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Queensland election: A choice between solar and coal

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On any detailed analysis, the results announced by Peabody Coal – the world’s biggest privately-owned coal miner – should sound the death knell for Queensland’s Campbell Newman government.

Peabody, with extensive operations across the globe and including Australia, reported a much wider loss than expected, slashed its dividend by 97 per cent and saw its shares plunge to a 12-year low.

The significance for Queensland is this: Premier Newman has bet his state’s economy on a rosy future for coal. He hopes the Galilee Basin, for which he has proposed royalty holidays and direct government investment – can mop up some of the jobs that will be lost when the LNG construction boom comes to an end.

As government-led economic strategies go, it is about as dumb and short-sighted as they come. He is proposing to privatise one industry (the generators and the grids), so he can free up money to nationalise another (railways supporting the coal mines). Without that government subsidy, there is no way the project could go ahead. Even with the subsidy, it is highly doubtful.

Even The Australian newspaper – the favoured reading of white male octogenarians – has realised this. Business correspondent Richard Gluyas wrote this week that Newman’s coal strategy was looking shaky, because if Peabody could not make any money out of Queensland coal, there was bugger all chance of India’s Adani Group making money and attracting investors to the Galilee Basin, which needs some $16 billion invested in infrastructure before it sells its first lump of coal.

“The stakes are incredibly high, not only for Newman but for the nation’s official coal ambassador Tony Abbott,” Gluyas wrote.

“It begs the question: if the biggest private coal company in the world struggles to register a gross profit from its Australian coal business, how can Adani claim to potential backers that it will be commercially viable when the total cost of its project, including maintenance and continuing capital expenditure, is expected to top $16bn over four years?

The bitter irony is that Newman himself knows this to be garbage policy. Or, at least that is what he said in 2011, before he became Premier.

As New Matilda reported this week, a video has emerged of Newman comprehensively demolishing the idea that the Galilee Basin should be exploited, let alone funded by the state government.

“Rather than digging huge piles of black stuff out of the ground a few hundred kilometres north of here to keep those lights on, perhaps it’d be better in the long term for our children, our grandchildren and generations to come that we actually set things up differently,” Newman said when Lord Mayor of Brisbane.

“We have a really strong vision that we want this to be the most sustainable city in Australia and there are many aspects to delivery in terms of that,” Newman said.

But any such vision was blurred by the trappings of power, and presumably the influence of the mining lobby once he became Premier. And he hasn’t stopped at government handouts.

He has weakened the anti-corruption laws, made it all but impossible to protest against major coal projects, and ditched environmental oversight.

“Setting up differently” – as Newman described it – would be to embrace the rapid change that is going on around the world and which Queensland, if he bothered to look, is actually leading.

Queensland, along with South Australia, has the highest rates of rooftop solar penetration in the world. That is a scary scenario for the state-owned energy incumbents, particularly the coal-fired generators. But it puts Queensland at the forefront of the big swing from centralised generation to distributed generation, and that is a phenomenon that should be accelerated rather than slowed.

Its own network operators speak of the need for micro-grids and stopping the reliance on redundant poles and wires delivering coal-fired electricity to customers thousands of miles away. Ergon is installing unsubsidised battery storage on its networks to save costs. The Sunshine State could be exactly that.

Bizarrely, however, Newman has done nothing but attack the solar industry since being elected to power.

The potential folly of this strategy was highlighted in Sophie Vorrath’s story on Thursday, which noted that Queensland’s burgeoning number of solar households could help decide the outcome of the election.

Data compiled by Sunwiz from Clean Energy Regulator records show the percentage of solar households exceeds the margin for the electorate in the vast majority of Queensland seats.

In Premier Campbell Newman’s own electorate of Ashgrove, which the LNP holds by a margin of just 6 per cent, 10 per cent of residents (or 17,615 households) have a PV system on their roof.

“The Newman Government squaring blame on solar owners for the rise in power bills has been misguided to say the least,” said Solar Citizens national director Claire O’Rourke in a statement on Thursday.

Newman is fortunate, because Ashgrove has a relatively low penetration of rooftop solar. The Australian Photovoltaic Institute has just released a fascinating map that shows the penetration of solar in Queensland electorates.

apvi qld electrorate

In areas of the Gold Coast and the Sunshine Coast, and their hinterlands, and to the west of Brisbane, the rate of penetration in many electorates is more than 40 per cent of available homes. In the LNP electorate of Glass House, in the Sunshine Coast hinterland, it is 49 per cent.

