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In the midst of a self-inflicted power pricing and supply calamity, you’d hope your Energy Minister could identify the cause and fix it. When the Minister happens to be Josh Frydenberg, any hope of a sensible solution fast turns to disappointment, on its way to frustration and exasperation.

From the moment he took up the role in July 2016, Frydenberg went out of his way to become the ‘BFF’ of Australia’s renewables rent seekers: cavorting with them at renewable energy shindigs around the country, allowing them to occupy his office in Canberra on a time-share basis and going out of his way to never, ever offend them.

In pushing the National Energy Guarantee (which, if deployed as originally devised, spells the end to intermittent and unreliable renewables), Josh has been ‘de-friended’ by a number of his former BFFs, including a couple of RE spin-kings, Tristan Edis and John Grimes.

Josh Frydenberg blasts critics of national energy guarantee

The Australian

Greg Brown

26 April 2018

Energy Minister Josh Frydenberg has hit back at GetUp!, green groups and renewable activisits over their campaign against the federal government’s signature energy policy, accusing them of “rent-seeking” and using “juvenile tactics” rather than acting in the national interest.

Mr Frydenberg attacked militant green groups, Smart­Energy Council chief executive John Grimes and Green Energy Markets director Tristan Edis over their tactics in criticising the proposed national energy guarantee.

Mr Frydenberg said critics of the guarantee were making misleading claims for ideological and economic reasons.

“Some of the opponents of the national energy guarantee are more interested in rent-seeking than pursuing the national interest,” Mr Frydenberg said.

“They should leave behind their juvenile tactics and their green-left zealotry and realise that this approach is part of the problem, not the solution.

“The fact the guarantee has widespread and unprecedented support from business, industry and community groups, where on the other side of the ledger you have a handful of ideologues, speaks volumes as to where public opinion is.”

Mr Grimes this week reportedly vowed to run a “ruthless” $500,000 campaign against the “anti-renewables policy”.

In an interview with The Australian Financial Review, Mr Grimes referred to the 2014 Warburton review into solar energy as “genocide”.

He has made claims, disputed by the government, on the impacts of the NEG, including: “We are disappointed the government would choose to lock in and subsidise the dirty, polluting, expensive energy.”

Mr Edis produced a publication, funded by GetUp!, called Renewable Energy Index.

Yesterday he denied he was opposed to the NEG and that his work for the index used the same data as reports he produced for energy companies.

“The database information that we use to produce the Renewable Energy Index is the same data that we use to produce a range of subscription reports for paying clients that include an array of major energy companies,” Mr Edis said.

“If the data did not match between the Renewable Energy Index and our other reports then we would very quickly lose any credibility with our range of other clients and lose vastly more money in subscriptions than we receive from GetUp!.”

He said he did not oppose the NEG and considered it could work if designed appropriately.

“The minister or his staff are welcome to call me at any time to provide a detailed reconciliation of how his government’s policies will deliver on its 2030 international commitments,” Mr Edis said.

State governments last week endorsed Mr Frydenberg’s proposal to continue work on the NEG.

The Australian

Ouch! Hell hath no fury like a rent-seeker scorned. Proving the adage never stand between wind and solar outfits and a 60 billion-dollar bucket of other people’s money.

Frydenberg’s sense of high dudgeon, belies the fact that he continues to defend wind and solar outfits, as if they were blood-relatives.

The NEG, as originally conceived, places very substantial financial penalties on retailers if they do not have forward contracts with conventional generators, sufficient to satisfy their customer’s demands, on any given day.

On any given day, the sun sets, and wind power output collapses (often, totally – see above, the combined output of every wind turbine connected to the Eastern Grid in January), which means that the first port-of-call for any retailer is going to be a coal-fired power plant, gas-fired plant or hydro, in that order.

