Essay by Eric Worrall
Inexperienced vitality development agency destroyed by the shift to inexperienced vitality? $10 billion of vitality transition initiatives in danger.
Clough collapse threatens $10b of vitality transition initiatives
Angela Macdonald-Smith and Jenny Wiggins
Dec 6, 2022 – 6.45pmFederal Power Minister Chris Bowen is looking for pressing briefings from his division as the federal government seeks to restrict the fallout from the collapse of engineering contractor Clough, amid a menace to nearly $10 billion of initiatives crucial to Australia’s vitality transition.
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Trade observers warned that Clough’s administration, which occurred after a $350 million sale cope with Italy’s Webuild fell via, would delay and will drive up prices of the Perth-based contractor’s initiatives.
These embrace a few of Australia’s greatest initiatives, such because the $5.9 billion Snowy 2.0 storage enterprise and the $3.3 billion Venture EnergyConnect electrical energy interconnector between South Australia and NSW, in addition to one of many few gasoline energy vegetation being constructed within the Nationwide Electrical energy Market.
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Within the wake of the Clough administration, Credit score Suisse analyst Saul Kavonic mentioned value will increase seem inevitable for no less than among the initiatives, together with Snowy 2.0 and Waitsia, “with dangers of delays additionally rising”.
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Clough was bleeding money as a result of unresolved monetary claims on lump sum, fixed-priced contracts and delays getting so-called “milestone funds”, which it has blamed on provide chain disruptions.
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Learn extra: https://www.afr.com/firms/vitality/clough-collapse-threatens-10b-of-energy-transition-projects-20221206-p5c41s
Why are Australia’s provide chains so unreliable?
A part of the reason being excessive vitality costs attributable to the multi-decade inexperienced vitality push is hammering our manufacturing trade, which implies numerous stuff which Australia used to fabricate now must be imported. From August 2022;
Analysis highlights impression of vitality disaster
Aug 26, 2022
Matters: Economics Analysis, Advocacy
Nationwide employer affiliation Ai Group has at the moment launched new analysis detailing the impression of rising vitality costs on a bunch of Australian producers.
“Many producers are energy-intensive, and manufacturing companies are on the front-line of hovering international vitality costs”, Innes Willox, Chief Government of the Ai Group mentioned.
“To know how vitality worth rises are impacting trade, Ai Group sought suggestions from companies within the manufacturing sector and the responses had been sobering.
“Greater than half of the 78 producers who had been contacted reported that they’ve already suffered vital unfavourable results from rising vitality costs, with expectations that higher difficulties are to come back over the subsequent yr.
“Just one in six mentioned they will substantively pass-on rising vitality costs. For many, the associated fee should be borne elsewhere on the steadiness sheet. It is a vital drag that weakens the capability of vitality intensive industries to put money into R&D or job creation.
“Worryingly, roughly one in 5 say they count on to both minimize manufacturing and/or employment within the subsequent twelve months as a result of excessive vitality costs,” Mr Willox mentioned.
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Learn extra: https://www.aigroup.com.au/information/media-centre/2022/Analysis-highlights-impact-of-energy-crisis/
WUWT just lately reported Australian Reserve Financial institution Governor Philip Lowe’s remark “… A technique of tackling inflation induced by supply-side shocks is to handle the provision…”. Whereas Lowe stopped in need of advocating a particular coverage response, an apparent option to deal with the provision downside could be to roll again punitive regulatory political assaults on reasonably priced vitality, akin to Victoria’s “everlasting” ban on fracking, which was handed in 2021.
The loss of life of a renewable vitality development firm by renewable vitality has a sure narrative symmetry. However I don’t really feel like laughing. Hundreds of individuals could possibly be about to lose their jobs, simply earlier than Christmas.
None of that is prone to persuade our internet zero obsessed politicians to vary course – they’re in all probability making an attempt to determine the right way to pump in freshly printed subsidy cash to rescue the state of affairs. As a result of subsidies and worth caps appear to be our present authorities’s go to reply to addressing the issues attributable to their economically illiterate insurance policies.