As much as the solar lobby would like to think that solar could swing the election, it probably won’t. There are simply too many issues for the electorate to deal with. But it may have an influence, and tip the government over the edge.

The fact that Newman could hold 73 seats in an 89 seat parliament and still be at risk of losing power is extraordinary in itself.  

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  • Ted Toastie

    It’s the Bjelke-Petersen factor all over again. Arrogant corrupt QLD politicians taking advantage of the the voters. C’mon Queensland people! Wake up and take a look at the crooks you are letting into power. Time to CRITICALLY analyse the facts instead of voting for a party ‘cos that’s the party you (and possibly your parents & grandparents before you) have always voted for! Must be something in the air up there… 🙁

    • Chris Fraser

      … and now they are starting to say they don’t have to be elected !

    • Harry Verberne

      Campbell will be fine when he loses his seat as seems likely. His pals in the coal industry will give him a big fat job. But what a bare faced liar he is to claim to support a sustainable future in 2011 but completely ditch that support one elected.

      That is as much a form of corruption as taking bribes. I hope that he and the LNP get a thorough bollocking from a big and hairy pineapple!

  • Rob Campbell

    As a conservative voter, the last 5 years of partisan government has lead me to the following conclusion.People are selfish creatures and look after themselves and themselves only. I have been greatly disparaged in seeing a well intentioned campaign to support solar by the Solar Council turn into a “baby out with the bathwater” campaign.
    If we are to believe the Solar Council and the Greens, the current LNP government is responsible for everything including the Kennedy assassination. Sure solar jobs are waning in Queensland, but this is mainly because all of those who can and want solar, already have it. 99% of people who now have solar would not of put it in unless they were given a ridiculous incentive to do so, the previous Labor government got the ball rolling, and set up Queensland for huge electricity and water bills, The Newman government managed to almost double the amount of domestic solar prior to putting on the brakes.
    It appalls me that those who make money from solar are prepared to drive an agenda that will increase electricity costs to those who can least afford it, and who can’t access solar, without any reference to the absolutely obscene situation that Queensland electricity consumers are now in, due to the ill conceived, poorly executed and long lasting bonus scheme hatched by the last Labor government.
    I am all for solar, wherever we can put it in, but the current hysterical call for solar support is akin to Rolf Harris wanting to start working on a kids show. A careful look at the past might translate to a technical, rather than a emotional argument for a planned and heavily scrutinized restart.
    Solar will put downward pressure on electricity generation prices, but it is but a fraction of the costs to retail customers, most of those costs are hyper inflated charges designed to generate income for governments trying to pay off huge debts. It has been said that the temperature rises that will occur will turn our forested areas into desert, it is also said that the worlds population will be majority Muslim by 2050. For some this will signal a transition and for some it will be the end. Perhaps those who think it will be the end are happy to vote Labor, run up the national debt and just leave a Quiran in their wills for their one (or maybe two) grandchildren. I for one don’t differentiate between anyone, we all face the same challenges ahead and should work as one for either a solution or a way through current and future issues, and to look more than three or four years ahead.

    • Rob G

      I think you lost me at the Kennedy assassination remark.

    • Chris Fraser

      I agree, and well said. Now perhaps we should discuss the merits of yet more solar incentives and clever design, or should we continue to be in a subsidised ‘coal business’ ?

    • john

      Rob the present situation is that only those in situations, where the body corporate disallow visible solar panels or other restrictive practices stopping the installation of solar, are precluded from utilising Solar.
      It would have been better policy to adjust the FIT down to a lower level year by year., as per the German example.
      The lowering in installed price has been world wide and even the FIT at the low 6c level in most of regional Queensland with 10% transmission loss this is 2.4c.
      There is attrition of 8% or more for those who had 44c FIT.
      The lowering of dispatched wholesale price has added even more benefit where those people who put solar power on are subsiding those who don’t.
      The point that misleading statements made in the media by misinformed parties is the bone of contention.
      The over spend on distribution where expenditure was guaranteed 10% return is of some disquiet.
      The none event of rising demand projections for this expenditure, has to be seriously looked at.

      • Peter Campbell

        “…where the body corporate disallow visible solar panels…”
        In the ACT the Unit Titles (Management) Act 2011 prohibits rules (aka by-laws) that prevent the installation of sustainability infrastructure. I understood that Qld had led the way on this previously with ‘Ban the banners’ legislation.
        Where I am in the ACT, an owners corporation (aka body corporate) cannot say no to solar panels or a clothes line or dictate poorly insulating window coverings. However, they could still prefer a colour or style or location in such things. If the only practical place for solar panels were on a unit’s north-facing visible roof, I don’t believe that could be disallowed.

