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Clean Power dominoes

Published on September 2nd, 2014 | by Joshua S Hill

41

Australian Renewable Energy Target Now A Giant Game Of Unintentional Dominoes

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September 2nd, 2014 by
 
Last week, news reached mainstream media that the Australian Renewable Energy Target review panel had handed in its recommendations to Prime Minister Tony Abbott, and predictably enough those recommendations were soon public knowledge.

To quote Bloomberg, “Australia should weaken or phase out its renewable-energy target in favor of a lower-cost approach to cutting greenhouse-gas emissions, a panel appointed to review the plan recommended.”

I covered the rumors and fears of such a recommendation for several weeks leading up to last Thursday, and then I remained relatively quiet. In some regards, I was simply stymied by the fact it was the weekend. In other respects, I simply let those smarter than me cover the immediate aftermath.

Friend of the network and fellow countryman Giles Parkinson has been doing a stellar job covering the fallout over at RenewEconomy, and I recommend you go and check out his immediate response and subsequent articles. Bloomberg has also written a pair of interesting articles investigating the issue that are worth a read.

Playing Dominoes with the Climate

The fallout from the recommendations given by Dick Warburton’s panel of biased climate skeptics have been utterly unsurprising — another reason I haven’t felt compelled to write about them given the number of other stories from around the world which do something other than inspire thoughts of overthrowing the national government. Chinese solar capacity could reach 100 GW by 2018, while European energy efficient building spending is expected to reach $800 billion through 2023.

In other words, thank heavens the rest of the world is carrying on as if one of the leading economies of the world hasn’t just made a monumental environmental policy mistake at the behest of ignorant political chiefs.

But at some point, the number of dominoes that have collapsed to the ground or are teetering on the brink simply require critical comment.

Never mind for a moment the obvious pandering to fossil fuel lobbies and their institutional cronies desperate not to lose their polluting cash-cows. Let’s just look at the impending culling that is predicted to sweep across the Australian renewable energy industry.

An Industry Down the Drain

Bloomberg kicks us off with a very succinct and clear picture of what the recommendations mean for the Australian renewable energy industry:

Accepting either [recommendation] would imperil A$20 billion ($19 billion) of existing projects and shut the door on new investment.

They further quote Kobad Bhavnagri, an analyst for Bloomberg New Energy Finance in Sydney, who said that “Essentially, this says Australia is closed for business for renewable energy.”

The Australian RET required electricity retailers to purchase renewable certificates from wind and solar farms or generate clean energy themselves. The recommendations (available in full here) suggest either winding down the RET altogether and “grandfathering in” existing recipients, or modifying the program to allocate a share of growth in electricity demand to renewables.

Such a change to the Target diminishes any impetus companies have to invest and rely on renewable energy generators, subsequently kicking the renewable energy industry in the shins and running away, squealing in happiness all the way to the bank with the share of their savings.

Meanwhile, the renewable energy industry loses out on at-home investment, sees diminishing demand for capacity, all of which force international investors to look elsewhere, kicking off the cycle again so that, inevitably, the industry suffers a catastrophic failure.

Existing and Future — Gone

Giles Parkinson, writing on Monday, covered the warning from Australian analysts that a number of Australia’s wind farms could be forced to close down if the RET proposals are taken on-board. The RET review panel has made inaccurate assumptions, failed to consider the basic refinancing risks, and ignored the debt obligations many of the wind farms are under and the future struggles they will face as a result.

Quoting an unnamed analyst:

“I’m amazed at how flawed this document is. It is internally inconsistent, it is intellectually flawed … and it doesn’t even try to cover up its bias. It is 160 pages of self-serving logic.”

Another unnamed commentator, referring to the fact that almost every wind farm in the country is set to be up for refinancing in the next 3 years, said, “They will be in major financial distress, and they are all at risk of falling over.”

