Essay by Eric Worrall
Big government backfire – the People’s Republic of Victoria attempt to accelerate the green energy transition via direct public investment has spooked the renewable industry.
‘Perilous journey ahead’ under Victoria’s energy overhaul
Patrick Durkin and Angela Macdonald-Smith
Oct 21, 2022 – 4.54pmClean energy investors have warned of an investment drought and large energy users say their survival will be threatened unless the Victorian Labor government gets its radical plan to revive state ownership of electricity supply exactly right.
Big industry fears they will be slugged with higher prices and be forced to take on more risk under the plan by a re-elected Andrews government to revive the State Energy Corporation to invest, own and retail renewable power.
The fears voiced by the group representing companies such as Brickworks and Bluescope Steel came as major renewables investors said they won’t invest the tens of billions of dollars required to meet Victoria’s proposed 95 per cent renewables target for 2035 if they are disadvantaged in any way against the new state player.
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Private investors could face being squeezed out of new investment in energy under the plan, which the industry super sector – which would co-invest with the SEC – lined up to back. Morgan Stanley labelled the plan “a net negative” for major suppliers AGL Energy and Origin Energy.
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Read more: https://www.afr.com/companies/energy/perilous-journey-ahead-under-victoria-s-energy-overhaul-20221021-p5brro
What can I say – he who lives by the political fiat, dies by the political fiat.
I suspect what incumbents want is for the Victorian government to hand over big bags of cash, in an even handed way, so they all get to profit from even more taxpayer funding.
But there are bad memories of last time a left wing Victorian government tried to play merchant banker. Back in the late 80s, the Tricontinental scandal came close to bankrupting the entire state, leading to the forced sale and closure of the State Bank of Victoria to the Federal Government owned Commonwealth Bank, and just under a decade of Conservative rule under the Kennett government. The overnight destruction of an entire banking union was too much to swallow, even for the left leaning voters of Victoria.
I remember having a beer with some State Bank of Victoria employees at the time of the crisis. It was a running joke with the employees that all you needed to do to get a loan from Tricontinental was show up in a smart suit, and bring a suitcase for all the cash.
The Victorian state government’s track record with direct ownership of energy assets is almost as bad as their track record as a finance provider. In these days of mostly reliable electricity (for now), it is easy to forget the main motivating factors for the big privatisations of state owned energy assets were the regular blackouts, long connection wait times and high costs. At the time I was lucky to live nearby, on the same subgrid as a very large company which had a multi-million dollar penalty clause for power interruptions in their electricity contract, back when a million dollars was real money. So when it came to load shedding, someone else usually took the hit.
With memories like this, it is no wonder that Victorian government plans to take a step towards renationalising their electricity assets are being received with less than overwhelming enthusiasm.
Politicians keep trying central planning, no matter how many times it has failed.Obviously, they are brighter than those fools who failed, so this time it will work.
That’s what amazes me, that with all the lessons current and past, they still think they are smarter than everyone else. I understand the greed, the desire to emulate movie moguls who bark orders, the need for more votes and more limelight. I do not understand the stupidity.
All people think their belief system keeps them from making
mistakes, when in fact, that’s 100% wrong. This error is
why every group does stupid & nasty things when they get
power. Hopefully, libs don’t get too much power for too long
to destroy everything beyond repair!
What actually happens is that the Labor party gets control, destroys the state & gets voted out. This usually takes about a decade. Then the Liberal party gets control, (mostly) fixes the things Labor destroyed & then gets voted out. Rinse and repeat.
I remember in the 80’s, driving from NSW to Victoria. You could tell when you’d changed states because the roads deteriorated markedly. One year it didn’t happen & I suddenly realised that the state government had changed.
They once again prove the truth of the old adage,
”The government that governs least governs best.”
When the renewables gang gets worried, it must be really bad.
Hog Soooeey!
The AFR article is paywalled but the above excerpt is confusing, as far as I know Bluescope Steel* is not a renewable energy investor.
