#southaustralia

$14bn shock for Shorten. Not $100m

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Let’s face it, pre-election budget boasting is a beauty contest we can do without. Fanciful promises guarantee we will not end up in surplus. Shorten’s speech was loaded with mistakes. Let’s cut through some numbers.

The Coalition put forward the following on Tuesday.

What escaped many in the Frydenberg budget of Tuesday is that to fund the 16.8% jump in tax receipts on 2018/19, individual taxpayers will still see their pockets hit +18.4% in aggregate even after including the ‘generous’ rebates. Superannuation tax collections will jump 43% in 4 years time.

NDIS spending is targeted to be 92% higher by 2022/23 than last year. Medicare +24%, public hospital assistance to the states +21%, aged care services +27%. For all the celebrations of lowering pharmaceutical rebates for one wonder drug from $120,000 to $6.50, the reality is spending in this segment will fall 18.4% in total. The family tax benefit will squeak 4% higher in the next 4 years.

As written on Tuesday, the revenue projections of the government are unrealistic as we stare at a slowing world economy. German industrial production in March cratered to 44.1 and China’s auto sales continued a 7-month double-digit slump in February.

Analyzing the Labor response

Shorten claimed NDIS was cut A$1.6bn to get a surplus. Under Frydenberg’s budget, NDIS for 2019/20 will rise A$4.5bn. Out to 2022/23, it rises to over A$24bn.

The Opposition Leader also made reference to A$14bn in cuts to public schools. Note the funding to public schools on 2013/14 was A$4.8bn. In 2018/19 it was $7.7bn and projected in 2022/23 to be A$10.4bn. 

$200mn to renovate nursing campuses in Australia won’t achieve much. The John Curtin Medical Research School at the ANU cost $130mn alone.

Shorten made reference to bushfires being caused by climate change. Fire & Rescue NSW notes that 90% of fires are either deliberately or accidentally set. A Royal Commission after the horrible Black Saturday bushfires showed that policies which restricted backburning reduction targets were to blame for the larger spread of fires, not climate change. In 2013, Tasmania learned none of the lessons with similar policy restrictions preventing the Tasmanian Parks & Wildlife Service to complete more than 4% of all the 2.6m hectares it manages. The reef is not being damaged by climate change and floods and drought are no more frequent or severe than a century ago.

While climate alarmists will relish the prospect of 50% electric vehicles (EV) and cut emissions 45% by 2030 to save the planet, a few truths need to be considered:

1) our own Chief Scientist, Alan Finkel, has admitted that no matter what Australia does to mitigate global warming our impact will be zero. Naught. Nada. Putting emotion to one side, is there any point in spending $10s of billions to drive electricity prices?

2) South Australia and Victoria have already beta tested what having a higher percentage of renewable energy does or rather doesn’t do for sustainable and reliable baseload power. Both states have not only the highest energy prices in Australia but the world. These stats are backed up in Europe. The EU member states with a higher percentage of renewables have steeper electricity prices than those with less. These are facts.

3) Consumption patterns matterLast year Aussies bought only 2,200 EVs. In 2008, SUVs made up 19% of the new car sales mix. Today they make up 43%.
In 2008, c.50m total passengers were carried on Australian domestic flights to over 61m today. The IATA expects passengers flown will double over the current level by 2030. These are hardly the actions of people panicked about cataclysmic climate change. Or if they are, they expect others to economize on their behalf.

Qantas boasts having the largest carbon offset program in place yet only 2% of miles are paid for, meaning 98% aren’t. 

4) Global EV production capacity is around 2.1m units. While rising, it is still a minor blip on 79 million cars sold worldwide. Add to that, auto parts suppliers and car makers are reluctant to expand capacity too fast in a global auto market that is slowing rapidly.

Car sales in China have fallen for 7 straight months. In Feb 2019, sales fell 13.8% on the back of January’s -15% print.  Dec 2018 (-13%), Nov 2018 (-13.9%) & Oct 2018 (-11.7%) according to the Chinese Association of Automobile Manufacturers (CAAM). The US and Australian car markets are under pressure too. 

5) So haphazard is the drive for EV legislation that there are over 200 cities in Europe with different regulations. In the rush for cities to outdo one another this problem will only get worse. Getting two city councils to compromise is one thing but 200 or more across country lines?

Without consistent regulations, it is hard for makers to build EVs that can accommodate all the variance in laws without sharply boosting production costs. 

6) Fuel excise tax – at the moment, 5% of our tax revenue comes from the bowser. $25bn! Will Mr. Shorten happily give this up or do we expect when we’ve been forced to buy EVs that we will be stung with an electricity tax on our cars?

7) Norway is a poor example to benchmark against. It is 5% of our land mass, 1/5th our population and new car sales around 12% of Australia. According to BITRE, Australia has 877,561km of road network which is 9x larger than Norway.

