10th Aug 2018
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No excuses, says consumer body as AGL posts $1b profit
Author: Janelle Ward
Electricity prices

Energy giant AGL has revealed its full-year earnings jumped by more than a quarter in 2017-18, allowing it to post a $1 billion profit, as a key consumer group says the time for excuses on retail costs is over.

Yet its shares slumped after the company warned that lower electricity prices could affect profits next year.

Making sense of energy costs is embroiling tens of thousands of older Australians struggling with confusing energy plans and paying ever-increasing gas and electricity bills.

Meanwhile, the National Energy Guarantee (NEG) is to be decided on Friday. The aim is to reduce emissions, ensure there is enough energy and keep – or should that be make – it affordable.

AGL chief executive Andy Vesey said the company recognised “many Australian households are facing cost-of-living pressures because of the higher energy bills that have resulted from higher market prices’’. He referred to a package of steps to “help vulnerable” customers, including $50 million of hardship debt relief.

He said the NEG would help push prices down further.

“If the NEG is settled, we anticipate being able to make further progress on new electricity projects, including potentially additional gas-fired generation and pumped hydro generation, as well as battery storage projects in the longer term,” he said.

However, Energy Consumers Australia chief executive Rosemary Sinclair says it is past time for more affordable energy. A recent survey found only 44 per cent of respondents believed they got value for money with electricity costs, she said, compared with 73 per cent for mobile phones and 74 per cent for banking. And only 25 per cent were confident things would get better.

Writing in The Age during the week, she said: “With electricity prices having increased by as much as 30 per cent in the past two years, consumers are sick of excuses and want to see prices return to more normal levels.”

She said that analysis by Energy Security Board experts had identified $150 a year in savings for consumers directly related to the introduction of the NEG “by reducing the costs and risks of new investment in energy generation”.

“According to the Australian Competition and Consumer Commission (ACCC), the biggest

savings are in parts of Queensland, Tasmania and NSW, but even in Victoria, the potential savings are almost $300,” she wrote.

“If we do listen to the experts … then we can expect much bigger falls in electricity prices to be announced by retailers in June 2019 and beyond …”

Do you have faith that energy costs will fall over the next 12 months? Are these costs hurting your retirement?

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    COMMENTS

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    Chris B T
    10th Aug 2018
    10:12am
    My AGL This Electricity Bill had minor adjustments Down by .01c for service per day and .005/.002 off consumable tariffs.
    So I'm gifted about $3 a quarter. Woopy.
    After Putting Up Service Fees by so High To Now Reduce By .01c per day.
    {:-(
    HS
    10th Aug 2018
    11:41am
    Not according to my AGL bill Chris B T.
    I pay monthly.
    The Peak rate went down by 0.001 cent and
    Controlled Load 1 rate went down by 0.003 cent

    Supply charges have not changed $1.42 per day for Peak and 0.13 per day for Controlled Load 1

    In June bill they gave pay on time discount on the usage for June. Now in July when usage is much higher they are giving pay on time discount discount for June's usage not for July. So in August when usage maybe the same or higher they will discount on the usage in July not for August

    What do you think about that?
    Chris B T
    10th Aug 2018
    1:32pm
    Depends on Which State You Live In.
    But Most Us Live In State of Fright as the Power Company's do what suits them not the customers.
    Still {;-(
    *Loloften*
    15th Aug 2018
    4:07am
    I've had my usual 20% AGL gas discount for past 2+yrs. Noticed a discrepancy between this last bill compared to last yr's one re my comparative usage for same quarter (they were wrong) & rang 'em. After confirmed (A/C in front of me) it was less usage this yr, my bill was 25% more even tho' had same % discount/bit more pensioner discount!? When finally got thru on phone...the Customer Service person just stattered in embarrassment "can't explain it." Sooo pe*ed off, 25% more in their coffers...& just recently announced a record $profit. Have checked all others out...none any better, all ripping us off.
    Sundays
    10th Aug 2018
    10:41am
    It’s all about profit, electricity companies couldn’t care less about lowering prices. Unless they are somehow compelled to things won’t change
    Knows-a-lot
    10th Aug 2018
    6:30pm
    As with the banks, a Royal Commission into the power sector is needed.
    Not a Bludger
    10th Aug 2018
    10:50am
    Don’t blame the energy companies for wanting to make a quid.

    Blame thug union boss led labour,the greens and Getup for refusing to use our abundant, cheap natural resource viz coal.

