Australian Parliament

Wind Farms (adjournment speech)

Senator EDWARDS (South Australia) (21/08/12) (20:53): Mr President, I seek leave to speak for 20 minutes. I doubt I will be done in that time.

The PRESIDENT: There being no objection, leave is granted for 20 minutes.

Senator EDWARDS: It seems our moons are in alignment between Victoria and South Australia, Senator Madigan, because I too rise on to speak on wind energy. You could probably head it: ‘Blowing away the spin of renewable energy developers pocketing taxpayers’ cash—the money-go-round’. I have a different take on the same issue but, nonetheless, I think we are probably talking from the same song sheet.

I rise tonight to talk about the proliferation of wind farms in South Australia and the adverse impacts they are having on my home state. I do not come to this issue from a perspective of whether or not there is a health impact from the noise of turbines or blades, rather that Australians are paying dearly for this renewable source of power. More than half the wind power installed to date across this nation has been in South Australia. Proponents of wind farms claim these are now generating 31 per cent of the electricity from 534 turbines in South Australia, but they never acknowledge this growth is being driven artificially.

Renewable energy certificates have enabled the developers of wind farms to maximise their returns because of the Gillard government’s commitment to 20 per cent of Australia’s electricity coming from renewable sources by 2020. Electricity retailers are legally required to purchase a set number of large-scale generation certificates each year. One LGC equals one megawatt hour of generated renewable energy electricity. The market price for LGCs can fluctuate daily and has varied between $10 and $60 in the past. The end result is that South Australians are paying the highest electricity prices in the nation. Power charges have risen by more than 40 per cent since 2007 and are expected to increase by another 30 per cent over the next two years.

I have welcomed an academic’s critique of wind farms because consumers and taxpayers need to know how much this form of renewable energy is costing them. I refer to the statement of the University of Adelaide’s climate change professor, Mr Barry Brooks, who said:

There’s no guarantee that building wind farms will bring down power prices. It certainly hasn’t to date …

Wind costs a lot of money to build and then it has to be financed and then paid off and when the wind’s not blowing it has to be backed up by something like gas. It’s not cheaper than gas or coal right now; it would be more expensive…

It’s not going to bring down the cost …the overall trend is clearly that power prices are going to go up.

Senator Madigan, you would strike a chord with those comments. These remarks by Professor Brooks highlight that wind energy has its limitations. They are a factor in why South Australians are being charged some of the most expensive electricity prices in the world, behind only Denmark and Germany. Apologists try to blame sharply rising power charges on the need to replace ageing poles and wires, but infrastructure costs do not account for all of those increases.

Wind farm developers have concentrated on South Australia because of the benevolent planning guidelines of the Rann-Weatherill Labor governments, unmatched by any other Australian state. These planning policies have allowed turbines to be erected only one kilometre from houses with no rights of appeal by landowners. It is extraordinary stuff! Because of tougher regulations in Victoria, three developers want to erect 220 turbines along the Limestone Coast, not far from you, Senator Madigan, in the south-east. These projects are known as Woakwine, Green Point and Allendale East—I am sure you know them. However, a development assessment panel of the Goyder Council at Burra in South Australia’s mid north have held out. They rejected the 41-turbine Stony Gap wind farm proposal submitted by the power company, TRUenergy. But TRUenergy said it had strong grounds to appeal against the decision—a first under the state government’s wind farm legislative reforms.

The five-person panel from the Goyder Council voted three-two against it on the basis of health concerns relating to noise. But TRUenergy said its application met all the state planning requirements. I am sure it did. It is appealing against the decision in the Environment Resources and Development Court. TRUenergy has also applied to the Clare and Gilbert Valleys Council to add six turbines to its Waterloo wind farm near Clare, my home town.

