Reaping the fruits of political sabotage of the electricity industry

The third world nature of Australia’s electricity industry was revealed this week with wholesale prices in Victoria and South Australia at the maximum $14,500 for lengthy periods in spite of thousands of customers being cut-off, major users agreeing to shut down demand in return for compensation paid by consumers, and even some oil plants being called in.

The causes are clear.  For twenty years, Australia has embarked upon a subsidy program for intermittent, unreliable and costly wind and solar.  This is accompanied in Victoria and South Australia (and perhaps now in Queensland) by outright hostility to coal, the form of power that had given the nation the lowest cost and most reliable electricity in the world.

As I said in a previous post, there has been no shortage of spending on electricity generation

Over the past decade, we have spent $70 billion on wind and solar. That $70 billion is enough for 12 new coal generators that would give us electricity with a wholesale cost of one third that of the current level. Instead we have been closing down the more economical coal fired power stations because renewables, two thirds of the costs of which are covered by subsidies, are making them uneconomical.

Not one cent of the $70 billion spent on wind and solar would have occurred had it not been for the subsidies. Those subsidies – renewable energy schemes, the Green Energy Bank, direct support from the Commonwealth and state support measures – are running at $5 billion a year.

The subsidies to this activity had (as intended) an adverse effect on existing unsubsidised supplies.  It meant coal generators were only marginally profitable and ultimately brought about many coal plant closures, chief among which were the 540 MW Northern plant in South Australia and the 1600 MW Hazelwood plant in 2016/2017 (an additional factor for Hazelwood was a punitive tax increase by the state government).  Would anyone seriously argue that the replacement output we got from wind/solar, which supplied only 4 per cent of electricity in SA and Vic yesterday, was adequate compensation, even without the $70 billion cost?

The subsidy-seekers blame our ageing coal plant for the lack of reliability and coal plant did feature in this week’s debacle – one of the Victoria’s remaining eleven major units developed a fault and another was undergoing scheduled maintenance.  But such claims by the renewable lobby overlook the fact that renewables are intrinsically unreliable – which is why they are referred to as ‘intermittent’ and ‘non-dispatchable’.

Long lived infrastructure is common.  Roads, rail, wharves, are in place for decades – even centuries.  But, like grandfather’s axe, they are modified and improved over time.  At one stage, in a rare Victorian ministerial visit to Hazelwood in 1995, the staff thought we had come to announce its closure (it was actually originally scheduled for replacement in 2003).  Hazelwood went on for another 20 years with relatively minor investment and would have continued operating under different circumstances.

Eventually, repair and refurbishment does become uneconomical and the older plant is retired and replaced.  But in Australia the renewable subsidy and government hostility has meant profitable coal plant cannot be built, while gas faces the problem of governmental action against fracking (and all exploration in Victoria) which has prevented new supplies being developed.

While in the past, even with excess supply created as a result of efficiency gains under the post 1995 privatisations, there were plans, some of which eventuated, to expand or renew coal and gas supply. But the last coal plant was built in 2007 (two gas plants were built 10 years ago).  It now seems that no new plant can be profitable without some form of governmental support. In a classic of policy madness, the government now needs to provide a subsidy to allow reliable plant to be profitable against subsidised and unreliable wind/solar.

While the ALP and The Greens have been the key political parties conspiring to this sabotage of the Australian electricity industry, the Coalition is not without blame – John Howard introduced the first subsidies and Tony Abbott might have done more to reverse the process.  Scott Morrison still could do so.  The destruction of competitive electricity supply has ramifications across the entire economy.  To rectify the damage, ALL subsidies to wind/solar should be terminated immediately, including those which have previously been ‘guaranteed’.

 

 

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21 Responses to Reaping the fruits of political sabotage of the electricity industry

  1. JohnL

    This is getting serious – the ABC is reporting that the cafes in Elwood can’t make coffee.

    Well, shit happens!

  2. Dr Fred Lenin

    If anything inspires the globalists to action in this power schemozzle it will e lack of latte ! That will ensure quick response before the casualties begin clogging our psychiatric facilities . May I suggest windmills in every public park and beach in Melbourne ,I can just see them lining the Yarra and next to the Pre School (parliament ) in Spring street and every ton and city hall . Improve the iew.

  3. Leo G

    For twenty years, Australia has embarked upon a subsidy program for intermittent, unreliable and costly wind and solar.

    Crony power rules, mate!

  4. Bruce of Newcastle

    Keep in mind that the climate data shows that the apocalypse they are all saving us from is not happening. In other words this whole crisis, and the $70 billion we taxpayers have been bilked of, is a due to a gigantic lie.

  5. Genghis

    Bruce of Newcastle
    Lie is a bit rough. I would call it a Scam the biggest the world has ever seen!

  6. Dr Faustus

    .To rectify the damage, ALL subsidies to wind/solar should be terminated immediately, including those which have previously been ‘guaranteed’.

    Love the concept – but a lame-duck PM four months out from an election?

