Private capital bullies Morrison’s corrupt coal cranks out of way

Honestly, the Morrison Government is an entire pack of psychos:

An expansion of the proposed taxpayer-funded power station at Kurri Kurri in the Hunter Valley is being considered by the government amid a scramble to fill a baseload generation gap caused by the premature closure of the Eraring coal plant.

Energy Minister Angus Taylor said the government’s overwhelming preference was for the private sector to fill the void, but indicated the Kurri Kurri plant was designed to be expandable if need be.

This is 100% psychopolitics and 0% economics or markets. Here’s what the industry says about it:

Kane Thornton, the chief executive of the Clean Energy Council, said Origin’s announcement would prompt companies to immediately reassess electricity investments that did not previously stack up. He said there was a “massive pipeline” of potential renewable energy and battery projects across Australia, but companies felt uncertainty over whether the federal government would intervene in the market and change their viability.

“There’s still that uncertainty hanging over the marketplace. It just undermines confidence,” he said. “There is no doubt we can build enough capacity [to replace Eraring]. We just need the government not to get in the way and disrupt the market.”

The market is desperate to invest in renewables that will decarbonise, stabilise power output plus lower prices by marginalising Morrison’s evil gas cartel. Here’s what private capital is doing about it:

Canadian fund manager Brookfield and tech billionaire Mike Cannon-Brookes have launched a bid to take over Australian energy giant AGL and set stronger emissions-reduction targets that would force earlier closures of its remaining coal-fired power stations.

The confidential offer proposes to acquire AGL’s retailing and power generation divisions spanning coal, gas and renewable energy assets across the country. If successful, it would halt the company’s plans to demerge its business later this year.

There’s $880bn in queued projects if the psychos get out of the way. Here’s what the economics says about it:

Coal is currently $250 per tonne and gas is roughly $12. Neither can compete with renewables + storage. They can’t even compete with perennially overpriced nuclear.

In short, Morrison’s psychos are spending your money to raise your power prices so that they can divide and conquer your community, and blockade a deluge of new energy capital ready to transform the grid. Why? This:

Everyone wondered whether there was some connection between the government’s direction and its financial indebtedness to the fossil fuel industry. But no one could prove it. Why? Because the Commonwealth doesn’t have real time disclosure of political donations.

Only now, long after the public’s attention has moved on, have those suspicions been confirmed. Thanks to the donations data recently made public on the Australian Electoral Commission site, we know that fossil fuel companies — and the gas industry in particular — were giving generously to both major parties at the time, a whopping $1,329,754 to be precise, with just over half of this from the gas industry.

The Coalition got the lion’s share ($731,534), although Labor collected the not-insignificant sum of $598,220.

If you add to the Coalition’s total for that year the just over $1 million the LNP harvested from fossil fuel via its fundraising entity Cormack, the Coalition’s indebtedness to gas, coal and mining in the 2020-21 period swells to $1,735,048.

Morrison’s butchery of energy policy is alone grounds for electoral annihilation.

Houses and Holes
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  1. As you know by now, the Cannon-Brooks offer for AGL has been rejected by the Board. It will probably take another 10% to get there which the bidders would have known for sure and which the market seems to be substantially pricing in at the moment

    • This audacious move is a delight to behold.

      Taylor must be apoplectic this morning, and poor old Scomocchio is saying it will raise prices.

      As MCB said with PK this morning, renewables cost less and are more reliable with firming.

      Mike has made Labor’s job EVEN easier.

      • Oh. As I said on the weekend links yesterday, it is an extraordinary Alpha move – by a private citizen against an national government no less.

      • The Traveling Wilbur 🙉🙈🙊

        The best bit is that no one seems to have figured out the *really* clever bit behind this move, yet. Which assumes this takeover will eventually happen, and within a year or so.

        They’ll make 100s of mill, extra.

        • His tweet with Musk helped get the first big battery installed so MCB is a very smart operator. I’m unsure if he expected the AGL board to accept his offer or if the public rejection was his plan to get some media attention.

    • You would have seen the stock shorted progressively to lower the price before the large purchase by JPM. This was before the price was put. The laws with respect to setting prices in the Corporations law have been totally disregarded and unenforced by ASIC which is a joke. Lots of Australians will have had their super shredded by this kind of mercantilism. The coal fire power station is critical in keeping a stable grid.

  2. AGL’s C-suite managers are backing that wholesale electricity prices going to rise in the near future due to the uncertainty of the wholesale markets so they didn’t think the offer was enough.

    If anything showed you how stuffed the energy market is in Aus, is that line of thought.

  3. I’m sure i have heard conservative politicians banging on about not picking winners in relation to industry policy. Is picking losers ok? Or only whey they are donors?

    • You just pick anyone when there are donors involved.

      Winners, loosers, negative sideways movers – everyone gets a spin of the wheel.

