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July 13th 2017 print

Alan Moran

Electricity: All Hope is Lost

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

wind turbineWith Australian electricity prices now approaching world-beating highs, we have on Friday another meeting of the Council of Australian Government (CoAG) energy ministers who have created the current energy catastrophe. 

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 the political tinkering which, in the space of just 15 years, transformed the Australian electricity industry from the cheapest in the world to one of the dearest. Distortionary subsidies to renewable energy, which have also undermined reliability, are paramount in this.

Finkel decided that renewables are inevitable (which is why Malcolm Turnbull appointed him) and commissioned economic research to demonstrate that this is so. The modelling showed future lower prices from the substitution of wind/solar for lower cost coal.  It did so by using two mechanisms.

First, it has the renewables subsidised and with priority access to the grid, meaning coal powered stations have either to run at a loss or close down.  The optimists assume coal will run at a loss in an oversupplied market then close down in an ‘orderly’ manner.

In theory, this allows a second mechanism – forecast cost reductions of wind and solar – to swing in.

One shortcoming of this picture is that if the coal stations hit major expenditure needs at an inconvenient time, they will be forced to close down. This was the case with Hazelwood, which was operating in the face of Worksafe notices and requiring perhaps a billion dollars for new boilers.  Finkel’s solution (adopted by politicians) of requiring three years notice of closure is absurd and unworkable.

Moreover, the fabled and imminent onset of cheap renewables will not occur, just as it has not ocurred through the past 30 years of similar erroneous predictions. Ah, but batteries will save the day, I hear some say. But no, they won’t. Batteries are simply a costly way of smoothing out the peaks of renewables’ intermittency.

Compared with the cost of coal at below $50 per MWh for new power stations and less than that for existing ones, wind is at least $90 plus the costs of storage ($14 according to the totally inadequate estimates published by Minister Josh Frydenberg) and requires aditional transmission expenditure.

With current policies having brought wholesale prices to around $100 per MWh, Finkel decided to airbrush from history the sub-$40 prices that prevailed until the renewable subsidies started to bite in 2016.

It is easy to forget the changes that the deregulation of energy created, before politics overturned its competitive nature.

With the reforms initiated in Victoria, some of them even underway from 1990 during a left-wing ALP government’s tenure, management of the power stations (and poles and wires) was taken away from the de facto union control that had developed over the previous quarter of a century.  Benefits of the system’s reform were amplified by the privatisations.

Between 1990 and 2002, labour productivity in Victoria’s electricity generators (including contractors as well as employees,) rose from six man years per GWh to 36 GWh.  The increased efficiency was also manifest in the generators’ “availability to run” which was lifted from under 80% to 95%, an outcome that effectively increased capacity by one fifth.

As the national market started to emerge, state-owned generators in New South Wales and South Australia were forced to follow the same cost-cutting path that the new rivals in Victoria had pioneered. The outcome was the low prices that did so much to engender the remarkable economic resurrection of Australia in the two decades to 2015.

It is hard to see how this, the free-market norm, can be recaptured.  Green activists and subsidy seekers have combined to destroy Australia’s developed endowment of cheap coal-generated electricity.

Even the Australian Energy Market Manager (AEMO), the institution set up provide a technology neutral market management, has been undermined.  The present head, Audrey Zibelman, filled the big shoes of predecessor Matt Zema when she came to Australia as a refugee from Hillary Clinton’s presidential defeat. The AEMO role is management rather than policy promotion and Zema was guarded in offering advice which ventured into politics. By contrast Zibelman has flung herself into the political deep end.  She has urged the adoption of the 42% renewable energy target favoured by Finkel, lifting the wind/solar subsidised component from its current 9%.  At its current level, subsidised wind has already brought a doubling of wholesale prices and an unreliability that has offered an opening for notorious subsidy harvesters, think here of Elon Musk, to offer expensive panaceas.

Ms Zibelman says she wants us to get beyond the point when energy isn’t such an emotional issue.  But this is shorthand for saying, “accept my position and let’s move on”.  She likens her role with CoAG ministers to that of Google’s management which is “constantly planning and investing in their networks”.  It is of course something of a stretch to compare a failed government monopoly institution to a globally successful outfit operating in a highly competitive market.

