It would have happened without Vladimir Putin. It will happen again even after he swings by his heels from a lamppost in Lubyanka Square. The crisis in Australia’s energy markets is less a crisis than business as usual for the handful of fossil fuel multinationals that own 95% of the country’s LNG export industry. It’s Stringer Bell giving D’Angelo Barksdale the TLDR on the heroin trade.
“Sh*t is strong, we gonna sell it; sh*t is weak, we gonna sell twice as much. You know why? ’Cause a fiend, he gonna chase that sh*t no matter what. It’s crazy, you know. We do worse, and we get paid more.” – Stringer Bell.
We’re the dope fiends in this scenario, with our civilisational need for baseload power. And Chevron, ExxonMobil and Shell are Stringer Bell’s organisation. They the own corners, the towers and all the shit in between. They’ll hook you up with what you want…
So far, we’ve been paying in extinction-level mega-fires and once-in-a-century floods that have started rolling on us every other year. Since May, however, we’ve also been paying old school, with truckloads of the folding stuff.
The reasons why all trace back to our carbon addiction.
Despite the solar panels sitting on top of every fourth roof in Australia, we remain fools for coal. More than half our baseload power comes humming out of big arse coal-fired power plants. Some of them are so old they’re literally falling apart, and as they fall apart, catch fire or simply blow up, they go offline.
At the moment, 25% of our coal-fired capacity is offline. But the gigantic tongue of nipple-freezing polar air licking at us from Antarctica remains very much online, so we’ve turned on the heaters. Contrary to the agitprop coming from the gas industry, renewables are kicking in like champions, providing more electricity to more people than ever before. Still, after nine years of an actively hostile federal government, there’s much less green energy capacity on the national grid than there should be. Not to worry, though, cos here comes Stringer Bell with an offer you can’t refuse (unless you want to freeze your arse off).
The multinationals that somehow squatted on our gas fields are more than happy to hook a brother up. But you still gotta pay. And since they sell almost all of their product into the global market, you gonna pay the global rate, which is a little spendy at the moment because of a series of unfortunate incidents in Ukraine. And seeing the gas suppliers making out like bandits, not just here but all over the world, coal miners have raised their prices too.
Some other supply and demand shit is going down. For instance, there’s only so much coal and gas you can move around on the rolling stock and through the pipelines you have, and that scarcity drives up the price, too.
But in the end, you’re getting gouged because the guys who own the corners, the towers, and all the shit in between know that you’ll pay.
So what can you do?
Well, Albo could get medieval on the gas industry. They’ll be minting it like kings and if you’re wondering how much tax they’ll pay on that, prepare yourself for disappointment. The kings will pay no tax because they never do.
A handful of heretical pointy heads are all for raking back some of the insane profits the multinationals have been sacking away. ANU’s Dr Hugh Saddler, from the university’s Centre for Climate Economics and Policy, reminds us what it means when you set up on the corners. You can name your price:
“Low availability of coal means that gas-fired generators, although only a small contributor to total supply, are more frequently in the situation of being the marginal source of supply, thereby setting the spot price for the relevant trading period.”
His colleague from ANU’s Crawford School of Public Policy, Economics Professor Frank Jotzo, recommends the Omar Little approach. Shake the mofos down. “We are really falling far short in this country in properly taxing resource excess profits.”
Jotzo recommends spending any tax take on building out the new, smarter, greener grid required to get us to zero carbon.
Albo, sadly, has already ruled that out.
Last week’s ministerial hook-up was notable for being the first in nine years at which Angus Taylor didn’t pole dance for a bunch of fossil fuel barons while future generations stood with their faces pressed against the glass, watching their futures go up in literal smoke.
Liberal and Labor state energy ministers all held hands and promised to be better. It was a genuinely lovely moment. Maybe something will come of it, but not for a while.
The statement released after the group hug promised fast-tracking of renewable energy infrastructure, a lot of which could be in place within three years. But a lot of it is in place already. It’s just not being used because of painfully slow approval processes. Tristan Edis, the Director of Analysis at Green Energy Markets, writes that…
“there are many hundreds of megawatts of wind and solar plants that are fully built but are being constrained from exporting their full output due to what has become a very drawn-out grid connection commissioning processes imposed by grid operators.”
