Electricity and Gas Articles:
Over the past year, we have seen the misnamed report into “energy security” by Chief Scientist Finkel, the ACCC’s report (“restoring electricity affordability”) — and now a new annual report by market operator AEMO. These are in addition to a couple of dozen reviews into specific market-machinery matters and the regular reports from Code administrator AEMC, price and informational regulator AER, and AEMO. All these outputs derive from resources poured into government management of a sector to
The Pope, deprived of the counsel of Cardinal Pell, the Church’s most astute voice, foolishly called coronavirus “nature’s response” for failures to act on climate change. It was, therefore, hardly surprising that coronavirus would be recruited to push for additional renewable energy subsidies to reinforce those that have already created today’s high cost, low quality electricity.
A story in the Guardian demonstrates the impotence of government against the Deep State machinery that it nominally controls. This involved an attempt, in line with government policy, to divert money from the Emissions Reduction Fund to less harmful activities than efficiency-undermining promotion of green energy that it normally funds. The case under review was an attempt by Delta Energy to get some $14 million support for refurbishing its Vales Point plant, an outcome that would extend the pla
Danandrewstan: two steps forwards, one step back as energy security matters more than ever
The Spectator, 18 March 2020
The latest energy policy from the Victorian government is to place a constitutional ban on fracking and coal seam gas exploration but once again permit the search for conventional gas in the state. The proposed policy was developed in consultation with an industry/activist Independent Stakeholder Advisory Panel. The panel was chaired by the Lead Scientist, Amanda Caples, a pharmacologist, who was previously responsible for developing the state’s “strategic industry growth plans”. In announci
Renewables rent-seekers aren’t interested in bushfire prevention – or cheap efficient energy
Spectator Australia, 20 January 2020
No amount of mouth-frothing by Piers Morgan or artful deception by the legions of renewable energy warriors published by the Australian Financial Review and the Guardian will change the facts about this summer. The severe fire season is due to dry weather (not itself conceivably a result of climate change – rainfall trends have been flat for the past century) and the accumulation of combustible material on the forests’ floors. The build-up of combustible material is a result of the criminal neg
The NSW government is considering approving the establishment of a liquefied natural gas import facility moored off Port Kembla. This same government has erected formidable barriers to domestic gas production. Gas imports to Australia were last considered 20 years ago. The source was to be Papua New Guinean gas, to be sent here via sub-sea pipeline, then distributed — again by pipeline — to Queensland and NSW. The then federal government liked the idea as a way of providing aid to PNG.
Cheaper power coming? Blink and you’ll miss it if our Paris goals remain
Spectator Australia, 11 December 2019
There is a panoply of agencies regulating energy at the Commonwealth level and not all of these seem to be rowing in the same direction. The main agencies are • The Energy and Environment Department with 490 staff in energy and greenhouse — plus another 454 in its dependent agencies: Clean Energy Finance Corporation, the Clean Energy Regulator and the Climate Change Authority; • The Australian Energy Regulator (AER) with 283 staff; • The Australian Energy Market Commission (AEMC) with 95 sta
I have a piece in the Spectator today that draws together some recent developments in energy policy being developed in the half dozen or so agencies that control what is ostensibly, and was in earlier days, a market with supply largely from private enterprise. I also did a session on the issue with Chris Kenny. The destruction of the once highly efficient electricity supply industry by government and bureaucratic oversight is, of course, well known. This, the most vital Australian industry
Compared with a National Market that had a turnover of less than $7.5 billion a year four years ago, the turnover in just two days in January was over $1 billion. It is impossible without all data on contracts to determine who the electricity industry’s winners and losers were from the January 2019 high priced events. With the electricity there are multiple markets but it is best to think of them comprising just two markets. The first is the spot market which we see every five minutes; the pr
Reaping the fruits of political sabotage of the electricity industry
Catallaxy Files, 25 January 2019
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 sol
Banks pretend to be virtue signalling while plundering electricity consumers
Catallaxy Files, 21 January 2019
In the salad days prior to 2015, before governments’ destructive interventions undermined Australia’s stable low-cost electricity supply, electricity as a topic of general interest hardly figured. Any concerns about power blackouts just did not reach the front pages or the late-night news bulletins. At that time the National Market had about 50,000 megawatts (MW) of capacity, about 80 per cent of which was coal with gas and hydro providing the balance; with the exception of wind/solar, which ha
The Australian Energy Regulator’s wholesale electricity market performance report
Catallaxy Files, 9 January 2019
The more desperate the situation of an industry, the more reports and regulatory overseers’ governments require, blind to any recognition of an industry’s malaise being created by their own actions. And so, with electricity we have an alphabet soup of regulatory agencies analysing, advising and fiddling. At the Commonwealth level we have the ESB, AEMO, AEMC, AER and ACCC all seeking a place in the sun. On top of this are state regulatory agencies and conventional line departments. Then we ha
The gilets jaunes (yellow vests) demonstrations across the Atlantic against climate change driven fuel taxes offer Premier Doug Ford yet another reason to congratulate himself on repealing Ontario’s carbon tax. Less reassuring however is the speculation that he is to introduce a measure similar to the Australian ‘Emissions Reduction Fund’ (ERF). A sop to the leftists within the Australian coalition conservative parties, this provides funding for a reverse auction where, instead of taxing all e
Sucked in by spurious claims of the loss of 99 per cent of all coral reefs, mounting natural disasters, a permanent drought in the Murray Darling, and illusions that fossil fuels are archaic, Labor is preparing to announce its energy policy. Earlier this week, in a dummy run, Energy spokesman Mark Butler claimed, in the context of apparent public support for renewables, that we can up the government’s 23 per cent renewable energy share, which
Regulatory measures – subsidies for wind/solar – have wrecked the Australian market, driving up prices and increasing supply costs. And the policies have created wind and solar capacities that have on-going effects, which cannot be unwound by simply allowing the subsidies to run their course, since this will exact an increasing toll on energy costs. Countervailing subsidies to coal generation cannot solve the problem since, with existing policies in place, a subsidy to one or more coal generat
Power prices have ignited the current leadership crisis and there are few signs of sufficient understanding of what caused this in the political firmament or, for that matter, in the mainstream media. Malcolm Turnbull engineered the now comatose National Energy Guarantee to disguise his ideological imperative of a planned energy system that is fundamentally based on those wind/solar/battery technologies he regards as the shape of things to come. He says: Our primary focus is to bring power
Will abandoning energy subsidies allow the electricity market to self-correct?
