Wasteful investment in wind/solar has a negative value

A breathless piece by the Guardian’s Calla Wahlquist announced that Victoria’s renewable energy boom is set to create six thousand new jobs.   And yet the head of the renewable energy lobby group, Tristan Edis, was downbeat because the subsidies are being phased down.  This is the group that claims subsidies are not really needed (or is it will soon not be needed?) because the wind and solar technology has made such colossal leaps that they are now (or will soon be) on parity with that archaic fossil fuel technology.

New “clean energy” investment in Australia was estimated in 2017 by the renewable punting Bloomberg New Energy Finance at over $10 billion.

But the term investment is somewhat casually used here.

Neither BNEF nor Ms Wahlquist have ever heard of “Broken windows syndrome” whereby “investment” replacing destroyed investment is not productive.  The replacement-of-broken-windows-as-investment notion is fallacious enough when applied to the spurious benefits of replacing damaged assets but this is magnified when, as with renewables, the replacement has only one third of the efficiency of the plant it replaces.  We are swapping valuable assets by worthless assets and paying $10 billion a year to do so.  And the 6,000 unproductive jobs in producing the high cost energy are jobs that consumers and employees elsewhere must subsidise.

Fortunately for the government, all this is hidden and will be claimed to have been due to natural forces.  That claim, like the PR announcement of the policy settings, will be eagerly embraced by journalists with little ability to undertake their own critical analysis.

Victoria’s government, soon to be joined by Queensland, is doubling down on the financing of the scam by negotiating contracts for long term renewable supplies that consumers will need to finance in their energy bills in years to come.  Claimed to be negotiated at less than $60 per MWh ($40 per MWh was the Australian norm before renewable policies destroyed the industry’s efficiency), the intermittent unreliable power generated will need to be “firmed” by a side-by-side contract for reliable power.  The cost of this is likely to exceed $30 per MWH.  And 96 per cent of the profits, courtesy of the unwitting Victorian electricity consumer, are to be gathered by overseas suppliers.

Where will it all end?  Fortunately the Trump revolution is on the way.  By carving out US subsidies and pushing down prices, America is already hoovering up investment from high cost energy countries like the EU and Australia.  This, and the recent measures by China to staunch its own $20 billion a year subsidies to renewables will force a reversal of policy here – a forerunner of which is already annoying the subsidy seekers.

Action cannot come soon enough and must entail the abolition of all subsidies – including the retrospective removal of those granted under the false pretences that they soon would not be needed.

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25 Responses to Wasteful investment in wind/solar has a negative value

  1. struth

    The Trump revolution is on it’s way?
    This is great news, if I was gullible enough to believe it.

    Are you?

  2. min

    Alan perhaps they should talk to Germany and see how well their renewable energy programmes are going . Turbines not working when I was there in May due to lack of maintenance ( costly) were 15 years old and literally falling down. How long do solar panels last? Not 50 plus years I bet.

  3. Bruce of Newcastle

    I could create 6,000 jobs breaking rocks into smaller rocks with sledge hammers. I could even employ school-leavers with no experience. And Arts graduates! Is that virtuous or what? The smaller rocks would be sold for concrete used in all sorts of useful things, like wind turbine foundations. I’m sure my business model would work very well with appropriate right-sizing of the government subsidies.

  4. Dr Fred Lenin

    Wouldn’t it be poetic justice I we stopped ALL subsidies to the carpetbaggers and refuse to admit any power which could not be generated 24/7 we would financially ruin some of the biggest theiving bastards in the world. We could savour this form of justice.

  5. I’ve driven past the Inverloch windmills several times and they have always been quiescent. Silent totem poles venerating Gaia. You’d think that they would at least paint them green or some such, rather than leaving them glaring concrete and plastic white.

  6. RobK

    Thanks Alan. Well said.
    The present hobbling of the electricty supply and distribution system is akin to breaking the shop front window and replacing it with plastic sheet but charging for laminated glass, claiming it is safer and having someone else is pay.
    The subsidies have to stop. There is no other way to stem the rot. The figures you have quoted for wholesale electricity are only part of the issue. The increased distribution costs are even more insidious and hidden, namely, redesign including beefing up the conductors, increasing instrumentation and control due to wild surges of supply and demand, facilitating demand control and enhanced load shedding. This all makes for a far more complex, unstable, unsafe and expensive electricty industry. No one wins in the long run. The longer it persists, the greater the cost to reinstate what we had. We need to ramp up the pressure.

  7. RobK

    Compounding the insidiousness is that superannuation funds have invested heavily in the subsidy industry. The serpent eats its tail.

  8. manalive

    Victoria’s government, soon to be joined by Queensland, is doubling down on the financing of the scam …

    It may reintroduce an element of competition between the states that was lost with the introduction of the NEM.

