This report by Australia’s Cyber Dream Time and Thought Monitoring Agency (ACDMA) is classified above Top Secret!
Authorization: Alpha, Zulu, Lucy
Classification: Random white fella dream time story recording
Purpose: To monitor thought manipulation by foreign agencies and subversive individuals intent on damaging Australia’s national security.
Security Alias Protocol: Spoof
Dream Time Subject: Malcom Turnbull, PM
Dream Time Scan: 2 am – 3 am EST
In a previous article I hinted that the Turnbull government would not go ahead with the implementation of a CET (Clean Energy Target) or even an ETS. This anticipated outcome was predicated on the assumption that there is little appetite for a clean energy subsidy scheme supporting Australia’s energy cartel. Then another obtuse idea thundered through the corridors of power from the opsimath of public persuasion squatting in the bureaucratic recesses of panopticism. Let’s persuade Australian consumers to agree to an agnostic energy technology subsidy for the benefit of Australia’s energy cartel. The gods of thunder and lightning could be forgiven for misunderstanding the true intent from the Abbott of wrath and retribution. Claims of sabotage and even disloyalty have hounded the broad church as its hall of mirrors collapsed into chards of indecision and vailed acrimony. Amidst this pantomime nearly everyone forgot the one question few have dared to ask. How does a political marketing gimmick birthed by the peon of energy policy stack up against the weight of national interest and national security? Hang on! Wait a minute here! Do we need someone in a uniform to stand around in the background before we can answer this? Perhaps this is not even the right question to ask in Australia’s current political climate. Maybe a more appropriate question to ask is this. How does a political party nurtured on free market ideals reconcile its moral and ethical obligations to the nation whilst engaged in the self-interested pursuit of power for the benefit of a convenience deal?
Everyone agrees that Australia urgently needs a national energy framework that outlines a coherent national energy market master plan. What is perhaps less clear are the discussions around what a national Clean Energy mechanism looks like in a poorly regulated market controlled by less than a dozen companies protected by state self-interest. At the political level Australia’s free market emperor remains hidden behind the security fence that surrounds his Canberra castle at ‘Mole Hill’. In this obvious predicament, this ‘Top Cat in a Top Hat’, has chosen to be more concerned about asking his tailor to market his conservative brand of clothing and apparel wear, instead of tackling the fundamental contradictions that govern the rules of a broken energy cartel market. During this apparent confusion the robber stoats and their henchmen are lying prostrate in front of the security fence surrounding ‘Mole Hill’ praying for leadership. These guys actually want greater regulatory control in the national interest! The cynicism of those who understand the stakes of this enormous game of chicken played out on the national stage knows no boundaries. Few could have predicted that emperor ‘Top Cat’ is now actively pursuing his own political survival as the robber stoats eye the gold in the treasury under his hill. A few months ago the smiling confidence of the emperor promised a national energy blue print. A new suit of clothes fit for a new age conservative who is both a queen’s man and a staunch republican. The appointment of professor ‘Underhill’ emerged as a critical mission in the education of a struggling seething Canberra mass in their quest to understand how individual state owned enterprises morphed into a privatized cartel operated for the express benefit of the bothers ‘OFI’ (Overseas financial interests) and ‘Sloth’ ( Government sanctioned siphoning of Australian tax dollars into legal overseas tax heavens). How such a transition is explained within the ideological precepts of a conservative political party wedded to the free market remains a conundrum the ‘Cat in the Top Hat’ has so far failed to explain.
It is an irony that has not escaped the robber stoats. Sending their loyal servant AEMO of NEM to do battle with the power hungry overlord of AEMC in the den of royal penance was a sign of true genius. To the administrators of panopticism it was a clear message about who intends to be in charge. Naturally the soothing crooning harmony for a better world had the emperor’s tailors and royal attendants crowing in delirious bliss. The announcement that all interested parties and robber stoats associates would welcome Australia’s gas addiction, if they are allowed to design and control a forward capacity market mechanism for the benefit of national energy security and affordability, was almost a side line medley. After all, the NEM was created as an artificial wholesale and retail market from a privatized state owned monopoly under specific contractual agreements to absolve the states of ‘Tedium’ from any ownership responsibilities of their people’s assets. No responsibility and all the benefit has been the creed of ‘Friedmanites’ pursuing the blood oath of monetarism since the dawn of time. The fact that state and federal jurisdictions ignored the regulatory environment of these artificially created markets cannot be blamed on the cartel of stoats managing these assets for the express benefit of the states who are ultimately liable for the provision of reliable, secure and affordable energy for their own regional economies under their jurisdiction. Plausible deniability was a contractual commitment agreed to by all parties and guaranteed in some cases for the next 99 years or more. State governments have long benefited from favourable tax, royalty and related administrative arrangements in return for unfettered interference in the daily operation of a business dependent on continued taxpayer support. In this business discrete administrative fees and charges, for auxiliary services as well as other related undisclosed service payments, are important traditions in a brown paper bag system of finance. As such, it is entirely conceivable that a trade-off for greater market intervention and industry transparency should entail a subsidy of perhaps $60 per MWh in an effort to maintain the competitive integrity of an Australian energy market in transition.
