Coalition energy crisis explodes

Reap the whirlwind. The Coalition’s self-made energy crisis has finally exploded.

From the top, mining is furious:

The chief executive officer of miner Rio Tinto has lashed out at Australia over its rising energy costs, saying the country had kicked “a national own goal” letting states set their own energy targets and make their own gas access arrangements.

In a speech at a Minerals Council event in Parliament House in Canberra, Jean-Sebastien Jacques said Australia was “an energy-rich country” and it “should have affordable, secure and flexible supply”.

Electricity companies will write to a million households by Christmas to offer them cheaper power plans, Prime Minister Malcolm Turnbull demanded.

But within a decade the country had “gone from having some of the most competitively priced energy in the developed world to having nearly the most expensive”

“The future of many operations – mining, manufacturing, agriculture – and businesses large and small are at risk. The lessons of the past decade would suggest less state-based intervention and more national coordination,” Mr Jacques told his audience of mining industry leaders and politicians.

“Too many states going in too many directions on their own targets, on their own gas access arrangements, have been too much of a national ‘own goal’.”

Business is livid:

Australia’s largest energy users have warned that an estimated $9 billion in additional electricity and gas costs will feed through to the broader economy, threatening jobs and investment, as business drives pressure on Canberra to ease predicted power shortages.

Major packaging and brick makers, supermarkets, soft-drink bottlers and poultry producers said yesterday the bill shock would chip away further at profit margins and could push up consumer ­prices as a political firefight continued over Malcolm Turnbull’s push to extend the life of the 1900 megawatt Liddell power ­station beyond 2022, a call rejected by its owner AGL.

Economists, including Nat­ional Australia Bank chief economist Alan Oster, warned the power bill shock was expected to show up in national inflation figures as early as next month.

He predicted headline inflation would increase 0.6 per cent for the July-to-September quarter, purely from energy price rises.

“And that is significant, ­because what it means is that if you are running the rest of your price increases by about 0.6 or 0.5 per cent, which is where they are at, you suddenly have a 1.2 per cent (inflation figure),’’ Mr Oster said.

It’s turned toxic for households and the populists, Andrew Bolt:

IT takes world-class idiots to give Australia not just world-record electricity prices, but blackouts, too.

Your bills have doubled in a decade and the Australian Energy Market Operator on Wednesday warned of summer shortages.

You think “idiot” is too strong? Then how could a country with huge resources of coal, gas and uranium run short of electricity?

And policy process is out the window as Do-nothing Malcolm channels his self-generated chaos towards AGL, at the AFR:

Energy giant AGL has earned the wrath of the coal sector and Malcolm Turnbull has urged the company to put consumers before shareholders as he pushed the company to agree to sell the Liddell power station rather than allow it to close in 2022.

Mr Turnbull and Energy Minister Josh Frydenberg will meet AGL chief executive Andy Vesey on Monday in a bid to convince him to sell the old coal-fired plant in the NSW Hunter Valley, even though it would be against AGL’s commercial interests to effectively establish a competitor in the generation market.

“Generators, electricity companies, obviously prefer electricity prices to be high. That’s when they make a lot of money,” Mr Turnbull said.

“Our perspective, our responsibility is to the Australian people, whether it’s mums and dads, families, whether it’s businesses, to ensure that electricity and all energy, is affordable and reliable.”

The Coalition attack dog, The Australian, has launched a culture war on the energy retailer:

A senior manager in charge of promoting the energy policy of Australia’s largest electricity producer previously worked for activist group GetUp!, which is committed to shutting down the coal-fired power industry.

Self-described political strategist Skye Laris is an executive member of AGL Energy managing director Andy Vesey’s team as he sticks with the company’s plan to shut down the Liddell power station in the NSW Hunter Valley, despite protests the planned closure threatens energy supplies.

Ms Laris, who joined AGL in February as senior manager, digital engagement, is now a senior manager, public advocacy for the company. She is a former campaign director for GetUp! and has worked in a series of senior ALP jobs, including leading the party’s digital campaign for the 2013 federal election campaign and during Bill Shorten’s first few years in the Labor leadership.

Immediately before joining GetUp! in March 2011, she was chief of staff and policy adviser to Labor frontbencher Tony Burke, who is also her partner.