The inability to guarantee delivery of wind and solar, means there is no incentive for retailers to sign up to contracts to purchase it under the original NEG – for the reasons set out here: PM’s Reliable Power Play Spells Disaster for Unreliable & Intermittent Wind Power

It’s the NEG’s focus on reliability that has the likes of Tristan Edis and John Grimes foaming at the mouth, and badgering Frydenberg to make sure its design is “appropriate”: which is code for ‘don’t you dare mess around with the greatest wealth transfer in Commonwealth history’ – under which wind and solar (including domestic solar-PV) are set to collect $4 billion a year in subsidies from power consumers, until 2031.

Frydenberg seems to think that he’s got trouble with rent-seekers like Edis, Grimes & Co, but his truly existential threat comes from the Monash Forum, a group of 30 Liberal and National MPs, out to destroy the renewable energy rort and to restore reliable and affordable power, to all Australians.

Frydenberg got a taste of what the Monash Forum is all about, during this interview with Alan Jones.

Alan Takes on Federal Energy Minister Josh Frydenberg

Alan Jones and Josh Frydenberg

2GB

26 April 2016

Transcript

Alan Jones: Federal Energy Minister, Josh Frydenberg, we’re only going to talk energy, he’s with me in the studio. Minister, good morning.

Josh Frydenberg: Nice to be with you Alan.

Alan Jones: Thank you. Look, let me be blunt. I’ve known you for some time, my judgement of you is that you’ve sold your political soul for the sake of ministerial office. You don’t believe this global warming stuff, you don’t believe we can survive on renewable energy. You know that coal fired power will be the source of our energy needs for years to come but you’ve swallowed this left-wing, Labor Party, Greens rhetoric. Why?

Josh Frydenberg: Well Alan, that’s not true. I’ve always rejected the reckless responses to climate change, but I’ve never rejected the science. In fact, I’ve been on the record for more than a decade, well before I went into Parliament, about the need to tackle climate change. Now, we need to tell some home truths.

Alan Jones: What is climate change?

Josh Frydenberg: Well, it is the fact that man is contributing to the warming of our climate-

Alan Jones: How much?

Josh Frydenberg: Well, it’s gone up by about one degree-

Alan Jones: How much?

Josh Frydenberg: … since 1900.

Alan Jones: Would it be 1.3%, something like that?

Josh Frydenberg: We are 1.3% of the world’s emissions, that’s right.

Alan Jones: How wonderful to stuff up the economy for the sake of 1.3% of the world’s emissions and carbon dioxide may, in fact, be good for us. Look Bjorn Lomborg is a world authority. He argued as recently as last December that, according not to Alan Jones, the UN’s own climate model, “The difference between a world with all the promised Paris carbon cuts …” which you got into bed with, that’s carbon dioxide not carbon … that’s the other mistake. ” … and one without them, is .05 degrees centigrade.” That’s the UN has said. So if every nation, including the United States extended its carbon promises past 2030 and kept them going right throughout the century, temperatures would drop by less than .2 of a degree centigrade. You’re the energy minister of the country with some of the richest energy resources in the world and we’re paying prices for electricity that are out of all proportion to our resources. How can you hold your job down while you allow this to happen?

Josh Frydenberg: Well, the fact is we do need to reduce our emissions but we don’t need to compromise affordability and reliability. Prices are too high, I know that all too well-

Alan Jones: Why?

Josh Frydenberg: … it is hurting households and businesses.

Alan Jones: Why are they high?

Josh Frydenberg: Well they’re high because … and the ACCC has confirmed this, Alan, they are high because we’ve had gold-plating of the poles and wires. That’s the single biggest factor. We’ve also seen states lock up decades worth of resources-

Alan Jones: Oh that’s rubbish.

Josh Frydenberg: … when it comes to gas. Well it’s not rubbish.

Alan Jones: It is absolute rubbish.

Josh Frydenberg: It’s not rubbish.