The wind industry isn’t the only one facing a desperate future. The Australian solar industry — already second best to wind — faces innumerable challenges if the RET recommendations are upheld. A number of companies have already bailed on Australia, many more have warned of the dire consequences facing Australia if they go through with the RET recommendations. Already projects across the country have been scrapped, scaled back, or put on hold, as investors and companies wait for some sign that the government isn’t as short-sighted and blind as they currently appear.

Dick Warburton Living up to his Name

And to put a wonderful cap on it all, Dick Warburton couldn’t last 10 minutes without making a fool of himself in an interview with Fran Kelly of ABC radio’s Radio National a day after the report was released, when confronted with facts from his own report which showed that their modelling estimated the value of existing coal-fired power generators would increase by $9.1 billion. Warburton had challenged Kelly’s assumption that coal generators would be big winners, and when faced with his own modelling, Warburton could only suggest that the $9.1 billion was of “neutral benefit to” the coal generators.

Needless to say, such logic does not stand up.

Or sit down. Lie down. Exist at all in any dimension of reality or otherwise!

If you aren’t up for listening to the entire interview, head along over to the Climate Spectator for their rundown — given the absurdity of what Australia is facing, Dick Warburton’s inability to back up his own recommendations under the face of any type of scrutiny is proof enough everything has gone to hell in a handbasket.

Beaten by their Own Facts

The final nail in the coffin of Warburton’s recommendations comes via the very people whose work they used to justify their recommendations.

ClimateWorks has hit back at the panel for using their Low Carbon Growth Plan to support their proposal that there are cheaper options than the RET. In a statement sent out Monday, ClimateWorks make it clear what they think of their work being used by the review panel:

The panel cited ClimateWorks’ Low Carbon Growth Plan as evidence that there are lower cost abatement measures available than renewable energy. However, our research also clearly shows that we need all of those measures plus renewables if we are to achieve the emissions reductions that scientists … have advised are necessary. In looking beyond 2020 to 2050, ClimateWorks’ new research … shows that ultimately full decarbonisation of the electricity system is necessary. And the most cost effective way to achieve this is with a majority of our electricity coming from renewable energy. For this transition to occur, the RET or an equivalent should be retained and increased over time, not reduced.

I just want to highlight one part before I close. “The most cost effective way to achieve” full decarbonisation of the electricity system “is with a majority of our electricity coming from renewable energy.” A possibility that has been rendered absolutely impossible if any of the recommendations provided by the panel are implemented — recommendations that were made using ClimateWorks’ own modelling.*

In other words, Dick Warburton and his panel have lied.

It’s plain and simple. For whatever reason, under whatever pressure, Dick Warburton, his review panel, under the auspices of the Australian Government, with intense pressure from Prime Minister Tony Abbott and treasurer Joe Hockey, have lied to the public.

*Author’s note — Thanks to Climate Spectator for providing the ClimateWorks statement. 

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About the Author

I'm a Christian, a nerd, a geek, a liberal left-winger, and believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.



  • Thomas

    Completely besides the point. The policy was setup with timelines of certain periods, set in stone, bipartisan.

    All of the major coal power stations sold in recent times were after the Howard RET announced, they are merely trying to use influence to change the rules after buying the assets – thereby overnight increasing the value of those assets.

    Having said that, we need to look at compensating coal generators for land remediation costs like nuclear in the UK. Most of the damage done occurred when the sites were owned by state governments. No compensation, likely no shutdowns.

    The RET stimulated investment in plant, skills, and processes. All that investment was made on the basis of the long time lines.

    For the case that lots and lots and lots of renewables come on stream, the value of the LGCs and the STCs will drop.

    The simple fact is that the way we are going, there will +NOT+ be enough LGCs, the cost of LGCs will be too high, therefore big polluters don’t want to pay it.

  • Dallin Paul Jensen

    While all countries should reduce carbon emissions, Australia is almost insignificant in the global picture. All this will do is harm Australia by preventing it from benefiting from clean energy, and not allowing it to adapt to the reshaping of the global economy.

    • Ronald Brakels

      And once Ceaser is dead we can say that our knife wound was insignificant compared to all the other blades that were plunged into him. That makes us innocent, right?

