Green transition

Published on 25 December 2024

This is the first post-mortem of the Australian green energy transition. I can confidently assert it’s the first because the transition has scarcely begun to fail, the patient is still in good health and a post-mortem is very premature. My hope is that in future, when everyone else has finally spotted the terminal disease, my analysis will gain some authority from its prescience.

To explain how things have gone so wrong, it’s first necessary to recount some history. From my recollection it was in the late 2000s when academics started to seriously suggest that it was technically feasible to phase out fossil fuels from the NEM without resorting to nuclear and without especially large reserves of dispatchable hydro. At the time no-one was suggesting this was very cheap, and although the prices of solar PV and batteries have fallen faster than projected, neither of these really change the equation all that much. To deal with dunkelflautes (dark-lulls, i.e. long periods of overcast still days), your options are still principally pumped-hydro storage or massive over-generation with geographically dispersed wind power and big DC transmission lines everywhere. Neither of these approaches have become much cheaper since the days when even the 100% renewables crowd (then a fringe position) was admitting that it was going to be very expensive.

However, I don’t want to get bogged down in questions of cost. The real issue with these models is that they were principally feasibility studies looking at the grid from an engineering perspective. They paid no attention to what was politically practical, the regulatory framework, the electricity market, and typically used a great simplified model of transmission (if they modelled it at all). This in addition to ignoring some more minor technical challenges around grid balancing and so forth. All of this was perfectly sensible at the time, I would have taken the same approach as they did.

The problem is that these modelling papers have permanently framed the question of the renewable transition. Our energy policy debate starts from the premise ‘let’s ignore all the practical difficulties with the transition and instead pretend a god is building a network from scratch’, because that’s what the academic research did out of necessity in the first instance. The only significant improvement since then is that the AEMO has done some good work fleshing out what needs to be done re: transmission. But all the other obstacles which were bracketed out of the original analyses have not been given a fraction of the consideration you’d expect given what’s at stake.

The absurdity of this might be demonstrated by way of analogy. Imagine if an academic published a paper saying homeless could be solved in 5 years. I wouldn’t be that sceptical of the result; I expect that it is indeed possible from an economic standpoint, but I would be very incredulous that it was going to actually happen. The 82% renewable target by 2030 falls into the same category of ‘technically possible, obviously not going to actually happen’.

Let’s go through some examples of the weird assumptions the models have managed to smuggle into our energy policy. The modelling work, to this day, relies on a huge reservoir of storage known as CER – consumer energy resources. Modellers were struggling mightily ot deal with intermittency and solved it by assuming everyone would have EVs and the grid operator would be able to tap into those batteries whenever it felt like. Now even in the best-case scenario consumers must surely be compensated for this in some way, batteries cost a lot of money and cycling them reduces their lifespan and accelerates depreciation. Moreover the whole point of using them would be to draw power from them when electricity is dear, and recharge them when electricity is cheap, and this sort of arbitrage using someone else’s battery must surely be reimbursed. But the modelling papers could hardly predict how the spot price would behave in 2050 or exactly how ‘stealing private citizen’s energy’ would be legislated so they made the understandable simplification that it was just free. Again, as a modeller, I would have done the same thing at that time in those conditions. The unhinged bit is when non-technical people in politics and the public service have decided to build a new grid based off models like this. A serious category error has occurred here where some back-of-the-envelope modelling of a 100% renewable grid has been mistaken for an energy policy.

I said earlier that’s the best-case scenario, i.e. the one where government figures out how to pay consumers to use their batteries, the worst-case scenario is that it simply doesn’t happen. We know the sort of scare-campaigns that are going to result, we know how difficult smart-meter rollouts have been politically across the world, we know that consumers are perpetually angry about low feed-in tariffs, it’s going to cost an incredible amount of political capital. And as the problems I’ll be enumerating start to emerge, the credibility of the whole enterprise will be shot. Realistically a very likely outcome is that the LNP eventually get into power on a wave of dissatisfaction about energy bills, at which point they’ll have committed to blocking the sort of legislation necessary to make CER a reality.

An important note before I continue, it’s not just the renewable advocates who are ignoring these sorts of pragmatic considerations, even opponents have invariably fallen into the trap and accepted the framing of the issue as presented by the modelling papers, i.e. the grid as an engineering puzzle. So there’s a great deal of commentary when the CSIRO uses a dodgy capacity factor for nuclear, not a lot of commentary about the fact that all these models exist in a fantasyland where politics doesn’t exist.