Energy ministers, with the partial exception of Frydenberg, continue to demonstrate their utter ignorance of markets in general and electricity in particular by rising to support and intensify the on-going market poisoning by government regulatory controls.

Alan Moran is the author of Climate Change: Policies and Treaties in the Trump Era

Comments [28]

  1. en passant says:

    Alan,
    I have the answer!

    I moved overseas to a coal-fired paradise.

  2. Ian MacDougall says:

    Alan,
    I have the answer!
    Unless we can convince ourselves and the world at large that mainstream climatology is a full crock of excreta, we are up Faeces Creek without a paddle.
    Convincing ourselves here at QO is a piece of cake, since the received wisdom around here is that Arrhenius and nearly all scientists since him have been dead wrong on CO2, and that innocent CO2 despite experimental results to the contrary, is definitely not a heat-trapping gas and even if it was (which it isn’t) it would be a Good Thing anyway, because it is a plant food!!!! .
    Thus, we can continue to run our economies on coal-fired electricity and spew CO2, by which I mean plant food (!!!) into the air till the cows come home and the dinosaurs revive, which could happen sooner than we think, given current trends in the US Republican Party.

    • Keith Kennelly says:

      Ian

      You didn’t answer my question. Remember the maths?

      You have no credibility and are now in the climate warming minority.

      We are all talking about electricity prices. It’s the climate warmers like you who have bought us here.

      Your days are now numbered.

  3. Bill Martin says:

    There is absolutely no point in debating the exorbitant increases in the cost of power to the hapless consumer without the underlying issue of the CAGW scam. As long as an overwhelming majority of those with the power to control the generating and the distribution of power blindly believe in the alarmist scenario, all rational argument in favour of cheap, reliable coal fired power generation is absolutely meaningless. After all, how could anyone convinced that the burning of fossil fuels is definitely going to destroy the livability of the Earth could possibly endorse the continuing of the process?

    We simply must win the simple, straightforward argument that:

    The climate is and has always been changing and the various likely reasons for that process are not at all clearly understood;
    The warming of the planet over the past century or so is not at all unlike previous warming events, some of which were far more rapid than at present and none ever resulted in a catastrophic “tipping point”;
    Greenhouse gases, including CO2, trap a considerable proportion of the heat generated by sunlight, without which process the planet would be too cold for life as we know it, but the causal relationship between the level of CO2 in the atmosphere and it’s warming remains purely speculative, bereft of any empirical evidence, further complicated by records of there having being higher CO2 levels than now while the temperature of the planet was lower;
    Ice core samples from Antarctica clearly prove that the warming of the planet is followed by an increase in the level of the CO2 in the atmosphere some 800 years later, i.e. as the oceans warm, more and more CO2 is released by the warming water, irrespective of the cause of the warming.

    Without these rock solid points being acknowledged and accepted by the majority of our fellow citizens, there is no possibility of a sensible policy of power generation becoming a reality. With it being understood, the opposite is guaranteed.

    Let us then challenge the alarmists at every opportunity to offer empirical evidence of their prognoses, not merely discredited computer models and questionable consensus statistics.

    • ianl says:

      > “Greenhouse gases, including CO2, trap a considerable proportion of the heat generated by sunlight …”

      Actually, it is energy of very specific wave-lengths reflected back off the planet’s surface that is absorbed and re-admitted by atmospheric gases (both condensable and non-condensable), with a quantum-determined proportion of that re-admission going any which way but “up”. Your point is clear, though.

      > ” … as the oceans warm, more and more CO2 is released by the warming water”

      The solubility of CO2 is less in warmer than cooler water. So the oceans, which contain some 98% of available CO2 at any one time (so we are told), de-gas as the water warms. The mean lag of 800 years between temperature rise and CO2 atmospherics, empirically determined from the Vostok cores, is driven by the latency of warming/cooling water. This was elegantly described in a quote from Richard Lindzen some threads ago.

      Greening growth of desert regions along their margins, empirically mapped from NASA satellite imagery, is so far the only hard evidence of results attributable to CO2 atmospheric levels of 400ppm. That is, increased photosynthetic activity has occurred. All other claimed predictive “signals” including the favoured perennials of sea levels, (some) melting glaciers ad nauseum are well within historical bounds established by best empirical metrics. Temperature anomaly is up by 0.8C in 150 years – I accept this as a “best guess” as we are unlikely ever to aquire more precise historical data, so the informed default position is “lukewarm”. John Christy (UAH) has graphed the empirical temperature anomaly against modelled anomalies since satellite measurements started in 1979: the depth of resulting ad hom vitriol slightly surprised even me.

