Guest essay by Eric Worrall
Multinational Mining Giant Glencore has warned of job losses and damaging economic contraction, because government favouritism towards renewable energy has eroded reliable baseload capacity. Energy intensive businesses like Glencore are firing workers and decommissioning factories, to match the reduced availability of reliable baseload power.
Australia passes a ‘tipping point’ in energy crisis
Glencore has warned that Australia has drifted past a “tipping point” of industrial energy “demand destruction” and that the nation has 12 months to re-establish reliability and affordability of its base load power capacity or risk permanent and unpredictable shifts in the shape of the economy.
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“We have to meet Australia’s energy needs now, in five years, 10 years and 15 years. We can’t rely on blue-sky thinking. There is an energy crisis in the world’s largest exporter of coal, the second largest exporter of gas and a major exporter of uranium. We need real solutions. Unless we make decisions really quickly, and I mean in the next 12 months, that re-establish base load capacity then we have no chance of sustaining the economy in the shape that it is in now.
“In the end the market will work its way to balance,” Freyberg continued. “It will stabilise – but the wrong way and for the wrong reason. The inability to secure affordable base load supply means that the problem will be fixed by demand destruction.
“We are beyond the tipping point in terms of industrial demand destruction. And when capacity is closed and plants are shut down, they don’t come back.
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The Glencore position is that the erosion of Australia’s base load capacity caused by a policy preference for intermittent renewable options has left the national market critically exposed to peak-demand shortages. And Freyberg’s forthright criticism completes an unwelcome trifecta for our federal and state governments.
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In March, Rio [Tinto] shut 14 per cent of its production at the Boyne Island smelter for want of an acceptable electricity supply contract. Rio generates 86 per cent of its own power for the Gladstone-based smelter but had been acquiring the balance of its needs from the spot market. A two-year effort to replace that spot exposure with contracted supply proved unsuccessful and, as a result, an equivalent quantum of Boyne production was closed.
That meant more than 100 Australians lost their jobs and Rio surrendered 80,000 tonnes a year of aluminium exports. It is worth digesting in full the transcript of Jacques’s spiky post-annual general meeting contribution to the national energy debate. His frankness announces, with equal force, the depth of Rio’s anxiety and the difference in style Jacques will bring to Rio.
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Read more (paywalled): http://www.afr.com/business/australia-passes-a-tipping-point-in-energy-crisis-20170505-gvzemz
If Australia continues this green madness then we shall achieve dramatic CO2 emission reductions; the Australian economy will contract until business demand matches the availability of reliable, affordable electricity.
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You can’t mandate progress, it has to happen naturally …can you imagine if the govt mandated Henry Ford to make a million automobiles…to get stinky horses off the road ? Poor Australia a victim of the fraud called AGW. ..
Renewable?
Reminds me of this…
There is no sanctuary…
Do voters get this news? They don’t seem to.
Not via the MSM in Aus…nothing but propaganda!
I believe Glencore’s worries about reliable and cheap base load electricity is related mainly to their smelter and refinery operations.
Mining and shipping coal isn’t highly dependent on electricity (base load or cost).
Smelting aluminum is highly dependent on the base load cost of electricity. This is why companies build their refineries where the power is cheap and transport the aluminum ore from mine site to smelter. Normally mine smelters and refineries are located close to the mines to reduce transportation costs.
Large multinational companies like Glencore are happy to move their operations to countries with low cost power and ship the finished product back to the environmentally rigid countries that punish manufacturing.
Much of Australia’s aluminum, coal, iron ore, nickel etc. is exported. Expensive and unreliable electricity only makes it more expensive to produce these export products and therefore provides less profit for the companies operating in that country.
The sad part is the people in charge, that did this to their own countrymen, will blame others for the problems.
The US has the chance to be the #1 destination for business:
*Lowest energy costs
*No restrictions on emission of life-giving CO2
*15% business tax rate
*Reform education to teach math and science
I have my doubts that Trump is up to it tho. Too many Kushners whispering in his ear.
Shared this with a colleague in the powerplant and industrial supply here in the states. His reply was:
“Thanks. Same thing happening here. Talking to my colleague from calpine yesterday, and knowing about our own power plant econs, it is hard to justify expensive maintenance or any new development if you don’t run or get paid often due to renewables. So this is going to be an even bigger second/third order effect that people have not seen yet. 1st order is reliability. 2nd order is cost. Now it will evolve into unreliable and expensive. = 3rd world country.”
Let me see if I understand this.
All those aluminum cat food cans that I take to the recycling spot and exchange for cash are sent to China.
Australia is run by a bunch of imbeciles who don’t understand economics and think money just falls out of taxpayers’ pockets.
Pollution is bad if it’s local, but okay if it’s in some other country, e.g. China or India.