Let’s move on to another acronym which will cause a lot of strife in future: DSP – demand side participation. This consists of voluntary curtailment done by e.g. industrial users in return for payouts from the taxpayer. At least the direct costs are accounted for unlike CER, although the broader deadweight loss from curtailment of economic activity is ignored in the models. If the voluntary component isn’t enough it will escalate to load-shedding. Now while from an engineering perspective DSP might be a least-cost way of doing 100% renewables, it’s certain to prompt questions like ‘if baseload is a myth why is the taxpayer indirectly paying money to big-business to not consume electricity?’ This is not a dumb question at all and will certainly cause political headaches.

DSP, like CER, is a case of a modelling assumption being mysteriously transmuted into policy over time. If in future anyone ever asks ‘who decided that reducing energy demand would be a core plank of our energy policy?’ I doubt there will be a clear answer. There were modellers who consciously added it to their models to be sure, and then no-one thereafter really questioned whether it was a good idea. Modelling informing policy is perfectly fine, but instead we have modelling assumptions which receive rather little scrutiny becoming de-facto policy over time because the people at the top have no idea what they’re doing.

One reason for this confusion is that energy policy is a mess from a governance perspective. The NEM spans 5 states, who bear ultimately responsibility for their respective electricity grids. The regulatory apparatus which manages the NEM was not built with the intention of rebuilding the grid from scratch in short-order. Even worse, voters associate energy policy principally with the federal government, who has limited tools at their disposal to fix problems, which also means state governments have little incentive to fix problems which will be blamed on another layer of government. It’s hard to imagine a set-up less propitious for a successful transition.

Undoubtedly when the transition fails, a lot of people will claim that the modelling and theory was good, just the bureaucrats botched the execution, as a way of absolving themselves for supporting a policy that ultimately led to a major energy crisis. But this botching is entirely foreseeable, I’m foreseeing it right now. The only reason barely anyone else is seeing it is because they’re still thinking in terms of abstract grid models where governance issues can be ignored entirely.

Let’s drill down on one pillar of the obvious and predictable regulatory failure that’s going to occur, the transmission network. One reason we know there’s going to be regulatory failure here is because it’s already failing. The NEM has led to rising electricity costs for consumers since its inception due to ‘goldplating’ of the grid. Although the term used in the industry is goldplating it’s really just cost-inflation due to a broken regulatory model. The Black Saturday bushfires which killed 173 people were largely caused by transmission failures due to poor maintenance, resulting in a slew of successful class action lawsuits of unprecedented scale in the history of Victoria. One shudders to think what silverplating might look like.

The regulatory model is known as ‘cost-plus’, this is where the regulator approves capex projects the cost of which is largely determined by the transmission companies doing the work, who then recoup the costs through tariffs on consumers. If you’ve ever wondered ‘how does the Pentagon spend so much money for so little in return?’, the answer is cost-plus contracts. The normal market incentive to keep costs down is typically reversed, because the guaranteed rate of return which is used to set consumer prices is invariably too attractive, so the private companies intentionally drive-up costs everywhere knowing they’ll make it all back and then some.

It’s a bit like if you could invest money in the bank for a low rate of return, but if instead you hire a plumber, you’ll be gifted all the money you spend on him back plus a margin which works out to be better than what the bank is offering. You quite literally make money by spending it. Obviously, you’re going to start making up reasons to call a plumber. You might even start borrowing money from the bank to hire plumbers.

Note that one reason this model is extremely pernicious is that it’s impossible to detect the cost inflation just by looking at the accounts. Say you do a normal tender process instead, and there’s only one bidder, and they massively over-quote costs knowing they’re in a monopoly position. You can detect this easily enough after the fact, because the bidder will end up making a big profit. But with cost-plus, the profit margin is fixed, instead there’s just a hidden tax where everything is done in the most expensive way (hiring too many plumbers in the above example) but which nonetheless looks like legitimate costs from an accounting perspective. Naturally the regulator is aware of the pitfalls and is trying to deal with it in various ways, but at heart this is still what’s happening.

While there’s legitimate reasons in favour of this model in certain circumstances, it’s very liable to failure and is confused in its conception. If the AER knows what should be built, why doesn’t it know the cost? The implication here is that there’s some level of technical expertise in which the regulator has enough information to determine what capital projects must be undertaken and regulate prices for consumers, but not to just do the work itself or to set prices for the capex. Overwhelmingly the only way to understand what’s happening is to realise this is a pseudo-market set-up by market fetishists which has none of the qualities which makes markets work. Not only is there no competition (transmission being a natural monopoly), all the ordinary incentives which act like an invisible hand in the market have been replaced with the ham-fisted interference of the state.