        • john

          Well the ACT then has good by-laws in place it that regard however some developments here in Qld do have clauses banning “unsightly” or words to that effect regulations.
          No doubt a court challenge would throw out these clauses.
          If panels out of view then it is ok.
          However your points are good re practical placing of panels.

      • john

        Actually my 10% is the low side of MLF for Ergon on East grid it is more in the region of 15% so the actual gain to Ergon is quiet considerate.
        Figures from AEMO and Ergon not mine.

    • Ian

      You are right to say labor over-did the FIT, but at the time solar panels were 4 times the price of what they are now. The subsidy was cynically ment to pay lip-service to action on global warming, it was ment to hoodwink the voting public and the world at large as to how environmentally conscious we are, whilst simultaneously massively expanding the exploitation of fossil fuel production in Queensland. No one knew how rapidly the price of solar would come down. When Newman came to power he panicked and ditched this scheme and immediately gave people several months grace period. No wonder over 200 000 householders rushed to take advantage before the gravy ran out. Had he never been to Kmart on a Boxing Day sale, or to Carols by candlelight when ‘Santa’ brings the lollies! He needed to lead from his Tunnel under the Brisbane River for that stupid move. He should have reduced the FIT gradually to control the uptake of solar. He should have done his sums to see how much subsidy is needed to allow a reasonable payback time for people investing in solar. As we now know people still install solar at a steady pace even though there is no FIT to speak of, because it is worth their while. Newman could have explained to Queenslanders at the time that the FIT needs to match the cost of installing solar and reduced the FIT stepwise over six months or a year , people would have understood, those that were ready to install solar would have done so, others would have waited for an appropriate time. We are mature, we are not stupid. 10 000 might have installed solar instead of the 200 000, a sustainable and equitable FIT could have been achieved without animosity between electricity customers and utilities. The death spiral could have been avoided, and the old dames of coal generation retired gracefully. The grid could have evolved to be a portal of exchange between distributed generators and consumers, and as a supplier of electricity storage. With a bit of financial support ( that went to the miners) we might even have had a home-grown solar panel and inverter manufacturing industry. Maybe ,like the Chinese, we need a 5 year economic plan where sensible and interested stake holders can thrash out a consensus on future development trends and then put them into practice instead of government being blown to and fro by the winds of public opinion and gusts from interest groups.

      • Rob Campbell

        Correcto, and it now seems that Qld has spoken, it’s notbtheir fault that the state us in so much debt, the government is responsible. There is one form of government who says they can fix it without pain, so they are now in power. I for one are going to plan to collect any money that Labor spiills around the joint as they do. And I will look after number one!!

        • Mike Shurtleff

          Yes, even no nothing nay-sayer conservatives will install Solar PV and Storage when is saves them a buck. As long as you do I’m happy. Not gunna make you, just gunna save you some money. Don’t take it if you don’t want.

      • Mike Shurtleff

        “The death spiral could have been avoided, and the old dames of coal generation retired gracefully.”
        Nonsense, this is a disruptive change. Solar PV is waaayyy below the cost of end-of-grid power in Australia. Very low-cost storage is coming next. Australia in over investing in fossil fuels and over invested in grid transmission infrastructure that will not be needed as much with Solar PV + Storage.

    • Chris Baker

      Nice article Rob. As you say solar puts downward pressure on generating costs but is a fraction of the costs to the consumer. The cost of the distribution grid is a big portion of consumer bills and I wonder how the adoption of distributed storage along with generation will begin to affect the cost of the grid? As electric cars become ubiquitous the peaks will continue to fall, and along with it the need for upgrading or replacing the big transmission lines. These technology changes will continue and part of why its possible is because the subsidies worldwide help bring down the cost of solar very quickly. The cost of storage will follow the same downwards trajectory so I think it’s important for reducing electricity prices that we remain engaged with these changes and not stay wedded to the old ways.

      • Mike Shurtleff

        “These technology changes will continue and part of why its possible is because the subsidies worldwide help bring down the cost of solar very quickly. The cost of storage will follow the same downwards trajectory so I think it’s important for reducing electricity prices that we remain engaged with these changes and not stay wedded to the old ways.”
        Exactly! …except subsidies are no longer needed in many areas …like Australia. …and you may well need less transmission in Australia. Microgrids and off-grid power makes more sense there in many areas.