Catallaxy Files, 29 August 2108
Coordination of supply in network industries Network industries involve firms cooperating in order to meet customer demands. Their success depends upon parties mutually agreeing on certain interconnection standards in order to combine components together. This need for coordination was often ensured by keeping the major supply components in-house.
The idiocy of Turnbull’s handling of electricity policy now, once again, looks likely to cost him the leadership of his party. Faced with termination, he is seeking to extricate himself while pretending to reform the policy that has revealed his incompetence. His new proposals at modifying the National Energy Guarantee (NEG) are bromides that leave intact his destructive objectives for the electricity supply industry. Turnbull’s automatic default position is to override the market and substit
Different generator types earn different average prices in electricity markets. Australia’s National Electricity Market can see prices at anywhere between $14,200 per MWh to -$1,000 per MWh in response to different demand and supply situations. The price variability provides incentives for suppliers to stand ready to take advantage of high price situations, thereby also evening out the actual price. The average price is now $80 per MWh, double the level that prevailed prior to the regulatory
The Australian Energy Market Operator (AEMO) recently produced forecasts that gas availability would not be a constraint on electricity supply over the coming years, notwithstanding the tremendous increase in Liquefied Natural Gas (LNG) exports. AEMO projects the following picture.
The architects and current beneficiaries of Australia's addled energy policies won't admit it, but the Paris climate accord is disintegrating. The US has bailed, Canada grows wobbly and Japan opens coal-fired plants. Meanwhile, our leaders remain resolute -- resolutely blind, that is light bulb IIWith the National Energy Guarantee (NEG), Australia is locking itself into more and more intensive greenhouse gas emission restraints, when the Paris Convention that is the supposed framework for such
Energy policy, price escalation and the destruction industry competitiveness
Catallaxy Files, 8 June 2018
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 spa
Over the past decade, we have spent $70 billion on wind and solar. Here are some statistics from BNEF, not uncoincidentally, the venue where Bill Shorten and Mark Butler yesterday launched an outline of the ALP energy and climate policy.
Different generator types earn different average prices in electricity markets. Australia’s National Electricity Market can see prices at anywhere between $14,200 per MWh to -$1,000 per MWh in response to different demand and supply situations. The price variability provides incentives for suppliers to stand ready to take advantage of high price situations, thereby also evening out the actual price.
The Australian Energy Market Operator (AEMO) recently produced forecasts that gas availability would not be a constraint on electricity supply over the coming years, notwithstanding the tremendous increase in Liquefied Natural Gas (LNG) exports. AEMO projects the following picture.
Like a border skirmish that develops into a global conflagration, John Howard’s policy to require “two per cent additional energy” be met with renewables has escalated into a measure destroying the electricity market. Back in 1998, the idea sounded good: give renewables a leg-up while they march to their inevitable destination involving cost-competitively displacing fossil fuels in electricity supply. In the interim, an immediate bonus would be that the subsidised renewables, being virtually
On Thursday, at the Energy Users Conference, the government’s chosen head of the chive quango running the electricity supply industry, Kerry Schott, remarked that coal plants could no longer compete. According to The Australian (her speech has not been made public) she said “you are unlikely to see a new coal-fired generation plant unless there is a change in technology and a decline in the price of coal”. Had she simply wandered off her politics-free advisory role and opined that, given the le
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 action is getting hotter on the energy front. Having been in a small minority for years, readers and writers on catallaxy are now finding themselves closer to the mainstream on the policy on energy/climate. To recap, the recent initial incendiaries were thrown by backbencher Craig Kelly in forming the Monash Forum and calling for the abandonment of the renewable energy subsidy policy which is destroying the competitive fibre of the economy. Unnerved by the whole process Mr Turnbull then m
Electricity bills have doubled over the past three or four years. The main reasons are twofold. First, state and federal governments have required retailers to source increasing shares of the electricity supply from low reliability wind and solar, which receive subsidies from consumers hidden within their bills. These costs to consumers are amplified by the subsidised electricity forcing the closure of low cost and dependable power stations like Hazelwood and the South Australian Norther
hile the ACCC’s Rod Sims may have had a Damascene conversion when he noted that he would like to get the price of electricity down half a dozen years after the reason for the price surge became obvious (hint look at the forced growth of subsidised renewables). What he will do about it, short of reinforcing the cries on this blog to abandon regulation, is anybody’s guess. (Post script, the Australian Energy Regulator which is housed within the ACCC, having been in November 2016 asked to report o
The fall from grace of the Australian electricity industry has been breathtaking. At the turn of the century, Australia had perhaps the world’s lowest-cost, most competitive electricity industry. This rested on cheap, low-sulphur coal, which was responsible for 85% of generation, ample supplies of gas, and modest but useful hydro-electricity generation capacity. Reform in the 1990s harnessed these assets to create a low cost, highly reliable system. The reforms included: a national electr
Ben Potter, who as a useful idiot, was leaked a copy of the National Energy Guarantee (NEG) report by the Victorian Government, reports today that the states are likely to sign off on the NEG at their meeting tomorrow. Potter is excoriated by Terry McCrann in today’s Herald Sun for his pandering to green energy myths. NEG has twin features of reducing greenhouse gas emissions from the energy sector together with a measure that ensures wind supply has a firming contract to compensate for its inh
Environment and Energy Minister Josh Frydenberg’s tour de force at the National Press Club on Wednesday and his opinion piece on this page yesterday show a man on top of his brief and using it to smite the ALP and the Greens as well as those on his own side promoting direct investment to counter the continued damage being done by renewable energy subsidies. Renewable subsidies have caus