    Appalling, what they are getting away with - destroying our industry and economy.
    Anonymous
    10th Aug 2018
    1:45pm
    Absolutely 100% correct Not-a-Bludger
    Knows-a-lot
    10th Aug 2018
    6:31pm
    We have plenty of renewables here too. Wake up, Rightards!
    musicveg
    11th Aug 2018
    10:05pm
    Absolutely NOT 100% correct Not-a-Bludger
    Rae
    10th Aug 2018
    11:38am
    I'm still waiting for the money Gillard promised and the money Abbott promised.

    Get rid of all those retailers milking the system and renationalise the whole shebang.
    Old Man
    10th Aug 2018
    11:57am
    This is a simple case of supply and demand. Coal fired power stations are closing without replacement which, in turn, puts pressure on the renewables which are mainly solar and wind. No power generated at night when the sun isn't shining and no power generated when the wind doesn't blow or is blowing too hard. The base load power comes from power stations which are either coal or gas fired and when they close without being replaced there is obviously a drop in the base load capability.

    This country is being influenced by the Left which has a Kumbaya mentality and also spreads lies to support their ridiculous policies. The Left doesn't want coal or gas to be used because they claim that the world will end because of carbon dioxide. In fact, carbon dioxide is needed to make plants grow as plants use carbon dioxide to grow and expel oxygen in its place. There are claims that the Great Barrier Reef is dying and photos of the reefs in the Caribbean are shown to support their claims. The truth is that parts of the reef die off from time to time and regenerate. Any natural event such as a flood or drought or earthquake or volcanic eruption is blamed on climate change. Climate change, by the way, used to be called global warming until the temperatures settled. There is a drought at the moment on the eastern states but we are not allowed to build storage dams to help ease the water shortage because of those of the Left.
    HS
    10th Aug 2018
    12:33pm
    "In all honesty, anthropogenic (human-caused) climate change is not a scientic debate, it is a political/economic debate," According to Werne, the relevant question is not, "Is there human-induced climate change?"
    The question that we should be focused on is, if anything,

    "What should we do about human-induce climate change?"

    Reference:
    Causes of Global Warming
    By Alina Bradford, Live Science Contributor | August 18, 2017 08:14am ET
    HS
    10th Aug 2018
    12:37pm
    Think about it this way: Climate is what you expect, weather is what you get.
    So when we are talking about climate change, we are talking about changes in long-term averages of daily weather. In most places, weather can change from minute-to-minute, hour-to-hour, day-to-day, and season-to-season. Climate, however, is the average of weather over time and space.
    Entropy increases monotonically over the entire universe, and eventually all free energy will be gone. This is known as heat death.
    Knows-a-lot
    10th Aug 2018
    6:33pm
    The ignorance here is simply breathtaking...
    musicveg
    11th Aug 2018
    10:10pm
    I agree Knows-a-lot, they simply want to keep being ignorant because most likely they have shares in fossil fuels. The fact is that the earths climate has risen dramatically and it is causing huge problems, look at Europe in heat waves like they have seen before. We are heading towards disaster yet people do not care anymore, only about their pocket.

    10th Aug 2018
    1:47pm
    Blame the silly greenie policies for the increase in electricity prices
    If you want lower prices don’t vote for the parties who promote these idiotic policies
    Knows-a-lot
    10th Aug 2018
    6:33pm
    More Rightard bullshit from Lieberal Party shills.
    Anonymous
    10th Aug 2018
    7:55pm
    Please mind your manners Know-a-lot
    musicveg
    11th Aug 2018
    10:12pm
    Oblaid is another troll of the right wing, blaming the Greens what a joke, try blaming the sale of the energy market, we were promised lower prices when it was privatized, lies, and more lies, and they are still spinning them.
    Hoohoo
    14th Aug 2018
    6:38pm
    Yes, pure lies by the Liberals & rightists.

    Green energy is much cheaper, if only they invested in battery back-up instead of dirty alternatives. But somehow, they want us to believe it's cheaper to dig up the coal, pay the royalties, burn the coal & put it into the grid. It is a bloody lie & only fools will believe it.

