Doomed Planet

Another Green Spruiker Takes AEMO’s Helm

As well as subsidy-seekers, governments, international institutions, business leaders and investment managers all conspire to close down cheap energy. The confected notion of harmful climate change is the justification for the dethronement of market forces and their replacement by a new clerisy of politicians and bureaucrats controlling the world’s economies. Though market forces would normally bring the demise of higher-cost suppliers, political and administrative impediments under the Paris Accord on climate change are designed to prevent this, as my recent piece in The Spectator  explains. 

Although Australia is not (yet) formally adopting “net zero” emissions, there are strong pressures to do so.  In any event, Australia is unlikely to face the carbon tariff barriers that the US and EU are inching towards, as the impositions we place on hydrocarbons and the subsidies we provide to renewables are already among the most “progressive” in the world. This is facilitated by appointments to regulatory agencies of people with a view that renewables are the future.  Some base this on the claim that renewables will be cheaper in the future (some, like CSIRO, say they already are, but no advocates are supporting the corollary of the elimination of renewables subsidies).  Others argue that replacement of hydrocarbons by renewables is essential to combat the “climate change crisis”, fabricated though it be.

Australia has ensured that major energy regulatory agencies are marching in lockstep towards this carbon-free nirvana. Whatever the formal arrangements for these appointments, they are fundamentally controlled by the eight governments and all are now headed by people who are on board with the “energy transition “away from coal.

The three key regulatory agencies are the Australian Energy Regulator (AER), the Australian Energy Market Commission (AEMC) and the Australian Energy Market Operator (AEMO) with the Energy Security Board.

The latest appointee is Daniel Westerman as head of AEMO.  Mr Westerman is an Australian who had been with the UK National Grid, most recently heading its renewable energy ventures in the US. His predecessor, Audrey Zibelman, had been a political operator within the US Democrats.  She aggressively promoted wind/solar as a catalyst for an agenda seeking the socialised control of the electricity market. Presiding over a major expansion of the AEMO budget, she was appointed following the death, at the early age of 55, of the long-standing chief of AEMO, Matt Zema.

Matt Zema, like his former co-regulator John Pierce at the AEMC, had anguished over the forced introduction of wind into an electricity system designed to transmit hydrocarbon/hydroelectricity supplies with their inherent controllability and system strength.  He fretted that a disaster was looming and, understandably, that he would be blamed. September 2016, two months after his death, marked the wind turbine-induced blackout of South Australia.  

Daniel Westerman would have needed to satisfy the AEMO members that, as well as having competencies in the management of an electricity system, his views were consistent with those of the different governments. In his first major address, to CEDA, he expressed the same confidence so many others have voiced over the past 30 years that the future belongs to wind/solar, going on to predict the next green step forward is hydrogen generated by these renewables. He failed to mention the on-going subsidies that provide renewables with half their revenue, a regulatory regime loaded against coal, and the cost of the various market interventions necessary to allow the delivery of high cost, unreliable, intermittent electricity from wind and solar. Those costs, at least $6.9 billion a year, are itemised here.

In seeking the massive expansion of the national transmission network, which together with batteries and pumped hydro facilitates the vision of renewables’ allegedly imminent market conquest,  Westerman (right) recruits the recent serious fire at Queensland’s Callide plant.  He claims extended loss of part of the power station underscores the need for Australia to invest in a more interconnected grid, “to improve resilience, connect diverse sources of energy, and deliver more reliable, lower-cost energy for consumers”.  Perhaps benefits will accrue but it is unlikely they will offset the cost of transmission lines criss-crossing the country.  In any event, the original intent of national market was that transmission would be financed by the electricity supplier, thereby facing a true market test  rather than a surrogate financed by taxes on the consumer. 

Some have taken exception to Westerman’s statement that AEMO under his leadership is planning, “an energy system that’s capable of handling 100 per cent renewable energy, at any moment of the day, by 2025.”  However, this is axiomatic, given the subsidy and regulatory environment governments have created.  As he says, “more than 90 cents in every dollar invested in generation since 2012 has been in wind and solar. Per capita, Australia is leading the world in installing renewable generation. Double the rate of our nearest rival, Germany, and about 10 times the world average.”

In all likelihood, the system’s engineers will ensure that the market continues to be provided with electricity, albeit at higher cost and less reliably than in the past. But the sacrifice is clear: it entails a de facto carbon tax costing $3,000 per head based on a carbon price that must rise to $160 per ton by 2030 to restrict emissions to a “net-zero” level. Levied on Australia’s annual 500 million tonnes of CO2 neutrality this is a national cost of $80 billion a year. All this to achieve an outcome that would also entail closing much of the primary and secondary industry which gives us our First World living standards!