Alan Jones: There is no coal fired power station in South Australia and you stood by, as energy minister, and only this week they’ve blown up the rest of the Northern power plant. How the hell do you think South Australia is going to supply electricity and you’ve condoned all this stuff and you’ve stood by and you’ve defended a renewable energy target, yours, of 23.5%, you’ve signed up to Paris, 42%, and then you want to criticise the Labor Party? Well the Labor Party are on 50%, you’re on 42% at Paris, so Labor’s going to run over us with a concrete truck, you’re running over us with a bus.

Josh Frydenberg: Well we’re not on 42%, that’s actually wrong.

Alan Jones: Well, Paris, you’ve signed to Paris.

Josh Frydenberg: Well, so has 180 countries.

Alan Jones: Well hang on, I’m not worried about them, I’m worried about us.

Josh Frydenberg: And I’ll tell you about us. When it comes to South Australia, we’ve been very critical of their recklessly high renewable energy targets, the fact that they didn’t have the backup and the storage, the fact that prices have gone up-

Alan Jones: And you’ve done nothing.

Josh Frydenberg: … 29% even in the last few years-

Alan Jones: We know that, we know that, you’ve done nothing.

Josh Frydenberg: Well let me tell you. Well, why in New South Wales … Let me ask you this, Alan. Why in New South Wales, where you get more than 80% of your power from coal, has prices continued to go up? And the reason is because you import more than 95% of your gas. Now, gas sets the price of electricity, so if we’re going to be honest with the pastry chef that you like to quote, who gets up at 2.00 in the morning-

Alan Jones: I’m glad you’re listening.

Josh Frydenberg: A pastry chef who gets up at 2.00 in the morning, who’s facing higher energy bills, well let’s be honest with him and say, “We can lower those power bills if you develop more gas here in New South Wales.”

Alan Jones: That is absolute and utter rubbish, and I cannot believe … Let me tell you, a young 21 year old spoke to … and I’ll come to explain why it’s rubbish. A 21 year old yesterday said to me, “Oh, I hear you’re talking to Frydenberg tomorrow.” He’s got undergraduate degrees in law and economics with honours from Monash University, he’s a Masters of Philosophy and International Relations from Oxford, he’s a Master of Public Administration from Harvard University’s Kennedy School of Government, this is a 21 year old in the Liberal Party. He’s then said to me, “Alan, how can he be so dumb on energy?” And I said, “I have no idea.” Now, you’re talking about the fact we need more gas, 80% of our gas is exported. Many countries say there should be a gas reservation policy and if you listen to the program, you’ll remember what I have said about the farm where I was brought up, on the diary farm, and my mother would say-

Josh Frydenberg: Yes.

Alan Jones: … my dad would say, “How much milk does your mother want?” So we would keep the milk that was going to service the family and we’d let the rest go to the factory. Why don’t we have a gas reservation policy so that the gas that’s currently available to us is used for the benefit of Australians and Australian business?

Josh Frydenberg: Well the fact is that gas that we’re exporting is unconventional gas, which is actually the gas that you’ve been railing against being developed, Alan. So the point is why do we need to import gas 1000-

Alan Jones: Because you export what we produce.

Josh Frydenberg: No. But for a 1000 kilometres from Queensland into New South Wales, when you’ve got it here under the ground.

Alan Jones: Why are you exporting our gas to other countries so they can have cheap energy and we don’t? Why are you exporting our coal to other countries so they can have cheap electricity and we can’t? I have an account here in front of me from a major industrial outfit. Four years ago, domestic gas was available for all his manufacturing plant at between $6 and $7 a gigajoule. This year, they approached 16 gas producers, 14 said, “We can’t supply you.” He was offered a short term 2018 contract, not at $6, but $17.38. $17.38. The American price $4.51, the German price $7, the UK price $7, Italy $10. $17.38. His 2017 gas bill, $18 million, his 2018 gas bill, $34 million. You’re the energy minister and you’re presiding over all of this because of your dedication to renewable energy. Why don’t you say, “Build coal fired power plants, now, yesterday?”

Josh Frydenberg: Well if somebody wanted to build a coal fired power plant, then bring that on.

Alan Jones: Oh, you’re kidding me.