Norway has around 8,000 chargers countrywide. Installation of fast chargers runs around A$60,000 per unit on top of the $100,000 preparation of each station for the high load 480V transformer setup to cope with the increased loads.

Norway state enterprise, Enova, said it would install fast chargers every 50km of 7,500km worth of main road/highway.

Australia has 234,820km of highways/main roads. Fast chargers at every 50km like the Norwegians would require a minimum of 4,700 charging stations across Australia. Norway commits to a minimum of 2 fast chargers and 2 standard chargers per station.

The problem is our plan for 570,000 cars per annum is 10x the number of EVs sold in Norway, requiring 10x the infrastructure.

While it is safe to assume that Norway’s stock of electric cars grows, our cumulative sales on Shorten’s plan would require far greater numbers. So let’s do the maths (note this doesn’t take into account the infrastructure issues of rural areas):

14,700 stations x $100,000 per station to = $1,470,000,000

4,700 stations x 20 fast chargers @ A$60,000 = $5,640,000,000 (rural)

4,700 stations x 20 slow chargers @ A$9,000 = $846,000,000 (rural)

10,000 stations x 5 fast chargers @ A$60,000 = $3,000,000,000 (urban)

570,000 home charging stations @ $5,500 per set = $3,135,000,000 (this is just for 2030)

Grand Total: A$14,091,000,000

Note that Shorten pledged $100m to EV charging stations around Australia to meet his goals. Even if he was to skimp on 2 fast and 2 slow chargers per stand, Aussies taxpayers will need to shell out $6.5bn. At least he could technically cover that with repealing $6bn in franking credits.

Norway’s privately run charging companies bill users at NOK2.50 (A$0.42c) per minute for fast charging. Norway’s electricity prices are around NOK 0.55 (A$0.05c) per kWh to households.  In South Australia, that price is 43c/kWh. So will Shorten subsidize an EV owner charging in Adelaide at the mark up a private retailer might charge? 

What about subsidies to EV buyers? If we go off Shorten’s assumptions of $3,400 per EV at 570,000 EVs per annum, the tax payer will fork out $1.94bn a year.

Will there be a cash-for-clunkers scheme?  If the plan is to drive internal combustion powertrains off the road, existing owners may not be emboldened with the decimation in the value of their existing cars. Let’s assume buyers are irrational and accept $3,000 per car (Gillard offered $2,000 back in 2010) trade-in under the scheme. That would amount to $1.73bn.

8) Making our own batteries! While it is true Australia is home to all of the relevant resources, sadly we do not have enough cobalt to make enough of them.

Australia is home to only 4% (5,100t) of the world’s cobalt. 60% of the world’s cobalt comes from DR Congo which has less than satisfactory labour laws surrounding children. If we want cheap EVs, we have to bear that cross of sacrificing children to save the planet. It can’t be done any other way.

Li-ion batteries consume around 42% of the globe’s cobalt supplies. Cars are 40% of that. The rest being computers, mobile phones, etc.

9) Automakers have set up their own battery capacity to supply internal production. Given our terrible history in automotives, we should not expect them to line up to buy our batteries.

Nissan spent around A$770m on a battery plant in Sunderland. Panasonic plowed $2.8bn into the battery plant that supplies Tesla.

10) Australia has no real homegrown industrial scale EV battery technology. If we bought in a technical license, that will only make our production costs prohibitive on a global scale. Our high wage costs would add to the improbability of it being a sensible venture.

All in, Shorten’s EV plans could cost Australians well over $20bn with c.$4bn in subsidies ongoing.

11) Green jobs – according to the ABS, jobs in the renewable sector have fallen from the peak of 19,000 in 2011/12 to 14,920 in 2016/17. The upshot is that green jobs in the renewable sector are not sustainable.

In short, Mr. Shorten’s budget reply was extremely thin on detail. Especially with respect to climate change. The LNP has plenty of ammunition to prosecute the case on his wild costing inaccuracies (as outlined above) yet will they have the gumption to fight on those lines. Saving the planet is one thing.

Loading a stretched grid with EVs and increasing the proportion of less reliable power sources looks like a recipe for disaster. We need only look at consumption patterns to get a true sense of how ‘woke’ people when it comes to global warming. South Australians and Victorians are already living the nightmare of renewables.

This election is about one thing – individual pocketbooks. The electorate needs working solutions, not electric dreams.

Renewable investment dropped by largest margin ever

While watching the MotoGP in Sachsenring over the weekend CM couldn’t help but notice the lack of wind power being generated nearby the circuit. Last week we saw Ontario Premier Doug Ford terminate 758 renewables projects on the basis of their inability to provide sustainable and affordable energy. Last week South Australian consumers were hit with spot prices of $1,200/kWh because of the lack of baseload. Former Premier Jay Weatherill was turfed in the recent election because voters were growing tired of facing the highest electricity prices, slowest growth and highest unemployment rates. Despite all the jaw boning about the big renewable energy job machine, the Australian Bureau of Statistics noted, “by state, South Australia has seen a 65% fall in green jobs since the peak in 2011/12. Victoria down 46%, Queensland down 49%, NSW down 32% & WA down 55%.”