    How many mega-batteries could have been purchased with that 1/2 billion dollars for the Reef Foundation? And if they were honest or serious about protecting the Reef, the first thing they should do is to ban Adani. But they will only talk about research into farm run-off & crown of thorns starfish. Nothing about preventing coral bleaching or stopping dredge harm. All while wining & dining Board members from the likes of Peabody (USA's biggest coal miner). Stinking, bloody liars.
    floss
    10th Aug 2018
    2:32pm
    We had a great power system then our various governments decided to share it with their shonky mates by privatisation the lot , look at the mess we are now in and it can't be reversed.
    Anonymous
    10th Aug 2018
    3:15pm
    It’s would have cost us muchmore had it not been privatized
    Hoohoo
    14th Aug 2018
    6:39pm
    Rubbish, olbaid.
    floss
    10th Aug 2018
    2:37pm
    Not a bludger the unions opposed privatisation so get your facts right, you are making your self look like a fool but then again it may be what you are.
    Anonymous
    10th Aug 2018
    3:08pm
    Of course they would and the taxpayer would have had to fork out billions to keep the sector going
    Not a Bludger
    10th Aug 2018
    3:24pm
    No Floss - not a fool - just a seriously qualified engineer who spent a lifetime in serious manufacturing in Australia - started in the 1960’s when we had a serious space industry (Australia the third country to launch a satellite from its own shores) - gone, so off to the then growing Automotive industry employing 100’s of 1000’s, apprentices everywhere - now gone - Australian shipping to all over the world - gone - manufacture of plastics, electronics, farm equipment etc - all gone.
    It is moaners and groaners like you plus those who insist on living on the public teat plus thug boss union led stupidity that have cost us our once proud value adding country.
    Robbo
    10th Aug 2018
    4:10pm
    All we need is that idiot Shorten and his labour dills to get in and the price of power will double from what is now and all the silly pensioners etc. that vote for these lefties will wonder what struck them.
    Hoohoo
    14th Aug 2018
    6:45pm
    Feeding off the public teat? Really, Not a B? My solar panels have been subsidising the coal burners.

    You want public teat-suckers? How about the Reef Foundation Corporation who were just gifted $444,000,000 of public (taxpayers) money. What bloody bludgers! Some Board members are Malcolm's corporate buddies. These are the real entities that are sucking our country dry, metaphorically & literally, with NSW declared 100% in drought.
    GeorgeM
    10th Aug 2018
    5:06pm
    All customers of AGL are paying for the large bonus & salary for this American CEO who will depart in the next couple of years with a truckload of money - time Aussie customers took their business elsewhere.

    The NEG is a disaster in the making - $150 per year savings - makes one laugh in disgust!
    About time they scrapped all subsidies for renewables and set up efficient coal-fired power stations with Public Ownership and controlled prices (partial re-regulation)- then we can maybe hope for real lower prices.
    musicveg
    11th Aug 2018
    10:15pm
    Don't you mean scrap subsides for coal fired instead of renewables?
    GeorgeM
    12th Aug 2018
    8:16pm
    No, Privatisation and subsidies for renewables (with shutting down of coal-fired power) are the main reasons for high prices, and the NEG has failed to act on either issue.
    musicveg
    12th Aug 2018
    8:52pm
    You are making it sound so simple but again you have not the whole picture;
    https://www.cleanenergycouncil.org.au/policy-advocacy/electricity-prices.html
    Also: According to the Australian Renewable Energy Agency, the biggest contributor to rising electricity prices has been a substantial increase in network charges. This means money spent on the poles and wires that carry the electricity from power plants to homes and businesses.
    In fact subsidies to renewables is a very tiny amount and we actually need to invest more in renewables to bring the prices down.

