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What's behind the green door? The Power Producers' Club

By Geoff Carmody - posted Wednesday, 10 October 2018

One more night without heating.

Keep us warm while we're sleeping.
Green door.

What's that secret you're keeping?

Base-load 'kept the lights on'
now they say 'It's shot',

behind the green door.
'Green's so cheap' they swear
but then they hide its cost,

behind the green door.
Wish they'd let me in,

so I could find out what's
behind the green door.

With apologies to The Green Door (Davie/Moore, 1956)

Australia has a large Power Producers' Club (PPC).

Like the Industrial Relations Club (so labelled in 1983), the PPC is a specialised brethren investing and dealing in the complexities of power generation, big electricity grids, NEM bidding systems, reserve/storage capacity, grid stability, the literally second-by-second challenge to keep the lights on across the grid, etc.


Club membership covers a growing bevy of government acronyms: AEMO, AEMC, AER, ESB, and more. Power generators of all types (fossil fuel, renewables, etc), transmission and distribution investors and managers, power retailers, and industry associations of all stripes, belong. High-profile renewables advocates with investment 'skin in the game' are book-talking members.

Above all these, energy Ministers, Commonwealth and State (COAG), are key members. These have their own, conflicting, political axes to grind.

Combined, PPC members have lots of information on power supply and its costs. Power users don't.

Some history on power costs provides context.

Once upon a time, renewables were touted as a way of preventing extreme depletion of scarce fossil fuels that would drive their prices to destructively high levels. Renewables were 'sold' as permanent energy resources. They could also keep depletable fossil fuel costs down by becoming durable substitutes for them.

This was a fairy tale. Economic, reliable, fossil fuels are still being unearthed. Our nuclear stocks are large.


Time for a new story.

Global warming (or climate change, or extreme weather – the labels keep changing) is the new crisis. Now, remaining fossil fuel resources mustn't be used at all. Otherwise the world will cook. Policy protects and subsidises renewables, making them appear cheaper than fossil fuels. They're not. This policy also makesfossil fuel power intermittent, increasing its costs, driving it out of the market, and deterring new investment.

First it was claimed renewables would keep fossil fuel costs down. Now their job is to force them up. Either way, reliable renewables' own costs are opaque. Worse, factual cost information is replaced by ex cathedra assertions that renewables are cheaper. This cost catechism is learned by rote, accepted as faith, repeated ad nauseum, and, above all, must not be challenged by evidence. Those questioning this faith using facts are condemned by believers to apostasy (like Galileo – after The Dialogue).

Greens, governments and international organisations are the lead preachers of this new dogma. Many convert to this faith, in the hope it's true. Some want lots of cash charity as part of the deal too.

Using facts to guide energy policy these days is regarded by some as 'unenlightened'. Ironic. The Enlightenment (1685-1815) stressed reason, logic, scepticism, and evidence, as the bases for knowledge. Historically, these have driven scientific advancement. They still do, where permitted to apply.

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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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