Energy policy, price escalation and the destruction of industry competitiveness

For some in Australia, the renewable rich UK electricity market is a beacon.

Wind produced 15 per cent of the UK’s electricity in 2017 and was running at 29 per cent earlier this year bringing Emma Pinchbeck, executive director of RenewableUK to opine, “The move to a smart, renewables-led energy system is well underway.”  Greenpeace UK’s energy campaigner, Nina Schrank, added, “The plunging price of renewables is allowing low carbon energy to replace coal and gas”.

The green soothsayers spake too fast!  Calm weather in the nine days to June 7 brought wind’s share down to around 4 per cent and forecasts are for such conditions to persist for another fortnight.

In a prequel to developments planned in Australia, subsidies to wind in the UK have led coal to virtually disappear.  Years of destructive regulatory measures in the UK have transformed what was, in 1990, the world’s first genuine competitive national electricity market into a high cost system.  Ministers, as is their wont, are panicking, and planning to subsidise a new nuclear power station to paper over the giant fissure their policies have created.

As in Australia, there was in the UK a near unanimity among the political classes inhabiting the swamp that wind and solar are the waves of the future.  Renewable subsidy was piled on renewable subsidy and coal, the lowest source of supply and originally the backbone of UK generation, is virtually defunct.

In Australia the interventions in the market in favour of wind and solar created a doubling of the wholesale price once the measures started to bite in 2015.  A tiny reduction in retail prices announced by Origin this week led Minister Frydenberg to declare that, “We are through the worst of it, we have turned the corner when it comes to energy prices. I’m very confident that my colleagues and indeed the states and the territories see the National Energy Guarantee (NEG) as being in the national interest”.

Aside from some voices in the political wilderness of the Liberal Party “Opposition”, the LDP, the Conservatives and ON, all politicians, regulators and industry lobby groups are acquiescing in continued growth of subsidised renewable energy.  Without a subsidy there would be no renewable supplies aside from the eight per cent that is hydro.  Right now:

Constant meddling in the market, the plethora of regulatory bodies and politicians’ gullibility in swallowing the renewable nirvana line have created a permanent regulatory frenzy.  At present there are some 30 different reviews underway and suppliers are unable to provide the advisory resources to head off all the bad ideas that these float.

The most important of the current reviews are those of the ACCC into retail prices and the aforementioned NEG, which will determine the future penalty on coal to enable wind, and maybe gas, to displace it with higher cost supplies.

The ACCC report, due at the end of this month, will almost certainly recommend additional regulatory measures in terms of retail supply and line charges, measures that were foreshadowed in the preliminary report of last September.  These measures may force short term cost reductions but in the long term will place us further along the road to higher cost supplies.

As for the NEG, what is being produced is yet another complex system whereby retailer will need to ensure a specific emission level is reached for each unit of electricity sold.  It will, in effect, replace new Renewable Energy Target subsidies with a form of carbon tax.

On current policy settings, the only thing that will prevent wholesale electricity prices from remaining at their present levels is de-industrialisation.  The smelters, once the jewels of Australia’s industrial crown, take 16 per cent of electricity and if they close prices will fall – but Australia will be much poorer.

The state and national renewable policies entail a subsidy to wind and solar of close to $5 billion a year.  This is in a market which currently is about $18 billion a year and was, of course, much less before the recent price doubling.

It is hard to see how we are to extricate the economy from the disaster that policies have created.

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35 Responses to Energy policy, price escalation and the destruction of industry competitiveness

  1. v_maet

    The UK would hav done much better to lay an undersea cable (like Basslink) to Iceland and source geothermal if they wanted renewables.

    Wind and solar are completely unreliable and solar at any latitude outside the tropics is just a waste of time.

  2. Roger

    A tiny reduction in retail prices announced by Origin this week led Minister Frydenberg to declare that, “We are through the worst of it, we have turned the corner when it comes to energy prices.”

    Politicians lie like birds sing; it’s their nature (HT Gore Vidal).

  3. wal1957

    The politicians in this country at the moment have to be the dumbest this nation has ever had.
    Solar provides power when the sun is shining, meaning that for a minimum of 14 hours each and every day solar provides nothing!
    Wind provides power when the wind is blowing…a bit. When the wind stops blowing, or blows too hard it provides nothing!

    Due to the unreliability of both wind and solar we also have to have reliable backup to these ‘free’ power sources. That backup is provided by fossil fuel generators. So in effect, we have to have 2 generators of electricity to produce the same amount of power that we used to produce with one generator. We are paying for both generators. This sounds like a script from the TV series of ‘Yes Minister’, unfortunately it’s not.

    The lemmings that are the Australian populace at the moment are asleep at the wheel. The politicians are asleep at the wheel. Turdball’s Libs, Labor and the Greens are effectively destroying this nations future.
    If we keep voting for either/or of the big 2 parties then I can see no way out of this mess.
    We need a change! Any party that demonstrates their opposition to this charade should get our support.

  4. Roger

    If we keep voting for either/or of the big 2 parties then I can see no way out of this mess.
    We need a change! Any party that demonstrates their opposition to this charade should get our support.