If I lived in Germany, my $.10/kwh charge for electricity would be $.30 to $.60/kwh because wind power isn’t cheap or free.
It’s about time for me to start thinking about a house where I can install a wood/gas-fired cookstove and a few soapstone-clad wood-fired parlor stoves.
I need to expand my library of basic ‘how to do something’ books beyond just cooking and sewing, and see if I can find a Singer treadle sewing machine, just in case things really do go sour.
Got it. There is no sanctuary. Energy of any kind is not free. Food has to come from some place if you don’t have room to raise your own. I don’t think we’ve come to a criss point yet, but it’s on the horizon.
but in Germany you’d probably have solar panels or a share in a windfarm, which would bring in income. You’d use far less electricity than Us household thanks to efficient appliances. Your house would be so well insulated your heating bill would be lower…. and you’d be on the world’s most reliable grid (which just had a weekend on 51% renewable energy with no grid problems)
The difference between highly efficient appliances and average appliances is only a few percent in power consumption. Just how much efficiency do you believe is left to be gained in electric motors?
As to insulation, there’s a point of diminishing returns, such that the cost of more insulation will never be re-couped in energy savings. Not to mention that people are dying because their houses are too air tight.
German’s use less electricity because they have no choice, it’s been priced out of their budget.
As to your nonsense about stability. So what if on a weekend when most everything is shut down, they manage for a few seconds to get to 51%? That’s not how stability is measured.
“the world’s most reliable grid”
Germany has been off-loading its instability to Poland, etc. That problem will grow as more of its power comes from renewables.
Sara, I think you understand it very well, unfortunately.
We have to hope it can be changed in time, before the inevitable.
Let me see if I understand this.
All those aluminum cat food cans that I take to the recycling spot and exchange for cash are sent to China.
Australia is run by a bunch of imbeciles who don’t understand economics and think money just falls out of taxpayers’ pockets.
Pollution is bad if it’s local, but okay if it’s in some other country, e.g. China or India.
If I lived in Germany, my $.10/kwh charge for electricity would be $.30 to $.60/kwh because wind power isn’t cheap or free.
It’s about time for me to start thinking about a house where I can install a wood/gas-fired cookstove and a few soapstone-clad wood-fired parlor stoves.
I need to expand my library of basic ‘how to do something’ books beyond just cooking and sewing, and see if I can find a Singer treadle sewing machine, just in case things really do go sour.
Got it. There is no sanctuary. Energy of any kind is not free. Food has to come from some place if you don’t have room to raise your own. I don’t think we’ve come to a crisis point yet, but it’s on the horizon.
Chickens coming home to roost. Won’t end well for Oz.
Perhaps the destruction of industry is what the green blob intended to do, so by their goals everything is going according to plan. A certain level of nihilism is present in some greens, that industrial society is evil, and all the peasants should live like third world residents, or at best the Amish. They, of course, have no desire to live that way themselves.
Yup.
It appears Australia will be one of the first victims of Green Suicide. Sorry to hear this, but your sacrifice will hopefully not be in vain. Your story will hopefully be enough of a deterrent for some sober second thought in other similar jurisdictions on the folly of diving in over your head in trying to run an electricity grid on too high a component of non firm renewables. And not looking out for rocks…
And, if some OZ loony politicians decide to follow Germany and open their doors to radical Islamic invaders, how do you spell Austlastan, OZstan, OZgonestan? Or the Islamic Republic of Australia?
[Auslastastan? .mod]
All by design. I thought the UK would be first to go under but they saw the writing on the wall and are correcting. Those who think AGW as a means to destroy Capitalism is a conspiracy theory need to look no further than Australia and New Zealand.
Really? another wind farm went online today, in Wales… The Bubo Bank offshore wind farm has just been awarded a ‘CFD’ contract
The fact that politicians keep building wind farms is proof that wind energy not only works, but is economic and loved by all.
MarkW,
Wind farms only are built thanks to the lobbying of the dredge firms and windmill producers. They survive thanks to the “green” subsidies in different forms: direct, certificates, guaranteed feed-in tariffs (even if the market price is below zero), absolute priority on the grid,… at the cost of “conventional” producers which still must guarantee a stable grid with 100% backup for the case that there is little or no wind (and sun)…
Just ask the consumers here, which pay near double the price for electricity in less than 5 years, or those in Germany and Denmark how they love windmills…
The outcome warned about here identifies exactly what the ultimate (true) goal of the climate change liers is: the destruction of the developed world’s industry and economy. Suppression and control.
The worst thing about this whole mess is that when the collapse comes, that the blame will be laid on those who have been doing the most to prevent it (electricity providers). The blame will laid buy those that caused it (the MSM) and the useful idiots will believe it.
