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Murdoch misleads readers about renewable subsidies and Saudi playboys

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It is hard to keep up with the Murdoch media. On a daily basis, RenewEconomy receives emails from outraged readers and mortified energy market players pointing to the latest nonsense and falsehood about renewable energy published in The Australian and the News Ltd tabloids that dominate the mainstream news media market.

RenewEconomy simply doesn’t have the resources to debunk them all – although we did contemplate a daily bulletin called the “Un-Australian” at one stage, but someone beat us to it.

saudi solar

But a story in today’s Australian has provoked us into action. The so-called “exclusive” is their front page lead and is titled “Saudi solar tycoon wins $300 million handouts boost”. The story is written by political correspondent David Crowe, who is not usually the worst of the bunch when it comes to renewables, but he’s got it badly wrong here.

The Australian‘s confected outrage is based around the story that a very rich Saudi businessman (Mohammed Abdul Latif Jameel) is making so much money out of Australian households from the Moree solar farm, and has a son (Hassan Jameel) who is dating Jamaican singer Rihanna at the same time.

What should we do in the face of this outrage and high-profile romance? Apparently we are supposed to agree to pay subsidies to extend the life of the ageing and unreliable Liddell coal-fired power station.

Except that the story is – like so much written about renewables in The Australian – a whole lot of cobblers.

The Australian has been going hammer and tongs against the RET in recent weeks, and broken out in full support of more coal. But like most ardent critics of the RET, including its columnists, it fails to understand the basics of how the RET works.

The source of Crowe’s outrage is the assumption that FRV, owned by Jameel, will pocket the value of the large-scale certificates it generates – currently trading around $80/MWh. The Australian did the sums and worked out that FRV would receive some $140 million in LGCs over 10 years. It writes:

“The Australian’s analysis of the payments to the Moree project are based on an $80 value for renewable energy certificates until 2020, in line with current market prices, and a $60 value over the decade to 2030.”

Great story, except for one thing: It’s not true.

A quick Google search would have informed Crowe that FRV signed away its renewable energy certificates, known as LGCs, in a power purchase agreement for the 57MW Moree solar project with Origin Energy early last year.

Under this agreement it will be paid a “bundled price” – thought to be around $85/MWh as part of a package deal with the Clare solar farm – that includes both the wholesale price of electricity, and the LGCs, for a period of 15 years until the RET scheme finishes in 2030.

It means that FRV will effectively receive no payment at all for the LGCs. It will certainly not, as The Australian story suggests, receive the market price for the LGCs.

Origin Energy has a good deal. Given that NSW wholesale electricity prices have averaged around $95/MWh so far this financial year – it means that Origin is getting a cheaper source of power from Moree, and getting the LGCs it must surrender each year, effectively for nothing.

This is pretty much the case for most solar farm developers now, and wind farm developers too – they are signing long-term contracts with retailers and others for both the output of the solar farm and the certificates, at a price below the current wholesale price.

This is the significance of two of the most recently publicised projects: the Stockyard Hill wind farm in Victoria and the Silverton wind farm in NSW. The contract prices – said to be sub $55/MWh and $60/MWh respectively – include both the wholesale price of electricity and the LGCs.

In the case of Stockyard Hill, that price represents around one-half of the current cost of wholesale electricity in Victoria, so it will likely deliver a big saving for Origin.

And it will get the LGCs from Stockyard Hill for nothing. Goldwind, the developer, is happy to have a price that ensures a fixed return on its investment – and the fact that it can do so at that price tells us much about the low cost of wind energy.

Indeed, few large-scale wind and solar projects are getting any money for the LGCs and are building the plants effectively without an ongoing subsidy.

The retailers are the ones benefitting – but only in the sense that they can meet their RET obligations without having to pay any money.

The threat that they might have to pay money if they don’t sign contracts encourages them to sign the PPAs in the first place. And the only reason why the market price is high now is because those retailers refused to sign any PPAs for several years while they fought to have the RET cut or canned altogether.

The Australian has gotten this wrong repeatedly. It appears to have used the current market price as its basis for assuming that the RET will cost consumers $45 billion over the course of the scheme. It is a ridiculous number that has never been explained.

Still, it has been repeated in numerous columns, including one by former nationals Senator Ron Boswell on Tuesday, and indirectly by Nick Cater in the same edition.

It also used the same argument in trying to embarrass AGL about the revenue it would supposedly receive from the Broken Hill and Nyngan solar arms.

Even if Moree had gone “merchant” – meaning that it could sell wholesale electricity and LGCs at the market price – Crowe’s numbers are way out of sync.

The LGC market price is high right now, because some energy retailers have not locked in enough supply, so they have to top up at high prices. But that price does not apply to all LGCs, only the small number traded on the market.

anti renewables tweet.

(Energy analyst Simon Holmes à Court explains this issue further in this Twitter “storm” you can find here).