Here’s a suggestion then, grid nerds. Maybe work through lunch and get that shit done yesterday.
Mostly what you’re going to hear about, however, is something called a capacity mechanism. Boiled down to essences, this means paying energy providers a retainer to hang around on the corners with a few sweet bags of extra product just in case any desperate fiends show up with a super-bad need on them.
If you’re a coal or gas supplier, it can look a lot like Angus Taylor on a stripper pole.
WA’s Merredin Energy, for instance, runs an 82MW gas peaking generator that came online in June 2012. When I say ‘runs’, I don’t mean it like running an artisanal little power plant that spins up every now and then for the delight of the curious and paying customers. I mean more like Omar running a shakedown.
Since it was commissioned ten years ago, the 82MW Merredin Energy peaking generator has run for about five hours a year, primarily for testing. But Merredin Energy has been paid about $12M a year under the current capacity mechanism scheme.
It recently declared it would like $14.5M a year because, fuck, who wouldn’t?
A capacity mechanism that delivers heaps more cheddar for Merredin Energy would be outstanding earn for Merredin Energy but suboptimal for the rest of us. But you can imagine who’ll be lobbying for it. The same guys currently occupying the corners and towers and demanding everyone pay them for their shitty product.
I guess we’ll see how that turns out.
If things have changed, any capacity mechanism, or capacity reserve as it’s sometimes known, will go towards building out renewable and storage.
Thanks for explanation JB. Now that I understand it better--What a complete fcking rort! Jesus Joseph and Mary why sell heroin when you can do this shit legally.
I dont know what I could possibly say, but feel like I should comment something.
Barely felt the cold last night.
Wrapped up in a queen, thick plush blanket. A few half-drunk beers helped, maybe.
Bed early. Just the one torch on, just in case QLD was cut.
Did leave a voice message at a regulator last night. Asking them to let us have electricity because it's winter. To please stop with the market manipulation. Let us have electricity.
There's no need for cutting the supply. As JB researched. Good to see that.
In the Kable household we sit fully warmly dressed - no heater on - maybe two hours of electric blanket - though me still top to toe rugged up in nightwear! To keep warm. I'm off to the mountains in the states north to-morrow - frost territory! layers of clothing again! I've now watched three separate commentaries on this energy crisis - brought to us largely by the LNP over the past decade...and foreign-owned corporation cowboys allowed to control us! Thanks, JB - confirmation icing on the multi-layer cake of gouging energy bandits.
A TLDR on the history of why this situation is so fucked - the NEM (National Electricity Market) was designed by and for fossil fuel generators back in the late 1990s and has been in need of major reform for at least 15 years. Specifically, the bidding mechanisms incentivise generators to withhold supply to force prices up; there is no accounting for emissions in the regulator's mandate; and many of the detailed regulations of the market are loaded against renewables. People like Saddler, Jotzo, Denniss and others have been talking about these things since I studied my Masters in 2007 and very little has been done.
And then there's gas. WA has a domestic reserve policy introduced in 2006 - 15% of gas from all developments reserved for domestic market. The East has needed one of these for 20 years, but successive Lib-Lab-Lib govts all refused to do anything about it. Then the industry built massive export terminals exposing us all to the global price. And guess what? Gas determines the marginal price of electricity. Completely avoidable clusterfuck. And don't get me started on the virtual monopoly of the Eastern pipeline network and how that is gouging us 3-4x what it should just to move the gas around...
I just can't believe that you got it all done without mentioning "gas led recovery" once. You mention the Merredin Energy peaking plant, but not the one the public is funding in Kurri Kurri NSW, a location that does not have a gas supply, but that's OK because they were not planning to run it any more often than the one in WA.
I'm waiting to see which of our federal rorters will Do A Downer, and magically appear on the board, as an advisor, of one or more of our energy tsars, with that prized little black book with all those private phone numbers of the movers and shakes in the Canberra bubble bath.
Why sign up to be registered lobbyist when you can lounge around pool side and make a few discreet calls, from your burner phone, to your old mates in the cabinet, or head of department.