Yet why would AGL sell the plant? It knows what’s coming, via Matthew Stevens:

Not quite four weeks ago, in the AGL profit briefings, Vesey was pushed on whether the sort of incentive power prices that we are seeing right now might make it more sensible to keep Liddell running beyond its current execution date.

In saying no at great length, Vesey noted first that sustaining Liddell was “not a free option”.

“We believe that the reduction of carbon risk in our portfolio is still very important. The greenhouse gas policy that we put forward in April 2015 is what we operate by and we are sure of the decision that that plant will close at the end of calendar year 2022.

“The reason I say that is it’s sort of not a free option because [of] that age of plant, which was built approximately 1975,” he said. (Just for the record, that is not quite right. In fact Liddell was commissioned over two years from 1971.)

“So it’s just a bit younger than I am,” Vesey quipped before expanding on his Liddell logic.

“It will require a significant investment and so, you know, if you’re thinking about extending the life of a plant like that for 10 years, let’s say, the level of investment would be significant.

“And the question we have to ask if we’re going to make a significant investment in generation, would we do it in an older plant which is less reliable with higher maintenance costs or should we be making that investment in new technology which aligns with what we believe is the future which will be a greater value long term to our shareholders and customers.

“Well, we’ve chosen the second and we are still of that view.”

And there’s the rub.

And he’s right, as Goldman confirms again today:

The low price achieved in recent renewables auctions worldwide implies a significant acceleration in cost reduction for wind/solar. We estimate that the costs of these technologies has decreased by c.60% on average over the last seven years, making wind/solar the cheapest way of producing electricity. We believe that there is still significant room for further cost reduction, and expect a further c.37% decrease in costs over the next eight years. Prices achieved by wind/solar in recent auctions have been surprisingly low… We see the outcome from the recent auctions (Exhibit 14) for wind and solar as solid evidence of the improvement in the competitiveness of these technologies, with prices of c.US$30/MWh in different countries, e.g. Morocco, the United Arab Emirates, Mexico, Chile and the US (in the US, wind and solar are awarded with tax benefits on top of the achieved price in the auction).

…implying a significant reduction in costs for these technologies We estimate that the wind and solar levelized cost of energy (LCOE) has decreased by c.50% and 70% respectively since 2009. We expect this trend to continue and (based on IRENA’s forecasts for investment costs and our expectation of more efficient turbines and the evolution of cost of capital) estimate a c.33%/43% reduction in LCOE for wind/solar over 2017-25 (Exhibits 15-16).

Wind and solar are currently the cheapest ways of producing electricity when all costs (including investment) are included We estimate that the reduction in LCOE for wind/solar has made these technologies the cheapest way of producing electricity when all the costs, including investment costs, are taken into account (Exhibit 17).

Laura Tingle says this is all wonderfully clever:

So now let’s bring some politics back into this. What has happened as a result of this intervention? Well Turnbull is talking about coal-fired power which keeps his conservative wing happy. But he’s talking about it as a short-term fix, not about building a new coal-fired power station.

For the rest, he’s talking about “making renewables reliable” through projects like his beloved Snowy Hydro 2.0.

The shift might have been lost in the noise. But it is to a much better place for Turnbull to be politically than he was at the beginning of the week.

Except keeping bullying Liddell to stay open won’t fix energy prices today. It’s five years away, for heaven’s sake. All of the government’s answers are many years away yet the crisis is NOW.

The ONLY way to deliver cheaper energy prices is cheaper gas. That’s all there is. Gas sets the marginal cost of electricity in the NEM not renewables. But Do-nothing has botched it, via The Australian:

Shell Australia expects the federal government to activate export curbs for Australian gas this year, despite early signs of wholesale gas prices falling and increasing flows of gas from Queensland to the high-demand southern states

Shell Australia chairman Zoe Yujnovich said she expected the Australian Energy Market Operator to declare a “structural shortfall” in domestic gas supplies within the next four weeks, providing the government with a trigger to impose export restrictions.

But she said any restrictions were “less likely” to fall on Shell’s export portfolio because it was already a net contributor to the local market.

