Julia Gillard announces a new green navy:
Prime Minister Julia Gillard is in Perth to announce the deal with Carnegie Wave Technology.
Wave power will be used to power HMAS Stirling’s electrical infrastructure at Garden Island.
Really? Wave power? Like the stuff that the now rusting taxpayer-funded hulk off Port Kembla was meant to produce? Well, hopefully more successful this time, fingers crossed:
At this small scale the project itself is not a stand-alone economic investment rather its aim is the demonstration of successful system engineering, operation and power sales
The project is supported by Australian Federal Government funding through the Australia Centre for Renewable Energy’s (ACRE) Emerging Renewables Program (ERP), and the Western Australian State Government through the Low Emissions Energy Development (LEED) fund. The Australian Department of Defence is a strong supporter of the project through a Memorandum of Understanding to provide power to HMAS Stirling.
Hmm. Lots of grants there, but still not a total cost. Let’s dig further:
- $10m Australian Government grant awarded to Carnegie for $31m Perth Wave Energy Project.
- $5.5m secured for Project from Western Australian Government.
- $16m equity funding secured to support Project funding…
The WA funds will come from Carnegie’s existing $12.5m State Government agreement. The combination of State and Australian Government funding also allows the project to proceed with approximately 50% Government funding.
Wow. So already taxpayers are on the hook for more than $15 million (and possibly $22 million) just to provide an alternative power generator for one naval base, using undeveloped new technology to produce limited power at a higher cost.
Next question: Is the project further subsidised by the navy through a deal promising to buy this already subsidised power at above-market rates?
Economics: Electricity sold to the grid will achieve A$170/MWh… This assumes a capital cost of $50m ($9.8m/MW), funding of $12.5m from government grants and $36.6m by equity contribution. The numbers may improve if the Federal Government were to match the State Government grant.
$170MWh? Wow. As the Productivity Commission found last year, a little shopping around could get the Navy much cheaper power:
While most physical electricity is traded through the central pool, generators and retailers also enter into financial contracts to hedge against the volatility in the spot market. For example, a retailer may contract with a generator to effectively purchase electricity for A$40/MWh (the ‘strike price’) in a given period.
Even allowing for the retailer’s margin, it seems the Navy is using its defence budget to buy green power at inflated prices, even after governments have tipped in more than $15 million. And all to make effectively zero difference to the climate.
This is your green future. Spending much, much more to make no difference.
No wonder the market was backing off fast, until Gillard and her navy rushed in, waving our millions to produce that little up-tick at the very end of the graph:
Andrew Bolt’s columns appear in Melbourne’s Herald Sun, Sydney’s Daily Telegraph and Adelaide’s Advertiser. He runs the most-read political blog in Australia and hosts Channel 10’s The Bolt Report each Sunday at 10am, and his book Still Not Sorry remains very widely read.