Either the authors are confused or have set out to confuse readers by conflating genuine energy-intensive industry concerns with the concerns of renewable energy ‘carpetbaggers’, in the end it does not matter who is responsible for the inevitable economic ruination that the government’s 95 per cent renewables target in the next twelve years will inflict.
* Bluescope Steel of course has a Net Zero by 2050 goal report but buried at the bottom of page 9 is the following proviso:
“Our net zero goal covers BlueScope’s Scope 1 and 2 GHG emissions. Achieving the 2050 net zero goal is highly dependent on several enablers, including commerciality of emerging and breakthrough technologies, the availability of affordable and reliable renewable energy and hydrogen, availability of quality raw materials, and appropriate policy setting”.
BlueScope seems to be nibbling around the edges of the green hydrogen push. As a major steel maker they are expected to convert from using coal to using green hydrogen to smelt steel.
https://www.abc.net.au/news/2021-12-07/bluescope-and-shell-announce-green-hydrogen-plan-for-port-kembla/100679982
Though they are trying to manage expectations, so I’m not sure how serious they are about it.
https://www.argusmedia.com/en/news/2360967-green-steel-still-decades-away-bluescope
They know about hydrogen embrittlement need I say more
Err … please do correct me if I’m wrong but ….
isn’t “steel” primarily an iron-carbon alloy (with a few other elements thrown in for desired properties) ?
And aren’t the cokes normally used to fire the steel the primary contibutor of that carbon to the alloy ?
So how then do you make “steel” if instead of strengthening carbon, you start adding embrittling hydrogen ??
Unless of course, it’s by adding another energy intensive step using materials the Greens hate so much ?
I hope the colonial cousins won’t take this the wrong way, but it distresses me to see people who built a nation out of climatic adversity suddenly go belly up. What happened guys?
And same about the Kiwis handing it to yous up the A$$ yesterday. See you on the 28th Oct.
A state that takes over the private sector of a country is a communist state and if the “People’s Republic of Victoria” ever wants to reach 95% renewable electricity, then go ahead and enjoy it for you will have that 95% plus a bonus track: random electricity 30% of the time and only between long periods of blackouts. Not to mention the monumental fare hikes.
Step one, get rid of 95% of the demand.
North Korea did.
The unlucky ones won’t die they will live out their lives pulling the plows that grow the food that feeds their lord and master.
Not just Victoria is having unrest. There is a danderous, uneasy mood among many people in Australia. Summarized for some, “I am sick of what is going on. Why have energy prices gone so high?”
IMHO, it arises when those in positions where they can affect national mood have seen their dreams going wrong and overall have become defensive, trying to avoid answering valid questions with proper answers, if they answer at all.
Here is an example that broke in the last 2 days: Even The Guardian carried the event, but with a leftist slant. Leftist politics have pervaded the scene here. It is about unrest in the Bureau of Meteorology, BOM. The Chief Exec is accused of speding highly-paid time designing a new logo, and more, while telling staff to not answer certain questions. Some are calling for a Royal Commission. The last one was blocked by political intervention by a Conservative bright spark with WEF connections.
I also called for a Royal Commission in our WUWT article a week ago on Uncertainty of Measurement Part 3.
Responsible bodies answer calls for matters serious enough for a Royal Commission.
What has the BOM said? Nothing.
Geoff S
https://www.thesaturdaypaper.com.au/news/politics/2022/10/22/exclusive-toxic-culture-has-plunged-the-bureau-meteorology-chaos#mtr
I understood that the issue for some, particularly the Labour Party and Greens is that BoM is stepping back from the “Climate Change” hysteria and becoming more neutral. Now that would be an ideal situation for a tax payer funded organisation. Unlike our ABC where we have the full on tax payer funded WOKE culture.
