the NEG will advantage batteries but will be an impediment to coal in a support role….so it looks like coal won’t get a look-in…and they’ll say it just can’t cut it…..another brazen con.

    The NEG was just thrown together in a few days at the demand of Turnbull…as was spelt out in the ESB’s first communication to the government on it.

    Just days before…. Frydenberg had obviously not known it was coming because he spoke at length at a conference without mentioning any such thing,

    I believe it was Turnbull’s panic move to save his own bacon late last year…to get him through the ‘killing season’…and it was deliberately left vague ….eg everyone had different views on what ‘dispatchable’ would mean in the implementation….deliberately vague –deliberately long timeline …to ensure they’d be able to delay and deter hard questioning until the cusp of the election…or after.

    Frydenberg’s claim that electricity prices will go down in JULY are meaningless. The effects of the NEG ie the firming costs …batteries .. pumped hydro.. frequency services… to make intermittents dispatchable….won’t be factored into those July prices at all…..we’ll be on the cusp of the election or it will be over before we know the true cost of the weather-dependent intermittents…and there’s a strong chance all of those firming costs will be subsidized by consumers in a post-election heist.. AEMO’s Zibelman has continually said consumers will have to ‘value’ frequency services.

    ‘Under the causer pays procedure, any amount not recovered from market participants ie generators…is recovered from market customers’.

    With the rise in penetration of the intermittents…frequency costs to make them usable have increased 20 fold from $5 million pa in 2011 to over $100 million in the 2017…and more to come..

    It’s all about running coal plants into the ground…using them and damaging them physically and economically by having them idle much of the time and ramp up and down at the behest of AEMO to prop up useless intermittents.

    The RE CULT is trying to brainwash Australians into believing that when coal plants trip due to being forced into a role that’s inimical to their design…those problems are actually due to inherent inadequacy of the coal generation technology.

    They’re boiling the frog slowly…making consumers think the country can run on weather-dependent intermittents so they’ll demonise coal and demand it be killed off…at which point we’ll have to pay for a massive overbuild of RE and transmission…whatever it takes—submit to rationing to keep the lights on …and centralized control if we’ve been silly enough to invest in rooftop solar and smart meters… we’ll have allowed the Left to do what’s been done nowhere else…to kill off our ONLY synchronous secure power…leaving Australia exposed and existentially vulnerable …as no other country on earth is.

    The former AEMO boss warned just before he died suddenly in 2016 …that the enormous subsidies heaped on renewables meant one thing & only one thing: “The system must collapse” .

    TBULL must have known about that warning… but very soon afterwards….knowing the US was pulling out… he RUSHED to RATIFY PARIS to lock in those very RET subsidies and start the rush of the rentseekers to Australia to get in on the dangerous gravy train.

    I won’t vote in the lower house at all in the next election if Turnbull still leads the Liberal party. There’s no point.

  16. Evan

    You lot are on drugs. There is absolutely no way Liddell will operate after 2022 and I’ll bet anyone who wants it $50 that plant is closed by 1 Jan 2023

    This is a conservative fever dream.

  17. Peter Farley

    1. You completely omit the fact that the market price of coal has tripled in the last 10 years and gas has quadrupled while the rise of the gentailers has increased their market power. As coal and gas still supply 87% of our grid generation (According to the AER), the fuel price rises and market concentration have had a much higher effect on prices than renewables.

    2 It might be true that Northern was driven out by partly by subsidies but Hazelwood was not. Hazelwood was still generating at around 75% CF in its last year. It was the deferred $400 m maintenance bill that could not be recouped in a reasonable time and its hopeless inefficiency that killed it (26% efficiency vs 40% efficiency at Kogan Creek and the old plant needed 5 times as much labour per MWh delivered)

    3. There is no free pass to the big emitters, in fact they are racing ahead of Australia in reducing coal use.

    a) The US economy is 13 times as large as ours and yet it has 21 times as much wind power, It has reduced coal from more than 50% of generation to less than 30% YTD. Even gas generation has fallen 7% in 2017.

    In 2014 the US generated 29 TWh from solar and 180 from wind . In 2017 that had risen to 77 solar and 254 from wind. i.e. wind and solar in the US now supply 50% more than Australia’s electricity consumption and rose 58% in three years. Since Trump was elected 26,GW of coal plants have announced closure. In the first 45 days of this year more coal capacity closed than in the first 1,000 days of Obama’s presidency. If the rest of the world followed Trump’s example coal power would eliminated by 2030

    b) China has reduced coal use by 10% while growing the economy 20%. Even though they went crazy and ordered about 400 GW of coal plants more than 150 GW have been cancelled and the remainder are running at 46% capacity and completions are falling rapidly down to 33 GW last year

    Since 2014 the year before the Paris climate accord wind generation has risen from 160 TWh to 307 TWh last year 91% increase in three years and solar has increased even faster from 23 TWh to 118 TWh in the same time. China’s economy is 10 times our size but it has almost 40 times as much wind and 20 times as much solar. On current trends China will produce the equivalent of Australia’s total electricity demand from solar in 2020/21 and by that time double our total demand from wind

    c) The Indian economy is about twice as large as ours and yet they are progressing ahead of schedule for 160 GW of wind and solar by 2022. They already have 33 GW of wind (Aus 5 GW ) and 20 GW of solar (Aus 7 GW).

    Where did you dream up the idea that we can get the lowest power prices in the world from coal and gas. Gas Prices in the US at A$3.50/m BTU are about 40% of ours. Powder River coal is $11/ton again less than half lowest Australian Black coal prices. Because of our long lightly loaded grid, transmission and distribution cost is double the US or Europe. i.e. if you stick with coal and gas you will guarantee double US prices and higher than most of Europe.

    As for indeterminacy, it is easily covered by the existing 8.8 GW of hydro and 10 GW of gas. Wind never goes below 5% capacity and with new design wind turbines and new locations in Northern NSW and Queensland by 2020 minimum wind will be 10% so with 20 GW of wind (about 1/3rd of Germany’s) we will easily cover minimum demand of 18 GW with wind gas and hydro of

    Some references for you:

  18. RobK

    Peter Farley,
    1. You completely omit the fact that the market price of coal has tripled in the last 10 years and gas has quadrupled 
    Much of it is sold to those countries that you say are so much further advanced in decarbonisation. Why would they pay such a premium? I note Victoria trebled its coal royalty. You give little credence to the parasitic nature of renewables sudsidies, so why not scrap the subsidies if RE is so cheap and everyone is doing it?
    The 10GW of installed gas turbines you speak of; how do you intend to pay for those? Either they will sit around doing nothing, if RE is as good as you say, or they will be roaring their guts out trying to be baseload at great expense taking up export dollars and even producing your dreaded CO2.
    The lightly used and extensive grid you refer to will need to be massively beefed up to cater for commercial RE because it fluctuates so much and your figures for wind, as an example, rely on very big transfers of energy oscillating the full extent of the grid in order to make any credence of your claim that wind will not go below 10% capacity factor. This is a theoretical figure with a good deal of uncertainty. It is widely known that below about 10-15% RE penetration the grid can cope reasonably well. As Finkel points out many changes are required to proceed with this experiment, including new panels and boards to monitor the progress. Victorian lignite will produce cheap energy. The proof is any of the existing power stations. The march of subsidized RE is its downfall.

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