    And yes the NEG does not resolve anything.
    Knows-a-lot
    10th Aug 2018
    6:28pm
    The thieving bastard power companies are as bad as the banks.
    bobm
    10th Aug 2018
    6:46pm
    Try WA we are stuck with only one provider Synergy plus Horizon both are off shoots of Western Power when the previous Labour decided to split the one company, Western Power, into 4 separate businesses.
    Yes insurance for the one company (WP) went on a sliding scale to flattened out the more the company was worth. Now with 4 diff companies the insurance doesn't reach the flat area of charges. ie. WP insurance may have been say $50,000,000 for a 10 billion company. With the split each company worth 250,000,000 and the insurance for the first 500,000,000 approx 20,000,000 each. Now total insurance is 80,000,000 plus 4 CEO at about 500,000 each previously one CEO on about 390,000.
    How can we get lower costs for power when these stupid people run the system. Now have to pay for sending power back into the grid from solar panels.
    Looks like batteries could help.
    Anonymous
    10th Aug 2018
    8:01pm
    Labor wasted $100mon Tesla batteries
    Should WA waste $10billion
    Plenty of coal and gas in WA but labor and the greens won’t allow it
    Hoohoo
    19th Aug 2018
    4:37pm
    How can you imagine the Tesla battery in SA wasted anything, olbaid? A Professor (of science) at a Melbourne Uni spoke at length to "The Drum" last week, saying in fact that the Tesla battery prevented ANY power outages in SA last summer, despite the dinosaurs bleating on (like yourself, olbaid) with this outright lie.
    He also quoted that the SA energy grid is 99.995% reliable now, as a result of the battery & other measures they took.
    The NEG is trying to make a big deal about reliability, when this has already been achieved.
    The Lib govt (& the Australian people by extension), will have their nests fouled by the likes of Abbott & his little posse of climate change deniers. They don't care about anyone but themselves & their holy grail for power. Rotten eggs. Bad apples.
    Hoohoo
    19th Aug 2018
    4:39pm
    Dinosaurs think that coal is the only source of reliable baseload power. They obviously own shares in the coal industry. It is another lie they tell the gullible sheep.
    musicveg
    19th Aug 2018
    4:44pm
    Yes it is greed (along with all the lies) Hoohoo that is ruling this country. AGL just made how much profit? All the energy suppliers are all about profit only. That is the reason our power costs have risen just like everything else. Everything keeps on going up. People will spend less and the economy will go down fast.
    All the scientists in the world (except those paid by coal,gas and oil companies) have enough evidence about our climate and pollution. Australia is falling behind other countries making the changes when we should be leading in renewables. On a positive note Daniel Andrews just pledged money for solar power to 160,000 houses, creating 5500 jobs if he wins the next Victorian election.
    Hoohoo
    19th Aug 2018
    4:47pm
    Yes, bobm, your post is proof that privatising the energy market has been a monumental disaster, because private companies are only interested in profit - not social or essential services.

    Privitisation has created the problem of no accountability for power reliability, price gouging, or taking any green measures to meet Paris commitments. These are the 3 main objectives of the NEG. Our Govts have given away their authority to govern for an essential service. Shame on them all.
    musicveg
    11th Aug 2018
    10:16pm
    Greed is what is driving prices up nothing more.
    Adrianus
    12th Aug 2018
    6:03am
    Some interesting comments.
    There is no doubt that coal fired power is cheaper. The reason Australia's biggest coal fired power supplier, the QLD Government, has retail prices so high is because of repayments for borrowings from the Public Service Superannuation fund and subsidies for back to grid solar. Not to mention the extra cash flow looks good on the budget bottom line.
    What is odd about this is that an LNP government would have sold down any government assets in coal but were out voted because the current Labor government said to do so would push up prices.
    What's going on here?
    Is Labor not all singing from the same hym book?
    Hoohoo
    14th Aug 2018
    7:00pm
    No doubt? Adrianus? Bulldust! It's a bloody lie & only fools will believe it.

    These are pure lies by the Liberals & rightists. Can you really believe it''s cheaper to dig up the coal, pay the royalties, burn the coal & put it into the grid, than it is to manufacture renewable power plants that collect energy for free?

    Green energy is much cheaper, all they need to do is to invest in battery back-up.

    And please, don't dare tell the lie about the storm that pulled down the 22 power towers in SA, causing power outages - ALL THE FAULT OF NASTY RENEWABLE POWER! More likely, it was climate change that CAUSED THE STORM in the first place. This is what the scientists are saying, "More extreme storms, more extreme droughts & more extreme flooding", which will also tear away our precious topsoil for future food production. Meanwhile, precious fresh water reserves are being wasted in coal mines, poisoning the run-off to boot. You poor farmers!