It all came so suddenly. Over the Easter break a ginger group of Coalition backbenchers, the Monash Forum, was announced. Chaired by Craig Kelly, one of the few MPs who has really studied the economic disaster that greenhouse policies are causing, it counts at least 20 MPs as members including Tony Abbott, George Christensen, Eric Abetz and Kevin Andrews. The forum’s manifesto states opposition to all subsidies and argues that no private company will now invest in coal given the risk th
The catastrophic outcome of government energy market interventions is palpably clear. As the latest new regulatory body, the Energy Security Board, diplomatically puts it: “Fifteen years of climate policy instability ... (have) left our energy system vulnerable to escalating prices while being both less reliable and secure.” Australia has seen electricity prices double since 2015 and the once reliable supply is now suspect. From enjoying the world’s lowest cost electricity a decade ago, Aust
The future is less certain than the past but even with the past there are varying views about what has happened and what drove the developments. We have seen the wholesale price for electricity rise from under $40 per MWh with very little trend up until 2012, and was still $40 in 2015, to its present level of around $90 per MWh Wind has risen from nothing in the early part of the century to a share of over 10 per cent today. All of that wind is dependent on subsidies currently around $85 per MWh
It seemed too good to be true: Snowy being bought by the Commonwealth from state governments in what appeared as a money creation process – the Commonwealth had no apparent increase in debt or other costs, while Victoria and New South Wales got $6 billion for their Snowy shares. The reason behind the acquisition was to simplify the political process whereby the Snowy 2.0 pump storage project is pursued. The credibility of innovative balance sheet practices aside, what we also now have is a
obody should believe what any Australian government minister tells them about energy. Influencing politicians are self-interested lobbyists, and voters who have fallen for green falsehoods that the coal fired power station that supply four fifths of our electricity are dirty and no longer needed. Many politicians have themselves drunk deeply from that Kool Aid. Their policies have led the nation into an abyss of high electricity and gas prices, with uncertain reliability. A few years ago Austral
At 12 PM on 19 January the electricity market manager, AEMO, to its own and everybody’s great relief announced “VIC AND SA ENERGY SUPPLY REMAINS SECURE”. It had been a knife edged couple of days with hot weather bringing high electricity demand (even though much of Australian industry remained on vacation). As often occurs on hot days, wind velocity was low and this, the fabled modern source of electricity, was feeding in less than half its capacity.
Bloomberg New Energy Finance (BNEF) lobbies hard for renewable subsidies and estimates global “clean energy” investment at $333 billion. This excludes hydro-electricity other than Politically Correct “small hydro”. Some 85 per cent of expenditure is in wind or solar with the rest including biomass, electric vehicles and waste-to-energy.
It seemed too good to be true: Snowy being bought by the Commonwealth from state governments in what appeared as a money creation process – the Commonwealth had no apparent increase in debt or other costs, while Victoria and New South Wales got $6 billion for their Snowy shares. The reason behind the acquisition was to simplify the political process whereby the Snowy 2.0 pump storage project is pursued. The credibility of innovative balance sheet practices aside, what we also now have is a maj
Nobody should believe what any Australian government minister tells them about energy. Influencing politicians are self-interested lobbyists, and voters who have fallen for green falsehoods that the coal fired power station that supply four fifths of our electricity are dirty and no longer needed. Many politicians have themselves drunk deeply from that Kool Aid. Their policies have led the nation into an abyss of high electricity and gas prices, with uncertain reliability. A few years ago Austra
Snowy Mark 2 as a pump storage is designed to use cheap off peak power to pump water uphill to a reservoir so that it can be used at a later stage when electricity prices are high. It does not create any new energy – in fact it requires some 15 per cent of the available energy to be used up in the pumping process. Starting out with a $1.5-2 billion estimated cost when announced by Mr Turnbull in March of last year, a heavily redacted feasibility study has now put the cost at $3.8 to $4.5 billi
At 12 PM on 19 January the electricity market manager, AEMO, to its own and everybody’s great relief announced “VIC AND SA ENERGY SUPPLY REMAINS SECURE”. It had been a knife edged couple of days with hot weather bringing high electricity demand (even though much of Australian industry remained on vacation). As often occurs on hot days, wind velocity was low and this, the fabled modern source of electricity, was feeding in less than half its capacity. On the spot market, prices reached $14,00
The supporters of renewable energy continue to claim – as they have for the past 30 years – that wind/solar is or soon will be cheaper than energy from coal generators. Even so, renewable energy supporters continue to lobby for ongoing subsidies, which today provide $85 per megawatt hour on top of the spot price of $80.
AGL’s proposed power station closure would ensure continued excessive electricity prices
Catallaxy Files, 10 December 2017
Yesterday AGL confirmed its plans to close the Liddell coal powered electricity generator in 2022. It did so in the face of calls from the government – even by notorious green aficionado Malcolm Turnbull – for its life to be extended. AGL epitomises the sort of firm that Warren Buffett invests in – that is a “business any fool can run, because someday a fool will”. It has previously been managed by a fellow fresh from running a Danish wind turbine manufacturer, Paul Anthony, w
Bad luck for the much hyped Tesla battery when the grand opening in South Australia yesterday coincided with storms that brought power outages in its immediate vicinity. Designated as reliability-proofing a state that has seen the future of electricity generation more clearly than Lincoln Steffens saw how effectively the infant USSR would work , it was launched with the usual puffery of how it could power 30,000 homes for an hour in the event of a blackout. This leaves 737,267 South Australian
Queensland and Victoria seeking to feast off national economic amputation
Catallaxy Files, 1 December 2016
here are those who say if you force people to invest in horses and buggies and use these for half of their road trips we would all be better off. Not for them the superficiality that this would reduce real incomes as a result of investing in technology that is higher cost, prone to breakdown and can only operate when the horses are not resting, eating or carrying excessive weight.