    • TedKidd

      They’ve paid technology premium to this point, helping the world drive price down, and now they don’t want to make hay?

      If Australia doesn’t want energy cost certainty, independence, and all the competitive advantages solar and wind are offering, maybe we shouldn’t encourage them. The outcome of their shortsightedness might create a cautionary tale benefit.

      • Dallin Paul Jensen

        Exactly what I was thinking… I’ve heard they have billions of coal projects in the pipeline just as Beijing is restricting its use.

        • Bob_Wallace

          Most of the world is cutting coal use. The US is closing almost 200 coal plants in the next 2.5 years. And US coal producers are dumping coal onto the world markets at cheap prices.

          The only country that is expected to increase coal use in any significant amounts is India and with their new administration pushing hard on renewables that market may shrink as well.

          Abbott seems to be leading the charge of the coal brigade…

          Theirs not to reason why,
          Theirs but to do and die:
          Into the valley of Death

          Road Tony’s admin…..

          • Gwennedd

            er..rode..just sayin’

          • Bob_Wallace

            Oops….

  • Vensonata

    At the root of Tony Abbott, is a giant reactionary right wing media empire. However, the internet is the great hope for sensible people who know there is more to life than a dollar. Thank you, Clean Technica for being yourself!

  • JamesWimberley

    Pretty staggering. What are the “lower cost emission abatement alternatives” Warburton claims to see?

    This recommendation gives the game away: “ensuring that new renewable energy power stations are only supported under the RET where electricity demand is increasing.” Since electricity demand at the meter is falling in Australia, that means they don’t want any new renewable energy at all, as it would cut into the existing fossil generation.

    I’m looking forward to the G20 summit in Brisbane in November. Abbott has kept climate change off the official agenda, but these things have press conferences. Obama, Merkel, Abe, Modi and Xi Jinping don’t owe Abbott anything and will quite enjoy embarrassing him as the hick he is.

    • Ross

      The “rest of world” should threaten to impose a carbon tariff on Australian exports if they don’t do their part in reducing CO2 emissions.

      • Gwennedd

        They haven’t done that to Canada, or the US..why would they do that to Australia?

        • Kevin McKinney

          I hesitate to say anything positive about US or (especially) Canadian climate policy, but the fact is that both nations have experienced falling emissions in recent years, particularly the dirty old US.

          http://www.epa.gov/climatechange/science/indicators/ghg/us-ghg-emissions.html

          (Full disclosure: 2013 did see an uptick from 2012.)

          http://i1108.photobucket.com/albums/h402/brassdoc/CanadasGHGemissionsandintensity.png

          • Gwennedd

            Hmm, likely a whole mixed bag of things that have contributed to those stats. Better vehicle emissions, shutting down some coal plants, solar and some wind(Ontario) and personal commitments to reductions. It has little to do with federal government policies.

          • Bob_Wallace

            The EPA is causing coal plants to close.

            PBO negotiated higher mileage requirements for vehicles.

            The federal government has heavily subsidized wind and solar installations.

            The US military has been reducing their fossil fuel use by installing wind and solar generation.

            Yep. No federal government policies at work here… ;o)

          • Kevin McKinney

            Bob’s spoken for the US case. On the Canadian side, I would tend to agree with you–Federal policy seems extremely weak to me (though there are probably a few positive measures they could point to, I doubt they amount to much–other than measures adopted to ‘harmonize’ with US ones, as has been done in the case of mileage standards.) But you’ve noted Ontario’s move to close coal plants and push wind; Quebec has an emissions trading scheme, and BC’s carbon tax seems to be having an impact.

  • Will E

    why do you need a RET.
    Solar is cheap and easy to install.
    40 cents a Kwh when you buy it in China.
    workin 20 year is 2 cents a Kwh
    and in Australia you get 2 times installed capacity
    is 1 cent a Kwh.
    no need for RET.
    Wind Power has became so cheap, on land.
    IMO you need no RET.
    when you pay 48 cents a Kwh
    all Solar and Wind power is a good investment without government RET. millions to be made.