    You'd have to be an idiot to believe that coal-pushing bullshit.
    Adrianus
    14th Aug 2018
    8:53pm
    If solar was really cheaper then why do we taxpayers need to prop it up?
    Hoohoo
    16th Aug 2018
    12:07am
    I don't know if you pay tax, Adrianus, but I know I do.
    I've also invested in my own solar plant which feeds subsidised (by me) electricity back into the grid, from which the wholesaler & retailers of electricity make a ripping profit, by charging everyone on the grid for my green-generated power at a greatly marked up price.
    The retailers have done ABSOLUTELY NOTHING to earn this windfall, except to attract my business. I have no alternative to giving in to the bloodsuckers, unless I get off the grid & keep it for myself with battery backup. This will be my next investment, but I'll be moving house first.
    I encourage anyone who invests in their own solar plant to put up enough panels with battery back-up, to become independent of the grid. Watch electricity prices rocket up when enough of us take this action! The government are fools to let this happen (if they're serious about lowering electricity bills).
    Adrianus, you're either an idiot or a liar to say taxpayers are propping up green energy COMPARED TO COAL BURNING. Yes, some of us taxpayers are propping up green energy PRODUCTION, but we are subsidising electricity retailers who proceed to rip us all off. It's people like you who refuse to see it as their responsibility to lower carbon emissions. It's people like you who are bludging off us, & yet you dare to try to pull the wool over your own eyes, & anyone else gullible enough to believe your lies. You & your stinking, polluting coal burners, & the mining companies who are laughing all the way to the bank.
    musicveg
    16th Aug 2018
    1:04am
    Well said HooHoo, you only have to look at AGL's recent windfall of profit. Increasing electricity prices are because retailers can charge what they want and AGL is one who owns the wholesale part too. The rising cost of distribution of poles and network makes up most of the price increases, everyone is paying for all the new networks in new subdivisions too.
    Great advice about going off grid. I hope to do that with a tiny house one day. Yes people forget how polluting coal burners are and how those who live near them have higher rates of respiratory diseases and cancer too. That is before it adds CO2 to the atmosphere.
    Leslie
    13th Aug 2018
    1:31pm
    S'pose it has nothing to do with Turnbull betraying all of us by signing us up to Paris without putting it to us?... still, at this stage it is non-mandatory and non-binding, but now with his NEG, energy price reduction etc is only a smoke screen, he wants to change our legislation to surrender our sovereignty and make it mandatory by law to obey Paris, then stand back and watch us all hit the fan... and it's not far off before he formally commits us in a similar manner to whatever the EU dictates our immigration intake shall be, as the equally deceptive foreign minister has already alluded to., and that's only the tip of the ice berg. We all need to make a stand and reclaim our country before this up-start sells us out completely.
    bob menzies
    13th Aug 2018
    3:13pm
    If we want affordable energy and thereby assisting Australians with cost of living issues and assisting businesses to operate competitively we must:-
    Remove ourselves from the Paris Agreement
    Eliminate all subsidies to renewables
    Build at least 2 HELE coal fired power stations (at least 900 to be built overseas in next 8 years).
    Pursue ACCC initiatives.
    The following elaborates:-

    As Australia’s electricity grids strain to cope with demand and government efforts to foist yet more renewable energy on them, consumers can at least be thankful that down under weather patterns are different from those of Europe where the wind does not blow for days.

    In mid-June, Bloomberg reported that virtually no power had been generated by the nation’s wind farms for about nine days, with calm conditions expected for another two weeks.

    It is summer in Britain and demand is low, but analysts are now concerned over what will happen during a similar clam period in winter, particularly as the atmospheric lows that occur in the region often combine calm conditions with arctic cold.

    This is an intractable problem for UK Greens dreaming of a fossil fuel-free future, as it is simply not possible to build enough batteries or pumped hydro capacity (dams) to supply Britain’s grid for days at a time.

    Weather patterns are different in Australia, but just how different is difficult to work out as there has been almost no proper discussion of the issue. One site which sheds some light on this point by tracking energy demand and supply by source over Australia’s eastern sea-board, including South Australia and Tasmania, is Aneroid Energy run by weather forecaster Andrew Miskelly.

    Like previous compilations of such figures for Australia, site statistics for April, May and June show that wind does not stop blowing across the region for more than perhaps two days at a time, rather than more than two weeks as occurs in Europe – but does display a distinct, irregular, saw-toothed pattern of strong supply followed by periods of calm.

    In the first half of June, to estimate from the graphs on the site, existing wind farms supplied less than 500 megawatts continuously for a total of perhaps three days, including one two-day period, and at other times peaked at or above 3,000 megawatts. The now vast numbers of rooftop solar installations add another 2,000 to 4,000 megawatts or so in distinct, sharp daytime peaks, falling away to nothing at night. That substantial output variation of between almost nothing to perhaps 7,000 plus megawatts has to be properly managed to fit into total demand that varies between 18,000 and 26,000 megawatts each day. This is usually done by directing the operating gas plants to throttle back whenever the wind blows and the sun shines.

    As can be seen even from those sketchy figures, boosting green electricity so that it supplies 50 per cent of demand, as some state targets require, and activists repeatedly call for, will require a major additional boost.

    At the moment the renewables, when they are all acting together, do not add up to half of the minimum daily demand (which of course occurs at night) So to reach the 50 per cent target, the grids will require not just vast additional investment in renewables but also either additional gas peaking plants, or some form of energy storage for the two days plus when nature takes a break. No one is building gas plants and the only dam proposal is the Prime Minister’s Snowy 2.0 option, which is expected to have 350,000 megawatt hours of storage when it is completed in the late 2020s. That is a good start but it is still less than a day’s worth of electricity for the eastern grid (WA has a separate grid).

