“BlueScope, undoubtedly, is one of the healthiest companies in Australia.
Now, the underlying net profit is up 88 percent as compared with the same period last year. They don’t even have any debt, there net cash sitting on the books of $127 million.
Part of the reason for it is because management made a strong and bold decision because they saw that energy prices in Australia were a significant hand-brake.” (Listen Here)
Newsletter March 1 2019 –
This week the Government announced they will commit at least $1.4 billion Snowy Hydro 2.0 expansion will potentially increase electricity generation from the hydroelectric scheme by 2000 megawatts – but is it all it’s cracked up to be?
If you consider right now the Liddell Power Station in the Hunter Valley has four 500 megawatt generators – so 2000 megawatts – but it rated as an aging power station, to put out just 1680 megawatts. But, of course, it will be closing in 2022. So it’s essentially just replacing Liddell. Not solving our energy shortage.
The other point – the mathematics behind the hydro scheme leave a bit to be questioned. For the hydro scheme to work, you have to pump the water uphill. It’s obviously best to do this when the demand for electricity is cheap as it will require a large load to make this happen.
If you do this during the middle of the night, when the electricity is at its cheapest, is if you have an ability to move water uphill by a hydro scheme, while electricity is very cheap – such as in the middle of the night – and then have it sit there until it is needed during peak times, and let it go instantaneously to create electricity – that is the science behind this scheme. (Listen Here)
But you wonder whether this is part of Australia’s energy solution or if it’s just filling in the gaps right now.
The Snowy Hydro is effectively owned by the Federal Government. Previously it was majority owned by the states of Victoria and New South Wales. The Federal Government spent around $6 billion to become majority shareholder. The additional $1.8 billion announced this week and no doubt further costs will also be announced shortly –bring the bill much higher.
So really, taxpayers will be in the hole more than $10 billion for just 2000 megawatts.
In other words, it’s just a really expensive power station.
Despite the government investment – this isn’t enough to solve our energy shortage.
Coal-fired power stations are getting older and though you might have wind and solar come in and replace them but because of energy policy, there hasn’t been enough replacement.
Australia, simply, has a lack on electricity generation.
And we can’t create anymore because of the lack of a national energy policy.
Now – what were the government options? Was hydro the only option or could coal-fired power station be the answer? Maybe a wind farm, giant battery – could the government have spent $10 billion better?
Frontier Economics Danny Price says this investment in Snowy Hydro 2.0 is a “waste of taxpayers’ money”.
“It’s really important that taxpayers hold politicians to account for the economics of these projects and just don’t believe ministers when they say it’s a great thing for them.” (Listen Here)
I have said before – I don’t care how electricity in this country is generated. I’m a pragmatist on this. I just understand that we need reliable and cheaper electricity generation.
Whether this is created best through wind, solar, hydro, coal-fired power station, batteries – I don’t care how the electricity is created, so long as it is created.
The point is – this goes straight back to government.
It goes to State government which has actually locked up gas reserves which Australia needs right now to produce electricity.
One of Australia’s former leading oil and gas chief executives from Santos, John Ellice-Flint, says we need to open up these gas reserves – we need to open up the Bowen Basin, we need a large pipeline in the south of the country, as well as the North.
But will that be enough to help our energy shortage?
“This would kick-start our energy – the importance of the combination interruptible energy sources such as solar, and the ability to firm that source with reliable electricity such as gas – that is what Australia needs”. (Listen here)
It goes to Federal government because they can’t agree on a bipartisan basis on an energy policy because they just fight about it.
And because they see political advantage one way or the other – nothing gets done (Watch Here).
So, not enough power stations are being built, there’s not enough electricity in the grid.
We survived summer – barley.
But it is due to the inactivity of politicians – state and federal. And they should all be held accountable.
Problem is, they get elected out at the next election, we get a new policy, and again – nothing happens because we don’t get enough generation built.
And so this goes on, not just for a year or so – this has gone on for almost a decade.
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