On 3 August, what was said to be the biggest wind farm in South Australia was announced—the $479 million Snowtown II project, involving 90 turbines with blades a record 108 metres long. A major player in the proliferation of wind farms in South Australia is Pacific Hydro, a company under the control of trade union industry superannuation funds that have close links to the Gillard government. Pacific Hydro operates the 27-turbine Clements Gap wind farm near Crystal Brook and now wants to erect 42 turbines at Keyneton, east of Angaston, which is close to the iconic Barossa Valley. It also has a $350 million plan to develop the Carmody’s Hill wind farm at Gulnare, north of Clare, 170 kilometres from Adelaide.

The company has targeted wind power projects to take advantage of the large-scale renewable energy certificates and taxpayer subsidies that it and other promoters are getting from the Commonwealth. The Clean Energy Council, which is the umbrella organisation for the renewable energy companies, conveniently overlooks that, without the certificates and taxpayer subsidies, wind power would be twice as expensive as coal or natural gas. One critic of wind farms has claimed that a three-megawatt capacity wind turbine that generates at the most $150,000 worth of electricity a year is eligible for guaranteed subsidies of $500,000 a year.

Senator Madigan interjecting—

Senator EDWARDS: That is right, Senator Madigan; you are right across this as well. On those figures, the Clement Hill wind farm is worth $13.5 million a year to Pacific Hydro and $21 million to Keyneton once its turbine blades are turning in the wind. By law, electricity distribution companies have to take power generated from renewable energy before either coal or gas, except for times when the wind does not blow and, if it is too hot or too breezy, the wind turbines are switched off. A renewable energy company relies on the certificates to bump up whatever it gets from the distributors from the sale of wind generated electricity, and one ex-union heavy has worked out how best for consumers and taxpayers to direct their money to his organisations.

The chairman of Pacific Hydro is Garry Weaven, a one-time assistant secretary of the Australian Council of Trade Unions, who decided that going into the superannuation industry was a much more lucrative career choice than that of a federal Labor MP. Pacific Hydro is owned by Industry Super Holdings through the IFM Australian Infrastructure Fund. IFM, or Industry Funds Management, which Mr Weaven was the founder of, manages assets with a total value of $29 billion for around five million fund members. Unions claim they do not control these industry funds, pointing to 50 per cent employer representation on the boards, but it is the union, Labor-linked officials who call the shots.

Besides Garry Weaven in Industry Super Holdings, other notable officials are: Bernie Fraser, the former chair and Treasury secretary under Labor PM Bob Hawke, also appointed as a Governor of the Reserve Bank; Anna Booth, former secretary of the Textile, Clothing and Footwear Union and currently chair of Slater and Gordon, the law firm where the Prime Minister used to be a partner; and Anne De Salis, a former staffer to Paul Keating. Four of the seven have an identifiable Labor background.

Mr Weaven has said the investment in Pacific Hydro was an excellent decision. That is an understatement. Renewable energy certificates are giving tremendous returns to the companies involved, but it is at everybody else’s expense. Industry SuperFunds took out a double-page spread on pages 2 and 3 of the News Limited state newspapers on 20 August—only yesterday—and these paid ads make the point that Industry SuperFunds have pioneered direct investment in long-term assets like wind farms. Also, the industry-union superannuation funds will soon have more money to invest in wind farms with Labor, increasing the superannuation guarantee from nine per cent to 12 per cent by 2020. These funds have perfected the money-go-round.

According to Ray Evans and Tom Quirk in the July Quadrant article ‘The Ruinous Privileges of Renewable Energy’, it is said the union super funds have $3 billion invested in Pacific Hydro, almost 10 per cent of their entire portfolio, and that Pacific Hydro would collapse if the mandatory renewable energy target scheme was repealed. Now, the state government has approved the $900 million proposal to put up 105 turbines at Hornsdale, between eight and 24 kilometres north of Jamestown. The application was lodged on 26 October last year, not long after then Labor Premier Rann eased restrictions on the development of wind farms to give backers more certainty, while removing third party appeal rights.