A centrally planned system has two major advantages over this. Firstly, all information is within the same organisation and can be used to make the same sort of determinations the AER makes. In the current system much of the technical expertise and relevant information is hoarded by the private companies who then exploit this information asymmetry in pursuit of their business objectives. Secondly, problems can just be fixed as they arise directly, rather than through a lengthy-process of adjusting the regulations so that the incentives created thereby will result in the companies changing their behaviour so as to solve the problem. The AER resembles a clumsy puppet-master; the puppets have no autonomy but nor do they necessarily do what the regulator wishes.

Things get even worse as you zoom out. The AER’s decisions are informed by the AEMO, who publishes the ISP (integrated system plan) which provides the long-term strategy for the transmission network. Here we add more points of failure because we have competing bodies which might be at odds with one another and which will surely suffer from miscommunication even in the best of circumstances. There’re many more bodies than the AER and AEMO, such the AEMC and the ESB, but it’s not worth my while articulating the responsibilities of them all. Suffice it to say, it’s a gigantic clusterfuck. That very few people seem to have any clue how the system works goes to show just how impoverished the discourse is with respect to the energy transition.

But it doesn’t stop there. Ultimately the most powerful bodies here are the states who have effective veto power over every project through planning and environmental approvals. Here we have another huge advantage of a centrally-planned system, coordination. The regulatory bodies are meant to provide this coordination in the NEM but are too underpowered to do so effectively. Any state can realistically compel the regulator to approve suboptimal projects by threatening to veto the alternatives.

Transmission projects typically depend on other projects also being completed to realise their benefits, in the same way there’s no point building a water-pipe with a missing chunk in the middle. The division of the network between states (and transmission providers, who cover different locales) allows parts of the network to hold the rest hostage. E.g. if the AER has approved tens of billions of dollars of projects that only make sense if another project also goes ahead, then the actors involved in that final project have incredible leverage. Also observe the integrated nature of the network creates extreme difficultly for cost-benefit analysis as the individual projects cannot be assessed in isolation.

What we have is a perfect storm of regulatory problems. Private companies are making large profits (not margins, but the scale of the projects is big) which they invest in lobbying state governments who can effectively decide what’s being built. We have a mess of regulators who are underpowered and lack the relevant expertise to act as anything more than a rubber-stamp on the proposals put forward by governments and the transmission companies. All of this ultimately gets paid for by stealth taxes in the form of electricity tariffs, so there’s not the usual pressure from state treasuries to keep costs down because it doesn’t impact the budget. And when the whole system blows up the federal energy minister will probably be blamed who isn’t really all that involved so there’s no democratic accountability either.

This can’t be fixed by just buffing up the regulators because there’s sound constitutional reasons why the states wield so much power; ultimately voters should have a say in what their state looks like. Furthermore the modellers have largely ignored the pragmatic difficulties which the states are more cognizant of, like the sclerotic processes around environmental and planning approvals and political feasibility. E.g. the Victorian government is giving a much bigger place to offshore wind because a few big offshore wind projects are more practicable than covering the state in wind turbines and transmission lines. Offshore wind is also a lot more expensive but this never makes it back to the modelling, i.e. when people say ‘renewables will cost this much’ they’re talking about a hypothetical network we’re already not building. The states and transmission companies are regularly defying the ISP, sometimes with good reason and often not. Regulators are then retconning these changes into their strategy as they occur. These changes invariably result in big increases in costs but no-one seems to care about the fact that past cost projections are constantly being invalidated; they continue to cite current projections as gospel.

The other reason the NEM can’t be fixed by buffing up the regulators is because it’s virtually impossible to make any sweeping changes. The NEM is a multijurisdictional shitshow, fixing it is almost as difficult as fixing federalism itself. We’ve inherited a regulatory apparatus that isn’t fit for purpose because it wasn’t built to do this and we can only make incremental changes. The shortcomings of the cost-plus model for transmission for instance, great though they are, were never going to immiserate the nation back when the plan was just to maintain an existing network. Now that we’re trying to invest over $100b in new projects and the lack of cost-control is a serious issue.