Turnbull’s energy policy proposals: more steps forward than back?
The Spectator Australia, 22 November 2017
The Government has now received but not yet released a report into the energy market plans it wants to put in place. These plans entail retaining the increased availability of the Renewable Energy Target (RET) subsidies until 2020 and then maintaining payments of those to installed plant until 2030. Currently the subsidies, which are direct transfers from consumers, pay wind/solar $85 per MWh in addition to them receiving the spot price now at $80 per MWh (double the price prior to the Haze
Bloomberg New Energy Finance (BNEF) lobbies hard for renewable subsidies and estimates global “clean energy” investment at $333 billion. This excludes hydro-electricity other than Politically Correct “small hydro”. Some 85 per cent of expenditure is in wind or solar with the rest including biomass, electric vehicles and waste-to-energy. In a press release of 16 January, BNEF includes the following graphic of Australian renewable investment trends.
All thinking people actually know what has gone wrong in the Australian electricity industry: a doubling of wholesale market prices, diminished reliability, investment being policy – directed into fashionable but high cost avenues – wind, solar batteries, pumped storage. Unwilling or unable to accept this, like a car careering down the wrong side of a motorway, state and federal governments have set up inquiry after inquiry to provide insights and cheaper ways of forging the future they wish to
Energy Minister Josh Frydenberg is now on his way to the UN conference in Bonn to pay obeisance to a global warming fraternity strengthened by two new members (Nicaragua and Syria) to the loss of merely one (the USA). Renewable energy (other than Politically Incorrect hydro) is the UN’s posterchild. Yesterday, two boilers from the last coal power station in South Australia were blown up. Apparently not in relation to the demolition, SA Premier Weatherill tweeted “coal is dead, long live renew
The government's electricity "reforms" merely confirm the existing subsidy arrangements for renewable electricity, with consumers paying the renewable tax till 2030. Its "reliability guarantee" adds no greater certainty but will entail a vast new inflexible bureaucracy. The measures will not result in the forecast lower prices.
ACCC offers some clarity but much obfuscation in its report on electricity price rise
Catallaxy Files, 16 October 2017
The battle of the causes of Australia’s excessive electricity prices is well and truly on. Having moved from the world’s lowest cost electricity to among the highest cost in less than a decade, finally questions are being asked. The government commissioned the ACCC to provide advice on the elements bringing about the price increases and in a selectively released “draft” Rod Sims has said about seven per cent ($100) is due to renewables. A great chunk of the increase was blamed on ‘”strategic
While Victoria retains a coal-based electricity supply, wind and solar provide 40 per cent of South Australia’s market. That’s the highest share in the world for a system that can import only about 15 per cent of its needs (in South Australia’s case from the maligned but dependable coal- based Victorian suppliers). Two weeks ago storms brought down South Australia’s electricity supply. Last week, Victoria saw similarstorms temporarily bring
Gas and electricity crises need deregulation not more interventions
Catallaxy Files, 27 September 2017
It is perhaps a little cruel to apply the epithet, “The best energy minister we have” to the likeable Josh Frydenberg, especially since he alone with Tony Abbott actually writes his own media pieces. In today’s AFR he writes about the unfolding gas crisis. While he cannot blame the Queensland government, where the ALP has followed the Coalition in permitting gas exploration, he blames the ALP under Gillard for permitting too many exports and the Andrews government for forbidding gas exploratio
Appointed as head of the ACCC by Rudd Gillard, Rod Sims has a long association with the ALP going back to the Whitlam years. His re-appointment by the Coalition is unsurprising given the callow nature of conservatives and the fact that many have interventionist sympathies that accord with those of the leftist intelligentsia that Sims represents. In his speech to the Press Club Sims addresses two points that have been warmly embraced by like-minded people within the media.
An endgame is now underway in the renewable energy scam that has been responsible for destroying the nation’s electricity industry as a low-cost, efficient and self-managing sector. Though, in Churchillian terms, countering the debilitating effect of the self-imposed cancer is beyond the end of the beginning it has a long way to go before we have anything like the market we once had.
Premier Dan Andrews is copying South Australia’s energy policy. The Premier aims to lift wind and solar’s share of the state’s electricity supply from its current 8 per cent to 40 per cent. Wind is unreliable and, in Australia costs three times as much as coal; solar is even more expensive.
Yesterday, Malcolm Turnbull, unveiling the plans by Pratt for new investment in containers said, “You know everything my government does is designed to encourage Australian businesses to invest.” The absurdity of this was underlined by Anthony Pratt informing us, “Our cost of energy in America is 2½ times lower than Australia.’’ One fifth the costs of the Pratt business’s production is energy and the facility is only possible by providing subsidies to the in-house production of this. Here is
Energy Minister Josh Frydenberg claims that renewable energy is a disruptive force in the energy market in the same way as the iPhone was to landlines and cameras. There is, however, a major difference: iPhones, like Uber, Kindle and eBay have disrupted previous commercial systems by force of technology. Renewables everywhere in the world have required government subsidies.
AGL have announced a contract for electricity from the Queensland 453 MW Coopers Gap Wind Farm at an offtake price of less than $60/MWh (real) for an initial five years, with an apparent option to extend this at the same or a lower price for another five years. The suppliers are a consortium of the Future Fund, QIC and AGL (which retains 20 per cent ownership). AGL originally owned the project (which is to cost $850 million and is scheduled for completion in 2020) and had spent $22 million on i
Just to prove that they are doing something to combat high electricity prices, the PM (and his energy Minister) called the major retailers to Canberra. Mr Turnbull offered the retailers the sharp end of his tongue, admonishing them for the high electricity prices. Mr Frydenberg nudged them along saying he was reluctant to regulate but unless they looked to reduce prices etc, etc. The firms promised to do more to advise customers of better offers and many of them said what was needed was a mov
Regulations create super profits in electricity supply – will Governments move to seize these?
