Energy Plan- why it is bad, and why there is not much protest.

19 October 2017

No one quite understands the new energy policy, (National Energy Guarantee -NEG) which is why there is not much protest. But I suspect it is very silly. Here is why.

The National Electricity Market worked because suppliers put in bids for a price on 5min supplies. But big producers could withhold creating a shortage, then put in a late bid at a high price. That segment would then go out at that highest price with every supplier getting the higher price. Logically then,the cheaper producers simply made more money. I have heard that a wind turbine in a good location could be paid off in 18 months, and that the price will settle at about $87 a megawatt hr.

The new plan puts big stress on reliability, so the solar and wind people are disadvantaged, but can still make a lot of money. The coal technology is still not much use, as they cannot compete with renewables when the sun shines and the wind blows, and they cannot ramp up supply quickly. They are, as everyone keeps saying, better for base (=constant) load. Added to this they are obsolete as the pipes in the boilers get stress fractures after a certain time and maintenance becomes uneconomic.

Gas is good at turning on and off quickly, but as we know, gas contracts for export has left us short, so Malcolm will create some problems there.

So a system that has been rorted by a few inside players who get supernormal profits will be given a licence to continue. The price of electricity will not fall much, and the consumer will continue to be gouged, with vulnerable industries simply going broke to allow the energy players to get profits that they really should not have. But there is not much protest because either people do not understand what is happening, or they are beneficiaries of a little understood rort that will continue because they have cleverly used fear of blackouts to get a cushy system.

And I suspect Labor will support it, as it has support from the energy industry, and they can claim bipartisanship, and they have been too lazy to get a better plan.

See also the Post ‘A Response to the Libs’ Energy Plan 19/10/17′

www.abc.net.au/news/2017-10-17/explainer-energy-policy-what-is-the-coalitions-new-plan/9057158