Perhaps the most glaring omission from the modelling, and thus the discourse more generally, is the NEM itself. The grid is modelled, but not the market. But it’s the market which determines how much people end up paying for electricity.

Instead there’s two types of costs the pundits are talking about. LCOEs, used by the morons at the CSIRO, are a joke, and anyone who uses them can safely be excluded from the conversation. It’s utterly meaningless to try to assign a single number to a generation technology while ignoring the other constituents of the network, available redundancy from hydro, the climate, availability of good sites, etc. The other cost quoted is total system cost, a much superior approach because it’s a cost of the system in its totality. In a market economy it approximates the real resources required to build, maintain and operate the grid and provide fuel etc. However from the political perspective what people really care about is how much consumers end up paying, which is not a univariate function of the total system cost. Which is to say, system A might have lower total system costs than system B while still providing more expensive electricity. The core insight here is that prices in the spot market are driven by marginal costs, but total system costs principally indicate average costs.

So to give an example from the real world. Victoria relies heavily on coal power, however the marginal producer tends to be gas. So when coal prices go up or down, changing the total system cost, it actually comes out of the margins of the coal generators, not consumers’ pockets. This dynamic will become even more pronounced with renewables, say before the sun comes up there will often be a mix of wind + gas. Wind has no fuel cost, the wind is free, and this ‘cheapness’ is reflected in the total system cost, but the consumer will still be paying an arm and a leg for said electricity.

Renewables also create site rents which redistribute from consumers to producers but which aren’t a ‘cost’ in the total-system cost approach. There will be monopolistic pricing from storage providers during scarcity events. And gas peakers, still necessary for firming, will need to rise prices substantially when they are used to recover their fixed costs after wind and solar have cannibalised a decent chunk of their sales. All these issues potentially drive a wedge between marginal costs and average costs, increasing profitability at a cost to consumers. The dynamics are sufficiently complex that I’d argue we don’t actually have a clue what consumer prices will look like a decade now, even if hypothetically the total system cost projections were accurate (which they’re not).

While no-one really talks about the spot market, the idea that the renewable transition is ‘market-led’, as opposed to a nuclear plan, is a central argument in the debate. Turnbull tweeted to this effect a few days ago. We supposedly know the market-led solution will be cheap because the state has modelled and planned it out (these market-advocates haven’t understood the calculation problem). To be fair, this isn’t entirely a policy-choice, insofar as transmission needs to be built first and can’t be guided by market forces, however after the transmission is built you’ve partly pre-empted where and what generation can be built to a substantial degree.

But it should prompt the question, what exactly is the point of the market in this solution? Absolutely no-one expects or hopes that prices will guide investment in the generation market. From the earliest days the government has provided extremely poorly-targeted distortionary subsidies for things like rooftop solar and the RET because no-one believes in a market-led solution. Turnbull himself is mostly famous for Snowy 2.0 and trying to get a NEG through which would have addressed the obvious market failure that’s going to occur.

The government has essentially a three-pronged approach to the green transition, centrally-planning what will happen, setting arbitrary and unrealistic targets, and the aforementioned subsidy regime. The current subsidies (CIS), a fair improvement on the RET, take the form of underwriting and contracts-for-difference (CFDs). The CFDs are to deal with a major problem; guys who invest in utilities tend to be pretty risk averse, and investing in the Australian generation market is a bit like taking leveraged bets on crypto. No-one has any clue what the market will look like in 10 years. CFDs provide a revenue-floor thereby derisking renewable investment, while also providing a revenue cap purely to make it look ‘balanced’ to uninformed voters. The revenue cap can only serve to stymie investment in those projects most likely to keep the lights on (although the market operator often caps prices anyway because no-one actually believes in markets).

The issue here should be pretty obvious, the whole point of the market is to utilize price signals, but the government is intentionally distorting those signals. It also has a dismal track-record of subsidizing the right-type of generation. Rooftop solar for instance is a god-awful source of generation only subsidized to win votes. CIS excludes gas-projects even though they’re integral to firming renewables, and it’s also poorly designed for long-duration storage which is what is most-desperately needed in-lieu of more gas-peakers. It’s quite likely we’ll end up in a scenario where, when it’s very sunny and windy, energy prices are negative, and the operator is scrambling to prevent the wires from overheating and causing bushfires, the taxpayer will be paying generators to produce negative-valued electricity due to CIS. Then when the sun stops shining and the wind stops blowing, the taxpayer will step-up and pay out manufacturers to turn-off their factories (DSP). Voila, the market.