Catallaxy Files, 21 July 2107
Environment and Energy Minister, Josh Frydenberg has assailed the Queensland government for presiding over (if not conspiring to produce) an outcome in the electricity market which has enriched the state government coffers by $1.5 billion (actually over four years). Following a reorganisation, the previous three generator portfolios, directly owned Queensland were collapsed into two. It is doubtful that the two businesses were actually formally coordinating their bidding (actions that are ille
Alan Finkel's otherworldly prognosis is bad enough. But toss in Malcolm Turnbull's advocacy of renewables and then add an imported American chief regulator who would have been happier working for Hillary Clinton ..... and where are you? The simple answer: thoroughly stuffed. They are to examine the Finkel report into electricity. Among the many counter-productive recommendations this report offered was an increase in the electricity market’s “governance”. This is a demand for even more of th
redictably, the Finkel report came out with a concealed attack on coal – a new tax which Finkel falsely described as “all carrot and no stick”. This is to cut in at a politically specified level of emissions with those power stations emitting more CO2 per unit of energy than this paying for credits and the subsidy going to the ones emitting less. Sounds like a carbon tax and it is one. The papers took their predictable stances, ones that totally disregard the facts that coal is easily the che
The electricity market review by Alan Finkel, was to be the blueprint for a low cost, reliable electricity supply system that emitted less carbon dioxide. Dr Finkel, like Mr Turnbull, has long promoted green energy agendas. Unsurprisingly his report was basically a carbon dioxide reduction plan, which disguised the costs and unreliability to the electricity supply system this entails. Regulations currently force consumers to accept an ever growing share of subsidised renewable energy – large
Reliability issues aside, in the debate over the flawed Finkel report a vexed issue is that of costs of coal versus wind/large scale solar. Queensland’s Kogan Creek coal plant commissioned 10 years ago was offering long term baseload contracts at $38 per MWh. But the Australian Research Council had new coal at $80 per MWh
Government is always a tension. On the one hand are those who want to produce things to meet consumer demand and to profit from this. And on the other hand there are those who want to prevent some forms of production that would disadvantage them and those who want to “redistribute” the income, often before it is produced. With energy policy however the main political rivals are in competition with policies designed to reduce national income and wealth. Shifting out of fossil fuel to wind/sol
Cheap wind power the latest furphy in support of suicidal energy policies
Catallaxy Files, 8 May 2017
Hot of the press, The Australian is breathlessly reporting that Origin Energy has contracted to buy wind energy at $60 per MWh, a price that is comparable with contracted prices from coal. The article sees this as evidence that the gap between wind and fossil fuelled electricity is closing. Just a moment’s hesitation would have made the journalist realise that something is wrong here. If the gap is closing why do we have the renewable energy subsidies and why are we bothering with not one but
AGL claims it has “a plan to get out of coal as smoothly as possible — embracing cleaner, more sustainable sources of energy like solar, wind and hydro”. This, it says, will be an “orderly” process beginning five years from now and finishing in 2050. Now that’s planning. While anxious to promote its green credentials, 90 per cent of AGL’s actual generation is fossil fuel based, mainly coal from Bayswater and Liddell in NSW, and Loy Yang A in Victoria.
Prices at the Wallumbilla hub have risen from their former levels of $3 per gigajoule to $10 at present and in the peak summer periods were $16 plus; this was before the Hazelwood closure and there are reports of forward contracts at $20 per gigajoule. Prices in the US remain at about $A4 per gigajoule and the prospectivity of Australia for gas is, according to the US Energy Information Agency, similar to that of the US. In the light of state based restrictions on new development and federal a
Not long before his sudden and premature death, Australian Energy Market Operator chief Matt Zema spoke candidly at a private conference of power-industry executives. The enormous subsidies heaped on renewables, he said, mean one thing and only one thing: "The system must collapse"
How governments have destroyed the world’s most efficient energy market
Catallaxy Files, 28 March 2017
The nation’s energy policy is in the hands of ideological tyros. At the federal level Malcolm Turnbull is running the show with the equally green evangelist, his Departmental Secretary Martin Parkinson. At the state level, we have a Victorian Government desperately promoting wind, to match Greens policies in the hope of retaining threatened inner city seats, while also killing coal, conspiring with the Liberals to close down gas supplies and otherwise using the electricity supply system to pro
With its cheap coal, Australian electricity prices were previously among the world’s lowest but are now among the highest. Picture: David Caird ENERGY costs and reliability have deteriorated over the past 15 years. With its cheap coal, Australian electricity prices were previously among the world’s lowest but are now among the highest. This has been caused by intensifying government regulations, especially those mandating an increasing share of subsidised renewable energy.
As I pointed out in my previous post, republished here, the Australian government is using all its abundant intelligence resources to argue that Trump will not follow up on his strictures regarding the global warming scam. Julie Bishop is unfortunately proving herself to be simply a vacuous fashionista in saying that the US will stick to the Paris Agreement because “like Australia” it can easily meet its goals.
Portland’s rescue however means upward pressures on other electricity users’ power prices and an even more precarious supply/demand balance next year. Wholesale prices have doubled over the past few years in South Australia, New South Wales and Queensland. Victoria will follow suit unless, as Terry McCrann advises, Hazelwood’s closure is averted. Electricity’s malaise is solely due to governments subsidising wind farms and rooftop installations. Energy retailers must include steadily increasing
There is no let up in the lies, ignorance and dissembling that passes for debate on Australian energy policy. Tanya Plibersek ventured onto the Bolt program and said, in line with green ideology, that the Renewable Energy Target means cheaper prices – a canard also voiced by the ABC insider duo of Lenore Taylor and Laura Tingle and central to the policy of the Victorian and other governments.