      None of this changes Alan Moran’s point. Following is an incomplete list of countries currently building USC coal-fired power capacity. It appears that these countries do understand Alan Moran’s point:

      South Africa, Mozambique, Botswana, Namibia, Zambia, Madagascar, Mauritius, Tanzania, Kenya, Nigeria, Mali, The Gambia, Morocco, Egypt,Indonesia, Phillippines, Vietnam, Burma, Kazakstan, Uzbekistan, Turkmenistan, India, Bangladesh, Pakistan, Sri Lanka, Armenia, Chile, Uruguay, Peru, Brasil, Columbia, Mexico, Cuba, Jamaica, Iran, Israel, Turkey, Greece, Hungary, Herzegovina, Sweden, Finland, Poland, Spain, Portugal, Ireland, China, Japan, South Korea, Germany, USA

      Now for the Hot Whopper.

    • Biggles says:

      The AGW scam is easily disproved by a simple physical fact. Outgoing infra-red radiation excites CO2 in the atmosphere, thereby slightly warming it. (Water vapour has by far the greatest greenhouse effect.) If the heat uptake by CO2 is plotted against its concentration in the atmosphere, it is found that the relationship is logarithmic; i.e. the more CO2 there is, the less its heating effect. In fact, about half of the atmospheric warming due to CO2 arises from the first 20 p.p.m. We are now at 400 p.p.m., way down on the tail of the graph, so far down in fact, as to make the effect of further CO2 emissions meaninglessly small. Were this widely known, the AGW scam would collapse in days.

      • Ian MacDougall says:

        The AGW scam is easily disproved by a simple physical fact…etc

        “The AGW scam!”
        Have you got any idea of what would be involved if all the climatologists and people working in associated sciences were all consciously involved in a massive grant-motivated worldwide fraud? As is constantly alleged against them?
        Only one of them would have to cross over to the opposing side, and denounce the ‘scam’ for what it allegedly is, in order to be hailed on the front pages of everything from Breitbart to the Guardian. Moreover, he or she would be able to dine out and drink endless Grange on it till Kingdom Come.
        A simple scientific fact that you should be aware of, but seem not to be, is that scientists take endless delight in enhancing their own reputations by demolishing those of others. That is why their statements and publications are so cautiously worded and so shot through with escape clauses.
        And if it all be so easily disproved by your “simple physical fact” don’t you think that the scientists of the Royal Society, CSIRO and AAAS might already have tumbled to it, and be creating waves and pressure within those organisations to get in line with the line at Quadrant Online?
        The scam: ie of the notion of an AGW ‘scam’, is easily disprovable by the simple physical fact of continuous thaw of glacial ice, particularly in polar latitudes, and consequential sea level rise. As in:
        GMSL Rates
        CU: 3.3 ± 0.4 mm/yr
        AVISO: 3.3 ± 0.6 mm/yr
        CSIRO: 3.3 ± 0.4 mm/yr
        NASA GSFC: 3.2 ± 0.4 mm/yr
        NOAA: 3.2 ± 0.4 mm/yr (w/ GIA)

        http://sealevel.colorado.edu/

        Now Biggles: back to your Spitfire. Or should that be Tiger Moth?

    • Mike_O28 says:

      Is it needed to convince people CAGW is wrong? How about we damn the warmist response to hell. http://www.woodfortrees.org/plot/esrl-co2/plot/esrl-co2/trend/plot/esrl-co2/mean:12
      look at this it is a graph coming directly from NOAA which speaks volumes. CO2 has risen steadily from 1960 but more than that it shows the rate of change has not only not gone down but is increasing. This means that all efforts to decrease the amount of CO2 have been futile and a waste of money. The reductions they boast about our estimates. Which is derived by counting the amount of emissions have been decreased. It would be much cheaper exercise to use prayer wheels and would be as effective.