These subsidies attract none of the scrutiny they should because they’re unrelated to total-system costs. Certainly government can induce bad investments, but the model is of the ‘optimal’ network and so this is assumed not-to-happen. And redistributions from taxpayer to energy-company shareholders simply aren’t ‘costs’ in the sense the modelling uses at all. Effectively the federal government can spend any amount it wants on the transition and, without lying, insist that it doesn’t change how much the transition costs – because budgetary cost is orthogonal to total system cost.

The left often attributes the desire for market-solutions to ‘neoliberal ideology’ which I find unconvincing. The bias towards markets is because the alternative is the state doing things, which immediately comes with huge PR risks. Only a truly crazy politician would want snowy 2.0 but for the whole grid, because it’s produced nothing but negative headlines. Much easier to set ambitious long-term targets, sound very ministerial while you talk about the market, then you’ll be long-gone when those targets aren’t met. Who was blamed for missing the ‘closing the gap’ targets? No-one. Market-solutions are a way of avoiding accountability and work, and then later they become entrenched when the beneficiaries start spending some of their windfall gains from the pseudo-market on lobbying and marketing for the retention of said state-sponsored pseudo-market (see superannuation as an example).

One would hope though that the confected enthusiasm for markets would be somewhat tempered by the fact Australia is already in the midst of a major energy crisis due to leaving things to the market. Australia exports a fifth of the world’s LNG, it is a gas superpower, but you wouldn’t know this living here. We’re wracked by endemic and ever-worsening gas-shortages in the southern states which are having to resort to burning liquid fuels (i.e. diesel) to keep the lights on. The Victorian government is even burning through electoral capital trying to ban gas-stoves (putatively to fight climate change through coal-powered electric stoves, but really to delay the gas shortages an extra election cycle or so).

Imagine if you couldn’t fill up your tank in the UAE because of oil shortages? Well the guys who’ve accomplished that in Australia have learnt absolutely nothing and are in charge of our electricity transition. And the risk of market failure with the NEM is much higher than they ever were for gas, although none of these can be captured in the models which have abstracted the market away entirely.

Indeed the notion of ‘risk’ is essentially absent from the public debates. The modelling’s uncertainty principally comes from variance in weather and unplanned maintenance; the uncertainty from market failure, governance failure, political obstacles, etc. are ignored. So everyone discusses different solutions in terms of minimising total system costs, which they wrongly conflate with electricity prices, as though there is no risk whatsoever with any solution.

But Australia is not Germany, we don’t have many industries highly dependent on cheap energy. Remnants of our manufacturing-base have already been driven overseas by high energy prices, due to the failure of gas policy and misregulation of the transmission network. Whether wholesale prices end up being say $130 MWh or $110 MWh really doesn’t matter all that much given it’s a tiny fraction of the CPI basket and not important for our economic outlook. Certainly compared to ‘the world is ending’ predictions from climate doom-sayers the bean-counting arguments around our transition are simply absurd. With Jevons paradox combined with high embedded carbon emissions of many VRE technologies (the solar panels are manufactured with coal power in China) it’s not clear we should be trying to minimise electricity prices anyway.

If one were to do a proper cost-benefit analysis one which allowed for risk one would almost certainly find that the potential costs of a major energy crisis with rolling brownouts (shortly to be redubbed ‘DSP events’) greatly outweighs any savings in the optimal outcome (which is all we’re modelling). We should be trying to minimise downside tail-risk. This is by far the most convincing argument for conventional nuclear, which has fairly foreseeable risks re: timelines and budget (e.g. blowouts like Hinkley C) but not the Knightian uncertainty you get with a science-fiction 100% VRE grid. One reason this argument never gained traction is that the LNP backed small modular reactors, a technology which doesn’t even exist, thus providing voters with two competing insanely risky energy policies.

The utter disregard for risk is especially galling given the hyper-conservatism of Australian politics in recent times. Albanese has spent his first term on big issues like the amount of empty air in chip packets, his predecessor was even more doggedly inert. Australia is embarking upon a radical rapid rebuild of the grid with a political class which soils itself at the idea of tweaking the tax code. Because they’ve done nothing for decades (since Keating), their ineptitude and the collapse in state-capacity re: technical projects have mostly gone unnoticed. People can scarcely imagine a government policy really causing devastating amounts of harm because government hasn’t done much at all in our lifetime. Accordingly we’re so complacent that we can decide to rebuild our grid without even thinking about risk.

