Solar power plant falls victim to profit motive

By Shua Garfield

Australia has just experienced its hottest August on record. During that month, some parts of New South Wales experienced fierce bushfires over a month before the “normal” start of the bushfire season. In the face of this climate chaos, it might be hoped that there would be some good news about Australian government action to reduce the emissions of greenhouse gas (GHG) pollution. Unfortunately, Direct Action is unable to provide that.

Instead, in a blow to renewable energy, the construction of Australia’s first large-scale solar power plant has been put in doubt after Solar Systems, the Melbourne-based company that was to build the plant, was put under voluntary administration on September 7. In addition, Solar Systems’ recently completed manufacturing facility in the Melbourne suburb of Abbotsford, which had the capacity to build 500 MW of photovoltaic installations a year — enough to replace a coal-fired power station every 1-2 years — has ceased production. Almost all of Solar Systems’ 150 workers’ have been stood down without pay while the voluntary administrators look for other capitalists to buy the company.

The $420 million plant that Solar Systems was to begin constructing near the Victorian country town of Mildura would have been the biggest solar power plant in the world, providing 154 megawatts (MW) of power — enough to power 45,000 houses once it came on line in 2013. Writing in the September 14 Australian, Giles Parkinson explained that, “Solar Systems’ major supporter was TRUenergy, an owner of brown coal-fired and gas-fired power stations, that made a $40m investment in Solar Systems and a funding agreement for the … project in Mildura, in a blaze of publicity about its green credentials. However, problems began to emerge last year when Solar Systems realised that its Mark V dish, one of the two key components … of its unique solar dish technology, needed to reduce its costs to remain competitive with rival systems.

“This would involve significant R&D expense, and while TRU said it was happy to contribute, it would only do so if other major investors were brought in.” After repeated failures to raise money from other private investors, TRUenergy “decided to cut its losses … [I]n late August TRU’s Hong Kong-based parent CLP announced it had written off its entire $53m investment.”

Thus, the Mildura power plant project fell victim to the capitalist system’s driving force — the profit motive. While the solar dish technology for the plant already existed, it wasn’t “competitive” enough — that is to say profitable enough — to make it worthwhile for its corporate owners. TRUenergy, a company that has profited from polluting the atmosphere with its coal- and gas-fired plants, got nervous about research costs required to make the technology “competitive” and bailed out.

Corporate subsidies

Often companies in similar situations turn to government subsidies and grants — corporate welfare — to help them out. But the $129 million that had been offered by the federal and Victorian governments wasn’t enough to keep the corporate bloodsuckers interested in maintaining their “green credentials”. While administrators claim there is “significant interest in buying the business”, according to a September 18 ABC report, there is no guarantee that operations will resume — this too remains dependent on the other capitalists’ estimates of how much money is in it for them.

The collapse of Solar Systems comes only four months after the federal government announced $1.365 billion in funding for its Solar Flagships Program (SFP), part of its $4.5 billion Clean Energy Initiative (CEI). The aim of the SFP is to support the creation of 1000 MW in solar-energy generating capacity in Australia by 2015. But the government’s approach to the SFP — handing out money to big businesses to try to make the technologies involved profitable — is the same approach that has now failed Solar Systems’ workers and the environment.

According to a May 13 fact sheet on the CEI released by the government, the project manager for the four solar power stations to be built under the SFP will be “expected to manage the development and operation of the power stations as an integrated commercial enterprise. Current energy market participants, with existing generation capacity and customers, may bid for this role.” Thus, government money will again be allocated to private corporations, probably the same ones responsible for massive GHG pollution, to help them run necessary renewable energy infrastructure not as a public service, but as a “commercial enterprise”. In his September 14 Australian article, Parkinson explains that, “TRU and other coal-fired utilities have argued that they should receive increased compensation from the emissions trading scheme because they are the only organisations that can support the cost and development of new technologies, an idea that the government has largely bought.”

So rather than spend government funds on directly implementing much-needed renewable energy technology and infrastructure, it will be put towards finding ways to make renewable energy profitable for capitalists. If and when these technologies are eventually used to replace coal-fired and other environmentally destructive forms of power generation will depend, not on the needs of the majority of people to have a livable planet, but on whether or not these technologies can make a few rich investors even richer. And if they can’t, we can expect more Solar Systems-style collapses.