Josh Frydenberg: But this is the point.

Alan Jones: What?

Josh Frydenberg: That our gas intervention that Malcolm Turnbull led last year, has actually seen the wholesale price of gas come down by up to 50%. The ACCC has said that we’re now seeing prices between $8 to $12 gigajoule. Now, you quote the United States, what has driven jobs there? What has driven manufacturing? What is driving down the price of energy is the fact that they’ve had the shale gas revolution. Now let’s get the gas out of the ground here in Australia.

Alan Jones: I’ll come back to … Oh stop it. Stop talking rubbish, Josh. Honestly, we have buckets of it and we are exporting it, why don’t we keep it for our own domestic use? Now look, I recently saw a report by a group called Urgewald based in Berlin and they have identified 1600 coal fired power plants that are under construction in 62 countries and they’re going to increase coal fired capacity by 43%. Now do you think that if you’re baking bread here and Ross is baking bread as well, and Ross is getting a massive subsidy as a result of his baking bread, that you’ll continue to bake bread? You’re providing billions of dollars in subsidies to renewable energy and wondering why no one will invest in coal fired power. Why won’t you cut all the subsidies to renewable energy? If it’s so fantastic, it’ll survive. Promise me now, make a statement today, “We’ll cut all subsidies to renewable energy.”

Josh Frydenberg: Well Alan, you’ve heard me in the past be very sceptical about the design of the renewable energy target, I think there were some big mistakes with it. Now, Tony Abbott reduced the renewable energy target from 45 thousand gigawatt hours to 33 thousand gigawatt hours. Now as a result, companies made investments so they are being phased out those renewable subsidies and we’re the National Energy Guarantee, which received a tick recently from John Howard and even our friend Craig Kelly has said positive things about it, means that it will get stability in the system, we’ll get the market working again-

Alan Jones: But Josh-

Josh Frydenberg: That’s why BlueScope out of Port Kemble, that’s why Brickworks, that’s why Rheem, that’s why the big employers-

Alan Jones: Josh …

Josh Frydenberg: The people who are employing the fitters and the turners and the truck drivers-

Alan Jones: They’re facing electricity prices …-

Josh Frydenberg: But they’re the ones who are getting behind our solution.

Alan Jones: People are laughing and you when you’re trying to pretend that we’ve got lower electricity prices. These subsidies you go on about-

Josh Frydenberg: I’m not trying to pretend that Alan.

Alan Jones: Oh, well who’s responsible for it? You’re the energy minister. These subsidies for one outfit as opposed to another will continue till 2030 and I was looking at the list last night, 423.7 million certificates are going to have to be purchased from wind and solar farms. Now, depending on the price of the certificate, that’s going to add tens of billions of dollars to consumer bills. You can’t justify this and we’re talking about 33,000 gigawatt hours of mandated … it’s on the statute book, renewable energy, and it runs till 2031. So, 33 million in 2020, 33 million renewable energy certificates all up, the bill? $36 billion dollars being added on renewable energy subsidies to the price that people are paying for electricity. God, you tell me how you justify that?

Josh Frydenberg: Well Alan, we want to bring an end to that subsidy mentality in renewables.

Alan Jones: When?

Josh Frydenberg: Well the National Energy Guarantee involves no new subsidies, no taxes, no trading schemes-

Alan Jones: But the NEG is ..

Josh Frydenberg: That is why it’s been warmly received by the employers.

Alan Jones: The National Energy Guarantee is another review. You had a COAG meeting and you’re going to review it.

Josh Frydenberg: Well no, we’re actually going to land it, that’s the goal.

Alan Jones: When are the renewable energy subsidies going to end?

Josh Frydenberg: They end in 2030-

Alan Jones: God, strewth. But we’ll pay $36 billion dollars in subsidies to renewable energy up until 2030 and you’re wondering why no one will build a coal fired power plant.