The Financial Review recognises that wind has broken Australia’s electricity system, and quotes Grattan advice that we need a new system, (redolent of Brecht’s channeling of East German politicians that it would be easier to dissolve the people and elect another). Entranced by the Chief Scientist’s pearls of wisdom the AFR also tells us that he is to seek the solutions in an upcoming trip to Ireland and Denmark. And they publicise the latest silver bullet, a new battery invented in South Austra
Well who would have thought this possible? Substituting wind for coal prices is driving up the average Victorian’s electricity prices by $135 next year. After all this is occurring with increased wind that proponents never tire of telling us is set to become the cheapest form of new power. Greens and the wind rent-seekers have been doing that since 1990 and yet, in spite of all the regulatory costs imposed on coal, it is still only one third the price of the new white hope of civilisation and
What is wrong with these people? We have state leaders from South Australia, New South Wales and Queensland purposely rejecting the low cost energy option of coal that nature has provided and opting for renewables that will always cost three times as much. And we have an apparent consensus of politicians in Victoria, New South Wales and Tasmania rejecting fracking, the technology that has rescued US energy supplies and proven itself harmless in spite of a million wells having been drilled. Tod
The first tragedy is that Australians, who not so long ago rejoiced in cheap and reliable electricity, now pay some of the world's highest prices. The second tragedy is that the same green fantasists, ideologues and rent-seekers are bent on making things far, far worse
Forced emission reductions entrench high electricity prices
Bad policy choices have seen our cost advantage become a thing of the past Major economic consequences are foreshadowed by several reports into the electricity industry that were presented to this month’s COAG meeting of energy ministers. Two of those reports addressed issues stemming from Australia’s ratification of the Paris Agreement on climate change. One of these, The future security of the national electricity market, was from a group chaired by the Prime Minister’s Chief Scientist,
Bad policy choices have seen our cost advantage become a thing of the past Major economic consequences are foreshadowed by several reports into the electricity industry that were presented to this month’s COAG meeting of energy ministers. Two of those reports addressed issues stemming from Australia’s ratification of the Paris Agreement on climate change. One of these, The future security of the national electricity market, was from a group chaired by the Prime Minister’s Chief Scientist, Al
The political conspiracy to close down low cost power stations to combat the shibboleth of global warming claimed another scalp with the Hazelwood closure. Fossil fuelled energy faces discrimination at every turn vis-a-vis the renewable stuff that costs three times as much and is highly unreliable. Under the Commonwealth’s renewable energy laws, wind gets a hidden subsidy from the consumer which gives it $80-90 per megawatt hour whenever it can operate in addition to the $40 it earns on the market. The subsidy means wind will always run when it can and impose stop-start costs on the fossil fuel generators. In addition to Renerwable Energy Target subsidies wind an other renewables also get soft loans from the Clean Energy Bank and from other Commonwealth programs as well as a swag of subsidies that state governments engineer through their own “energy efficiency” schemes to promote wind and solar. And to rub salt in the wound, the Victorian state government upped its royalty tax on the brown coal stations by $80 million a year (meaning a $20 million a year hit to Hazelwood).
The trove of emails that Wikileaks is publishing help to explain what drives political decision taking. This is especially evident in the environmental sphere. US “charities” linked to Clinton campaign are funding lawfare and other opposition to Australian coal, oil and gas developments. International finance flows to influence policy on climate change also go from Australia to the US. Wikileaks reports an email to Hillary campaign chief John Podesta as “Here is the plan to go after WSJ and
A little over two decades ago, as the deputy secretary responsible for Victoria’s energy policy, I accompanied the then Coalition government minister to a Hazelwood visit. Although the plant personnel were solid Labor and opposed to the emerging policy of privatisation of the electricity supply industry, we were received with great cordiality. Apparently, the workers feared the ministerial visit to the plant – the first in the memory of the workers there – was to announce its closure and there was great relief once they learned no shutdown was planned. In the mid-1990s there were reasonable grounds to expect the plant’s closure. Built in 1964 it had not been performing well – unreliability meant it was available to run only 70 percent of the time (paradoxically, a level that is twice as high as that of modern wind farms). Its design life gave it only a further ten years to operate
Though the wind-farmers’ propaganda machine regaled the media with fallen pylons as the cause of the South Australian 28 September blackout, the latest AEMO release refers to the pylon collapse as a cause of the State blackout only in a footnote. (“It is not yet clear whether those conditions potentially contributed to the line faults or whether the transmission towers collapsed after the Black System”). However available information (including to the Australian’s Graham Lloyd) is that this was irrelevant:
The trouble with wind South Australia has on average over 40 per cent of its internally generated electricity derived from wind. This is one of the highest levels in the world for a load with a relatively small interconnection with other sources (the two interconnectors with Victoria have a capacity to supply about 20 per cent of the state’s needs). Wind/solar generation has two features that are of concern. The first is that it is intrinsically high cost. As a mature technology, it will remain three times the cost of coal powered generation in Australia. It can only compete because it is subsidised by a regulatory charge on the consumer (thereby also not facing the same scrutiny if its support was through the Budget). It receives the subsidy whenever it runs, hence wind has an incentive to generate whenever it can, forcing established fossil fuel plant to be placed offline.
Government destruction of wealth: the saga continues with Victoria banning gas exploration
Catallaxy Files, 30 August 2016
Confirming Australia’s leadership in the world league of weak, over-reactive and stupid politicians, Victoria has announced it will convert into a total ban the existing moratorium on the production of gas coal seam gas, shale gas and tight gas using hydraulic fracturing (fracking) and other such methods. For good measure it is also banning exploration of conventional gas at least until 2020.