The promoter, Investec Bank, sure knows how to influence the right people. It sponsored the Wallabies-All Blacks rugby union Bledisloe Cup test match in Sydney on 18 August. On its website, Investec is offering a 5.3 per cent guaranteed return on fixed deposits for 90 days. That is much more generous than what Australia’s big four banks or even government bonds are offering. Investec Australia, chaired by the respected businessman David Gonski, is obviously relishing the financial benefits of renewable energy certificates. The Greens-Gillard government has expanded the framework and the investment bank is taking advantage of the commercial opportunities. It already has two wind farms in Western Australia and Victoria.

In South Australia, nearly 1,300 megawatts of wind power have been approved and are awaiting construction. Hornsdale alone will account for up to 315 of those megawatts. Boosters of wind farms brag about how much they have expanded in South Australia, yet they want electricity consumers to ignore how much power prices have increased. No matter the excuses, the two are inextricably linked—and taxpayers and consumers are being gouged. This has prompted SA Liberal shadow planning minister, Mr David Ridgway, to chair a parliamentary inquiry into any link between the number of wind turbines and the enormous electricity bills in South Australia.

Cameron O’Reilly, chief executive of the Energy Retailers Association of Australia, revealed what has been going on. He stated:

Reserving 20 per cent of generation through the Renewable Energy Target for technologies like wind has undermined the principles of an electricity market based on marginal cost. Investors would quite rightly cry foul if the RET were abandoned.

We are paying more for our power because of the influence of the renewable energy proponents on the federal and state Labor governments and the Greens.

South Australia has an average electricity price of 28.6c per kilowatt hour. Yet the Clean Energy Council claims that renewable energy, specifically wind, is only responsible for two per cent of consumer’s bills. Excuses include an upsurge in rooftop solar panels, the South Australian electricity network is big in area and extra network costs due to the additional spending required to upgrade ageing poles and wires. But these factors do not camouflage the part played by renewable energy certificates. Renewable energy should not be dependent on subsidies forever to sustain the wind farm industry.

This form of renewable energy is a long way from being a baseload supplier of power when it is needed most at peak demand. Wind only contributed 60 megawatts during maximum demand in the summer of 2011, although at times during the week either side of that maximum demand output reached 873 megawatts—in other words, when the power is most required, you cannot depend on wind farms to supply it. It is all very well for wind farm developers to be talking up the potential of their industry, but there is a lack of transmission lines with spare capacity to take the energy generated from additional wind farms.

Those pushing for the expansion of the wind farm industry point to possible areas that could be developed along the Yorke and Eyre peninsulas and on Kangaroo Island. However, these areas have plenty of wind but do not have much spare transmission capacity. ElectraNet, the transmission network service provider, stated in its annual report last year that the capacity to export such energy was limited because of the restrictions of the interconnector, and this was already particularly noticeable during period of light load and high-wind conditions—in other words, the wind farms are generating excess power at times when there is reduced demand within this state and it cannot be sent elsewhere because of limited transmission capacity, so it is not being used.

The proponents of the wind industry want the government to fund the development of greater transmission capacity within South Australia plus a connector interstate to offload that unused green power. It is all very well for wind farm developers to be talking up the potential of their industry, but there is a lack of transmission lines with spare capacity to take the energy generated from additional wind farms. The wind farms are generating excess power at times when there is reduced demand within this state and it cannot be sent elsewhere because of limited transmission capacity.

There has been pressure for the renewable energy certificates to be wound back since the carbon price was introduced on 1 July at $23 a tonne. For renewable energy to be anywhere near the price comparable with either coal or gas, the carbon price would need to be more than $50 a tonne and over five times what the unregulated world market in Europe is trading at right now. The only guarantee is that the price of electricity will keep on increasing.

In South Australia, the average yearly household electricity bill has gone from $770 in the mid-1990s to more than double that at about $1,600 today. This is the time for all Australians to put this matter at the forefront of the political agenda, lest we slip further behind in cost of living terms and business competitiveness. Renewable energy certificates might have been needed to kick-start a fledgling wind power industry but not anymore. As we can see by the topics raised in this adjournment speech, wind energy in both South Australia and Victoria is on the political agenda, and I urge the government to undertake an urgent review.