    Unfortunately, Wal, compulsory, preferential voting guarantees the ALP-LNP Uniparty a hold on power.

  5. DaveR

    As part of this national disgrace, ordinary Australians must call out legacy hydro power for what it is – something that was built in a different era when dams were “allowed” to be constructed. Its not part of the modern expansion of highly subsidised renewable power. But the greens and fellow zealots conveniently wrap it into the renewables figures every chance they get. The last time I looked, Greens and their fellow extremists are still against the building of any new dams, prefering the “Land for Wildlife” and other similar memes. There is little chance any new dam construction for hydro would be “allowed” by the foreign-based environmentalists in Australia today.

  6. H B Bear

    Aside from some voices in the political wilderness of the Liberal Party “Opposition”, …

    Bwahaha. Might have to pinch that one. The Lieborals will know all about Opposition shortly.

  7. Bruce of Newcastle

    UK energy policy has led to their rising reliance on Russian gas.

    Thanks to the anti-fracking lobby, Britain can’t avoid Russian gas (15 Mar)

    As for gas, which accounts for just under 40 per cent of total energy consumed in Britain, 43 per cent currently comes from UK production, 44 per cent comes from European pipelines (of which a third is ultimately supplied by Russia). The remaining 13 per cent is imported in the form of liquified natural gas (LNG) – either from Qatar, the US or, since of this year, the Yamal LNG project in Russia’s Arctic. Putin’s sale of this gas to the UK, when Russia is still under EU sanctions following the annexation of Crimea, is something of a PR coup for him. It sends the message that however much we would like to retaliate against him economically, we are constrained by our dependence on Russian energy.

    This is at the same time as more incursions by Russian aircraft and naval vessels have to be intercepted by British armed forces.

    It seems odd to make yourself beholden to the good graces of your apparent enemy.

  8. Senile Old Guy

    Unfortunately, Wal, compulsory, preferential voting guarantees the ALP-LNP Uniparty a hold on power.

    This is the problem. Any person aspiring (I hate to use that word in this context) to be elected in the lower house in the federal government must align themselves with either the ALP or LNP. Both parties have drifted further to the left, so most voters must vote either for the left wing ALP or for the left wing LNP.

    At the state level, and in the senate, other voices can get a chance but not in the federal house of reps.

    You can, of course, “accidentally” spoil your vote and note vote for the uniparty but that also will not change anything. Abbott offered a sliver of a splinter of a tiny shard of an alternative but the LNP left wingers put a stop to that. And Abbott was not (at the time) right wing, only somewhat less left wing.

  9. Tom

    ”I’m very confident that my colleagues and indeed the states and the territories see the National Energy Guarantee (NEG) as being in the national interest”.

    The Orwellian doublespeak in the Liberal Party’s criminal conspiracy against the public interest gets more gargangtuan by the week.

    There’s still not a single federal MP of any stripe who’s prepared to call out the corrupt junk science that is decimating our economy.

    And they wonder why we pejoratively call them the political class.

  10. Up The Workers!

    To Bruce of Newcastle, at 9.47am,

    It is not only UK energy policy that has been relying on Russian gas for years…Lee Rhiannon and Wee Doogie Cameron have been exuding the stuff for decades.

  11. a happy little debunker

    Of course ‘pumped hydro’ will save us from that folly.

    Why, just yesterday Frydenburg was detailing 12 likely sites for pumped hydro in Tasmania, whilst extolling the benefits of being Australia’s backup battery.

    The only way for Tassie to ‘benefit’ from such proposals would be via another multibillion dollar basslink – where the first has benefitted Tasmania by around MINUS 100 million dollars.

    Exporting our competitive advantage to our cost!

  12. egg_

    Aside from some voices in the political wilderness of the Liberal Party “Opposition”, …

    The UniParty’s Opposition?

  13. None

    I said back then that every member of the Gillardgreens government should be jailed. I now include every parliamentarian since the 2007 election should be jailed for life and all their personal property confiscated and their families exiled.

  14. Habib

    Frydemburgers really is a twat of monumental twattishness. And he like several others was touted as a conservative whizz-kid that’d turn the place around. Going by his halfwit hippy pronouncements I’d say he’s been on the whizz ever since his election.

  15. egg_

    Frydemburgers really is a twat of monumental twattishness.

    Lord Waffleworth’s Gimp.

  16. hzhousewife

    Frydemburgers was handed a poisoned chalice and I never thought he’d last this long, of course nobody else wants his portfolio either. I reckon they all know the truth, but they simply cannot countenance being WRONG. And they are so wrong it’s killing them.

  17. egg_

    Took all of Mal’s “big battery”.

  18. indigo

    Interesting to speculate on how this plays out with the sun beginning a solar minimum last seen over 200 years ago when they had ice fairs on the Thames. 20 to 50 years of cooling is now a growing consensus among climate scientists.

  19. Dr Faustus

    It is hard to see how we are to extricate the economy from the disaster that policies have created.

    It is indeed. Because Australia crossed the point of no return about three years ago.