It is very handy to get a heads up on a board decision before it has been made public, and pass the tips on to return the favour.
Jesus A Christ, lets all bend over and take it like good consumers and constituents, this is a call to arms Albo... fix this clusterfuck, DO SOMETHING NOW!
Idris Elba...be still my beating heart and throbbing loins. Just had to say that, JB.
So the coal fondlers and gas guzzlers have got us by the goolies because previous governments have had no goolies?
Thanks for explanation JB. Now that I understand it better--What a complete fcking rort! Jesus Joseph and Mary why sell heroin when you can do this shit legally.
First comment FTW!
Angus pole dancing? (shudder) Going be hard to get rid of that image JB, you fiend!
I dont know what I could possibly say, but feel like I should comment something.
Barely felt the cold last night.
Wrapped up in a queen, thick plush blanket. A few half-drunk beers helped, maybe.
Bed early. Just the one torch on, just in case QLD was cut.
Did leave a voice message at a regulator last night. Asking them to let us have electricity because it's winter. To please stop with the market manipulation. Let us have electricity.
There's no need for cutting the supply. As JB researched. Good to see that.
Its all lies.
In the Kable household we sit fully warmly dressed - no heater on - maybe two hours of electric blanket - though me still top to toe rugged up in nightwear! To keep warm. I'm off to the mountains in the states north to-morrow - frost territory! layers of clothing again! I've now watched three separate commentaries on this energy crisis - brought to us largely by the LNP over the past decade...and foreign-owned corporation cowboys allowed to control us! Thanks, JB - confirmation icing on the multi-layer cake of gouging energy bandits.
"We are really falling far short in this country in properly taxing resource excess profits.” really Sherlock I hadn't noticed.
I got the shotgun, you got the electricity grid, it's all in the game though, right?
“Feel sick and dirty, more dead than alive”
Waitin for the man.
A TLDR on the history of why this situation is so fucked - the NEM (National Electricity Market) was designed by and for fossil fuel generators back in the late 1990s and has been in need of major reform for at least 15 years. Specifically, the bidding mechanisms incentivise generators to withhold supply to force prices up; there is no accounting for emissions in the regulator's mandate; and many of the detailed regulations of the market are loaded against renewables. People like Saddler, Jotzo, Denniss and others have been talking about these things since I studied my Masters in 2007 and very little has been done.
And then there's gas. WA has a domestic reserve policy introduced in 2006 - 15% of gas from all developments reserved for domestic market. The East has needed one of these for 20 years, but successive Lib-Lab-Lib govts all refused to do anything about it. Then the industry built massive export terminals exposing us all to the global price. And guess what? Gas determines the marginal price of electricity. Completely avoidable clusterfuck. And don't get me started on the virtual monopoly of the Eastern pipeline network and how that is gouging us 3-4x what it should just to move the gas around...
I worked for Dr Saddler for 5 years and energy policy is one of my areas of expertise if anyone has any further questions.
No one is talking how far along capture storage battery projects are in nsw, vic or qld. The one put into sa was a game changer to stop the gouging
Very nice article, thanks!
I just can't believe that you got it all done without mentioning "gas led recovery" once. You mention the Merredin Energy peaking plant, but not the one the public is funding in Kurri Kurri NSW, a location that does not have a gas supply, but that's OK because they were not planning to run it any more often than the one in WA.
I'm waiting to see which of our federal rorters will Do A Downer, and magically appear on the board, as an advisor, of one or more of our energy tsars, with that prized little black book with all those private phone numbers of the movers and shakes in the Canberra bubble bath.
Why sign up to be registered lobbyist when you can lounge around pool side and make a few discreet calls, from your burner phone, to your old mates in the cabinet, or head of department.
It is very handy to get a heads up on a board decision before it has been made public, and pass the tips on to return the favour.
Its a great article
Jesus A Christ, lets all bend over and take it like good consumers and constituents, this is a call to arms Albo... fix this clusterfuck, DO SOMETHING NOW!
Recommend a Quarterly Essay, ‘Getting to Zero’ by Alan Finkel.
Energy crisis? Why didn't somebody warn us??