But with all the wind and solar farms under construction and contracted now, the market price of LGCs is expected to fall to near zero from the early 2020s.

Now, there is no doubt that FRV will make a profit out of Moree, and a handsome one too.

As David Leitch has written, Moree received a grant of more than $101.7 million grant from ARENA and a $47 million loan from the CEFC, but that is separate to any ongoing subsidiary from the RET.

It could be argued that both payments were excessive – like the ARENA grants to AGL for Nyngan and Broken Hill – but that was FRV’s reward for being in the right place at the right time, and because it was prepared to take the risk of building the first solar plant in Australia with tracking modules.

Now, nearly every plant in the country is going to use trackers. And the next round of ARENA grants, in its large-scale solar tender, were just a fraction of its first round.

The Australian story is not all bad news, however. The romantic link between the Saudi owner and Rihanna must surely mean that she will be performing at the opening of the next solar farm.

Hopefully, in a tribute to the tracking technology, Rihanna chooses to sing “Towards the Sun” rather than “Umbrella”. We can’t wait for the invitation.

(You can read our report on The Australian’s follow-up to its fabricated front page “exclusive” here).  

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  • GlennM

    They are becoming so desperate. Nothing is off the table, RE will turn you gay, make you impotent and is the root cause of the Wallabies playing so badly…

    • mick

      i was with you right up until the wallabies lol

  • Brian Tehan

    One problem is that the energy market is quite complex and it’s very easy for dishonest journalists to say just about anything without being challenged…. Or just repeat denier propaganda – like I just heard on ABC radio. They were talking about the looming shortage of “baseload” when the AEMO and Finkel are talking about dispatchable energy. The ABC needs to pull its socks up on this issue instead of quoting Liberal propaganda.

  • Chris Drongers

    Giles – thanks for explaining the errors inDavid Crowe’s Australian article.
    Any chance of a note if Crowe publicly corrects his mistakes, or declines to correct the public record?
    This article is what happens when Turnbull’s government goes missing on explaining renewables, climate change, and anything else.

    • Joe

      Tomorrows edition front page reads…. ‘APOLOGY’…..

      • Steve159

        Joe,
        Just in case a Daily Telegraph or The Australian reader happens to land on this page, you ought include an explanatory “/sarcasm”, otherwise, they’ll be confused as, bumping into things, wandering around willy-nilly, becoming a (greater) menace to a just and sane society.

  • RobertO

    “And do not forget RE is resulting in kids drowning!”

  • George Michaelson

    If you stuck to the *facts* and avoided the invective, do you think the OZ would print the letter? If not, It makes for a great complaint to the press council. paper tiger, but none the less, not a good look for Murdoch.

  • DevMac

    I’d like The Australian to cover, with the same tone of self-righteousness, the government’s commitment to spend $X hundred million on rail and port infrastructure for Adani’s coal mine.

    Also, if the LGC’s are there to be monetised, isn’t that smart business? I thought The Australian was supportive of “smart business” almost to the exclusion of anything else, including morals and ethics. Maybe the Saudi tycoon beat Murdoch in the bidding for the solar farm, hence the bitterness?

    • Like everything conservative it falls apart at the slightest scrutiny.

  • Joe

    We subsidise the English Royals every time they come to visit us. What is so wrong with Saudi ‘Business’ Royalty plus the bonus of Rihanna getting a helping hand. Bring them to Australian, open that Solar Farm and let Rihanna put on a concert to entertain the punters….a small payback.

  • Ken Dyer

    Robert Manne wrote a very good essay about the evil of Murdoch some time ago. Here is an excerpt that is relevant.

    “Murdoch’s domination of the metropolitan press has two main consequences
    for our democracy. First, any government, no matter how worthy or
    unworthy, is now vulnerable should News Corp decide to target it in the
    way it targeted the Gillard government more than two years ago. Second,
    while News Corp retains its present dominance, mainstream debate about
    certain fundamental ideologically sensitive questions – how to respond
    adequately to the climate-change crisis; what levels and kinds of
    taxation are needed to develop the welfare state; the trajectory of
    foreign policy during the rise of China; Australia’s Middle Eastern
    policy; and, of course, media reform – is effectively ruled out in
    advance.”

    https://www.themonthly.com.au/issue/2013/november/1383224400/robert-manne/why-rupert-murdoch-can-t-be-stopped

    Perhaps Manne should have included Murdoch’s global war against renewables. Murdoch’s flunkies have been doing this a very long time, and Australia’s political arena, on both sides, is so very much poorer in leadership and initiative because the poor old politicians are shit scared of Murdoch. The future of the people of Australia is held back by Murdoch’s media dictatorship of Australia.

  • bedlambay

    Crowe was on 702 radio as a guest of Wendy Harmer and repeated the same nonsense this morning. Just as bad was his vigorous defence of Turnbull’s Liddell proposal. He should be made to eat crow!