Yes, there is indeed something in the wind, but it isn’t common sense or rational analysis.

Alan Moran is the principal at Regulation Economics and the author of  Climate Change: Treaties and Policies in the Trump Era

11 comments
  • rod.stuart

    Who is to blame for appointing screwballs like SSilberman and Westerman?

  • Ceres

    Where is Angus Failure who is supposed to be the Minister for getting electricity prices down? MIA.
    The assumption that anthropogenic CO2 is evil never seems to get questioned anymore it’s now, just a given. The real evil is subsidising expensive renewables and hypocritically selling our coal and gas overseas, and giving those countries a huge economic advantage. How stupid can you get?

  • Bert White

    It’s like this: The Leftist-Greenist forces are fanatical, malign, determined to take over everything, and well-generalled from the shadows. Meanwhile, the nominal non-Left/non-Greenists are barely awake, a few are scratching their heads wondering what’s up, and a couple fire off the odd complaint. And any non-Leftists/non-Greenists with the calibre to strategize a counter-war simply gave up a couple decades ago -mainly because the ordinary non-Left/non-Greenist people are too dopey to be got into action.

  • STD

    Poor goods are never cheap.
    In 2009 electricity costs were 1/2 to 1/3rds of the cost today.
    Idiot politicians have given affordable, reliable and taxpayer owned electricity supply to the mercy of the market.
    Another smooth talking reassured corporate con job – government sponsored corporate welfare.
    Electricity is now more expensive than any time in history and supply is more complicated and guilt ridden and driven by the apocalypse of climate- climate changes motivation is corporate greed.
    The gov and corporate mantra of greater completion has been realised in greater cost and realised as privatised competition for access to the electricity market profits.
    Enterprise espousing/ dressed as the morality of climate change to justify price!=SCAM
    What ever corporation’s want you to do , do the opposite – reward their incentive with disincentive.

  • STD

    Completion = competition.

  • Mike O’Ceirin

    I was amazed when I read Westerman’s comment about 2025. Now I see there are ways and means one can weasel out of it. The AEMO is “planning” a 100% capability it says and only for the “eventuality” of 100% renewables. Fossil fuels are closing down but renewables are certainly not stepping into the breach nearly quickly enough. Say in 2020 fossil fuels provided 72.4% of our energy and renewables 26.2%. But rooftop PV is changing the picture and it is an estimate. Wind at 9.67% and solar grid at 3.3% are directly measured but rooftop at 6.45% is not. With the current trends I cannot perceive anything other than massive blackouts 16% of the east coast electricity generation will be gone by 2030. Liddell, Yallourn W and Eraring will be retired by then.

  • Stephen

    This article has shocked me because, whilst knowing that renewables were Government subsidized to a degree I didn’t know they were subsidized to such a huge degree. Not long ago I discussed this with an close friend of long standing and he assured me that renewables were now cheaper and that the subsidizes were trivial. I said that, if that’s the case, climate concerns will cease to matter because people will change to get a lower bill next month quicker than they would out of concern about a risk that was 80 years off. What’s the reality? Much higher taxes in order to get this con job of a lower price.
    Speaking of subsidies, I recently received a letter from my local Vic. State member offering me $250 to help with my energy bill because I was a pensioner. This is available to all pensioners and those on the dole. If free enterprise and competition were allowed to determine the price this yet another gift from tax payers would not be necessary.
    By the way….I am shamelessly taking the money!

  • Alice Thermopolis

    Thanks Alan.
    AEMO has this interesting DISCLAIMER on its site:

    AEMO…..cannot guarantee that information, forecasts and assumptions are accurate, complete or appropriate for your circumstances…..
    Accordingly, to the maximum extent permitted by law, AEMO and its officers, employees and consultants involved in the preparation of this publication:
    • make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of the information in this publication; and
    • are not liable (whether by reason of negligence or otherwise) for any statements, opinions, information or other matters contained in or derived from this publication, or any omissions from it, or in respect of a person’s use of the information in this publication.
    https://www.aemo.com.au/aemo/apps/visualisations/map.html

  • ianl

    The entrenched bureaucracy, of course. Why have not the elected politicians prevented, or at least circumvented, this ? As a typical example of the real answer to this, Morrison and Berejiklian are simply double-crossing their voter base in slow motion, step by step; their own carrot and stick is half-hidden from public view and never acknowledged. Secretary of the OECD, anyone ?

  • ianl

    The first half of that comment went missing … oh well.

  • john.singer

    How’s that for diversity. Another foreigner.

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