Around the World, Buyer’s Remorse Sets in for Costly Clean Power
In this newsletter:
1) Green Energy Wars: Solar Energy Threatened By Wind Lobby
Associated Press, 25 April 2019
2) Renewable Energy Investment Looks To Be Going From Boom To Bust As Prices Collapse
ABC News, 26 April 2019
3) Around the World, Buyer’s Remorse Sets in for Costly Clean Power
Bloomberg, 25 April 2019
4) Subsidies For Renewables Under Attack In Texas
Houston Chronicle, 25 April 2019
5) Another Socialist Boom And Bust In Solar Down Under
Jo Nova, 25 April 2019
6) And Finally: German Data Centres Demand Power-Price Rebates To Remain Competitive
Clean Energy Wire, 25 April 2019
Full details:
1) Green Energy Wars: Solar Energy Threatened By Wind Lobby
Associated Press, 25 April 2019
ANKENY, IOWA — When Todd Miller began his two-person solar installation business in a suburb of Des Moines, one of the challenges he faced was keeping up with customer orders, as tax incentives and plunging prices for the boxy roof panels created a booming demand for this form of clean energy.
Four years later, Miller's company has grown to 14 employees, but now he faces a real obstacle: action in the state Legislature that he says could put solar companies out of business.
The threat is coming from an unlikely source, a utility known as an alternative energy champion for its installation of thousands of wind turbines across the landscape. The wind energy darling is pushing lawmakers to tack on an extra cost to future solar customers, even if doing so makes solar energy economically uncompetitive.
“Everything should be lined up for the best year we've ever had,” Miller said. “Instead, it's been a lot of sleepless nights.”
For years wind and solar were friendly twins in the campaign for green alternatives to fossil fuels, but the relationship is getting ugly in a number of states, especially in Iowa, where more than 4,000 turbines generate 34 percent of the state's electricity, the second highest rate in the country.
About half of those turbines were installed by Des Moines-based MidAmerican Energy, a wind energy leader that proudly notes its towering blades spin enough power to equal its customer demand.
The utility has taken aim at a growing solar industry made up of dozens of small companies across the state.
The acrimony comes as alternative energy sources are powering an increasing percentage of the country's needs. Since 1990, the country's wind energy capacity has grown from a tiny 0.2 percent to 6.5 percent in 2018, and in the past decade solar capacity has had an average annual growth rate of 50 percent. About 2 million solar systems have been installed on homes and businesses nationwide, with 3,700 in Iowa.
As alternative energy becomes more popular, the questions are growing about the appropriate level of tax incentives and other rules designed to jumpstart such power sources.
MidAmerican has received billions of dollars in federal tax credits to build its wind farms. With those incentives being phased out, MidAmerican and other utilities are now challenging the special perks that solar receives. The federal tax credits covering solar installation costs will decline in the coming years, ending for residential in 2022 and sticking at 10 percent for commercial projects.
A key to solar's recent success in Iowa and many states is that when panels produce excess energy, state law requires it be sold to utilities at a premium price. Solar advocates argue that if the price is lowered or other fees added, as MidAmerican has proposed, the foundation of the industry's expansion is threatened.
Full story
2) Australia: Renewable Energy Investment Looks To Be Going From Boom To Bust As Prices Collapse
ABC News, 26 April 2019
Stephen Letts
Having burst out of an investment black hole at warp speed, the renewable energy sector's massive building boom looks likely to hit an uncompromising wall.
The reckoning is likely to be sooner rather later, as a nasty confluence of factors keeps mounting up.
Long-term contract prices are tumbling, and the market operator has effectively slashed the value of projects operating on the periphery of the network.
On top of that, rooftop solar's rapid uptake is competing directly with utility-scale solar, and coal is still a cheap form of power.
All of this has developers and investors scrambling to see if their numbers still stack up. Many don't.
Almost $25 billion was invested in new large-scale renewable generation last year.
That is an extraordinary turnaround from the building boycott between 2013 and 2015 that coincided with the prime ministership of Tony Abbott, and the less-than-encouraging policy stance outlined in the Warburton review he commissioned.
Since then, there has been a boom. Around 4,700MW (megawatts) of solar and 5,400MW of wind generation has been committed since 2016.
Another 1,240MW of solar and 440MW of wind projects have secured long-term price agreements, but have not so far received final investment approval.
Boom may become bust
Green Energy Markets director Tristen Edis said the boom may well become a bust, as supply overwhelms demand and prices fall further.
"We are adding such a huge amount of extra supply — almost two Hazelwoods worth of extra generation — that wholesale power prices will be pushed down to quite low levels consistent with the operating costs of existing coal plants, rather than the much higher costs of gas plants," Mr Edis said.
The benchmark in that price squeeze is coal generation operating comfortably at $40/MWh (megawatt hour).
Investment bank JP Morgan has tracked the long-term contracts won by wind generators, and found prices have fallen 30 per cent over the past five years.
From around $90/MWh in 2014, the latest power purchase agreements (PPAs) — the long-term financial guarantees underpinning the volatile renewable sector — have fallen towards $55MWh at the recently-commissioned $275 million Mortlake South wind farm owned and operated by the Spanish engineering giant Acciona.
JP Morgan energy and utilities analyst Mark Busuttil said returns on a $55/MWh PPA — assuming the project was 80 per cent debt funded — would be around 11 per cent.
"We estimate that a wind farm costing $2,000/kW (kilowatt) with a $55/MWh offtake contract over the first 15 years, then reverting to a merchant power price of $75/MWh for the remaining 10-year life of the plant, would achieve a nominal internal rate of return of five per cent," Mr Busuttil said.