    • Ronald Brakels

      Point of use solar is no about 10 cents a kilowatt-hour. Or 15-20 cents with current new low to zero feed-in tariffs. New wind is about 4+ cents a kilowatt-hour. And that’s with a 5% discount rate. With the danger of the Coal-ition government building carbon reeducation centers, renewable energy is far too risky for a 5% return for wind to be acceptable. The marginal cost of electricity from an existing brown coal power plant, not counting externalities, is under 2 cents a kilowatt hour. The coal is basically free. It has no export value. And so electricity from brown coal is cheaper than the cost of wind. I mean, it’s not as if we have a carbon price or anything like that here. While rooftop solar is cheaper than coal and doing it a lot of damage, it takes time to build it out and isn’t very effective at night.

      • Brian Donovan

        No, solar is more like 3 cents per KWH over 30 year at about 2$ installed price in Australia.

        Your number of 10 cents is from folks who do things like say panels will last only 15 years, and they need batteries, and the inverter will fail every 12 years, or they use a complicate economic formula with discount rates that include fossils generator companies loses(I kid you not) All false. They also put in absurdity high maintenance costs.

        The raw cost of solar is now one of the cheapest for any energy source.

        Not only that, solar panels will probably last 50 to 100 years, and at current modern degradation rates will still have 60-90% of their original capacity after 100 years.

        Do the math yourself and you will see 10 cents is unbelievably high.

        2$ per W installed. 30 to 100 years lifetime. look up the ave solar insolation for Australia. multiaply by 365 *30 and for the upper range 365 times 100.

        • GCO

          Nope. Let’s do the math indeed.
          I ran the numbers for Brisbane here http://rredc.nrel.gov/solar/calculators/PVWATTS/version1/ => expect 1.4 MW⋅h/kW(DCpk)/year with ideal orientation.

          Let’s take wildly optimistic assumptions: 2$/W (if you don’t want junk, expect to pay more), 40 year life, zero maintenance (no inverter will last 40 years, but I’m trying to keep you happy here), modules clean themselves, all that…
          Cost for each kW: 2000$ over 40y = 50$/y + say 2.5% interest, 50$/y.

          Ka-ching, we’re already at 7 c/kW⋅h.

          • Ronald Brakels

            Thanks for the estimate, GCO. I will mention that for an average sized system of about 4 kilowatts the average installed price in Australia is $1.80 a watt. That’s about $1.67 US. But some people are getting solar installed for about $1 US a watt. Without our Renewable Energy Target subsidy the average cost per watt of a 4 kilowatt system is about $2.50 or about $2.33 US. The prices are here:

            http://www.solarchoice.net.au/blog/solar-power-system-prices-sydney-melbourne-perth-canberra-adelaide-august-2014

            And we don’t clean our panels. That’s just weird.

          • GCO

            Thanks. Granted, yes, with the very subsidy that’s apparently threatened, prices would be lower (still about twice Brian’s estimate); this however assumes net metering or high feed-in.
            Without such subsidy and/or FIT, I agree with your numbers above of 10+ c/kW⋅h.

            Re cleaning, I only meant that I assumed zero loss due to soiling. I don’t clean my modules either, not worth it IMHO… save for removing that one giant bird dropping at the beginning of the dry season maybe. My system uses optimizers (SolarEdge), great stuff except I can’t help but notice when one module produces much less than the rest. :-)

          • Brian Donovan

            it’s less than 2 cent if you do the math. I said the cost of solar not the cost of money

          • Bob_Wallace

            How about showing us your math, Brian?

          • LifeonBatteries

            Most likely because its to high, or just lazy to clean your panels, I clean my panel at least 3 time a week in bad weather of course I’m off the grid, (dust storms) but you cities folks just could not be bothered, shame what example do you set for other out there.

          • Ronald Brakels

            Proudly lazy, thank you LifeonBatteries. For a typical grid connected Australian, regular cleaning will result in a less than 3% improvement in system output. It is far easier to just make the system a couple of percent bigger in the first place than to spend time cleaning it.