There is little doubt that the nature of this absurdity has not escaped the emperor in the ‘Top Hat’. For those of us with a longer political memory then the goldfish under the hill, the epic sagas of the countries of the West, North and the Queen’s wood are lore of legend and awe. Resource export trade deals remain a permanent reminder of the ethical and moral fibre that characterizes the true nature of the servants under the hill. No one can claim particular pride in the royalties for regions epic, or the international laughing stock concocted by the administrators of the West Australian capacity market model. Even though the current iteration of this concoction deserves another year of observation, there is little doubt that the debt laden legacy of a morally bankrupt Western Australian LNP government leaves little to be admired. In stoic reflection of their cousin in the West, the greedy administrators of the Northern Territory and Queensland have little to be proud of either. Few would question the prevailing winds of self-interest that howl around the stench of the Northern Development Corporation and the Adani Carmichael mine. Those with better memories then most wince over the organized resource theft of Timor-Leste by the Howard government. No realist is under any illusions about the motivations behind the government commanded by the emperor in the ‘Top Hat’. The enormous game of chicken playing out on the national stage between the robber stoats and the peons of panopticism has always been about favours owed and favours earned. The mug in the middle simply pays the bills as the straw man theorists compete for the rich waters of the billabong the rest of us need to parch our thirst. We can take little comfort from the lessons we should have learnt from the Texas energy regulator or the various European capacity market model iterations. Australia’s political establishment will continue to hammer out its ideological irrelevancies in a disgusting competitive pissing contest regardless.
So what is the answer? Some kind of weird religiously inspired technological agnosticism? In a stroke of pure ‘Bright Spark’ the emperor charged his tailor with the quest for the perfect suit of clothing. This ‘Top Cat’ is no hollow man vainly trying to tap dance to an outdated conservative ideology. No way; old man! In a particularly humorous twist the emperor of swing caught sight of the tailor ‘ScoMo’ who enterprisingly advertised himself as the best in town. With the silk sold for trinkets and the waters of the billabong used for dying cloth contaminated with flies and maggots; tailor ‘ScoMo’ set about convincing the emperor that he could spin cloth so sheer it would make him glow like twin rainbows over the plains of plenty. In the mean time! The rest of the LNP hierarchy realized that the ideological hallmark of its founders had no place in a market owned and controlled by the cartel they had created. So they set about rebranding the true conservative vision as the enemy of treacherous security threats hatched by radical right wing economists and their left wing LGBIT followers. How could this fake news have happened? The LNP and every institution of the nation has slavishly served the same agenda for so long that this level of betrayal must have seemed like discovering that god has always been a transvestite. What a bitter pill to swallow! Oblivious to this crisis of faith and the carnage on the floor of the house of penance, ‘ScoMo’ the tailor, continued spinning the emperor’s new suit. Scheming in his swimwear, the Abbott of agnosticism called for a return to the religious roots of conservative values in true self-serving fashion. These are values the high lords from the minor kingdoms of Oz cherish in their own way as they rushed to congratulate professor ‘Underhill’ for his earnest efforts to unite the tribes. One was not amused when the emperor regaled the world in his new suit! Amidst the merriment, the high lords of Oz declared their undying commitment to serve the gas addictions of the people of the East in return for much gold, tax concessions and federally funded gas pipelines.