Josh Frydenberg: Well can I tell you, subsidies have been all round the place. When you look at coal, our governments forever have been building these coal fired power plants and you’ve paid for it through your tax bill, not through your electricity bill. When it comes to gas, we’re now encouraging and incentivizing and investing in gas developments so that we can get more gas into the domestic economy. When it comes to renewables, you’re right, there have been some mistakes with the renewable energy target but it’s legislated, companies have invested in it, Tony Abbott got it down, investments were made, now we’re breaking with the past with National Energy Guarantee.

Alan Jones: Your government is spending $6 billion to buy the shares of the states in Snowy 2.0. Another $4 billion will be needed to build Snowy 2.0. At what price per megawatt hour will Snowy 2.0 need to sell electricity to the grid to become economically viable?

Josh Frydenberg: Well the levelized cost of energy from Snowy 2.0 is around $25 a megawatt hour. Now, I’ve heard you quote some American study-

Alan Jones: It’s not some American study, this is an eminent outfit. Now this is where you get your stuff in a knot, I don’t know who’s advising you on this stuff, I quote Lazard’s who are a financial advisor and asset management firm that engages in investment and banking and asset management around the world in 27 countries and 43 cities, they’ve been credibly in operation since 1848 and they’re from New York and Paris and London and they say the cost of pumped hydro, like Snowy, $200 a megawatt hour. Now, I can’t check that with you. Why? Because when you look at the feasibility study, then I have a look at the feasibility study and I said to Mathias Cormann, “Where is it?” Oh, Chapter Three: Commercial, redacted. Chapter Four: Business Case and Modelling, redacted. Chapter Fourteen: Cost Estimates, all missing. All missing. So, I don’t know, they must have something that is incriminating of the figures you’re stating, otherwise we’d all be able to read them.

Josh Frydenberg: Now, that American report relates to American pumped hydro which has a capacity of eight hours. Snowy 2.0 has a capacity of 175 hours so you’re actually not talking about like for like.

Alan Jones: You’ve got-

Josh Frydenberg: Now when it comes to the feasibility study, Alan, we have released more than 600 pages. There are three chapters-

Alan Jones: You don’t have the Commercial chapter, the Business Case chapter, or the Cost chapter and the reason you don’t have it, there must be something in those chapters that you don’t want us to know and given that you’ve spent 10 billion on Snowy, if Snowy 2.0 is built, doesn’t the government have a vested interest to prevent another coal fired power station being built? This was evidence, given Kristina Keneally asked the question in the Senate to some bloke Whitby from Snowy. Now, “Mr. Whitby …” she said, ” … if there is a coal fired power plant built in this country, would that destroy the economic viability of Snowy 2.0?” His answer, “Put simply, yes.” So you’ve got a vested interest in not having coal fired power.

Josh Frydenberg: That is not right. There are three chapters out of the 18 that have been redacted purely because it is a corporate player, Snowy Hydro, and they can’t reveal their commercial secrets to their competitors. You would understand that. Now, when it comes to coal, we say that it has a future in Australia, Bill Shorten says it doesn’t have a future in Australia.

Alan Jones: Subsidise the other people. Subsidise the other side, renewable. I mean, the redacted chapters would demonstrate an estimate.

Josh Frydenberg: We’re ending subsidies.

Alan Jones: The redacted chapters would be an estimate of what Snowy 2.0 would need to sell electricity, you’re leaving it out, we don’t have it, we’re not being told. Now look, we have run out of time unfortunately. You most probably will say no for the next 10 years, but you are most welcome to return and continue the debate on this … because I believe energy can win an election but the gap between you and Labor on energy policy, even though you’d argue it, the public out there think there’s no gap and you can’t make this a political issue. If you want to come back next Thursday, I would welcome you to the program.

Josh Frydenberg: Well Alan, of course I’ll be here. It’s a sticky wicket, I love to play on it-

Alan Jones: Good.

Josh Frydenberg:… because we need to explain to the public-

Alan Jones: You do.

Josh Frydenberg: … all the good work that we are doing.

Alan Jones: Okay, I hope you can.