The Andrews Government in Victoria has set in motion regulatory arrangements that will permanently prevent hydraulic fracturing (fracking) and other measures of tapping “unconventional” gas while maintaining in place an embargo of all other on-shore gas exploration until 2020.
Renewables an expensive rejection of cheap fuel and competitive advantage
Australian Financial Review, 29 July 2016
Exotic renewable energy from wind and solar costs three times as much as electricity from coal and gas generation plant. Renewables are subsidised by households and firms being required to include growing proportions of renewable energy in their electricity supply. The Renewable Energy Target (RET) in place requires 23 per cent of electricity to come from wind and solar by 2020. The renewable lobby estimates this is costing $40 billion for wind and large-scale solar installations. Unfortunately that expenditure is not beneficial investment. Rather, it is money spent on incendiaries to destroy existing productive fossil-fuel plant. And it is being unwittingly provided by electricity customers whose reward is higher prices due to subsidised renewable plant displacing low-cost coal and gas generators.
Environmental programs, especially those targeting carbon dioxide emissions, have come to dominate energy supply policies over the past 20 years. Hence, following the federal election, energy and environment policy has been merged into one ministry under Josh Frydenberg. Last year in Paris, Australia like many other nations committed to reduce emissions of carbon dioxide by 26-28 per cent by 2030. Integral to this are policies to force the replacement of coal-generated electricity by renewable energy. Australia’s policies include lifting the current 6 per cent share electricity supplied by large scale renewables (mainly wind) to 14 per cent by 2020. In addition, there will be over 7 per cent in small scale (rooftop) generation
In May of this year, South Australian Treasurer Tom Koutsantonis was somewhat remorseful over the closure of the Port Augusta coal fired power station He said It is a sad day for our state to see such an important investment close but it’s an old coal-fired power generator that was past its day and unfortunately for whatever reason no one is going to reinvest in a coal fire generated power station, no one’s going to upgrade the plant. That power station closure came a few years after the closure of the state’s other coal fired generator, the Playford power station. Together the two power stations had a capacity of 780 Megawatts, which was only 15 per cent of the state’s capacity or 12 per cent including rooftop (600 MW) and the interconnectors (680, soon to be 920, MW).
Government is always a tension. On the one hand are those who want to produce things to meet consumer demand and to profit from this. And on the other hand there are those who want to prevent some forms of production that would disadvantage them and those who want to “redistribute” the income, often before it is produced. With energy policy however the main political rivals are in competition with policies designed to reduce national income and wealth. Shifting out of fossil fuel to wind/solar is a key policy of the Coalition, the ALP and The Greens with differences centred on how fast and on the mechanisms for doing this. The policy, now driven by alleged human induced climate change, means substituting electricity that costs around $38 per megawatt hour with a product that costs $120 and which also requires considerable back–up cost to offset its intrinsic low quality.
Wind industry lobbyists Pitt and Sherry, and their journal, RenewEconomy, jubilantly produced the following table as proof that wind energy lowers prices. They pointed out that in May wind enjoyed its biggest ever month, with 8.5 per cent of the National Electricity Market supply and argued that this had led to prices falling. They also claimed that the table, as it shows a lower price differential between South Australia and other states in May compared to March, demonstrates that wind drives
In a remarkable policy change announcement Shadow Treasurer Chris Bowen and Australian Workers’ Union chief, Scott McDine, placed an op ed in the Financial Review that reverses a long standing ALP policy. In the piece Mr Bowen and his union puppeteer called for a “national interest test” for new gas development proposals. That is code for ensuring a domestic allocation of gas at discounted prices. Major gas users, led by Incitec Pivot and Dow’s Andrew Liveris, have long sought preferential access to gas supplies, a goal that has doubtless become more urgent as a result of regulatory suppression of new gas developments by fracking. Manufacturing unions have also been supportive of a regulation that would offer advantages to a heavily unionised industry at the expense of general enhancements to national productivity. A 15 per cent domestic allocation is often mentioned. But such a share is likely to raise overall costs by 10 per cent and kill off a great many projects.
Few people and no politicians would understand the costs of the political parties’ energy policies. The ALP, Greens and Liberals each have lengthy statements explaining how their approach is smarter and would cost little and be supervised by a plethora of acronymic bodies to regulate, advise and judiciously dole out money. In estimating the costs of energy policies, the bottom line is:
Australian electricity policy: Armageddon or slow economic strangulation?
Catallaxy Files, 12 April 2016
Yesterday the ALP is reported to be examining how it can shut down “ageing coal-fired stations”. This is part of the policy to reach 50 per cent renewable energy by 2030 and the Greens claim Shorten is seeking an escape from the Party’s previous announcements. Coalition government policy is for a Direct Action buy-out of emissions coupled with 33,000 gigawatt hours of electricity from “large scale renewable energy” (mainly wind) plus small scale units on rooftops. At present, large scale renewables account for 12.75 per cent of electricity and the small scale units a little under 10 per cent. Large scale renewables are to increase by another one third by 2020. There is no limit to the small scale units.
Inflicting on-going damage: the relentless green energy push
Catallaxy Files, 4 February 2016
Yesterday saw the publication of one of the regular horse-chokers that emerge from the electricity regulators and government funded analysts. This one was looking at the Queensland situation, with a view to examining how the ALP can implement/diverge from the crazy policies they proposed for an election they never expected to win. One piece of good news? “Modelling of a Queensland 50 per cent target for renewable generation by 2030 suggests an average increase in retail electricity prices of 0.5 per cent for households and 0.3 per cent for industry, and a reduction of 0.7 per cent for commercial customers for the period 2015–16 to 2034–35.” Less than good news “The ACIL Allen modelling estimates that (this) would require a subsidy of about $10.8 billion (real) over the period to 2030.” Doubtless the renewable cheer squad will highlight the former but not mention the latter.
