From Watts Up With That?

Essay by Eric Worrall

Power prices are rising, despite recent political promises they wouldn’t, and renewable investment has stalled, despite frantic government efforts to attract new capital.

‘Profound slowdown’: Alan Finkel quits Victoria’s SEC

Patrick Durkin BOSS Deputy editor
Jun 23, 2023 – 5.00am

Former chief scientist Alan Finkel has quit his role advising Victoria’s State Electricity Commission, as the organisation’s chief executive warned energy prices will rise, despite Victorian Premier Daniel Andrews’ election promise the SEC would bring down prices.

…

Chris Miller, appointed interim CEO of the SEC, acknowledged on Thursday the energy transition would cause a large uptick in energy prices, despite Mr Andrews’ election claims.

“We know that getting to 95 per cent renewables in Victoria will require a large uptick in billed build rates _{[see AFR correction below]},” he told the conference.

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But Mr Miller pointed to warnings by the CEO of the Australian Energy Market Operator, Daniel Westerman, and data from the Clean Energy Council that shows “a profound and recent slowdown in new financial commitments for large-scale user generation projects”.

“In fact, in the first quarter of this year there were no new financial commitments across the nation despite a strong pipeline of projects.”

…Read more: https://www.afr.com/companies/energy/profound-slowdown-alan-finkel-quits-victoria-s-sec-20230622-p5dijw

Part of this slowdown might be a perception that China’s economy is about to fall off a cliff. Australia is heavily dependent on the Chinese economy.

The problem afflicting China is for decades Chinese local officials have been running a Ponzi scheme, borrowing heavily to hit fake economic growth targets, squandering the borrowed money on useless infrastructure projects – to the tune of at least $18 TRILLION Dollars in outstanding Chinese local government debt. Much of that money was spent on purchasing raw materials from Australia to build all that pointless infrastructure.

But now, thanks to their crazy Covid lockdown, China has abruptly run out of cash. The Ponzi scheme is now fully exposed.

Prospects for Australian mineral exports to China are looking a little shaky.

We can only speculate why this public debt fuelled Chinese Ponzi scheme was allowed to grow to the point it threatens the stability of the Chinese state. I suspect it remained concealed for so long, because as local officials were promoted to central committee jobs on the basis of their fake economic achievements, their highest priority has been to conceal their personal financial malfeasance. They couldn’t expose their former underlings continuing the Ponzi scheme, without their own misdeeds being exposed. This has likely created a web of lies and concealment stretching all the way from local governments right up to the central committee.

In Western countries a free press usually uncovers and exposes such public sector financial disasters well before they become a national disaster, though arguably the Western press have been asleep on the job lately, at least when it comes to their handling of Democrat political scandals.

The dire financial distress in China has left Australia flailing. Most current federal and state governments are committed to massive expenditure on greening the Australia economy, but who in their right mind wants to lend money to a country which could be about to lose their biggest customer? As interest rates rise, as the Chinese economy falters, businesses across the country are tightening their belts in anticipation of the coming crash.

As for China, about the only move left in China’s playbook is to create a distraction big enough that people don’t notice their government has squandered all their money.

Whatever China decides to do, none of this bodes well for the Australian economy.

Of course the rapid approach of the Chinese export crisis hasn’t stopped our financially illiterate politicians from spending borrowed money like water, pushing forward with their Nut Zero plans. They’re still demolishing real power stations, offering what’s left of Australia’s manufacturing industry up like a grizzly Aztec sacrifice, perhaps in the hope the gods of green energy fantasies will smile on their mindless abasement.

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h/t Nick – AFR has issued a correction: “Correction — An earlier version of this story incorrectly reported that interim SEC CEO Chris Miller referred to “a large uptick in billed rates”. The correct reference should have been to “build rates”.” But given elsewhere in the article the AFR quotes an SEC estimate of $320 billion for Australia to transition to renewables, I don’t see how that changes anything. The $320 billion will have to be paid by consumers, either through increased bills or via increased taxes to service government borrowing.