  4. Please tell me why it is a good idea for zealot software developer billionaires to think shutting down 3GW of baseload to be replaced with intermittent sources (at best) will be good for the Australian economy?
    What is going to replace this baseload?
    Yes replacing coal in the long run is desirable, however as I type (~1pm) AEMO dashboard is telling me the fuel mix is 48% Black Coal, 15% Brown Coal, 4% Gas. ie. 67% coming from fossil fuels.
    Thats with solar providing 20% (during what would be roughly peak solar hours)

    • Absent any information on what you do/invest your money, if I was a betting man (thanks again, Dees), I’d be betting that MCB and Brookfield know what they’re doing and they’re unlikely to shut down the coal plants without a transition to replacement renewables with firming.

      But of course, you could listen to MCB on RN Breakfast this morning, where he spells out this exactly.

      • When a notionally first world economy can’t keep the lights on, you’ll find an overreliance on wind and solar at the heart of it. So it is in California. As in Germany, as in South Australia, Californians are victims of a maniacal obsession with wind turbines and solar panels.

        Last time I looked SA power was 50% more expensive than the rest of Australia.

        The bidders talk of borrowing $20,000,000,000 and will not guarantee that the current costs will be maintained. Loy Yang gives stability to grids in South East Australia.

        As for corrupt I note AGL has been sold down constantly over the last 2 years with a lower price that would facilitate such a bid. I cannot say this is another case of ASIC not doing a proper job in regulating the market. It may be that the bid was only a short time in the planning. It is notable that there was a large purchase of shares at the end of the large downturn. The sellers included BlackRock a well known supporter of coal burning power stations, having purchased the shares in 2017. They seemed to be buying and selling the shares to themselves during that time which would have had the effect of making the casual holder think that there was more selling than otherwise. It is an illegal practice but again not policed by ASIC. I wonder who will be supplying the 20 Billion in loans?

    • I don’t think you read the above analysis. 880B in the pipeline hamstrung. Utility Solar + Partial battery at cost parity with coal.
      The idea is not to shut it down tomorrow but in 5-7 years time with the relevant renewable + battery capacity is already built.

      • Thanks I’ll take a listen. It does seem like a hell of a lot of generation to replace ~15GW, and you’ll have to be generating more than that given your solar plants/wind etc. won’t be running at max. load factor all the time so sufficient excess has to be generated to supply load plus charge the batteries.
        Also need to consider growth of new load, especially if we want more electric transportation infrastructure.
        We will see, but doesn’t leave a lot of room for error.

        • am a bit skeptical as well. the 880bn invested wont be charitable, they will insist upon a market rate of return, and i am sure will have a line of bankers insisting that the return start around 12%… plus we have a real world experiment on shutting down base load power and replacing with renewables. its called germany and the uk, who not that long ago were boasting about negative energy costs because production was overwhelming the system. today they are subsidising households and businesses because the cost of energy has soared. and before anyone blames the russians (lol, is there anything they are not responsible for?), remember this stuff happens, its called the world, and needs to be built into your “models”… f%^king mba consultant types

          • Does anyone think AGL/Essential etc are in this out of the goodness of their hearts?

            I know I don’t.

            They’ve been printing money for years – and unless I am mistaken – have had their business subsidised by the taxpayer and also protected in a way because of the lack of action on the renewables transition.

            Has any analysis been performed on what is happening in Germany and the UK? Are they apt comparisons for AU?

            We are of course not pricing in the total cost of coal into the math, are we. Do we want to price all the externalities into the equation? CC and everything it begets (insurance, health, etc) for example.

          • if youre insisting on a full cost benefit analysis then i agree. otherwise youre just an ideologue backing a horse named mcb, and that’s a pretty concentrated bet.

          • High volatility in the system is also good for trading profits!
            At least the Sun cable should be up and running by 2026, so that should provide some visibility on how these work as a mega-project.

          • Germany decided to shutdown nuclear post Fukushima. Incredibly stupid decision at least until renewables are cost competitive there. They hitched their wagon to Russian gas and now have to live with those consequences..
            I’m fairly confident the economics of running a solar plant in UK is quite different to Australia…

          • today they are subsidising households and businesses because the cost of energy has soared

            Sounds bizarre.

            My understanding is that the German elite removed generating capacity and then created a shortage of energy. The solution to the shortage is high prices which will cut usage somewhat, and raise supply (by accessing expensive external supply) and hence ensure that demand and supply match. That is basic market behaviour.

            To then “subsidise” would partially defeat the cut in usage. How are they paying for this? Are they taxing the beneficiaries of the shortage?

            Bizarre. Create a shortage then blame price.

            If they want to reduce energy usage without causing money losers and winners, then they should use some other rationing scheme – not a market.

    • BillMcLeanMEMBER is showing 51% renewable generation at 1PM, made up of 27.3% rooftop solar, 14% utility solar, 6.5% wind and 2.8% hydro.

  5. Those costs propaganda, at best… you cannot claim any level of objective analysis continually quoting them. They are a fiction and you know it.