No one should be more agnostic to the fervour of the contradictions inherent in the LNP diatribe then the burghers suffering these daily brain farts. What is at issue and what has always been at the core of the national energy crisis is the lack of specific focus on a national energy market regulatory framework. To this end we can all agree with AEMO the loyal servant of NEM acting in the name of the cartel. I have long maintained that the ordered implementation of a national market regulatory compliance, standards and market rule enforcement mechanism is a precursor to a flexible, competitive and low cost energy transition market that maximizes system resilience within a responsibly planned investment environment. Whether these objectives eventually create a CET (Clean Energy Target mechanism), an ETS (Emissions Trading System), a forward capacity market subsidy system, or all of the above, is not even an issue until we have designed a viable and fully transparent market regulatory framework. This is not a question of engineering but entirely a question of market transparency, market competition and stakeholder compliance and market rule enforcement. Fixing the energy market regulatory framework is a mandatory requirement for a national energy market master plan. I will go as far as to say that Australia cannot have one without the other. This is true irrespective of the political twists and turns executed at both state and federal level of government. We cannot escape the need to fix Australia’s broken energy market regulatory framework first. Even the stoats lying prostrate at the gates of mole hill know with certainty and with a glint in their eye; that the doors to the castle treasury must eventually open. It was not their fault that the lords of the land had given away their silk and the gold under their lands whilst draining the sacred billabongs of their forefathers in exchange for worthless beads and trinkets.
What if there is a third way? A way that goes ‘Beyond’ forward capacity markets! A way that integrates better market rules and a clean energy target with the LNP religion of technological agnosticism left intact for the true believers! What does this new way look like?
It starts with taking responsibility for the duties of governance instead of outsourcing them to a marketing company. It begins with some basic honesty. The Australian people have a right to know who has got their hands in their pockets and for how much. Malcom, mate! Wake up from your dream time delirium! Buddy, we need you to make some decisions right here and now!
No business let alone a government can afford to be indifferent to its future strategic direction. The purpose of any responsible management team is to chart the future profitability and long term sustainability of the business. The objective is to minimize costs and to pick winners. No rational business leader, let alone a national political leader, can claim ambivalence in relation to the necessary governance matters including the strategic business decisions relevant to the future profitability of the business. This is especially true when both the nature and meaning of technological agnosticism, let alone the levels of energy affordability and reliability, remain undefined within the context of a national energy security framework. At a serious strategic policy level we must ask what the precise definitions of energy affordability and reliability are to the Australian consumer. So far the Turnbull government has not delivered a clear definition. What has been stated categorically is that Australian consumers are unlikely to enjoy neither affordability nor reliability in the foreseeable future unless we accept energy technology agnosticism as a policy option. To any punter engaged in charting the progress of national productivity, employment and growth, this absurdity is little comfort going forward. It is also a self-reinforcing circular argument containing several assumptions and undefined assertions that have never been tested against any serious factual analysis. It is a rank populist argument that calls for faith in a government gambling its managerial credentials on a critical national infrastructure issue at the expense of a key national productivity input.
So far we have witnessed announcements for major hydro storage as well as ongoing negotiations to secure a short term gas reserve. We have witnessed state based initiatives in the development of battery storage and auctions for new wind and solar farms. The recent discussion over an AGL owned NSW coal fired power station indicate that technological agnosticism is not a consideration in the Turnbull government’s approach to fixing Australia’s energy crisis. A creeping sense of desperation and the inability to find agreement between the various stakeholder groups is. This sense of desperation is clearly at odds with the religious fanaticism that is characterized by the hard right of the LNP. These people are steadfastly advocating the virtues of a cartel operated centralized energy capacity market owned by the brothers ‘OFI’ and ‘SLOTH’. How a political party committed to the principles of free market competition is able to reconcile these apparent ideological differences in its own conservative platform is a pantomime of breath taking scope and exceptional oral gymnastics. Is the Turnbull government committed to increased energy market competition and improved energy affordability and reliability; or is the Turnbull government committed to subsidizing the existing energy cartel? No one seems to know! Those who are clearly in the dark about any of this are the loyal members of the LNP stalwart who don’t seem to be able to grasp the inherent contradictions between these publically stated positions and the conservative values they claim to hold dear to their bleeding hearts.
The conundrum is that old centralized coal fired power stations supplying baseload power are neither viable, reliable nor affordable in an energy market transitioning to DER ( distributed energy resources ). Australian renewables are experiencing a rapidly decreasing marginal cost curve comparable to the rest of the world. With a CONE ( cost of new entry ) value for new coal hovering at $200 and gas cycle power stations between $110-$150, the very notion that Australia’s energy affordability crisis can be avoided by a series of piece meal measures designed to manage transition via a short term gas forward capacity market supported by a regime of managed coal plant closures is nonsense. Even if we consider a $60 per MWh forward capacity market subsidy for all existing and new generators, the cost of new gas exploration, including unconventional gas supplies, will increase the burden on an already out of control national budget. It will not provide any assurance for lower energy prices nor increased capacity supply reliability. Existing gas power station costs hover at $94 with imminent increases forecast for new exploration. The members of Australia’s gas cartel are fully aware of this because the easy access reserves are almost depleted. For this reason Mr. Turnbull’s repeated efforts to bully the states into releasing new exploration licenses is both perplexing and confusing. Why would anyone claim that opening new exploration leases will somehow result in lower energy prices and greater energy reliability when the exploration costs and forward export contract deferment costs would make both propositions unlikely?