"The risk is that all free cash flows for the initial 15 contracted years would go solely to debt repayment, and equity holders would only generate returns beyond the contracted period."
In other words, equity investors would not see returns for 15 years. Even then, those returns would be highly dependent on volatile power prices which are more than likely tracking down as more supply is added.
Full story
3) Around the World, Buyer’s Remorse Sets in for Costly Clean Power
Bloomberg, 25 April 2019
Two decades ago, governments and utilities around the world began offering above-market rates and contracts to fuel the rise of clean energy, helping wind and solar become some of the cheapest power sources. Now, these pacts are under attack.
In Canada, Ontario Premier Doug Ford killed hundreds of contracts for planned wind and solar farms. Spain pulled back subsidies, yanking the rug from projects already up and running. And in the U.S., bankrupt California power giant PG&E Corp. could soon move to renegotiate costly power deals signed when prices were three times as expensive as they are now.
The rollback has divided both policy makers and the energy industry, with some calling it a natural evolution and others warning that it will undermine clean energy growth just as wind and solar have finally become mainstream sources of power. While renewables can now compete head-to-head against coal and natural gas in some parts of the world, the risk of contracts getting dropped threatens to scare away investors and undermine the economics of capital-intensive projects.
“It sends shudders through the industry,” said Ethan Zindler, head of Americas research for BloombergNEF.
The blowback is, weirdly enough, a sign of renewable power’s success.
Full post
4) Subsidies For Renewables Under Attack In Texas
Houston Chronicle, 25 April 2019
Renewable energy has prospered in Texas over the years, supported by federal subsidies that have helped to make the state the biggest producer of wind power in the nation and lowered electricity prices for Texas household and businesses.
But now Texas lawmakers are examining ways to undermine that support and strip away what fossil-fuel interests have long decried as unfair advantages for wind and solar industries. The state Senate on Wednesday passed a bill that would require state regulators to determine how to eliminate the financial advantages created by federal subsidies through measures such as new fees on renewable generators or higher rates for traditional generators — moves that would likely raise retail electricity prices.
A similar measure was approved earlier this month by the House committee on State Affairs.
The goal of the legislation’s proponents is to slow the development of the wind and solar generation that is taking increasingly bigger shares of the Texas power market, according to Joshua Rhodes, research associate at the University of Texas at Austin’s Energy Institute. Wind energy today generates nearly 20 percent of the state’s electricity.
“Our market is designed to reward low cost generation,” said Rhodes. “The idea is to tax wind and solar at the state level to counteract the federal subsidies.”
The legislation is another front in a broader fight launched by fossil fuel interests as wind, solar and other green technologies have become formidable competitors, slicing into the profits of traditional coal, nuclear and natural gas generators. Federal subsidies and other incentives, such as property tax breaks, that were designed to help what were once emerging technologies compete are coming under attack nationwide.
Full story
5) Another Socialist Boom And Bust In Solar Down Under
Jo Nova, 25 April 2019
Behold, the Victorian Govt are proving yet again that Soviet-style electricity management can crush lives, hopes and wallets.
The free market is never as cruel and destructive as one run on “good intentions” or the desire to win virtue-signaling fashion parades.
The invisible hand of the market was replaced with Daniel Andrews whimsy. This might work if he was smarter than the collective brains of 5 million people.
Apparently Andrews assumes
But now they’ve temporarily halted the free gifts, orders have disappeared as the free market returns to accurately valuing solar installations. So the workers are being sacked. The rebates will come back again in July, so business-owners somehow need to get a different income stream for two months, survive the turmoil, and then the golden gravy will run again.
As per usual ABC policy, no free market voices were harmed, interviewed or asked to provide comment:
Victorian solar company reeling after popular rebate scheme halted temporarily
An award-winning Victorian solar company has laid off just over half of its staff after the Victorian Government placed a temporary freeze on a solar panel rebate program.
The $1.3 billion solar homes package started last August and has been so popular that the rebates for this financial year have been fully subscribed.
Since the freeze on new applications came into effect, the work for solar installation companies like Sky Energy Systems of Melbourne has dried up.
The business’s directors, Sam Kent and Ross Howard, said they had no choice but to cut staff when customers started cancelling their orders.
Twenty-five people have been told to finish up work on Friday and another 15 staff could go in two weeks’ time.
Live by government handouts, die by government handouts. Oh the pain:
“Having no sales is like having no oxygen. You can’t breathe. There’s no business so it’s devastating,” Mr Kent said.
Full post
6) And Finally: German Data Centres Demand Power-Price Rebates To Remain Competitive
Clean Energy Wire, 25 April 2019
The German government isn’t doing enough to support the country’s digital infrastructure, data-centre operators told Inga Janovic in an article for Frankfurter Allgemeine Zeitung. While their competitors in Scandinavia are exempt from electricity tax, German politicians have not agreed to such rebates, or exemptions from the renewable energy surcharge. The data sector argues that power consumption makes up a very high share of its running costs, as it does for the energy-intensive industries that are (partially) exempt from the renewables levy. The state government in Hesse, where many data centres are concentrated around the city of Frankfurt, argues that digital companies should invest in energy efficiency and that high growth rates in the sector shows that firms are doing well under current conditions. But Bela Waldhauser, managing director of Telehouse Germany says that growth rates in other countries are even higher. Since 2017, Germany’s digital infrastructure sector has been losing market share, Janovic reports.
The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.
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