Fracking for gas in Victoria: Another useful idiot prevents progress
Published on Catallaxy Files, 19 August 2015
The Victorian Auditor General, John Doyle is another key state government identity (actually appointed by the Coalition) who is under a “personal grievance” cloud, having left a previous position in British Columbia following expense fiddling allegations. He was somewhat controversial in his previous post in criticising the BC government’s performance in preserving biodiversity, which he declared was “.. like a canary-in-the-mine situation. Declining biodiversity is like a litmus test, a warning sign, that tells you about an environment under stress.” With such statements under his belt, his report on fracking to tap “unconventional gas” in Victoria is unsurprising. In it he, “concluded that Victoria is not as well placed as it could be to respond to the risks and impacts that could arise if the moratorium is lifted allowing unconventional gas activities to proceed in this state.”
Wind farms are raising electricity costs for consumers
Published in the Australian Financial Review, 9 July 2015
The Australian Climate Roundtable alliance is seeking to limit human induced global warming to a 2degree increase. The alliance comprises business lobbyists, ACOSS, the ACTU, and green lobbyists, the Climate Institute, the ACF, WWF and the Investor Group on Climate Change
Green energy generates big costs for little gain
Published in Australian Financial Review, 22 June 2015
Alternate energy Reports of the death of coal are greatly exaggerated. For green power is still very costly and uncompetitive, and likely to remain so despite all the subsidies. In this newspaper last week Richard Denniss opined that there was a stampede of investment money out of coal ("Abbott blind to coal decline", AFR, June 15). He excoriated Tony Abbott both for failing to recognise the death of coal and for suggesting that wind farms, their preferred replacement, are a blight on the landscape.
Meddling by politicians undermining cheap energy in Victoria
Published on Catallaxy Files, 15 May 2105
I have a piece in the Herald Sun this morning that addresses issues in energy policy, in particular those affecting Victoria. The two most contentious issues are coal seam gas and renewables. The Napthine Coalition government banned exploration for all gas, not only the unconventional gas extracted by fracking. The Coalition was spooked into this decision by the coal seam gas agitprop which alleges fracking brings risks to aquifers. In its decision the Napthine government ignored the clean bill of health findings of the Reith Inquiry that it set up to review the issue. The State Liberals claim that the then Labor Opposition contributed to its economically irrational decision by leaving open a possibility of campaigning on the matter in the 2014 election
Ross Garnaut plays out his previous government agenda in criticising the White Paper on Energy. He says it is deficient because it has no carbon tax and fails to enhance the merits of the Renewable Energy Target. He says “do the math” and you will see that forcing the substitution of energy that is three times the cost of energy otherwise available will lower prices. This from an economist who claims some renown! Yes if one forces high cost products on a market that is oversupplied and where supplier exit entails costs, prices will fall as existing suppliers battle it out. But the outcome beyond the short term sugar hit can be nothing other than high prices.
Fracking: another case of voter ignorance killing wealth generation
Published on Catallaxy Files, 24 March 2015
On Q and A last night, a discussion from about 7 minutes took place on coal seam gas. Coalition MP and junior minister Fiona Nash brags that NSW coalition has not approved one coal seam gas exploration permit and has bought back permits of those granted by Labor. Now only 11 per cent of NSW land can be used for CSG, down from 45 per cent under ALP. Naturally, Tony Jones egged others on in support of measures that deny development and only ALP frontbencher Joel Fitzgibbon offered any form of lame support for other than economic nihilism.
THE poles and wires of electricity networks are natural monopolies, accounting for 60 to 70 per cent of household consumers’ costs. Their ownership remains highly politicised 20 years after the Kennett government in Victoria opened the book on Australian privatisations. At the time, claims were made that private owners would milk the consumer and cut corners by avoiding necessary reinvestment and maintenance ....
Power still to the people from electricity move
AUSTRALIAN electricity consumers financed a report on electricity costs prepared by the consultancy CME and managed by UnitingCare. The report has once again demonstrated how Victorians have benefited from the Kennett/Stockdale electricity privatisations of the 1990s. Aside from raising $29 billion to rescue the state from the preceding ALP Government’s spending excesses, this created a leaner, lower cost industry
Snowy Mark 2 as a pump storage is designed to use cheap off peak power to pump water uphill to a reservoir so that it can be used at a later stage when electricity prices are high. It does not create any new energy – in fact it requires some 15 per cent of the available energy to be used up in the pumping process. Starting out with a $1.5-2 billion estimated cost when announced by Mr Turnbull in March of last year, a heavily redacted feasibility study has now put the cost at $3.8 to $4.5 billi
The catastrophic outcome of government energy market interventions is palpably clear. As the latest new regulatory body, the Energy Security Board, diplomatically puts it: “Fifteen years of climate policy instability ... (have) left our energy system vulnerable to escalating prices while being both less reliable and secure.” Australia has seen electricity prices double since 2015 and the once reliable supply is now suspect. From enjoying the world’s lowest cost electricity a decade ago, Australi
At 12PM on 19 January the electricity market manager, AEMO, to its own and everybody’s great relief announced “VIC AND SA ENERGY SUPPLY REMAINS SECURE”. It had been a knife edged couple of days with hot weather bringing high electricity demand (even though much of Australian industry remained on vacation). As often occurs on hot days, wind velocity was low and this, the fabled modern source of electricity, was feeding in less than half its capacity. On the spot market, prices reached $14,000
Bloomberg New Energy Finance (BNEF) lobbies hard for renewable subsidies and estimates global “clean energy” investment at $333 billion. This excludes hydro-electricity other than Politically Correct “small hydro”. Some 85 per cent of expenditure is in wind or solar with the rest including biomass, electric vehicles and waste-to-energy. In a press release of 16 January, BNEF includes the following graphic of Australian renewable investment trends.