The government created the Australian Domestic Gas Supply Mechanism in June amid a rolling energy crisis that has seen soaring household and industrial prices and threatened the viability of large commercial users.

The mechanism gives the government unprecedented power to limit gas exports from the three terminals on Curtis Island in Queensland.

Energy Minister Josh Frydenberg can effectively divert gas back into the market to ensure there is an adequate supply of affordable gas for domestic consumers. But the mechanism is focused on companies that are not “net contributors” and draw more from third-party sources than their own dedicated export reserves.

“We feel that that is less likely to have an impact on our export portfolio,” Ms Yujnovich told a Bloomberg forum in Sydney yesterday.

“That won’t be the case across all the venture partners on Curtis Island.

The ADGSM is not tough enough. Contract prices have come down from $20 to $17.50Gj. A few years ago here it was $3Gj. The same gas can still be bought in Japan for $9Gj. And we should be paying $2Gj cheaper than that if prices met export net-back:

The one company most responsible for denuding the east coast of gas, Santos, is powering on the stock market because the ADGSM failed to force it to redirect enough gas locally. It’s too slow and too weak. Nor is there any apparent plan to bring Shell into a regulatory umbrella despite it sitting on, and failing to develop, the largest gas reserves on the east coast.

The eastern economy is caught in a dramatic energy shock that was long predicted. Do-nothing Malcolm has butchered the policy response, stuffed the politics and is now spraying blame like a crazy Catherine wheel in a poorly co-ordinated bullying campaign against energy retailers that won’t impact prices for years when the gas cartel is making out like a bandit.

The energy chaos descending on the east coast is a direct reflection of a decade of Coalition energy bastardry, first in trashing the carbon price, and today in a deeply confused, hollow man PM.

Comments

    • MSM coverage has been fairly extensive, so we’re not as impotent as we might be on housing. Waleed gave Frydenberg a good grilling last night, but Gretel actually summed it up best in the post segment wrap (good job Gretel).

      They just need to keep hitting them with this question:
      Why is the soon to be largest exporter of LNG on the planet unable to have a plentiful supply of cheap gas?

  1. Good editorial from SMH on the issue:

    http://www.smh.com.au/comment/smh-editorial/power-politics-is-damaging-us-all-20170906-gyc4i0.html

    Mr Turnbull’s suggestion that AGL close down Liddell, five years later than the company has been planning, sounds like the pleading of a desperate man.

    Mr Turnbull emerged from a meeting with power industry chiefs to announce the latest breakthrough in solving the power crisis: the companies would write a letter to consumers telling them to shop around for the best deal.

    A dull, utilitarian function that in the past was run by technocrats has become an ideological toy for posturing politicians. If you are a right-winger you like coal; if you are from the left, you like solar, wind and wave power.

    ——–

    I suppose if you are smart, you want a gas power station in the state where gas is cheapest (WA?) and a UHVDC transmission line connecting WA to the “national” grid. AUS has no national grid – just an eastern states one.

  2. Tassie TomMEMBER

    Really interesting article on many fronts.

    Goldman Sachs’s LCOE analysis is interesting – Wind at 30% load factor – down here in Tassie it easily achieves 35%, which should make it even cheaper. Solar at 30% LF – I can’t see how you’d achieve that without single axis tracking. Surely Goldman isn’t saying that SAT PV has a LCOE of US$35/MWh? If someone has SAT PV for that then they’ve done very well.

    Also, it’s a shame Goldman didn’t stick up LCOE for nuclear too. Maybe it’s because nobody really knows because nobody’s managed to actually get one finished for a while.

    Poor old Turnbull – even his former employer Goldman is sticking the boot in.

    Secondly – those power auction prices are generally well above LCOE (unless they’re subsidised). If I was a private company bidding in a PPA auction, I’d have to factor in making my investment back; interest; and a decent ROE, largely or entirely during the term of the PPA. Generators that are owned directly by governments or retailers (who therefore don’t have to reverse-auction off their energy) don’t have these restrictions, and so will be cheaper overall.

    I wouldn’t worry too much about what RIO says – they always want everything for nothing, and they usually get it.