Negotiating a temporary export moratorium to increase national gas reserves for domestic use can hardly be described as a major policy success when the cost of this short term forward capacity reserve has not yet been revealed to the Australian consumer. Everyone presumes that this cost is calculated at the current international export price. No one knows what the dollar value for contract default, legal and other costs relating to the voided export gas contracts now reserved for the domestic market actually is. Unless the government can somehow contract the import of cheap overseas gas for the domestic market we can safely say that non-subsidized gas has priced itself out of the Australian energy market in this renewable transition phase.
This forecast does not help heavy energy users and those industries who gambled their profitability on shifting their energy reliance towards gas. It does make it clear that the AEMO proposal for a forward capacity market with a 10-15% 6 month capacity reserve under a day ahead bidding system bolted onto the existing energy only market is likely to be a very costly subsidy scheme. A cost effective alternative to a flat rate undifferentiated capacity market subsidy scheme is a variable rate targeted scheme punctuated by bi-annual capacity supply auctions contracting guaranteed peak load supply. Australia’s energy capacity supply problem is not a baseload power issue. Australia’s energy capacity supply crisis is a peak load net demand shortfall exasperated by asset retirement and insufficient generation flexibility to address that shortfall. This suggests that a properly designed targeted capacity market can contain an embedded clean energy transition mechanism without compromising the Turnbull government’s commitment to technological agnosticism. We are witnessing considerable religious tolerance by the LNP government towards long term large scale hydro storage. The combined cost of both solar and wind farms plus storage is currently on a decreasing marginal cost trajectory of approximately $80 per MWh. A national energy storage mandate for all existing and future solar and wind farms might be a very bankable alternative if it was agreed at the next COAG energy summit. Not only would such a national policy address generation flexibility, grid stability and energy reliability under long term cost efficiency gains, it would also offer attractive auxiliary market returns. The assumption is that traditional financial leakages in the form of administrative and auxiliary service payments are retained by the energy cartel operators in the short term, in return for the following agreements:
- That new market players specifically focusing on customer and grid embedded storage and self-generation are allowed to operate behind the meter as a block chain customer focused
- That all customer focused block chain systems are allowed to enter into forward supply supplement agreements with suppliers of renewable energy under fixed price transmission and distribution agreements between 12 midnight and 6 am.
- That all customer lead block chain systems are allowed to export and import any excess energy, or supplement any local supply shortages through local distribution and transmission networks at a fixed price set by a national energy pricing commission.
- That reviews of national transmission and distribution prices are fixed by the commission subject to regular evidence based reviews required under formal submission by stakeholders
- That regular bi-annual auctions are to be held for forecast supply capacity shortfalls three years in advance of the expected shortfall.
- That an independent energy authority regularly report on anticipated supply capacity shortfalls for each state and territory for up to ten years in advance.
- That medium and long term energy capacity supply shortfalls are expected under normal market conditions and that this does not by itself warrant unreasonable panic, political rashness, nor policy stupidity.
No one is interested in suffering the indignity of the ‘Cat in a Top Hat’ parading before the world in a rainbow coloured birthday suit. No one is interested in the game of chicken Canberra wants to play with the cartel bosses. Let’s call the bluff! Let’s implement a highly targeted forward capacity market with a reducing marginal cost curve below average gas operating cost rates and we shall see the robber stoats fall in line. We might just get greater competition and a more transparent consumer focused energy market in the bargain. What do you think?
Development Bank members reading this in the context of ‘Active’ renewable energy loans for the Asia Pacific and beyond should be aware. Current project planning and risk assessment that includes gas generators must be urgently re-evaluated. This covers all active ADB and Australian supported DFAT projects in the Pacific, Indonesia etc. The CONE value of these projects will demand ongoing subsidies of between $57-$65 per MWh making loan repayment and local consumer energy affordability (per population density equation) high risk.