Stop renewable subsidies to allow lower electricity prices and competitive industry
Catallaxy Files
Alan Moran
24 April 2014

The RET Review brought the usual howls of anguish from the rent seekers concerned that regulatory measures will cease and that they will need to sell their wind and solar products on the open market. That means they would need to persuade people to pay three times the price they are already paying.

Support for the rent seekers is coming strong from the usual green left anti-capitalists, including THEIR ABC.

This piece on the Drum explains the issues then goes full pelt in support of the continuation of the rort. It includes a clip by Sarah Ferguson who, along with her husband Tony Jones and the dozens of other far leftists, is a major shareholder in the tax financed propaganda agency. In the clip the ACCI’s Burchell Wilson stoutly defends the consumer’s right to avoid exploitation by the politically correct.

The RET scheme with the feed-in tariffs for roof-top solar already adds 7 per cent to the cost of electricity to households, a cost that will more than double on present policies. By 2020 the scheme, if unchanged, will add over 40 per cent to the wholesale cost of electricity and largely negate the benefits from the demise of the carbon tax (should that occur). It is little wonder that major energy intensive industries are departing Australia – our prices have risen to be among the highest in the world from among the lowest less than a decade ago.

The RET review does not have the usual clutch of green left or docile functionaries that have previously characterised such reviews. Led by a highly successful businessman, Dick Warburton, there is no likelihood of a repeat of the previous pattern of reviews that ramped up the scheme. In the past we had:

• Howard announcing a scheme in 2001 which would subsidise an innocuous “two per cent of additional energy”; that was trebled to 9,500 GWh by a hand-picked team established to interpret this.

• A proposal in 2003 by the hapless Grant Tambling for an increase to 20,000 GWh, which John Howard, having come to his senses, rejected.

• And as a “compromise”, Rudd and Turnbull agreeing to the present 20 per cent of electricity to be provided by subsidised exotics, mainly wind, defined as 45,000 GWh by 2020.

The rent seekers know the game is up and there is no prospect of an economy-busting increase in their feed. They know they cannot even expect Gillard’s Climate Change Authority placepeople’s solution of retaining the scheme as is and are falling back on one that which would reduce it to comprise the currently expected 20 per cent of electricity.

The presently expected 20 per cent by 2020 shaves off at least a quarter of the existing RET’s 45,000 GWh because regulatory and tax boosts have caused energy demand to drop.

Alternative approaches would range from cancelling the scheme’s subsidies for any new proposals to doing something akin to the Spanish Government’s approach and ceasing to pay any subsidies, even on windmills in the ground.

The review is to report later this year and is taking submissions until May 15.
Alan Moran

Alan mentions “the usual howls of anguish from rent seekers” that followed the announcement of the RET review. Well, after the meeting held by the panel last week in Sydney – where the panel spelled out the review’s real mission (determining the cost impacts of renewable energy in the electricity sector) – those “howls” have become a blood-curdling banshee scream (see our post here).

But we can’t fathom why? You see, the greentard bloggers have been telling us for years now that wind power is “free” and already competitive with conventional power generation sources – it’s a “line” they still run, but now it’s about to be tested.

If they’re right – then the wind industry won’t miss the mandatory Renewable Energy Target at all.

The wind industry simply won’t need the RET to force retailers to take wind power ahead of conventional power under the threat of being hit with a $65 fine (the “shortfall charge“) for every MW they fall short of the mandated target.

And they should have no trouble at all finding retail customers willing to pay 3-4 times the cost of conventional power, delivered at crazy, random intervals – and also willing to find some alternative for the 70% of the time they’ll be freezing (or boiling) and sitting in the dark – wood stoves and candles, say?

And they’ll have no need for a further $50 plus billion worth of Renewable Energy Certificates that – under the current target – will be issued to wind power generators and added to power consumers’ bills between now and 2031.

But, from the hysterical hectoring now coming from the Clean Energy Council, the wind industry and its other parasites about saving the RET, we think actions belie words. Or, as the Americans put it: “money talks and bullshit walks”.