    The really interesting thing is the magnitude of difference between Wind/PV and CCGT – even at a load factor of 50%, although 30% is more realistic in Aus if they are used for their dispatchability (even though CCGT isn’t as dispatchable as OCGT, it’s a hell of a lot more dispatchable than coal). The magnitude of difference in LCOE brings into play storage options that are horribly inefficient, like chemical storage (hydrogen or methanol) or heat storage for later steam regeneration. Even if these are only 1/4 to (absolute maximum) 1/2 efficient, it is still cheaper to lose 3/4 of the overbuilt wind/solar energy by storing this way than to fill the supply gaps with gas.

    • Are you an EE, Tassie Tom ?

      Asking out of curiosity as my wife is one, and works for a Tasmanian company. Understand completely if you do not wish to provide any personally identifying info.

      • I’m not an energy expert. Just very interested in it – read a lot, ask a lot, read again, etc. Probably more than 20 years of informal research.

        Same with economics (although I’m not as up to speed in economics as I am with energy) – no economics degree, but read, learn, ask, read again – etc.

        The thing that frustrates me about energy and economics in Tasmania is that we have a golden opportunity to seriously increase our wealth and quality of life thanks to our existing hydro network. High power, higher energy dispatchable capacity – just what the markets of the future need.

        But the muppets running the show have got no idea about anything and absolutely squander our opportunities. All they do is rip as much as they can out of our energy companies in the form of dividends to prop up their own books, while whacking almost $3 billion of debt onto the “state-owned enterprise” power companies’ books. How are the power companies supposed to reinvest with this garbage going on?

        Most of this debt has been lent to the state-owned power companies by the state government (for a higher-than-bond-rate of interest). This way the government’s loan counts as an asset, so even though they have to borrow to fund this loan their NET debt looks smaller, and the state owned enterprises don’t appear as debt on the government’s books. Even though the power companies are charged a “government guarantee” fee by the government – the debt still doesn’t appear on the government’s books.

        Sorry for the rant – pure frustration.

        Hope your wife moves you to Tassie. It’s good down here. 0.5%pa population growth, and today I filled up my car with petrol for the first time in a month.

      • Sorry, meant Electrical Engineer. 😉 Figured if you were one as well the two of you probably know each other.

        Thanks for the rant though, I agree completely (neither of us are Taswegians, but she knows the history you’re talking about). 🙂

  3. As I commented yesterday the current contract price is not $17.50/gj. Worth doing a bit of research on estimated pricing for contracts signed this year, its more like $8-11/gj.

    • Tassie TomMEMBER

      $10/GJ is still $65/MWh CCGT and $100/MWh OCGT in fuel costs alone, before you pay any interest on the generator that you’ve bought or employ anyone to run the thing.

      Still, if in the future there is 2 or 3 times as much wind and solar installed power capacity than average power use, then gas will only set the price (in combination with storage) when it’s dark and calm. LCOE for gas will be higher because the capacity factor will be lower, but these high-priced periods will be averaged down by sustained ultra-low priced periods when there is a surplus of variable power.

      We’re in transition now, but this is the energy market of the future. The sooner we adapt to it the better.

      • Maaate don’t confuse the guys by adding real information to the discussion ffs they don’t need to know how many Mwh’s you get from a GJ of gas. they couldn’t be half as pissed off if they could do this simple math to begin with.
        Don’t you understand the MB site is all about competitive virtue signaling and real information just interferes with the signaling process.

  4. St JacquesMEMBER

    Dearest Mr Dolt,

    There are a few points about the fake energy crisis your blunt brain needs sharpening on:

    1. There is no shortage of gas produced in Australia. Australia has never pumped so much gas in its history than now. So much so that it is vying with Qatar as the biggest gas exporter in the whole damn world.

    2. But domestic gas prices have rocketed. Why? Because our damn stupid criminal and insane clowns from both sides of the mad house called parliament allowed too many gas export terminals to be built and now gas is being sucked up through a vast network of pipes across the whole eastern half of the country to those massively expensive new gas terminals in QLD to be exported to justify the massive investments in them.

    3. Point 2 brings us to point 3, which is that big gas exporters like Qatar, Australia’s main gas exporting competitor, RESERVE a certain percentage of their gas production for local use. Our criminal politicians refused to RESERVE a certain percentage of gas production for Australian use on some bullshit excuses about “free-markets” which is all very nice in some imaginary fairyland dreamed up by academics, but now that means that gas that used to go to Australian homes, businesses and power stations is now being sucked up through a vast network of pipes to the new, humungous gas export terminals jn QLD to be exported overseas.

