Six (crazy) things we learned this week …

If you can’t beat them join them. Germany is sometimes misinterpreted as a beatific island of green energy mindedness determined to forge a path to a low carbon economy for the rest of the world to follow. It’s only partly true. There has been massive opposition to the government’s renewable ambitions and its decision to close down its nuclear capacity, notably from the country’s two biggest energy companies, RWE and E.ON, who have an awful lot invested in nuclear, coal and gas and have been nearly apoplectic in their opposition to solar.

Now, a week after the two companies abandoned a $20 billion nuclear project in the UK because it was “too costly” and “impossible to finance”, and walked away from a smaller nuclear project in Bulgaria, RWE and E.ON have announced that they are embracing solar energy – because, in the words of RWE’s Hans Beunting, the cost of solar has “dropped dramatically, more than we have expected.”

Solar is also doing something unpleasant to their existing businesses. We’ve run plenty of stories about the merit order effect and why utilities have been pushing back against solar, and this Bloomberg article highlights the continuing impact, where wind and solar are pushing down the profits of RWE and E.ON’s fossil fuel plants to a third of what they receive in the UK.  It’s not surprising then, that E.On has decided to add at least 70MW of utility scale solar a year from 2013, while RWE is looking to build solar where the sun does actually shine, and is investigating opportunities in north Africa, where a group of leading German industrials is developing the Desertec initiative, capturing solar energy from the African continent and the Middle East and distributing it around the European continent via a series of super grids.

Super grids or no grids?

That super grid concept is certainly a hot topic in Europe, and Asia. The UK is investigating running a cable to Iceland to tap into that country’s massive geothermal energy resources, Ireland is linking with Britain to export its excess wind energy, and links are being built to and from the Scandinavian countries to tap into their hydro power, while Japan is looking at a similar Desertec concept that would see it source clean energy from wind and solar resources in Mongolia.

But super grids are a luxury that developing countries cannot afford, so some innovative people are coming up with some smart alternatives. In India, where large swathes of the population have no access to grids, they are bypassing the utilities and the networks altogether by combining the attributes of mobile phone companies and solar panel installers.  As Bloomberg notes in this fascinating article, they are on on the crest of an electricity revolution that’s sweeping through power markets and threatening traditional utilities’ dominance of the world’s supply.

Similar mini grids are being created in Germany and elsewhere in Europe, and will happen in Australia too – and the combination of renewable energy developers, smart technologies providers with appliances or smart phones, will provide a similar threat to utilities and network operators here. “The revolution is just beginning,” says Jeremy Rifkin, a professor at the Wharton School of the University of Pennsylvania. Adds Gerard Reid, a partner and energy banker at London-based investment adviser Alex Capital: “Over the next decade, utilities are going to be under a lot of pressure.”

Tea Party down under

Australian utilities have twigged to this, but luckily for them, Australian politicians – particularly those on the conservative side – have absolutely no idea, and seem to believe that the energy world is being attacked by aliens. They continue to push for business-as-usual – centralized fossil fuel generation, bigger and more costly networks, all in the name (apparently), that renewables are too costly, despite all the evidence that they – along with smarter ways of delivering and storing energy, and managing demand –  will in fact lower costs over the long term.

The push-back against carbon and green energy schemes is reaching a crescendo. The NSW Government, despite publishing an IPART report that showed the renewable energy target will add nothing to electricity bills this coming year, wants the RET abolished because it is “too costly”. Victoria and Queensland continue to push back against green energy policies. Standing behind them are the incumbent utilities (some of which the government owned) whose business are threatened in the same way as those of RWE and E.ON, and the usual business lobbyists who have no interest in climate or clean energy opportunities. Just look what’s happened to Jennifer Westacott, who as head of KMPG’s climate change practice, talked of how important it was to have a robust carbon price in Australia to maintain the economy’s international competitiveness. Now, as head of the BCA, and in cohoots with the AIGN, ACCI and the AIG, she feels obliged to say the opposite.

Subsidies? What subsidies? Oh, those subsidies!

Energy Minister Martin Ferguson still appears confused about what the renewable energy target is designed to do, labelling it this week as a “$20 billion cross subsidy” – possibly forgetting that the reason the RET exists is to balance the environmental cost of the emissions from fossil fuel generators in the absence of a “robust” carbon price. (When a robust carbon price does appear, the cost of renewable energy certificates will all but disappear). So, maybe a clever economist could argue that the absence of a robust carbon price represents an $80 billion cross-subsidy in the other direction, and it’s continued absence signals a chronic market failure. Oh, what’s that? They already have!

Still, the fossil fuel industry can’t complain. Brown coal generators this past week have received $1 billion in compensation for the carbon price (a significant multiple below what green energy producers have been told they will get, but a significant multiple above what they have actually received in 5 years of Labor government). And while some utilities are being paid to stay open, others are preparing bids for how much the government will pay them to close, as the buyout of dirty generators nears its conclusion. This could be a sign of the future – as costs of wind and solar energy come down, it will be the incumbents who will be in need of greater subsidies as their business models evaporate. In WA, this has already begun, with the state government considering a $90 million bail-out of the Bluewaters coal fired power station, owned by Indian interests. As Ray Wills, from the Sustainable Energy Association of Australia, said in a statement: “It has highlighted the inefficiency of coal-fired power to be a viable business in WA without significant State Government subsidies.”

Department of silly stories ….

In the US, a campaign by green groups and tighter regulations by the Environmental Protection Authority, has caused plans for more than 150 coal-fired plants to be abandoned, and the closure of another 100 or so to be announced. Now the coal industry is trying to fight back, curiously using a comparison with the mass murderer Osama bin Laden in a bid to gain public sympathy. United Mine Workers of America President Cecil Roberts said new EPA rules would kill the coal industry in the same way that Navy SEAls had killed bin Laden.  “The Navy SEALs shot Osama Bin Laden in Pakistan and (EPA chief) Lisa Jackson shot us in Washington,” he said. Good luck with that campaign.

But in the Tea-Party dominated politics of the US, nothing is ever too silly. Having attacked climate science, wind farms, solar panels, and even electric vehicles and the constitutionality of energy efficient lightbulbs, the next target must surely be smart meters. Lo and behold, an Australian group has beaten them to it ….

Smart Meter Syndrome: It’s a thing. No, really…

…Well, it is in Victoria, anyway. The Moorabbin Glen Eira Leader this week reported that an Ormond doctor has been forced to have her home painted with electro-magnetic sheilding paint (that’s a thing too, apparently) because smart meters in her street are making her sick. The symptoms – which are eerily similar to those resulting from that other cleantech-related affliction, wind turbine syndrome – reportedly include heart palpitations, chest pain, lethargy, dizziness, fainting and insomnia; all of which have combined to make the doctor “not able to function” since the February rollout of smart meters in her area, says the paper (she herself does not have one).

The paper also reports that the spread of this smart meter-related syndrome has proved somewhat of a boon for local companies like YShield Electromagnetic Radiation Shielding, which says it has painted “hundreds of houses” since the introduction of smart meters in the area. “We’ve done four houses this week, in Ormond, East Bentleigh and St Kilda,” YShield’s general manager told the paper, adding that demand as “so high we’re having to book jobs weeks in advance.” The Leader story, which was also published in the Herald Sun, also quoted state government spokesperson Emily Broadbent as saying smart meters were safe and their radiofrequency emissions weaker than those of many household devices. She also said the World Health Organisation had determined electromagnetic hypersensitivity was not a medical diagnosis – another eerie parallel with wind turbine syndrome.