    In the meantime, with no new conventional capacity being built, the eastern grid is struggling to keep industrial users supplied. In mid-June, due to unplanned outages in the state’s coal-fired plants and low output from renewables, NSW’s Tomago aluminium smelter turned off three of its potlines to avoid paying soaring electricity prices.

    Despite these obvious difficulties discouraging industrial investment, the media still quotes activists claiming that there is no real problem, that the combination of coal plant outages and lack of renewables production is ‘rare’, and that power from renewables is really cheaper than that of conventional power. In one story, an analyst stated that green power could be bought on long-term contracts at perhaps $40 to $50 per megawatt hour, which is well under the ruling state wholesale price of $60 a megawatt hour. However, as is common in such stories, there was no mention of the renewable energy certificate generated by each megawatt hour, required by the Renewable Energy Target legislation.

    In early June, the megawatt hour Large-scale Generating Certificates cost a substantial $82.50 each (there is a separate certificate for rooftop solar). That additional amount has to be paid by someone, almost always the consumer. Faced with such costs it is little wonder that Tomago managing director Matt Howell has called for more investment in base-load (that is, reliable) generators.

    While Australia digs itself deeper into its energy policy hole, the quest for expensive ways to store cheap green electricity continues, with the commissioning of a plant near Manchester in England to store energy by liquifying air.

    As is common in such stories the media is too busy breathlessly explaining the concept to mention costs and investment, but the plant stores 15 megawatt hours of energy and the financing included an £8 million ($A14.2 million) government grant. Highview Power, which runs the plant, also states that the plant stores energy at half the cost of a lithium-ion battery, without troubling to mention the costs of using batteries, and that the plant will last forty years, compared with ten for a battery.

    As the installation’s capacity would have to be multiplied by at least 1,000 to make the slightest difference on the Australian grid, let alone in the UK, consumers here are looking at $14 billion plus worth of investment just for starters, to even out the bumps in renewable power production.

    Snowy 2.0 will cost perhaps one third of that but regardless of the storage route taken, cheap green electricity has the capacity to ruin us all.


    Parts of Europe may be tearing themselves apart politically over the vast costs of adopting renewable energy, but Australian voters are being asked to believe that doing the same thing down under won’t cost very much at all.

    Modelling by Frontier Economics for the Energy Security Board has found that an influx of renewable energy will result in wholesale power prices falling over the next few years. In addition, an academic team led by Andrew Blakers, a professor of engineering at the ANU has devised a system for Australia to adopt renewables so that the country can cut emissions by 26 -28 per cent by 2030, effectively for free, or so the academics say.

    These confident findings will come as a surprise to voters in Germany, the UK and Spain among other countries, who have all become weary of paying subsidies to renewable energy projects.

    As this is being written, Germany is still without a government after elections held in September. Among the problems faced by Chancellor Angela Merkel in her struggles to stitch together a coalition is her previous support for refugees, and energy prices. The right-wing Alternative für Deutschland has gained support and seats in the Reichstag over those issues, and one set of coalition negotiations has failed, in part, over energy. The Greens demanded a major reduction in coal-fired electricity production, but the pro-business Free Democratic Party feared the job losses that would result.

    The FDP is, in turn, reacting to frequent reports of the vast costs of German’s transition to alternative energy, known as Energiewend or energy revolution/transformation. In October the American Forbesmagazine estimated that Germany had spent $US800 billion on green subsidies to date but was still likely to miss by a large margin its own target of cutting emissions by 40 per cent from their 1990 levels by 2020.

    Power prices are also a sore point with voters in the UK, which is further along the renewables path than Australia. The Financial Timeshas estimated that existing contracts with low-carbon generators will be worth an estimated £10 billion a year in subsidies by 2020. According to an estimate on the website of Centrica, one of the UK’s biggest distributors, those subsidies added about 12 per cent to the average power bill in 2016, with the distributor declaring that costs from environmental policies have grown substantially since then.

    Spanish enthusiasm for green energy, which resulted in the country becoming the fourth-largest wind farmer, has also pushed up end-user prices. According to a 2015 review by the International Energy Agency, those prices are ‘among the highest in IEA member countries’.

    In fact it is difficult to find any country where the introduction of renewables on any scale has cut prices, or has not required massive subsidies to keep operating, despite confident modelling by Australian groups, and repeated declarations about how the cost of wind turbines and photovoltaic panels are falling. But that does not mean the Australian models are wrong, for Australian wholesale power prices are now historically high.