    4. There would have been no blackouts in South Australia if South Auslralia’s gas fired power stations like PELICAN POINT were operating at full capacity. Why weren’t the gas fired power stations working at full capacity in a country that exports so much gas? Because gas was too expensive.. And why was the gas too expensive? Because the criminals we call politicians refused to RESERVE a certain percentage of all gas produced for Australian use when they gave the go ahead to the gas companies to build the f#ing humungous gas export terminals in QLD.

    5. Finally can you guarantee there will be no leakage of chemically poisoned, pressurised water from thousands upon thousands of fracking wells into ground water supplies over their ten, twenty or thirty year life times? And what about the enormous amount of freshwater each and every one of those fracking wells needs to operate? Where does that water, which is filled with a deadly cocktail of chemicals, come from? In, of all places, Australia?

    • Great post! Five solid points to examine including the outrageous pollution that accompanies the ‘fracking’ process. Like so many other aspects of Strayan society and it’s connection with economics, we really need to overcome the simplistic ‘smaking money so all good, mate’ approach to complex issues.

      It may be too late to avoid the windows being blown out of the ‘economics’ laboratory due to years of greed-driven policy, but we still have time to prevent permanent and irretrievable damage to our little corner of the Earth. Unless more folks wake up, those pipes supplying gas to ensure the books balance for the energy providers will be everywhere gas exists and they have demonstrated they don’t give a rat’s cheese about anything save the market value of the gas.
      http://www.lockthegate.org.au/fact_sheets

    • Bill Shorten on the radio this morning was speaking about Labor’s energy policy, sounded very much like MB’s narrative. Even had a quip that is ridiculous that people in Japan pay less for Australian gas than people of Australia.

      Keep pushing the policy, MB!

  5. It ain’t just about energy. Gas is the primary feedstock into the manufacturing process for nitrogen based fertilisers and explosives. Just this week the organisation I work for has been softening up the workforce for the closure of their major facility in Brisbane due to massively escalating gas contract prices.
    It’s all ok though. The Prime Minister was on site a few months back to make his announcement about fixing gas prices…

      • Gas can be used to make energy. It can also be used to make useful things like fertiliser and explosives. Value add if you will. Create jobs. Support those working families. Pretty much all the debate and rhetoric is on electricity prices.

    • Tassie TomMEMBER

      It’s astonishing isn’t it? The world’s got this non-renewable resource of all these different organic chemicals that we can turn into all of these fantastic materials and products – fertiliser being one of them, but we choose to put these amazing building blocks into cars and power stations and just burn them.

      Our kids will be asking “The world used to have all these amazing organic chemicals – what did you do with them?”, and we’ll say “We burned them”, and they’ll say “Burned them?! What the hell would you do that for?”

  6. Can’t call this a coalition crisis, most the radical self-harm in knocking out long-term reliable supply came from the leftist States such as SJW capital of the world Victoria, and that pathetic little man in SA. Prices have been rising strongly since the GFC, your gas story is a factor, but ultimately, fake news.

    • Andrew, besties with 3dee.

      “Pathetic little man in SA” – Lolz. Dunno who you mean but it’s not Weatherill. The man is a national treasure on energy

      • Tassie TomMEMBER

        Speaking of Freydenslayer Jay, was Andy Vesey the bald bloke trying not to laugh in the background when Weatherill hooked into Freydenberg?

        It’ll be an interesting reunion between the two. I wonder if Vesey will get the giggles?

    • Pretty much.

      States have massively damaged easy coast energy markets, rush to renewables will guaranteed wreak further havoc, LCOE has its place but also problems (underweight dispatchablty, too many fixed assumptions, ignores operational realities), whilst some new gas will prove more expensive to extract it still needs to be extracted, RET CET etc need to be curtailed or redirected to baseload. Turnbull is too immersed in the glorification of renewables to really get a grip on the very real dangers posed to energy provision in Qld NSW and Vic face. And the State Premiers! Useless.

