Australia’s self-inflicted energy crisis is the product of an obsessive ideology, wedded to the nonsensical belief that modern economies can be powered by sunshine and breezes.
The Federal Energy and Environment Minister, Josh Frydenberg never ceases to disappoint. His ignorance is only matched by his lack of shame.
In the week just gone, Josh put forward an op-ed in The Australian, peddling the myth that Australia’s power pricing and supply calamity is the product of everything except alien forces and the Large-Scale Renewable Energy Target: a market distorting, $3 billion a year subsidy scheme to wind and solar outfits, paid for by all Australian power consumers.
The article is so peppered with delusion and myth, that we don’t propose reproducing it here. Subscribers to The Australian with a masochistic streak can find it here.
Instead, we’ll turn over to The Australian’s Economics Editor-in-chief, Judith Sloan for her stinging rebuke to Frydenberg’s latest string of fantasies.
Minister should be red-faced over green schemes
22 August 2017
I’m just wondering whether Malcolm Turnbull regrets some of those things he said when he knifed Tony Abbott to become the Prime Minister. No, not the 30 Newspoll losses in a row (oops), but all that guff about governing through advocacy and not slogans.
I don’t know what “jobs and growth” is other than a slogan. And now we have another one, no doubt workshopped in those endless focus groups that we taxpayers fund. “Economics and engineering, not ideology” is the slogan attached to the panicked and chaotic energy policy of the Turnbull government.
If sticking with the damaging renewable energy target and committing to a wildly excessive emissions reduction target under our commitment to the Paris climate agreement are not ideological, I’m a monkey’s uncle.
And here’s another bit of ideology — that “green schemes” contribute only 8 per cent to the cost of electricity, according to embattled Environment and Energy Minister Josh Frydenberg. Pull the other one, mate: the rise in the cost of electricity in Australia, doubling in just more than a decade, has been overwhelmingly caused by these “green schemes”.
You only have to think about it for a moment to realise why this is the case. The main effect of the renewable energy target has been to drive out low-cost coal-fired plants, with the increasing proportion of intermittent energy being backed up by high-priced gas.
Let us not forget that the Northern Power Station in Port Augusta was relatively new, having been constructed in the mid-1980s. Notwithstanding an extraordinarily generous offer to the South Australian government by the owners to keep the plant going, Premier Jay Weatherill and his mates from the state conducting a reckless energy experiment (his words) declined. There was 520 megawatts, now blown up.
And when we look at the other coal-fired plants that have exited, there was very little attempt by their owners to revamp them for them to continue to operate. There is an element of Kelly’s axe in all these plants, but the disincentive of the RET and other “green schemes” has meant that large slabs of low-cost electricity have simply disappeared.
But the impact of the “green schemes” doesn’t end there. While it is common to blame the poles- and-wires companies for gaming the system — mind you, the government sets the rules — there is no doubt that much of the upgrading and extension of the transmission and distribution system can be attributed to renewable energy.
Because wind farms and the like are paid on the basis of postage stamp pricing — it doesn’t matter where these farms are located — there is no incentive to locate them near centres of population or existing transmission or distribution links.
Add in their preferential access to dispatch — that is, when the wind is blowing or the sun shining — and the uniform clearing-price auction system, and it’s easy to see why “green schemes” have imposed such a hefty slug on households and businesses. (This auction system means the price of the marginal supplier is paid to all those who supply electricity during the specified period.)
Then there are much-loved small-scale solar panels that sit atop so many homes, including our own Prime Minister’s. (I understand he has opted for the Rolls-Royce version, complete with a bank of batteries for backup.)
The combination of the excessive feed-in tariffs offered to the better-heeled who can afford these panels — low-income earners and renters be damned — and the loss of demand from the grid has meant that electricity prices are higher than they otherwise would be. That’s right — because of the “green schemes”.
Note that one-fifth of households have solar photovoltaics, meaning the other four-fifths are carrying the can. Is it any surprise that there are more than 100,000 households on formal hardship schemes because they cannot afford to pay their electricity bills? This is bound to get worse.
Then there is gas that is deemed to be the villain of the piece because gas is setting the price of electricity much more than was the case. In 2014, gas set the price 9 per cent of the time; the percentage is now 24 per cent.
But given the RET specifically excludes gas, was it any surprise that the gas companies would seek another market for their reserves? And it should not be forgotten that most of these new fields would never have been developed had it not been for the lure of export markets that a Coalition government is now doing its best to destroy. (Yes, that’s right — a Coalition government.)