The FT noted today that “Investment in renewable power declined last year by its largest amount ever and is likely to keep falling this year, threatening global climate goals…”

Should we be surprised to see the Turnbull Government in Australia look to keep open the very power stations they were seeking to close to meet Paris targets? Isn’t the 7% fall in global renewables investment last year yet more evidence of the waning popularity of saving the planet? IATA forecasts aircraft passenger travel to double by 2030. Gas guzzling SUVs are also toward the top of the sales charts. Consumers expect others to save the planet for them. Consumption patterns reveal one’s true care for climate change i.e. not much.

South Australia has been the biggest red flag when it comes to failed renewable policy in action. The irony is the state dynamited the old coal fired plants as a virtue signaling exercise. We have even seen some corporations look to take power plants over to become self sufficient because they have no faith in the grid.

Opposition leader Bill Shorten might want to censure coal fired power backers for being “knuckle draggers” but with a risk of repeat $1,200/kWh spot prices thanks to overreliance on renewables, many consumers will gladly wear that as a badge of honour if it means they can afford to heat their homes due to the overly cold winter.

Power prices hit $1200/kWh in SA

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When the wind doesn’t blow, South Australia’s 40% reliance on renewables gets exposed for it’s Achilles heel – lunatic power prices. At one stage today, power prices hit twelve hundred dollars ($1200) a kWh. Put into layman’s terms, if you accidentally left the porch lights on when you went to work and they were powered by two 100 watt light bulbs, in 10 hours each would rack up 1 kWh of energy. So that little mistake would cost $2,400 at those prices! So much for Elon Musk’s mega battery saving the day for South Australians during power shortages. No wonder Jay Weatherill’s government was turfed.

Virtue signaling fails again at the ballot box

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No matter how dreadful the Liberals under Turnbull are at a federal level, South Australians realized that the 16 years of Labor in SA led them to the slowest growth, highest unemployment and most expensive electricity prices in the nation thanks to the loony renewables policy of the Weatherill government.  He ran a platform to double down on the failed policy that led to multiple state wide black outs. Common sense prevailed and he was rightly booted.

No amount of blowing up coal fired power stations or smug smiles while shaking hands with Elon Musk to make out as if wasting $560mn more of taxpayers money was intentional, could sway the hearts of the electorate.

The Libs gained a majority on its own right with 25 seats. Labor set to lose 5 seats to 18. The Greens lost more ground in SA, slipping over 2% to 6.6%. No seats. At the sharp edge of the wedge, a growing number of constituents don’t need the virtue signaling. They want sustainable jobs, sensible stewardship of their tax dollars and reliable, affordable electricity.

Whether the Libs can actually deliver is another question but Premier Weatherill’s flagrant failure came home to roost. However Turnbull mustn’t take these state victories as an endorsement for the coalition at the federal level. He’s still badly burnt toast.

A windy day in Hamamatsu

Who would have guessed tht two out of five wind towers are working on a windy day in Hamamatsu, Japan? Why do we bother with such useless renewable power? Perhaps it is worth mentioning that these wonders of green madness require fossil fuel based products to keep the gears lubricated…never worry about that……

What could possibly go wrong?

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From Jo Nova

“SA Government has just agreed to run itself for 20 years off a plant that is a copy of Crescent Dunes in the US. It’s paying twice the price of wholesale coal power, the US plant took 5 years to build and worked for 1 year and 1 month before breaking down for 8 months.

Crescent Dunes only works at a 16% capacity factor which means a 150MW version would average only 24MW. Winter generation is a mere one third of summer (though there is only one year of data to go on!) SA may well be better off if Parliament has to shut down for winter, but how do you run hospitals and schools on one-third of the power?

What could possibly go wrong?”

80,000 litres of diesel an hour to save renewable energy failure

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You have to laugh at the irony. In order to make up for South Australia’s misguided renewable energy policy which has been the cause of numerous blackouts, 9 diesel generators costing $111mn will use 80,000 litres of diesel per hour to keep the lights on during power shortages. Had the Port Augusta coal fired plant not been ceremoniously dynamited as a virtue signaling exercise, South Australian tax payers would be $100mn better off as a start. Energy Plan Implementation ED Sam Crafter said after the initial 13-month period, there was an option to extend the lease for a further 12 months. There also was an option to walk away at the end of 25 months. So if South Australia chooses to extend the lease of the generators for another 12 months the cost won’t be included in the $111m. It is hard not to laugh at the irony of governments who make such appalling choices and cover up their mistakes by stealing more from taxpayers who they never properly showed costings to in the first place. Is it any wonder South Australia has the highest energy costs in the world, the highest unemployment rate in the country and the slowest growth. Don’t be surprised if Premier Jay Weatherill sees this as a fair price to pay to save the planet, even if South Australia is crushed in the process.