  4. Doubting Thomas says:

    Here’s one for the Brains Trust courtesy of JoNova and the blogger Chiefio:

    http://joannenova.com.au/2017/07/chiefio-minor-changes-in-clouds-swamp-the-effect-of-co2-see-it-every-day/

    Suck on that, Ian Mac

    • Ian MacDougall says:

      Therefore, the glaciers should NOT be melting, nor the level of the planet’s one ocean steadily rising. Yet, Jo Nova or no Jo Nova, that’s what is happening. (http://sealevel.colorado.edu/ )
      CO2 is a proven heat-trapping gas, and Venus (atmosphere ~98% CO2) has a hotter surface than that of Mercury. This shows that our slight but steadily rising concentration of atmospheric CO2 has the capacity to heat the whole atmosphere, hydrosphere and biosphere, though not to a higher surface temperature than that of Venus. (It was data from Venus that started Jim Hansen of NASA thinking about the Greenhouse Effect as it might apply to Earth.)
      But wait: there’s more!
      My theory of automatic and constant readjustment in nature (TACRN) says that Nature is constantly adjusting her laws to accommodate the needs of the major players in the human economy. Of particular concern to her are the needy coal magnates: those individuals who have successfully enclosed what was originally a common resource and made it their own fountain of continuous revenue.
      TACRN is all my own work. I hit upon it only last Tuesday.
      Or was it Monday?
      Could have been Sunday.
      One of those days…..
      I remember a few years back I had a run-in with ‘Jo Nova’ or whatever her real name is. I visited her site and put on a comment in which I referred to her as a ‘denialist’. She went into a bit of a meltdown and insisted in an email to me that I apologise for calling her that, and that until did, and profusely and publicly, she would publish no more comments from me.
      For some reason those who deny that CO2 could be heating the planet, do not like being called ‘denialists’.
      It reminds me of the Bodyline Series of 1932-33, the English captain complained to his Australian counterpart Bill Woodfull, that a member of the Australian team had called Harold Larwood, the English bodyline-happy bowler, a “bastard.” Woodfull responded to this shocking attack by turning to his team and saying something like “Right! Which one of you bastards called this bastard’s bowler a bastard?”
      But I digress…

      • en passant says:

        MacBot,
        Have you been in the Long Paddock talking to Gabriel again?

        Isn’t Colorado under water yet with all your rising seas that drowned the Maldives, Kiribati, Tuvalu and my new beachfront home?

        “I referred to her as a ‘denialist’.” You also called me a racist and insulted my family. You really are a disgusting piece of work as you never apologise when wrong, never answer the two key question of the ideal temperature and ideal concentration of CO2. In other words, you have no idea of the destination but will destroy Oz to achieve your goal.
        That is a psychosis that allows you to pollute this site because we are the nearest people to friends that you have.

  5. Keith Kennelly says:

    All just So much crap.

    Alan you are in absolute denial about the facts.
    You truth is based in belief not evidence. That makes you no better than the flat earth era or those who would deny the murder of the Jews by the nazis.

  6. mags of Queensland says:

    Until governments grow the necessary and ignore the doom criers the situation is never going to change. For too long we have allowed the idiot fringe to determine the fate of the nation. It’s time for this to stop -NOW.Power and water are the two most precious advantages for a thriving economy. We have failed to utilize the resources we have to make us a real powerhouse and have become hostage to unproven and unacceptable limits by those who care nothing for the country but continue to receive its rewards.

    My only conclusion is that those who continue to vote in rubbish governments deserve all they get, but the rest of us don’t.

  7. Keith Kennelly says:

    Oops should have been Ian, not Alan.

    Thanks en.

    Angry fingers this morning.

    I know a short term solution to Australias water shortages.

    There is a dirty great big lump of the Antarctic just broken off …

  8. Peter Sandery says:

    Alan, perhaps you could add the names of Ross Garnaut and John Hewson to the list of ”
    notorious subsidy harvesters”.

  9. Keith Kennelly says:

    Ian

    And your predictions are worth?

  10. Ian MacDougall says:

    Well, Keith, as the old saying has it: “you can lead a horse to water, but you can’t make him drink.” Very appropriate, given the present dry spell here in the bush (hopefully about to break soon.)

  11. Keith Kennelly says:

    The water you are drinking is poisoned.