    Data kept by the Australain Energy Market Operator shows that in 2007 when Kevin Rudd got into power and the networks were still largely regulated by the states, wholesale power prices averged $58.72 per megawatt hour for NSW, $52.14 for Queensland, and $54.80 for Victoria to take just the three eastern states as indicators. In 2017 to date the corresponding average figures are $81.22, $91.32 and $66.58.

    However, it is widely acknowledged that wholesale prices were kept stable and relatively low for years by the influx of renewable energy – that was the problem. Renewable energy flooded onto the spot wholesale market when the wind was blowing, often pushing those prices well down and crimping the margins of the conventional operators. Generators have supply contracts with distributors but supplement their earnings on the spot market. The end result was to drive a number of the older brown coal plants out of busines. Those plants had long since paid back the money invested in them with interest, were aging, and were acknowledged as the least efficient, most polluting of the coal plants. In other words, the Rudd government’s Renewable Energy Target lifted the electricity industry’s carbon efficiency, not so much by substituting coal-fired power with wind energy but by driving older coal plants out of business. However, the result was also to end excess supply in the market that had been holding down wholesale power prices. When Rudd took office, power prices of the time were being pushed up by higher water charges. Water is used by power plants and the millenial drought at the time was restricting supply. After that, changes in network standards which required major investment in the poles and wires network, and regulatory changes permitted further investment which could be charged to consumers. Those changes caused the bulk of the price hikes prompting consumers to grumble.

    Through most of those changes wholesale power prices were relatively subdued but now those prices have also increased. Frontier Economics modelling suggests that the present high wholesale prices will fall as major new renewable projects come on line. This may be true but, as occurred with previous surges in renewable supply, the end result may be a distortion of the market and further price hikes. In particular, those lower prices will not attract investment in the firm or conventional electricity supply required to keep the electricity network ticking over when the wind is not blowing.

    The modelling work by Professor Blakers and colleagues, set out on the Conversation in late November, points to an energy future of renewables backed by a series of pumped-hydro projects. These are artificial lakes at high altitudes, rather than on-river dams, set up so that water is pumped up to the lakes when renewable energy is plentiful and allowed to run out and through turbines when the wind is not blowing. Although entertaining and about the only way a 100 per cent renewables future is possible, such a scheme would require substantial political will, many billions of dollars (the academics consider the costs acceptable), and a host of difficult-to-obtain environmental approvals.

    The lesson from overseas attempts to decarbonise energy supply is that it is so expensive to do so on any scale that the result is often political turmoil.

    Our policy makers should bear that outcome in mind
    musicveg
    13th Aug 2018
    8:02pm
    We still need investments in renewable. We need to stop subsidizing coal power stations, they are expensive to build and run and will do nothing to reduce cost of electricity in the long run.
    I think this whole thing is about who is going to make the most money, not about reducing costs to users.
    Here is my copy and paste Bob:

    The NEG's targets are too weak to cut climate pollution or build renewables. To hit targets as low as Turnbull's, members of the coal lobby would need to police suburban streets to stop people putting up solar panels!

    Australia urgently needs a national plan to cut climate pollution in the electricity sector. But the NEG is going to do much more harm than good in its current form and here's why:

    The NEG's targets are also too weak to cut power prices. New research has confirmed that more renewable-friendly targets would lead to more competition, less profits for coal corporations, and lower power bills.1

    Turnbull is trying to lock in these anti-renewable targets for an entire decade. This would make it impossible for the policy to deliver real cuts to carbon pollution until 2031!2

    The NEG is designed to let big power companies pick our pockets in private. Because there will be no public scrutiny of the contracts energy companies sign under the NEG, we won't even know how much price gouging is going on under the scheme!3

    There's nothing to stop the Coalition government from making a bad policy, even worse. Unlike other climate policies, such as the Victorian government's, there's no protection against cutting the NEG's weak targets even further. And because Turnbull is demanding that the states sign up to the NEG without even seeing the federal half of the scheme, there's nothing to stop him from sneaking extra support for coal into the package after the states have signed up to it.
    bob menzies
    14th Aug 2018
    2:23pm
    musing - you make some interesting comments BUT please explain what subsidies are provided to coal power stations. If we were to stop today the $3b a year subsidies to wind and solar there would be next to no investments in renewables - there is evidence of this overseas.
    You are wrong about building HELE stations - Japan and South Korea have already provided evidence that they are the cheapest form of energy (not the lowest emissions) that would be nuclear.
    Even Germany the country that has invested the most in renewables is building HELE coal fired power stations.
    Your cut and paste article reads like a Greens ideology nonsense.
    Trump outlined overnight how much better USA is by getting out of Pairs Agreement which he said was bad for jobs and bad for nation. He is 100% correct.
    Hoohoo
    14th Aug 2018
    7:10pm
    People who promote coal refuse to understand that house-holders like myself have been subsidising the power grid for years, from our solar panels feeding back into the grid. We are also not burdening the grid during the day, because we are using our self-generated electricity & giving the rest back to the grid at a fraction of the price that the energy retailers charge back to you & me.