  9. BoyfromTottenham

    Excellent article, Alan. (Although calling $billions spent on the ‘clean energy’ boondoggle ‘investments’ stretches credulity).
    More importantly Alan, this whole boondoggle is underpinned by the Large Scale Renewable Energy Target (LRET) legislation which simultaneously creates the massive subsidy to ‘renewables’ generators paid by the way by hapless Mum and Dad electricity consumers, and forces retailers to purchase the useless unreliable and non-despatchable electricity that it encourages.
    Will someone please tell us Cat readers why, despite its obvious fatal effects on the profitability of baseload generators, the pernicious LRET is politically sacrosanct? I have yet to see a mainstream pollie even hint as rescinding this evil, economy-damaging legislation. Is there an ‘LRET protection racket’ operating, and if so who is behind it and why exactly? No prizes for wild-ass guesses here – verifiable facts only please. Over to you, Alan.

  10. NB

    I have a much better plan. Get four million Victorians to permanently pedal four million exercise bikes hooked up to the grid. That way we get four million new jobs. What could be better than that?

  11. Mark M

    For the next time someone says coal is finished …

    China set to mine as many as 400 million additional tons of coal

    http://www.cfact.org/2018/09/27/china-set-to-mine-as-much-as-400-more-million-tons-of-coal/

  12. Howard Hill

    NB
    #2829676, posted on October 2, 2018 at 12:10 pm

    I have a much better plan. Get four million Victorians to permanently pedal four million exercise bikes hooked up to the grid. That way we get four million new jobs. What could be better than that?

    I like it, renewable base load power. And they could be housed in a few empty factories so we wouldn’t have to destroy any more views and landscape.

  13. BoyfromTottenham

    Mark M – Good (factual) info, but unfortunately my experience shows that anyone trying to argue facts with CAGW True Believers is wasting their time. Facts don’t matter to these folk, they believe the ‘precautionary principle’ kool-aid story that any risk of any future damage to ‘the environment’ (aka ‘our children and grand-children, etc’.) has to be ‘avoided’, even if it bankrupts the country. Facts are mere trivial details in this scenario. Maybe counter arguments that address these future risks to ‘our children’ might work – e.g. that they might not have enough food, medicine, housing, jobs, etc. because of the phase out of ‘un-clean energy’? God knows.

  14. RobK

    http://mobile.abc.net.au/news/2018-10-02/tesla-battery-proves-a-leading-source-of-dispatchable-power/10326420
    ABCs Stephen Long claims:

    Australia’s electricity grid requires regular small adjustments to keep the supply and demand of electricity in balance and keep the system operating at the required frequency — a tight band around 50 hertz.

    The Tesla big battery is registered to provide these “frequency control ancillary services” or FCAS.

    He fails to mention that the tight band around 50Hz was loosened somewhat because the wind farms needed more “ride-through”. The other point is FCAS has only been a service required since RE came on the scene. FCAS costs fell by $33m apparently but it is still a hidden cost of renewables. If batteries were economic, baseload would happily use them instead of pumped hydro. Batteries aren’t quicker than inertia response but they are quicker than thermal lag, this can cause new problems with “hunting” as various responses to frequency excusions need to be dampened.

  15. Thank you Alan for your article.
    Prof Ross McKitrick, Prof of Economics at the Fraser Institute in Ontario has written along similar lines. Here is an extract from his recent article in the Financial Post titles “Green Energy Failure”.

    An industry that depends on subsidies for its survival is not a net source of jobs. The funds for the subsidies have to be raised through taxation, and the burden of taxes kills more jobs than the subsidies create. This is as true for wind power as it is for greenhouse cucumbers, and it doesn’t matter if the taxes are visible or are hidden in the form of feed-in tariffs and artificially inflated electricity bills.

    In countries like Spain and the U.K., which launched their own versions of the GEA a decade ago, the job losses are now being confirmed by independent analyses. In the U.K., a report by Verso Economics used the Scottish government’s own macroeconomic model to show that, despite receiving net transfers of about £330-million ($521-million) from the rest of the U.K. for its renewables sector, Scotland still experienced a net job loss from wind power, and for the U.K. as a whole, 3.7 jobs were lost for every job created in renewable energy.

    In Spain, researchers at King Carlos University found that, on average, each job in the wind sector cost the country more than £1-million, implying a loss of 2.2 private sector jobs for every new job created in the renewables sector.

    Link https://www.fraserinstitute.org/article/green-energy-failure

  16. mem

    Thank you Alan for your article. I wish we had spent as much on coal and gas. You may find this article by Prof Ross McKitrick from the Fraser Institute in Canada of interest (if you have not already seen it). Here’s an extract.