    Liddel is going to shut in 2022, followed shortly after by Tarong and the older Gladstone units. In disaster avoidance mode, we would already have a new 1,500MW USC coal fired power station under construction in the Hunter, another one about to break ground in Queensland, with another late in the permitting process. In Australia these things take 7+ years from concept to commissioning.

    Instead, in 5 years time Australia will be relying heavily on open-cycle gas turbines to prop up the subsidised windmills and freak-show PV, emitting more CO2/MW than a new HELE coal unit, burning gas at $11.00+/GJ instead of coal at about $2.50/GJ.

    In addition Australia will be paying big for more ‘poles and wires’ to manage the distributed generation – plus the cost of rent-seeking storage projects.

    This is all now unavoidable due to the constraints of logistics and engineering. It is the inevitable fruit of the Uniparty Plan – and none of AC, the Liberal ‘Resistance’, or PHON can do anything about it.

  20. old bloke

    Tom
    #2731269, posted on June 8, 2018 at 10:30 am

    There’s still not a single federal MP of any stripe who’s prepared to call out the corrupt junk science that is decimating our economy.

    Then stop voting for the bastards, and write to your local member and tell them why you won’t vote for them.

  21. Rohan

    Then stop voting for the bastards, and write to your local member and tell them why you won’t vote for them.

    +1

    I voted donkey last election and added a note for the Lieboral scrutineers telling them exactly why. But that was just me. #notamarxistsowontvoteforanymarxistparty

    Seriously thinking about adding a decent standby gen set to the blind side of the house.

  22. H B Bear

    Instead, in 5 years time Australia will be relying heavily on open-cycle gas turbines to prop up the subsidised windmills and freak-show PV, …

    Plenty of carbons from these inefficient units with most of the energy going straight up the exhaust stacks.

  23. Mark M

    Minister Frydenberg to declare that, “We are through the worst of it, we have turned the corner when it comes to energy prices.”
    Minister Frydenberg to declare that, “We are through the worst of it, we have turned the corner when it comes to consensus NEG policies.
    Minister Frydenberg to declare that, “We are through the worst of it, we have turned the corner when it comes to renewables.

    When you have turned 4 corners you are back where you started.

  24. I look at our energy, immigration, taxation and freedom of speech policies and have formed the opinion that the Australian government is actively working against the interests of its own citizens! For example – they have all but destroyed the energy sector and are now talking up destroying the transport sector by imposing mandatory electric vehicle quotas and toll taxes on all vehicles on all roads. All in the name of this ridiculous Paris Accord! How do we stop this madness when both major parties are engaged in the planning of our destruction?

  25. I notice Craig Kelly, possibly once the only liberal politician that was willing to speak the truth about renewables, has softened his stance markedly since being threatened with not being preselected. We all have our price apparently!

  26. John Constantine

    The Revolution is all about the deindustrialisation of the racist settler economy and the Dawn of their new low carbon services economy, where war veterans that felt they were freedom fighters in the decolonisation Struggles can do Zimbabwe style confiscation of racist deniers Stolen from Society belongings.

    Huddle in the dark for warmth, Comrades.

  27. max

    UK Electricity National Grid Demand and Output per Production Type
    last update 2018-06-08 04:05:00 GMT

    Demand 22.253 GW

    Nuclear 7.352 GW
    CCGT 9.395 GW
    From France 1.839 GW
    Biomass 1.424 GW
    Wind 1.266 GW
    Solar 0 GW — it is night.

    Renewable electricity capacity was 40.5 GW at the end of 2017

    http://gridwatch.co.uk/

  28. Dr Fred Lenin

    When the peoples Revolution finally happens and all the Paris accord criminal are arrested , I suggest trial by tribunal. The same as happened to the German fascist socialists in1946. Those not executed could be imprisoned for life on Macquarie and Heard Islands ,in tented camps . They will be removed from civilised society and if their writings are burned, ( an old national socialist tradition worth copying ) ,they will no longer be able to pollute the minds of the impressionable with their filth. On the islands they will be treated humanely,given a blanket each ,and fed twice a day on mouldy bread and fish head soup , (another old socialist tradition ) .all trace of the climate scam will be removed ,paid for with their confiscated family assets and it will be illegal to promote u.n,communism , a mandatory fifty years on the islands for offenders with no remissions .. The Leniency of the punishments proves that unlike socialists we are humane people .

  29. Kneel

    “When you have turned 4 corners you are back where you started.”

    As the Irish are wont to say: “If I was going there, I wouldn’t be starting from here!”

  30. Mr Black

    This policy is so utterly corrupt that I’d welcome civil unrest and sabotage to defeat it. If connecting lines were brought down, sub-stations destroyed and politicians found in a ditch, I’d send money to any legal fund that defended the patriots responsible.

  31. egg_

    A tiny reduction in retail prices announced by Origin this week led Minister Frydenberg to declare that, “We are through the worst of it, we have turned the corner when it comes to energy prices.”

    We’ve taken the ruinables fork-in-the-road, you mean?

  32. Up The Workers!

    To “a happy little debunker” at 10.35am:

    The term “pumped hydro” is merely another form of the term: “purloining the micturition” (but perhaps without the added saltiness).

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