    Morison would be swept away by the media outrage, public apoplexy and foaming by the good and great, howls of the rent seekers, court action, small children begging for their lives to be spared, defections from the Turnbull wing, and protests from every Investor hostage to Australian sovereign risk.

    The only upside is the prospect of Goblin Shorten dying of political orgasm.

    Sadly the controls are set for the heart of the Sun.

  7. Megan

    28,000+ taken off the grid at the moment by SP Ausnet. Reason given? Demand exceeds supply. Absolutely criminal. I’m getting in the pool for as long as it takes. Which could be a bloody long time.

  8. teddy bear

    “There are mounting concerns about the ability of coal stations to cope with heatwave conditions.”

    https://www.news.com.au/technology/environment/power-stations-fail-as-victorians-brace-for-hottest-day-since-black-saturday/news-story/b404770015b841f39e348b19e5eec3a7

    They are now trying to make it seem that coal fired power stations don’t work in the heat.

  9. Dr Fred Lenin

    Teddy. The scammers always say this sort of lie they can never be wrong even when they are wrong , the answer is “the power system worked well untill you and yor mates started taking the big bribes off the carpetbagger ruinables thieves “

  10. Leo G

    In other words this whole crisis, and the $70 billion we taxpayers have been bilked of, is a due to a gigantic lie.

    You can’t see the Big Picture without swallowing the gigantic lie.

  11. Chris M

    Yesterday afternoon wholesale power prices were sitting at $10 – 14k in the casino that is the ‘national’ power market.

    Within four hours I received an email from my electricity retailer notifying of a 14 % price rise effective a week and a half from now.

  12. Chris M

    Last year it was a 28% rise in one hit – so improvement no? Climate must be stabilising or something.

  13. Mark M

    Di Natale blames fires and heatwaves on climate inaction

    “Speaking with Sky News, Senator Di Natale linked the Morrison government’s climate change policies to the Tasmanian bushfires and Adelaide’s record-breaking temperature, which reached 46.2 degrees Celsius on Thursday.

    Opposition Leader Bill Shorten today supported his remarks, asking ‘how hot does it have to become in Australia before the Coalition government starts to do something about climate change?’”

    https://www.skynews.com.au/details/_5993612059001

    Coal miners to blame for Queensland floods, says Australian Greens leader Bob Brown

    https://www.news.com.au/breaking-news/coal-miners-to-blame-for-queensland-floods-says-australian-greens-leader-bob-brown/news-story/cbfe12042fa9c4149ea3c10524f57344

    These people are insane.

  14. John Bendall

    Being brought up in in Melbourne one was blessed with two things. Where ever you were and wanted a drink, almost the best and cheapest water in the world was freely available from….. a tap. Likewise where ever you were and wanted the use of the cheapest electricity in the world you were never put off from flicking the switch on because of the cost. Then the first scam that really started in this country was when bottled water became the flavour of the century at many times the price of petrol for God’s sake 😱. From there the “Lucky Country” foundered. Surely the “drinking bottled water” scam must have been the influence for the introduction of the second scam of “wind mills and solar panels” and the elimination of coal (and the virtual end of manufacturing)to enable us to have “cleaner, cheaper electricity”(never mind the subsidies) when we already had the cheapest electricity in the world. And this, we were advised, would save the planet from climate change caused by our pollution of the atmosphere with CO2 for which we rely on to sustain life…. Go figure???? We seem to be heading for a never ending brain draining catastrophe. Maybe it’s the bottled water!!???😂
    draining

  15. Leo G

    Di Natale blames fires and heatwaves on climate inaction

    Even though it’s leaders like Brown, di Natale and Shorten who most oppose action on adaption to climate variability and change.
    Subsidising renewables is a “p!ssing into the wind” policy.

  16. Dr Faustus

    They are now trying to make it seem that coal fired power stations don’t work in the heat.

    Coal fired generation is generally insensitive to changes in ambient temperature. Power output from gas turbines reduces significantly under hot conditions due to lower inlet air/fuel density.

    So

  17. Ian MacCulloch

    At royalty put on brown coal when the first Andrews government came to power (no pun intended) hastened the fall of viable power stations. Add to that, inherent instability in the market and a beefed up investment in the grid to cope with 2 way power and you have classic unintended consequential activity unfolding.
    Now with widespread pollution caused by vast numbers of windmills built across huge areas of pristine wilderness and a nightmare unfolding for an ideological whim.

  18. Behind Enemy Lines

    One doesn’t want to be a constant doom-monger, but these energy shenanigans really do make me fear that the Australian political class is far too corrupt, and the electorate far too stupid, for us to survive much longer as even a nominal democracy.

  19. MatrixTransform

    Venezuela Venaustralia

  20. Rob

    Behind Enemy Lines says – the electorate is far to stupid for us to survive much longer as even a nominal democracy.
    Quite so.
    South Australians had the nation’s worst ever blackout inflicted upon them by their Labor government but most of its complicit MPs were retuned at the following poll.
    Incompetence is apparently something to be pitied and rewarded.

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