      • Insightful! You’ve already worked complaining about SJWs, “fake news”, and calling people ‘sheep’ into 2 comments on an article about energy policy. That’s basically the unhinged wingnut trifecta. Well done, sir! Please continue… when you get to using the word ‘cuck’ I’m having a beer.

    • You do realise that if gas was at the long term average price then SA would now have the cheapest and most reliable power in the Country?

      You would almost think that it is a fossil fuel conspiracy against renewables – but it probably is just about corrupt companies trying to make as much money as possible.

  7. So what I’m hearing is, invest in Gas shares?

    Why not profit from Chaos? We all know this aint gunna get fixed……….. in fact worse………..

    Coalition will be in for another term……. wait and see 😉

  8. Wind and solar offer no benefit of scale. The grid cannot provide despatchable or buffered power from wind and solar any cheaper than a household. The unsubsidised wholesale cost for reliable supply from wind and solar is $500/MWh.

    The LCOE figures are pure fantasy. You only need to look at SA through this week with its 1600MW wind capacity throttled at 1200MW for two days while the wind was there for 100%. What does that do to the load factor? Extrapolating enough capacity to provide buffered power from wind or solar forces load factors to single digits – of the order of 4 to 5% in a 100% wind and solar network.

    The fundamental is that the ratio of electric energy out of a buffered wind or solar system to the electrical energy in to manufacture it is 2.1. The current renewable illusion is based on making all the components in China using electricity generated from coal and nuclear plants.

    Anyone coming up with LCOE figures for wind and solar should go and try to run their household on a wind or solar energy system using those numbers. They would soon realise where they went wrong. It is just fantasy. Some days a solar or wind system, anywhere in Australia, will produce nothing or next to nothing. The is the situation that a system needs to achieve – not the average.

    AGL has grown its revenue 4-fold in the last decade. It sees this mad rush to unrenewable renewables as the greatest opportunity ever presented any business. They would be incompetent not to grab it and embrace it. It will cause their revenue to skyrocket exponentially. The investment opportunities are literally endless as they gobble up more of the economic output chasing the illusion.

  9. Once again MB has swallowed the green energy koolaid (along with Goldman but they at least are transparently pushing investment in renewables on which they get big dollars)

    1) The Goldman Sachs numbers are not LCOE costs in the geographic graph – they are contract prices after subsidies – in other words the real costs are two to three times greater. Price is not a reflection of true production cost
    2) It has been pointed out many times that LCOE is a very poor way to compare energy costs – especially across energy sources. It is like comparing the marginal costs of production for entirely different manufactured goods. Despite the strengths of LCOE as a metric – it is easy to understand and widely used – it has some shortcomings, too. Namely, it leaves out geographic variability, changes with seasons and usually ignores the cost of environmental impacts such as the cost of carbon emissions. This metric is a bit too simple when comparing variable wind and solar generators to power plants that you can turn on and off at will, such as those fuelled by uranium, coal and natural gas.

    https://www.sparklibrary.com/9-reasons-why-lcoe-can-mislead/

    The IEA recommends system costs are used as a better metric – https://www.iea.org/publications/freepublications/publication/next-generation-wind-and-solar-power.html

    And when you do that wind and solar costs jump hugely – especially at high penetrations

    http://www.sciencedirect.com/science/article/pii/S0140988313000285

    Blind Freddy can see that the jurisdictions with the highest percentage of renewables have the highest electricity costs – claiming wind and solar are the cheapest ways to produce electricity is at best a delusion and a worst an outright fabrication.

    It’s well past time MB authors educated themselves about this topic before they keep writing such poorly thought through comments

    • I can understand the authors at Macrobusiness being so naive on this aspect of wind and solar. I can also understand that energy companies like AGL would put their revenue and profit ahead of any moral responsibility particularly when they would be banging on fruitlessly.

      The technical side of the Finkel report beggars belief, particularly the contribution from the Jacobs Group. But that is what you get from a scientist tasked with achieving a political objective.

      Why is there such poor understanding of the low capacity factors that must apply to wind and solar when they are the sole source of generation and the cost of storage is so high? Surely there are technical competent people employed by policy makers who can understand this. Why isn’t the IEA more vocal on this insanity? Any farmer running off-grid using wind and solar understands the issues.