A really interesting and, apparently, well sourced and non-comitial article from, surprisingly, the Saturday Paper. Looks like the BOM is in a world of trouble and is now relying almost completely on computer models, rather than experienced meteorologists, to forecast potential disasters. No prizes for working out why Lismore got no advance warning the first time.
I know that I get cranky whenever I have problems with dander.
Geoff, you are dead right about the need for a Royal Commission, but not just for the BoM but also the CSIRO who have the same issues, including just accepting the IPCC mantra, not doing their due diligence for Australian conditions, using inappropriate computer models etc.
But the worst is the dodgy homogenization resulting in trashing of the historical climate data to suit the AGW agenda that is paramount in the BoM.
We can’t continue to have these agencies giving false climate alarmist propaganda to our governments, causing panic and all the stupid and wasteful mitigation policies currently in vogue that are giving us expensive and unreliable energy. This is the quickest way to kill our economy and future prosperity, utter madness!
When the public finally realizes they have been sold a rabid dog, they are going to be very angry and will punish all the people in authority who have supported this climate farce.
Same deal in South Australia with the then Labor Gummint and the State Bank necessitating the subsequent sale of the Electricity Trust of South Australia to clear the worst of the debt-
State Bank of South Australia – Wikipedia
But in any case the privatization of public utilities continued under both Labor and Conservative Govts State and Federally due to the ongoing bloating of the public sectors in general from the 70s. The WWII generation had gone without in the 50s and 60s to build the power water sewer infrastructure and various Govts were living off their dividends but alas not putting away for their depreciation as they grew the Evil Empire.
When the inevitable brownouts or burst pipes began to show and the need to raise either bills or taxes became obvious they took the easy road of privatization to let them become the bearer of bad tidings. New generations have to cough up real current costs for that but now loaded on top of that is the cost of saving the planet particularly with electricity. Now the Marxists like Danistan are deluding themselves into believing the answer lies in the past with public servants-
“Pedal to the metal:” Musk says battery storage will outstrip electric vehicle growth | RenewEconomy
There aint enough lithium battery resources in the world for either of them let alone both you idiots. As an example the first Powerwall in Oz in 2017 cost a householder $9000AUD but a new one now costs $19000 and rising. Not to worry the Gummint will take care of it.
“There aint enough lithium battery resources in the world for either of them let alone both you idiots.”
Are you sure that’s a problem? Janice Moore doesn’t seem to think so, because she’s read so many books on Economics.
Here’s her rebuttal of my argument that we should start preparing now for a future scarcity of fossil fuels. I hope she doesn’t mind my quoting her from another thread.
“Your remarks indicate that you did not study economics in college, here is some suggested reading to educate yourself about scarcity and how resources do not suddenly, “dramatically,” run out and how free markets calmly create new technology/discover new ways of using existing resources (e.g., silicon for copper and nanotechnology synthetic chemistry innovations such as James Tour’s graphene.”
As I understand, from her comment, the ‘free market’ will discover a replacement for Lithium long before we suddenly run out of it, so no need to worry.
The replacement for Lithium will be a return to hydrocarbons and/or nuclear. You’ll love it.
If the ‘Free Market’, encouraged by government subsidies, fails to find a suitable alternative to Lithium for batteries, then I certainly hope we would return to the use of more fossil fuels, and/or nuclear. It should be obvious to everyone that reliable and affordable energy supplies are the foundation of our prosperity.
However, there are many different battery technologies that are currently under development, which don’t rely upon scarce materials, and I would be surprised if none of these developments are successful, because I have a reasonable degree of confidence in the potential of scientific research. The history of science is full of marvelous inventions.
The history of science is full of scientists as well. Unfortunately, this is one time history is not repeated.
We have several hundred years of oil and gas, close to 1000 years of coal.
It’s rather stupid to start preparing for running out of either now.
I know that you aren’t smart enough to understand Janice’s argument, but it is completely true.
“We have several hundred years of oil and gas, close to 1000 years of coal.
It’s rather stupid to start preparing for running out of either now.”