    Yes, people like me have already INVESTED into the energy market & the energy retailers are ripping everyone off. We are also boosting the green credentials for coal-burning energy producers & retailers.
    Hoohoo
    14th Aug 2018
    7:14pm
    PS to bob menzies, Trump is a mega liar. He invented the term "fake news" because he invented fake news.

    I received an email today from someone called "Trumpnews", who claimed that Josef Stalin was spotted on a Miami beach today. These people are obviously crazy nutjobs. Say no more.
    GrayComputing
    14th Aug 2018
    8:30pm
    Our WA LNG tankers can easily fuel the eastern state gas supplies.

    Using LNG tankers will help overcome the eastern state energy shortages and help wean them off coal.

    Putting in a West -> East Gas Pipeline is a truly a pipe dream as it will use over 80% of the gas to power the gas pumping stations along the pipeline.

    Instead why not use the very well established LNG terminal technology and the world wide massive fleets of LNG tankers.

    We can also avoid years of delay to build LNG shore terminals in Botany Bay or Western Port and other state harbours.

    We could in the interim 3-8 years use large floating LNG terminal barges moored nearby a gas hub-pipeline refinery or processing complex.

    Now that would drop the eastern state energy prices by 50%
    *Loloften*
    15th Aug 2018
    4:12am
    My energy company sure did "run out of excuses" when queried my last Gas bill
    Adrianus
    15th Aug 2018
    8:39am
    For crying out loud, its not brain surgery! We are not talking about flying to another galaxy. We need power and we need to prioritise the variables in this order..

    1. RELIABILTY of SUPPLY.

    2. LOW COST


    3. CLEAN. EVIROMENTALLY FRIENDLY


    Our biggest export is coal. Why? Because it is the world's cleanest.

    Labor has adopted the Green's energy policy which is a shame, but it wouldn't be the first time they have hit their voter base in the pocket.
    Adrianus
    15th Aug 2018
    8:55am
    And another thing. In a pristine park where people take their dogs to run wild Australia is the chihuahua getting scolded for pooping while the 100 great danes are running amok.
    Hoohoo
    16th Aug 2018
    12:10am
    Clean coal, Adranus? Really? There's NO SUCH THING. You're a filthy liar.
    Hoohoo
    16th Aug 2018
    12:11am
    Or a troll, paid to tell filthy lies.
    Adrianus
    16th Aug 2018
    9:47am
    Unfortunately for you hoohoo I read the Greens environmental policy on their website before Julia Gillard agreed to take it on in exchange for Bob Brown's support. This radical policy was toned down soon after with more acceptable language, so as not to frighten people. We all saw the document signing and the two handshaking as Gillard committed us to high power prices and restrictions on industry. In simple terms it read, subsidise "green' energy and penalise the coal industry until they go out of business.

    When we dig up coal to send overseas we create pollution. But this is ok with you lot of zealots.
    musicveg
    16th Aug 2018
    2:07pm
    Whatever happened in the past Adrianus there is no need to keep digging up coal, it is too costly, too inefficient and too polluting not just for the environment but the many people who live near coal fired power stations and mines. There are no zeolots here just people looking for a cleaner future. The only thing keeping up prices is the greed of the wholesalers and retailers, only have to look at AGL's profits recently. Everything else is just an excuse to cover up their greed.
    Hoohoo
    16th Aug 2018
    3:36pm
    Yes please, let's leave the politics & politicians out of this argument, because ALL the major parties stuffed up.
    Labor & Greens stuffed up in the face of the COALition wedging them. The politicians are all hopeless while Corporate greedy gutses laugh all the way to the bank.
    At least the pollies either try or pretend to care about struggling people's power bills. Corporations aren't even obliged to pretend to have a conscience, just stuff their wallets on the back of the tears of the old & poor. They are proud of their achievement of this misery, kind of like a psychopath is proud of himself for being a winner when he hurts & manipulates someone else.


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