  • Diego Fuentes

    And of course the probably the most important piece of missing information from the Murdoch articles is that every single coal fired power plant in Australia was built with public money and reasoning about why they’re exempt from market economics.

  • howardpatr

    Is it too much to expect David Crowe to have some ethical standards? Seems it is.

  • Johnnydadda

    Syria, a country that exports oil and gas and has been a war for six years, has just inaugurated its first solar plant using domestically made cells.
    http://sana.sy/en/?p=114073

  • David

    I get The Australian delivered every day. We need paper for the dogs to crap on. (True story)

    • john

      I stopped my subscription several years ago because the content is rubbish

      • David

        I don’t read it… the dogs might, but they aren’t saying.

      • Gyrogordini

        Similarly, after 30 years of subscription, the last five on-line, I gave up. Completely baseless, nasty, unrepentant rubbish. A national disgrace. RIP the original masthead.

    • neroden

      I think you can probably get cheaper wastepaper. Maybe an advertiser coupon supplement?

    • Sally Noel Triggell

      Thanks David for helping fund Murdoch, and his intent to destroy what ever democracy we have left. I have friends who buy the Courier Mail for the TV guide, can’t be more stupid than that.

      • David

        Thanks Sally, your comment is noted, your intelligence, not so much.

        • Mike Westerman

          Ouch guys! We all on the same side! We are all eagerly waiting for the same death notice.

          David I suggest you steal your neighbours paper for the dog to crap on.

  • Neville Bott

    The entire Australian article was read today on an ABC radio station (In WA but I didn’t note which one) without any questioning.

    Using the ABC to spread Murdoch’s anti renewable propaganda may violate some rule though I couldn’t see the current management doing anything about this.

    • Mike Westerman

      The article should be referred to regulatory: a) Saudi Arabia for better or worse is Australia’s trusted ally in current ME operations b) it is racist to single them out, especially for a turncoat US citizen running propaganda sheets here to do so while paying so little tax c) as this article points out, the Murdoch article is grossly inaccurate d) a number of electricity utilities are foreign owned and gaining subsidies to incentivise changes in behaviour e) journalists who display such ignorance on so many levels deserve the opprobrium they get

    • riley222

      I read a while ago that Murdoch got dudded on a deal in the early days of renewable energy, and that was it. Surely that cant be the reason .
      How can he operate as a human and encourage the pointless nastiness he does. I really cant understand how he’s ended up with the views he has, with all the goodness thats surrounded and surrounds him , surely he realises the damage he’s doing.

      • Mike Westerman

        That sack of shriveled skin and bitterness hob-nobbed with Saudi princes, and sold his birthright, when he was after business. He has nothing to say – his only interests are self enrichment.

    • Joe

      Aren’t the existing media laws being relaxed… so that Rupert can buy OUR ABC. This is of course will be a giant win, win all round. The Liberal Federal Govt. no longer needs to fund The ABC and all those left winger journos they whingle about non stop. And Rupert / Newscorp win as they spread their very fine publications and good words to every corner of the Continent….the takeover is now complete.

    • neroden

      If you knew which station it was…. report it. They have to read the correction which came out the next day

  • Joe

    If anyone needs a laugh about the duplicity of Newscorp surely it is their party held in July to celebrate the 10 year anniversary of their campaign ‘1 Degree’ which is all about reducing waste, reducing emissions and making sustainability the goal. They / their newsrags used to have the 1 Degree moniker printed in their paper issues…disappeared some time ago. Now every week all you read is about the prolonging of Fossil Fuel and they are going in hard as boosters for Adani and now the latest pet project of Liddell. No doubt that COALition slush fund, The NAIF, is primed to ‘subsidise’ Adani for a lazy $1 Billions and now ‘subsidise’ Liddell for another lazy $900 odd millions. Nearly $2 Billions worth of … sustainability…NOT !

  • David leitch

    You will see there is another article by David Crowe which is effectively a correction, but hardly presented as such

    • Chris Drongers

      Yrs, an acknowledgement by David Crowe that his article was wrong on the subsidies paid to the Saudi prine.

      On page 6, column 2 of Wednesday’s The Australian.
      “The Australian’s initial estimate that the company would collect up to $141m in subsidies until 2030, is not correct”.
      Then follows a more reasoned explanation of hoe the LGC system works and how Abbott stuffed it.

  • MaxG

    I always ask: who reads this stuff?! Wilful ignorance, not being prepared to do one’s own hard research — even worse: believing the corporate press, is a shocker.
    I spoke with a colleague today who represents the other side (the clean coal and blame renewables, climate change denier, etc.). I was lost for words and did not even attempt to set the record straight, slowly removing myself from the monologue.
    We live in our won circles and being exposed to others can be a shocking experience, I am sorry for being a coward and bailing out; but I simply do not have time to invest teaching others — what literally equates to another language or culture — so deep is the rift.