    An industry that depends on subsidies for its survival is not a net source of jobs. The funds for the subsidies have to be raised through taxation, and the burden of taxes kills more jobs than the subsidies create. This is as true for wind power as it is for greenhouse cucumbers, and it doesn’t matter if the taxes are visible or are hidden in the form of feed-in tariffs and artificially inflated electricity bills.

    In countries like Spain and the U.K., which launched their own versions of the GEA a decade ago, the job losses are now being confirmed by independent analyses. In the U.K., a report by Verso Economics used the Scottish government’s own macroeconomic model to show that, despite receiving net transfers of about £330-million ($521-million) from the rest of the U.K. for its renewables sector, Scotland still experienced a net job loss from wind power, and for the U.K. as a whole, 3.7 jobs were lost for every job created in renewable energy.

    In Spain, researchers at King Carlos University found that, on average, each job in the wind sector cost the country more than £1-million, implying a loss of 2.2 private sector jobs for every new job created in the renewables sector.

    https://www.fraserinstitute.org/article/green-energy-failure

  17. BoyfromTottenham

    RobK – many thanks for your explanation of FCAS and where the trivial SA ‘giant battery’ fits into the picture. It is yet another example of why I cannot trust anything that the ABC (and most state governments) say about RE. The stage govts all seem to have multi-$ billion vested interests in maintaining this boondoggle.
    Its a pity that more people don’t understand the critical role of generator ‘inertia response’ in stabilising our electricity system. Unfortunately its not the sort of thing that one could easily explain to the mythical ‘man on the Clapham omnibus’, or to my wife for that matter. But don’t let me stop you trying!

  18. mem

    In the meantime from the AEMO Data Dashboard
    Market Notice 64703
    AEMO ELECTRICITY MARKET NOTICE

    Possible intervention to manage power system security in South Australia (SA) Region

    The combination of synchronous generating units currently expected to be synchronised in SA from 0100 hrs 04/10/2018 in Pre-dispatch published 1230 hrs 02/10/2018 will not provide sufficient system strength in SA to maintain the power system in a secure operating state.
    In the absence of sufficient market response AEMO may need to intervene by issuing a direction requiring one or more SA synchronous generating unit(s) to operate or remain synchronised from 0100 hrs 04/10/2018 to maintain power system security in SA.
    If necessary, AEMO will estimate and publish the latest time at which AEMO would need to intervene after the 1230 hrs predispatch run on the 03/10/2018.

    Manager NEM Real Time Operations
    https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard#nem-dispatch-overview

  19. BoyfromTottenham

    mem, thanks for your 3.39 pm post about the AEMO Notice. Do the words ‘expected to be synchronised’ effectively mean that ‘expected to be on line’? If so, if a unit is expected to be offline for say non-urgent maintenance in this instance, does that mean that the generator could simply re-schedule the maintenance to comply with the notice? If not, do you know why?

  20. mem

    Reply to BoyfromTottenham

    Do the words ‘expected to be synchronised’ effectively mean that ‘expected to be on line’? If so, if a unit is expected to be offline for say non-urgent maintenance in this instance, does that mean that the generator could simply re-schedule the maintenance to comply with the notice? If not, do you know why?

    I’m not an expert in that field, The best person on this site to answer your question is, I think, Bruce from Newcastle. So I would put out an APB for him. eg Calling all cats called Bruce!!!!

  21. RobK

    BfT,
    If it is synchonized, they mean it is spinning at frequency and energized but not outputing energy.
    I.e. spinning reserve (with mass) that can respond immediately with inertia followed by a thermal response. They are paid extra for idling along without selling energy.

  22. Mr Black

    Retrospective legislation requiring all subsidies to be repaid, personally, with the directors and board liable. Put the fear of god into subsidy famers for the next 50 years that no governments promises of support can ever be trusted to last beyond its term. Let the market decide things.

  23. Dan Andrew’s latest entry into the RE industry is based on the usual sales blurb.
    1 – 6,000 jobs
    2- 650,000 homes.
    3 – 929 MW of installed energy – ( but only if it works 100% of time)
    4 – $160,000,000 guaranteed revenue per year for the 96% foreign owners.
    Dan doesn’t say is that $160 million/year will cost users about $80/MWh for power produced, about double the cost of Victoria’s brown coal, and who knows what other costs are kept hidden.

    venue This is

  24. JohnL

    In the USA, Lockheed Martin has registered the patent for the fusion generator.
    A number of companies are showing a renewable interest and research in “molten salt” (thorium etc.) generators.
    I Australia, and in particular SA, we are still trying to prove that the “perpetual mobile” (pumping the shit up the hill) does work.
    And Don Quixote is still fighting with windmills.

  25. RobK

    JohnL,
    Yes, that and with the presidents support;
    President Trump Signs Bill to Boost Advanced Nuclear in America | Department of Energy
    https://www.energy.gov/articles/president-trump-signs-bill-boost-advanced-nuclear-america

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