Guest essay by Eric Worrall
h/t JoNova – A government green idea so stupid even Tesla is worried; The South Australian Government, the world’s renewable crash test dummy, plans to implement fossil fuel mandates to halt the loss of baseload capacity caused by their renewable mandates.
Tesla, energy companies concerned prices won’t drop under South Australian Government’s plan
By political reporter Nick Harmsen
Battery giant Tesla has joined power generators, retailers, major energy users and experts in voicing concerns about a central component of the South Australian Government’s $550 million energy plan.
The Energy Security Target (EST) was one of six key measures announced by Premier Jay Weatherill in March.
Submissions about the Government’s policy range from urging caution because it may not lower wholesale prices, to killing off plans for a new interconnector to feed power into the state.
The SA scheme operates in a similar way to the Federal Government’s Renewable Energy Target (RET). But instead of incentivising new renewable projects, it would require retailers to source 36 per cent of the state’s electricity needs from gas generators and other synchronous power sources.
According to the scheme’s designer, economist Danny Price, the energy security target would create more wholesale market competition and put downward pressure on prices, offsetting the direct costs of the scheme.
But renewable energy companies have voiced concerns about the EST saying it would create an effective cap on the volume of renewable energy within the state and lock out renewable generators.
‘Lower wholesale prices may not be achieved’
Tesla, which has won money from the Government’s energy plan to build the world’s biggest lithium ion battery in South Australia, is concerned the scheme will favour traditional generators over batteries.
“We do not feel that the draft regulations and supporting consultation paper are representative of the current South Australian position as leaders and innovators in the renewable energy space,” Tesla’s Mark Twidell wrote in a submission to the Government’s plan.
The energy security target is command economy idiocy at its finest.
Consumers are currently stung when grid operators have to pay a premium to purchase as much renewable power as they can.
If this new target is implemented, fossil fuel generators will not only be able to play the same game, it will be their duty to shareholders to squeeze every penny they can out of the uncertain remaining life of their assets, just in case the government suddenly decides to shut them down. Short term strategies, squeezing their captive market for every possible dollar, skimping on plant maintenance – it would be irrational to do anything else.
If the government steps in and imposes price ceilings, nobody has to supply power at the government mandated price. If the government tries to force providers to supply power at their price, fossil fuel operators will abandon their generators – as many have already done so.
If the government fully nationalises the industry, takes direct control – they already tried that, it didn’t work out. Government owned utilities are a playground for militant union activists.
The golden age of Australian electricity, when different providers bid on the open market to supply power at the best possible price for consumers, seems a very distant memory.