    • Richard Koser

      Rob, I’m not surprised you’ve seen a lot of selfishness if you’re a conservative. There’s some pretty robust science which shows conservatives are more selfish than liberals, who have more empathy. Your second comment, about looking after number one, illustrates that point perfectly. I’d address your solar criticism if I understood it. You seem to resent people who are going solar on the basis that they are getting some unfair advantage, unlike the coal companies mentioned in this article.
      If you read the excellent work Giles did a few years ago on network gold-plating – which has been confirmed repeatedly – you would see that the biggest driver of power price rises was the networks building grids to nowhere because the regulators allowed them to crank their prices on a ‘cost plus’ basis.

      • Rob Campbell

        Richard, you have taken my commentary as my own objectives. This is not correct, I am stating that it is that the beneficiaries of bad policy, need not be held guilty nor have to apologise. But the people, like myself who are banking $,000s of tax free dollars should be the last ones saying that they are being ripped off. i feel sorry that there aren’t better incentives available but who’s to say that either party might not try to fix the inequity in the system by finding a way to recover the 44c FIT from those who have for 13 more years ?

    • Mike Shurtleff

      A whole lot of blather with no solutions of your own to offer, everyone else is just wrong. Useless. Noticed you worked in a line about everyone who wants it already has Solar. Horse feathers! Solar PV is still being installed at a good clip …very much in spite of Abbott’s and Newman’s attempts to stop it.
      Phase down of the FIT and continued support for Solar PV was and is the ticket.

  • Rob G

    Newman should have stayed on the renewable path, now his chances are going in the same direction as coal – downwards.

  • Martin

    I think Monbiot’s comments are just as relevant here – surely the only sane vote is Green

    http://www.theguardian.com/commentisfree/2015/jan/28/convictions-politics-fear-syriza-podemos-snp-green

  • john

    I have been told by committed LNP voters they are going to protest vote this time.

  • mike flanagan

    Thanks for that Giles, much of that you say about the Coal industry applies to the fictions about the LNG export bonanza supposedly on the horizon. LNG spot market prices have moved from $20/mbtu to less than $10/mbtu in the past month or so. We seem to be heading into an oversupply situation as a fall in demand occurs in conjunction with increased supply, similar to the iron ore dilemma. With the coming arrival of major projects on the West Australian coast I suspect a number of the trains planned for Gladstone will be put on the backburner and the plans for delayed construction are already on boardroom tables..

  • Chris Drongers

    Labor is pretty much in. I doubt that solar incentives had much to do with this, except at the very margin.
    More likely that many electors hated the LNP government;
    – taking them and the Westminster style of government as mere background (Bleije, VLAD, origin of donations; roads over rail;
    – of describing Qld economy as a one trick pony (coal and gas, no brains)
    – of bribing their way into power (including the extended high rate solar FIT) then suddenly ‘discovering’ a budget blackhole
    – appearing to describe environmentally concerned citizens, including those spending their own money on solar, as vandalizing Queensland.

    Hopefully the new government won’t repeat the mistakes.

  • Ian

    Nice article, it demonstrates a maturity and understanding of queenslands future better than most trying to win this election. LNP says business as usual, labor says fling a few dollars at residential solar and promise a little solar park then business as usual. Dig out the coal, frack the gas, dredge the barrier reef. Both clown parties need to be ditched. This state and in fact this country is loaded with natural wealth, and there are many rich suitors that are lining up to get a bit of action. We don’t need a government to pimp it all away for a few little trinkets and lollies. We want our children and their children to enjoy this magnificent land . We want to be masters of our own destinies. Residential solar represents this. It figuratively, ( and literally) gives power back to the people and it represents the wish to preserve God’s good earth for the future. Of course a few panels on the roof are not going to reverse global warming but the message is clear: We care about the environment and our right to freedom and we want our voted representatives to care too.

  • Mike Shurtleff

    Criminally excessive support of a dying industry, coal. Hang’em high.
    Excessive subsidies for Solar PV + Storage are better than excessive subsidies for a dying industry. Lesser evil. You no longer need any subsidies for Solar PV, or Storage, in Australia. A better way would be stable policies toward Wind, Solar PV, and Storage. Throw no more money at coal, good money after bad. That is a very old industry. They can sink or swim on their own.
    Pretty simple.

  • john

    Having looked at the election results perhaps some people did react to the rhetoric from the LNP that has been ongoing for well over 10 years against any RE.
    Just once it appears the bell sounded a message “you are not exactly being told the truth”
    Once an electorate realises that they get very angry and no amount of trying to placate them will work so vale can do you have not exactly done what u can.

  • Pedro

    Does anybody know how big an effect the PV issues had on marginal QLD electorates on the election result? From ABC news it appears “Toxic Tony” and the privatisation of state assets were major influences on the outcome.