For the record here’s how bad I’d guess the risks are by 2040:

Miss 2030 renewable target : >90%
Transition is widely reported by MSM to have been botched: >90%
Consumer prices are risen much more than anticipated: >70%
Coal-plant closures have had multi-year delays: >50%
Policy agenda is torpedoed by opposition winning office (ala NBN, East-West link): >25%
Grid reliability bad enough to materially impact economy: >10%

Where the main thing preventing grid reliability issues being much higher is that the transition will stall before it gets to that point.

To understand how the government has got into this mess it’s imperative to understand why it’s doing any of this. The issues with how the transition is being conducted is downstream of why it’s being done, which is principally thanks to the success of the environmentalist movement. This movement much more resembles a religious movement than a scientific one. Its figurehead is not a climatologist but an autistic Swedish schoolgirl. Their moralising crusade has worked wonders in convincing the Davos-crowd but this is only half the challenge. The difficulty the state has in pulling-off technically demanding projects has been exacerbated by the fact that the transition is foremost an ideological project.

While there might be creditable reasons for not adopting nuclear (at least in Australia which is relatively well-placed to rely on renewables), those were certainly not the reasons nuclear hasn’t been adopted. Rather the lunatics gluing themselves to bridges and vandalising artworks, who are afraid of chemicals and GMOs and getting cancer from their phones and everything else artificial, have a deep spiritualist antipathy for nuclear. Environmentalism, and not engineers or economists, is the driving force behind our energy policy.

So while energy experts will be blamed when things go wrong, they’re not really in charge. The public service’s policy role in the modern Westminster system is not to advise on policy, but to justify it after the fact. As policy is subordinated to political considerations, modelling becomes just another PR exercise. Technical experts cannot be entirely trusted in this endeavour, so they’re constantly being undermined by a much larger contingent of public service managers who understand exactly what conclusions the experts must produce to suit their masters.

The ISP would have been a fine document if it merely remained a plan to inform transmission projects, but it was conscripted into the fight over energy policy which has compromised its integrity. Note there’s no good reason the modellers aren’t allowed to participate in public debates and defend their findings. The lack of transparency is critical to their real function though, government tells the public it has all the experts (true – no-one else can afford modelling like that), while telling the experts if they say anything on twitter they’ll get fired.

There is quite a vicious feedback loop here. As the government gets worse at governing, the public service becomes ever-more dedicated to concealing this fact. This involves of a lot of internal propaganda about how everything is actually going great and anyone who dares criticise the current approach is a closeted climate-change denier. But it’s this very attitude which makes it virtually impossible to govern effectively. The establishment is constantly getting high on its own supply of internal propaganda, which leads to worsening government, which leads to more criticism, which reinforces the defensive mindset making it impossible to do course-corrections. The only way the feedback loop can ever be broken is when anti-establishment figures win at the ballot-box. But in the context of Australian politics this likely means someone who doesn’t believe in climate change whatsoever.

That all being said I don’t blame the environmentalist movement and its tactics entirely either. Sure a lot of their alarmism is wrong, their prescriptions foolish, etc. but there’s no reason to believe a better-informed saner movement would have been nearly so successful in precipitating political action. The fact that we’re trying to fight climate change at all is a herculean achievement. Policy wonks have, in comparison, had extremely little success in influencing policy even if their policy suggestions are much better thought-out.

The crux of the problem is that our voters reflexively oppose almost all change. Voters vehemently rejected the best climate policy we had, the carbon tax. And if you manage to whip them up into an emotional frenzy, as the environmentalists have done, it may be conducive to some sort of action but there’s still no reason for that action to be effectively directed. The morass of confusing and contradictory policies we have is because nothing incentivises politicians to produce anything better, they’re just trying to signal that they believe climate change to be the great moral challenge of our generation. In short, I don’t think our democracy is structurally capable of pulling off this transition.

While this piece is very long I haven’t even scratched the surface of the problems which will soon come to light. From bad modelling decisions (e.g. around weather foresight and dispatch patterns), to problems that already exist but people are ignoring (e.g. disorderly bidding) to ongoing policy failures (e.g. the Retailer Reliability Obligation), I could easily make this 10x longer. My point though is that everyone is getting lost in the detail. It’s not details that are going to trip up the transition, it’s that our institutions are not up to the task and any analysis which ignores institutions (like our grid modelling, or every op-ed that appears in the AFR) will provide a poor guide to the future.