          • LifeonBatteries

            Yes that maybe so on the grid, but keeping costs down and extending batteries life 3% is a good number.
            That 3% doesn’t sound like a lot, but can make the different between running fridge in bad weather over prolong days for an extra 5 hours without starting up the generator which I hardly do now.

          • Bob_Wallace

            Boy, you must live in a very dirty place. I clean the snow off in the winter, but “clean” the panels only a couple times a year. Usually right after I weed eat around them.

          • LifeonBatteries

            It’s been one of those years where the clouds are seeded with lots of fine dust after it rains.

          • RobS

            $2 per watt is insane, I had premium panels and a premium german inverter installed over a year ago for $1.70 per watt. Even with that silly starting point you come to 7c/Kwh when retail tariffs are now pushing 30c/Kwh, so I’m confused are you arguing for or against solar on economic grounds?

          • Ronald Brakels

            GCO is just showing Brian that his estimate is a little optimistic and just isn’t aware of what solar actually costs us in Australia.

          • Brian Donovan

            No he’s showing the cost of money for a 40 year loan, that no one would get. The cost of solar is less than 2 cents.

          • Ronald Brakels

            Brian, my relatives in Queensland in Australia just recently had solar installed. It cost $1.23 US a watt or about $2 US without subsidy. It’s a good site so it may operate at 18% of capacity. Their house may last roughly another 30 years if cyclones don’t get any worse. (It hasn’t been knocked down yet!) If they had left their money in a term deposit in the bank they could get 4.2% interest. How does that work out to a cost of less than 2 cents a kilowatt-hour for solar electricity?

          • GCO

            I was just showing that Will and Brian’s claims of PV producing kW⋅h for 1 to 3 cents don’t align with current reality.
            You’d need installed cost to dip below 1$/W and/or interest rates to stay at about zero for the lifetime of the system to reach those levels.

            1.70$ is only 15% lower than the number I used (which wasn’t even mine btw), why would you call it “insane”?
            In the very optimistic scenario above (constant production for 40 years with zero maintenance), it gets you to 6 c/kW⋅h instead of 7. Big whoop.

            Me just wanting to get the record straight has nothing to do with arguing against solar. Au contraire, I think presenting its advantages objectively helps more than unrealistic claims.

          • Brian Donovan

            You are just showing the cost of money, now on get a 40 year loan.

            The cost of solar is less than 2 cents.

        • Ronald Brakels

          Okay, I’m Australian, what do you think my discount rate is?

      • Joseph Dubeau

        “The coal is basically free.”
        Is ocean warming free? Is Ocean acidification free?
        Thing about health Great Barrier Reef.

        I can expect this from Koch brothers, but Australia.
        This is disappointing.

        • Bob_Wallace

          The energy business does not add in external costs.

          A lot of decision makers will only consider the money that changes hands. Getting the external costs priced requires political will which is lacking in several countries.

        • Ronald Brakels

          Those would be externalities which I mentioned weren’t counted. A portion of them stopped being counted two months ago because our Coal-ition government ended our carbon price. Apparently some men just want to watch the world burn. So now all the brown coal generators need to do is scoop coal with a giant pooper scooper and dump it on a conveyor belt which takes it straight to the power station. This process costs maybe a few dollars a tonne. They don’t need to pay for the CO2 released, they don’t need to pay for the health effects on Australians, they even get away with not paying for the health effects on their own workers. (Victorian power station workers die about 15 years earlier than the Australian average and they bulldozed a community apparently to prevent it becoming a statistical ealy death outlier.) Imagine the Koch brothers in charge of a nation. That is basically Australia at the moment.

          • Gwennedd

            Good grief! Is there no protocol for getting rid of a Prime Minister that is ruining his country? ( says a Canadian whose country faces the same problems)

          • Ronald Brakels

            His own party will want to get rid of Tony Abbott before the next election because he is so toxic. Unfortunately, replacing the current government doesn’t look likely at the moment.

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