Thank you Australia for showing the rest of us what our future will be if we continue on this path to destruction.
C02 is not a pollutant.
Gosh, if only there was a world leader somewhere ready and willing and able to step into this energy demand void, what an opportunity that country would have!
Step forward, Chinese premier!
Griff do you mean the General Secretary of the Communist Party, Xi Jinping?
Apparently Griff likes ruthless but slick dictators. Before retiring, I worked at a nuke plant under construction. To get there we passed the largest coal plant, 5000 MWe, which ran on imported coal.
China is not building nukes to reduce ghg. In 2005, China’s slave labor coal industry could not produce coal enough coal to meet demand.
This allowed places live the the US and Australia with very good safety and environmental records to compete in the world market.
China is not an enlighten place but a batch of thugs with slick public relations.
Since I was an engineer in the power industry, I understand the importance of quality for things that produce and use electricty. Safety is a big concern since failed electrical circuits cause fires and electrocutions.
So if you are advocating cheap PV systems for home, you are really advocating home fires.
An example of difference in quality is cordless drills. My son and I both 18v power tools made in China. My drill costs 5 times my son’s. My charger us 0.3 watts when not charging, his 2.4 watts. My system has two batteries and charges at 50 watts, his charges at 20 watts. My charger shuts off automatically and is cool to the touch, his does not and is smoking hot,
My point here is that performance can be measured. Something that we do in the power industry. Since the wind and solar industry bases performance on press releases that Griff likes to link, wind and solar are not yet part of the power industry but a cheap junk industry.
Yes, China is a current leader at that.
I’m not a fan Kit… but he and his nation are not exactly backward about coming forward…
And yes, their solutions are basic and not overly safety engineered at times…
But those solutions are nuclear, are hydro are especially wind and solar and decreasingly coal.
Here is the paywalled article published on reddit Australia by a commenter:
“And when capacity is closed and plants are shut down, they don’t come back.”
Exactly what the greenies want. Mission close to being accomplished. One does wonder however; when WIFI no longer reliably supports their personal devices and the infrastructure they don’t even realize they count on fails, will they connect the dots? Or will they just run to a safe space with puppies, suck their thumbs and ignore it all?
They will just demand that government supply what they want.
After all, in their minds government can not only do anything, but can do it perfectly and without mistakes.
It looks like the Australian politicians are bound and determined to ruin their economy with their delusional pursuit of windmills and solar.
Maybe their crashing and burning will cause others to hesitate in following in those same foolish footsteps.
Australia did this to itself once before. It committed economic suicide commencing about 1960. That period of economic tedium and ennui because of excess unionization and socialism lasted for more than 40 years. 40 years of stagnation, lack of economic diversity, hatred of business,welfare, and flight of capital. Promulgated by the delusions of socialists, totalitarians, and labor leaders, just as today.
The Australian Energy Market Operator forecasts a peak price of $A13,504/ MWh in Victoria tomorrow and
$A13,100 for South Australia.
https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard#price-demand
The government has offered a once-off payment to pensioners of $A75 to cover the massive increases in electricity costs.
Well done Eric to bring this to everybody’s attention. Complete madness in Australian energy policy at the moment, and I was not aware of this statement by Glencore. Of course, they’d be many companies not saying anything, but closing shop and moving. Truly frightening. How to make the “lucky country” very unlucky!
Unreliable base load power is only one of the problems. The wind and solar power industries are net energy parasites. Their construction, maintenance and infrastructure activities consume more energy than their grotesque wind turbines and solar panels can ever produce. That’s why they always lose money unless they are given subsides and set-asides. In addition, wind and solar power are environmental disasters that kill millions of birds and bats, destroy thousands of acres of wildlife habitat, and whose rare earth metal strip mines pollute millions of gallons of ground water. There is nothing “green” or “renewable” about wind and solar power.
“environmental disasters”
Really Mike! State and federal regulations require environmental require all power project to have an EIS with a finding of no significant impact.
Mike logic is a slippery slope. Should we destroy his house because I make wild claims about habitat, energy use, and how grotesque it is?
I was looking at a double wide that was for sale. I noticed an official posting by the county. I came to the conclusion that the existing structures would have to be destroyed.
So Mike where do you live? Is there a specific solar or wind project that you can get torn down? Maybe you join the Sierra Club.
“But those solutions are nuclear, are hydro are especially wind and solar and decreasingly coal.”
At least Griff responded. However, he does understand why things are done.
Solutions for what? Wind and solar are neither a solution for providing power or reducing ghg. Wind and solar are shiny things that distract those who do not know how to solve problems.
China is not decreasing the use of coal because they want to reduce ghg. They are building nuke plants to reduce imports of coal in locations where China’s domestic coal and transportation system can not meet power demand.