Where did you get your information from? You sound as reliable as a CO2 alarmist.
Doing a search on the internet I came across a few sites that are in rough agreement with the following figures relating to the currently known reserves.
(1) Reserves of Coal – 139 years.
(2) Reserves of Oil – 54 years.
(3) Reserves of Gas – 49 years.
“Years of global coal, oil and natural gas left, reported as the reserves-to-product (R/P) ratio which measures the number of years of production left based on known reserves and present annual production levels. Note that these values can change with time based on the discovery of new reserves, and changes in annual production.”
https://ourworldindata.org/grapher/years-of-fossil-fuel-reserves-left
The key point here is that these estimates are based on the current usage of fossil fuels, world-wide. However, It is perfectly reasonable to expect that additional reserves would be discovered if the use of fossil fuels continued unabated.
However, the discovery of these additional reserves will not necessarily match the increased rate of usage as humanity progresses towards a more prosperous and safe world where poverty has been eliminated and infrasctructure is built to protect societies from extreme weather events.
If it’s true that about 86% of the world population is living at a standard below what the average Westerner would consider acceptable, then it is reasonable to expect that the use of fossil fuels would escalate as these problems are addressed.
If there was no scare about the environmental dangers of fossil fuels, I can imagine that their usage, world-wide could escalate to possibly 10x what it currently is, provided there is a drive to increase the living standards of the majority of the population, and protect people from extreme weather events, which would require an increase in fossil fuels usage even in currently developed countries.
Since energy supplies are fundamental to everyone’s security and prosperity, it’s sensible to strive to create as many options and sources of energy that are possible. Along the way, certain sources of energy might prove to be too inefficient and expensive, and will be abandoned.
I should also add that as new reserve of fossil fuels are discovered, the cost of extracting much of those additional reserves might be uneconomical. Imagine trying to extract coal from Antarctica. The energy value of the coal extracted could possibly be less than the energy required to extract it and transport it.
However, if fossil fuel usage were to increase unabated, by the time we needed to extract coal or oil from Anarctica, the price of all fossil fuels would already be very high. At this stage, rational people might be wondering why we didn’t spend more on research and development of alternative sources of energy 50 years ago.
From the followimg site:
https://discoveringantarctica.org.uk/challenges/sustainability/mineral-resources/#:~:text=There%20are%20known%20reserves%20of,mineralized%20rocks%20have%20been%20found
“Mining in Antarctica would be very difficult, dangerous and expensive as the climate is so harsh, the ice is very thick and Antarctica is very remote from major centres of population. This would make the transportation of minerals and equipment in and out of Antarctica hazardous. Drilling would also be difficult because of the vast quantities of moving ice and glaciers as well as the huge depth (5km at its thickest) that would be required to drill to reach the minerals making it too expensive to be economically viable.”
The leftists often complain about what they call capitalism but ignore the economic prosperity that the free enterprise, free markets system has provided.
Australian governments should not be involved in picking winners and losers, leave that to the consumers/taxpayers.
The state of Victoria in Australia is broken.
No the crazy Feds are in too remember and there’s those cow farts-
Federal government commits to signing global pledge to reduce methane emissions (msn.com)
No taxes or levies if you can trust the grin but there’s always slipping in the jackboot.
Whether fascism or communism is your preferred mode of governance, Dannolini Andrewsky has got you covered in Victoria. And you can’t send him back to Diktators’R’Us for any refund. They are all out of cash.
Hmmm. I’m sure there’s a government solution for reluctant investors. Something like eliminating choice and “free money”.
Yes, we aren’t really talking about free market economics when the market is so perverted by political intervention. And sometimes scarcity is just scarcity. Engineering and technology have limits and constraints at any given point in time. If it was just a matter of stimulus and response, then we could just create a extreme scarcity” for example of food or transportation and – Voila! Some one would invent a transporter or replicater . “Beam me up Scotty”