  10. Exhibit 14 above is highly deceptive. It makes out that wholesale price for wind and solar power is under USD100/MWh in most of the referenced locations. All those prices are for unbuffered output. The capacity factors are the maximum possible for the installation assuming that all potential output is used.

    Denmark has the highest priced electricity of any developed nation; just behind SA from the perspective of a separately priced network. They have large hydroelectric installations that they can use to buffer the variable output from solar. There are other subsidies in addition to the auction price that contribute to the project costs. They have the capacity to export and import power from countries using reliable sources of generation.

    Canada has a similar situation with abundant hydro to buffer the intermittent output of wind and solar.

    SA could claim it is getting the CSP at AUD78/MWh. How deceptive is that when the LGCs will be traded for an additional AUD90/MWh and all the power that the plant can possibly produce is guaranteed dispatch. There will be days when it sucks power from the grid just to stay warm and keep security lights working.

    Mexico is just starting their chase for the illusion. All the recent projects averaged USD50/MWh on the basis that they will export all the potential energy from the system. Average capacity factor of 33%. For a buffered system the CF falls to between 4 and 5% so real cost, as the proportion of wind and solar capacity increases, will be something north of USD300/MWh. Then there is the additional cost of the storage capacity or fast response dispatchable generation.

    Putting up Exhibit 14 simply shows how little understanding there is on getting reliable supply from intermittent generation.

    The evidence is clear. There is no correlation between increasing use of wind and solar energy and reduction in CO2. There is a strong correlation between increasing use of wind and solar and electricity price:
    https://gailtheactuary.files.wordpress.com/2016/08/euan-mearns-europe-electric-price.png
    Regression coefficient of 84% should. at least, make any sensible person ask why is it so! The fact that understanding the reason requires ability to analyse and think should not stop people from trying.

  11. Deregulation of the energy industry went so well. At least as well as the deregulation of banking and finance, the building industry and tertiary education sector.

    The nation state went up for sale based on the idea that the market was always right and the captains of industry have our national welfare at heart. Yeah, right…

    The trickle down of urine from the big end of town, to accompany the bullshit, has proved the worth of neoliberal ideology. More truth is found on the floor of a milking shed.

    Now to take the country back and banish these idiots and their pustulant values. Then the young can set about clawing back the pile of loot that this generation of baby boomer politicians have feathered their nest with. They can start with a GST on all family homes over $2 million in value and a death tax of 30% on estates worth over 5 million – that should get some trickling down happening fast. And when they complain let them eat cake; just as the young were left with debt and the finger. Because we don’t want the boomers eating avocado on toast in their retirement villas do we?

    And if they ask how is gen X, Y and Z is going to pay to care for the boomers in retirement? I suggest an seldom considered strategy – don’t bother. If generation Y and Z reciprocate with the same intergenerational theft, lack of care and mean spirited policies who could blame them? But I think our younger people will surprise us with far more compassion.

    Little will happen with the election of the ALP unfortunately. They are neoliberal lite – fearful of principle and led by Robot Bill clutching a bag of zingers in the hope that they make him look like a mammal. The only real change will happen if people hold their noses and vote One Nation. Yuck. But what choice is there?

  12. All the fossil fuel parasites come out every time an article on this comes out. Guess you gotta work for your dog biscuits when your industry is going to die a slow death.

    • Your so-named fossil fuel parasites are falling in love with renewables as they come to understand the spin-offs. AGL has realised that renewables provide the greatest business opportunity imagined – they have embraced it. Why do you think they have their feel good campaign with the bearded man. Other mining and energy businesses will soon come to realise it is a breathtaking opportunity. Renewables provide the prospect of mining and energy business taking a much larger slice of economic output.

      All the renewables components that are made in China require truly massive amounts of iron ore, coal and aluminium in their manufacture. That bodes well for Australian mining. Energy companies in Australia are now enabled, through incredibly generous subsidies and guaranteed market access, to command an ever increasing take from electricity consumers.

      If you have the ability to get off the grid then do it now. Electricity prices have only started their long rise toward eventual collapse. Leave those unfortunate enough to be stuck with the grid to pay the high cost of allowing wind and solar generation onto the grid.

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