So don’t give me all that codswallop about economics and engineering, not ideology. It’s all ideology. Pumping water up a hill is the apotheosis of ideology.
When it comes to electricity, the Turnbull government’s real message is this: you may not like our ideology but Labor’s ideology is worse. We are targeting renewable energy of only 42 per cent by 2030, but Labor wants 50 per cent. Evidently, we should be really scared about 50 per cent, but 42 per cent is just fine and dandy.
The reality is that the energy market is heading for complete disaster notwithstanding all the desperate tinkering by this government. The giant Liddell coal-fired plant, all 2000MW, will close in 2022 as its owner continues to make huge profits by taking advantage of the system.
In the meantime, the proportion of intermittent energy continues to rise, including the preposterous proposed solar thermal plant in Port Augusta with a mere capacity of 150MW with scope to operate nine hours daily.
At a capital cost of $650 million — you will be pleased to know we are handing over $110m of free capital to the American owners — and a putative cost of delivery of $78 a megawatt hour, something doesn’t add up.
The broader point is that all these figures of dollars per megawatt hour attached to intermittent energy are completely misleading because they do not account for their inability to dispatch most of the time. We are not comparing apples with apples.
The bottom line is that countries with higher penetrations of renewable energy have higher electricity prices. It is a perfect fit. And while we may worry about the impact on households, the more important consideration is the future of businesses and the jobs they provide. It all comes down to those dastardly “green schemes”.
Nice work, Judith. It’s hard to write a response to the tosh dished up by someone paid to know a whole lot better and not leave the reader with a sense of desperation mixed with fury. STT is glad that Judith dealt so well with Frydenberg’s deluded ramblings and saved us the grief of doing so.
Frydenberg is so detached from reality that he still claims his Federal Large-Scale RET has absolutely nothing to do with rocketing power prices and a grid on the brink of collapse.
The correlation between electricity systems dependent on the weather and obscene power prices is pretty clear.
See if you can spot the States and Countries wedded to subsidised wind and solar [to get you started here’s a hint, the top spot goes to Australia’s wind power capital]:
Australian leader hints at a clean energy target by year’s end
SYDNEY (Reuters) – Australia could adopt a clean energy target by the end of the year, heeding the call of national energy providers and scientists as a means to cut carbon emissions and cap soaring power prices.
Australian Prime Minister Malcolm Turnbull said the government was “carefully considering” the recommendation by the nation’s chief scientist Alan Finkel as a way to ensure affordable, reliable and cleaner power.
“We’re certainly aiming to make a decision by the end of the year,” Turnbull told Australian Broadcasting Corp.
Finkel in June led a list of recommendations presented to the government aimed at ending a decade of political warfare over climate policy, meaning coal-fired power generation using carbon-capture technology could potentially be used alongside gas and renewable sources such as wind and solar.
Energy companies argue they need long-term policy certainty to invest in new power generation and bring down electricity bills – and the key to unlocking that was to roll out a national clean energy target.
The government is awaiting a report from the Australian Energy Market Operator, which Turnbull labeled “a critical thing” before moving to decide on a target.
“First, we need to be satisfied as to what the gap in baseload power is going to be over the next five and 10 years,” he said.
CLIMATE CHANGE – THE FACTS 2017 – Institutue of Public Affairs – Sydney, July 27th 2017
The second printing of Climate Change: The Facts 2017 SOLD OUT on August 18, 2017, and advice regarding future paperback sales will be made the following week.
Edited by Dr Jennifer Marohasy, Senior Fellow at the IPA, Climate Change: The Facts 2017 brings together contributions on the latest climate science from some of the world’s leading experts in the field including John Abbot, Sallie Baliunas, Paul Driessen, Tony Heller, Craig Idso, Clive James, Pat Michaels, Jo Nova, Ian Plimer, Tom Quirk, Peter Ridd, Ken Ring, Nicola Scafetta, Willie Soon, Roy Spencer, and Anthony Watts.
There are also essays by Matt Ridley, and Bjørn Lomborg on the economics of climate change, and by Simon Breheny on how the freedom to discuss climate change science is under threat.
This book is dedicated to the memory of Bob Carter.
Professor Bob Carter on Global Warming Science
A public lecture on “Climate Context as a basis for Better Policy”, given at the University of Southern Queensland, Toowoomba, June 2011, by Australian paleoclimatologist Professor Bob Carter.