    Ahhh Ian, there is that selective fact picking again. Ahh must not mention the freezing winter. Where is that bloody global warming when we really need it?

    Hahahahaha.

  12. Ian MacDougall says:

    Keith old mate:
    Looks like I have to be the one fated by Providence to lighten your ignorance by dispelling the odd illusion, though believe me I hate to have to do it. But I’ll break it to you as gently as I can…
    Weather is not climate.
    We are not dealing with weather change. It’s another beast entirely.
    It’s called climate change.

    • acarroll says:

      Care to quantity the differences between the modelling of weather and the modelling of climate? How can we be so bad at long term weather prediction yet superb at long term climate predictions?

      Where is the evidence for the latter?

      Methinks you are just reciting a mantra. You know, like “4 legs good, 2 legs bad”.

      Come on mate, you can do it. We know you have some humility. Admit that there are a while bunch of data points that contradict your position. Be a man! Be honest!

      • Ian MacDougall says:

        acarroll:
        Thanks for being so non-condescending.

        How can we be so bad at long term weather prediction yet superb at long term climate predictions?

        I am not a climatologist, and am happy to be proved wrong, but as far as I can tell, the planet we all live on is in a rather pronounced warming segment of an interglacial phase. This interglacial I assume to be due to orbital forcing as part of our present phase of the Milankovitch cycle, accentuated by the present atmospheric load of greenhouse gases, the latter in part put there as a direct or indirect consequence of human activity.
        BUT bear in mind My Theory of Automatic and Constant Readjustment in Nature (TACRN) which says that Nature is constantly readjusting her laws to accommodate the needs of the major players in the human economy; which I am sure you will subscribe to. And I am also sure that is the bedrock that much AGW ‘scepticism’ rests on, particularly around this curate’s egg of a site.

        However, I digress. Weather is hard to predict IMHO because of chaotic factors in the atmosphere. Climate I understand to be less subject to these, and consequentially the computer models are more successful at prediction. I suggest you google ; see what you come up with.

        • en passant says:

          Ian MacBot,
          You quoted the concentration of CO2 on Venus as ‘proof’ that it is a hothouse gas. “CO2 is a proven heat-trapping gas, and Venus (atmosphere ~98% CO2)”
          The CO2 on Mars is at 97% and the planet is freezing. Just goes to show what that extra 1% CO2 makes.
          I am still waiting for the seas to rise so you can sail your boat into my living room. Come – in about 1,000 – 10,000 years from now.
          What is the ideal concentration of atmospheric CO2 & what is the ideal average global temperature you seek?

          I can wait about 1,000 – 10,000 years but I know that you will NEVER answer, but will just keep trolling along as we are your only friends.

          You can never afford to answer as that would then provide a measurable target that can be evaluated, so you must keep your statements totally vague and never be specific.
          Its called ‘troll science’…

  13. Keith Kennelly says:

    There you go again Ian.

    You refer to drought, its climate change.

    I refer to freezing events, it’s weather change.

    Mate we’ve always. Had droughts …. so where is the change?

    You tell me the climate is warming yet we are all freezing … more often and for longer periods this winter.

    Oh and as a warmist can you tell me why we are having those pea soupers so often in Brisbane this year? They are a weather event n usually occurring where surface temperatures of the water and the land are very cold and where winds don’t occur because the air doesnt rise because the surface isn’t warming the air.
    Remember the s in the subtropics.

  14. Biggles says:

    Ian McDougall. You certainly have a lot of ‘facts’ and ‘experts’to support your contention. When Einstein was told during the war that the Germans had published a document called ‘One hundred scientists against Einstein’ he remarked that’if they were right, one would have been enough’.And by the way old boy, you have not challenged my main point which is that increasing CO2 is not causing warming; the physics says it can’t.

  15. Keith Kennelly says:

    He can’t answer … he’s a denialist.

    About now he’ll be choking then he’ll post a link to something totally irrelevant to your question or he’ll post something that actually supports your position.

    Then he’ll go all quiet hoping you’ll go away and take your damn question with you…. and he’ll never refer to it ever again.

    I just keep pointing out how he’s looked silly with his denials and evasions. That keeps him quiet until he forgets the issue himself. Then he goes off on another tangent.

    One thing is certain. His circles are getting smaller and smaller as the holes in his positions get bigger and bigger.