2GB

Josh Frydenberg seems to think that he’s in a position to ‘explain’ to the public why Australians pay the highest power prices in the world (that RE superpower, South Australia tops them all).

At least Frydenberg had the integrity (on this occasion) to admit that the subsidies enjoyed by wind and large-scale solar, and suffered by all Australian power consumers, roll-on until 2031 (the subsidy set up by the legislation only ends on 31 December 2030).

Until recently, Josh has been pretending that the NEG spells the end of subsidies to wind and solar. So, full marks for a little candour, where it counts.

Josh might also like to explain the relationship between heavily subsidised, intermittent and unreliable renewables and rocketing retail power prices (Josh, we’ve included a picture, drawn up by Dr Michael Crawford, to help you with your explanation).

Josh seems to be channelling the old chestnut about ‘sovereign risk’ when he talks about the “legislated” renewable energy target and how “companies have invested in it, Tony Abbott got it down, investments were made”.

Josh is all too keen to explain his heart-felt obligation to protect the ‘investments’ made by wind and solar outfits, but he’s nowhere near as eager to explain what his obsession with subsidised wind and solar has done to the multi-generational investments made by Australia’s miners, mineral processors, manufacturers and tens of thousands of small businesses, being crippled by rocketing prices and an unreliable power supply.

While he’s explaining the new and burning need to protect investments in renewable energy, Josh might like to start explaining how the average ‘mug’ investor can hope to match the incredibly ‘lucky’ RE investments made by the PM, Malcolm Turnbull’s son, Alex.

Turnbull Jr defied convention and bet against the house, when he purchased a swathe of shares in embattled wind power outfit, Infigen, through his investment fund, Keshik Capital, back in late 2015. Canny to a fault, Alex Turnbull snapped them up for $0.20 apiece, just before his Dad signed Australia up the Paris Treaty in April 2016, when, hey presto, those shares jumped to $1.20, almost overnight. Talk about lucky!: Born Lucky: Stars Align Perfectly for PM’s Son with Mammoth Bet on Wind Power Outfit Infigen

Instead of protecting wind and solar outfits, as if they were some rare and endangered species, STT hears that the Monash Forum is about to launch an assault on the value of subsidies to wind and large-scale solar with a very simple move.

The value of Renewable Energy Certificates (RECs), aka Large-Scale Generation Certificates (LGCs) is fixed by the shortfall penalty, created by the Renewable Energy (Electricity) (Large-Scale Generation Shortfall Charge) Act 2000 and sections 5 and 6:

Imposition

The large-scale generation shortfall charge that is payable under the Renewable Energy (Electricity) Act 2000 is imposed by this section.

6 Rates of charge

(1) The rate of charge is $65 per MWh.

If a retailer fails or refuses (as a number have already done, with more to follow) to purchase RECs from wind and large-scale solar generators, that retailer is hit with the shortfall charge at a rate of $65 per MWh for every MWh they fall short of the 33 million MWh annual target, until 2031.

The choice is either purchase a tax-deductible REC or pay the non-tax-deductible fine.

The tax treatment of the shortfall charge, means that a corporation paying an effective 30% tax rate, is better off purchasing a REC and paying up to $93. It’s that relationship that has set a floor price for RECs (currently trading around $85 each).

Where the Shortfall Charge Act sets the rate of the penalty at $65 per MWh, it could just as easily set the fine at $0.00, providing much-needed relief to power retailers and their customers, at the stroke of a pen.

There are plenty of renewable energy zealots who keep telling us that wind and solar power are truly competitive with conventional generators, suggesting that the need for whopping subsidies is a thing of the past.

Well, the Monash Forum is raring to give wind and solar power outfits a chance to stand on their own two feet, by chopping the shortfall charge back to zero.

Then, renewables rent seekers, like Tristan Edis and John Grimes really will have something to complain about. Unless they truly are serious about being ready to ‘compete’ head-to-head with conventional generators? Yes? No? Maybe?