According to several recent articles in News Corporation’s Australian, the only way to prevent such collapses in the future and thereby ensure the development of renewable energy is for even more government subsidies to be doled out to corporate parasites. On September 9, the Australian’s Lenore Taylor repeated calls by the energy corporations’ Clean Energy Council for “special tax breaks as well as massive government subsidies”. Taylor reported that the government’s current funding commitments may fall $1.7 billion short of what is needed to achieve its aim of having 1000 MW of solar energy generation capacity by 2015. In his September 14 article, Parkinson claimed that “if the government wants to encourage the development of new technology as a viable alternative to coal, then it needs to dramatically increase its level of direct support and offering other incentives such as tax breaks and feed-in tariffs”. He cited the figure of $3-4 billion per year, proposed by Professor Ross Garnaut, suggesting the money should come from the emissions trading scam that the government is trying to have passed by parliament.

Who should bear the cost?

Of course the task of replacing coal-fired power with renewable energy will require the devotion of a lot of resources. If we were to extrapolate, on the basis of Solar Systems’ project in Mildura, that it takes $420 million to install 154 MW of solar generating capacity, then to replace all the coal-fired generation capacity in Australia with solar power would take roughly $100 billion. Of course Solar Systems’ technology is not the only form of solar power, solar is not the only form of renewable energy, and prices of various renewables energy technologies will change as they develop. However, the point is that it will take a significant investment — equivalent to a few years of Australia’s military spending ($23 billion in 2009-10) or BHP-Billiton’s profits ($16 billion in 2008).

The question then is, why billions of dollars should be given to corporate polluters and unreliable investors who might use it to introduce renewable energy, when it would be much more straightforward to take billions of dollars from them and actually do it!? The irrationality of the government’s approach contrasts sharply with the demands of the hundreds of people who protested on September 12-13 to shut down Victoria’s Hazelwood brown coal-fired power station, and of those who protested outside Solar Systems’ Abbotsford factory on September 18 to demand that the government reopen it.

‘Public’ ownership

Environmental activists are right to put demands on the government for an end to coal and to implement an increase in renewables. Campaigning around such demands is a necessary part of building a mass movement, without which even minor concessions from the capitalists and their government are unlikely. At the same time, it would be mistaken to think that capitalist government intervention alone would be sufficient to address the global warming crisis, much less be a socially just solution.

However, the approach of some socialists is to promote this illusion. For example, a statement distributed at the Hazelwood protest by the Socialist Alliance (SA) correctly criticises relying on the private capitalist market to replace fossil fuels with renewables, but then simply counterpoises government ownership as a solution. The SA statement read: “The fact is that a government with the political will has the capacity to set up wind turbine, solar thermal and solar photovoltaic factories and run them in the interests of the community … Public ownership of new green industries would enable governments to ensure that jobs are created where people live. With a government commitment to public ownership, communities reliant on coal mining and coal-fired power could be sure that ‘green jobs’ are going to be there for the long haul, not just for a few years.”

An article in the September 23 Green Left Weekly by SA member Ben Courtice retreats even from this traditional social-democratic call for public ownership by a capitalist government: “It is important to note that government assistance, including investment and perhaps ownership, is likely to be needed to get this manufacturing industry running. Like most hi-tech industries, renewables are highly concentrated in ownership … A genuine push from government to convert the grid to renewables is needed, regardless of whether the manufacturing and generation facilities are owned publicly, privately or co-operatively. Public ownership is essential in at least one part of the transition: a fair outcome for coal and power workers. New industries set up under the ownership or regulation of a state power company could re-train and re-deploy the workers without changing their pay rates, years of service or entitlements” (emphases added).

In calling for “government assistance” and “investment” in industries that will be privately owned, SA’s policy shows remarkable convergence with the more-subsidies-for-big-business line pushed by Rupert Murdoch’s Australian. But this is a logical extension of the SA’s previous calls for a “Green New Deal” — a reference to the New Deal program of public works and deficit spending (including massive handouts to private contractors) by the government of US president Franklin Roosevelt during the 1930s, which served to prop up capitalism during the Great Depression.

What kind of government?

It is true that it would be technically possible for a government “with the political will” to implement replacement of fossil fuels with renewable energy, though there is no evidence of any capitalist government having this political will. But what does it mean to call for industries to be “run in the interests of the community”? The interests of one section of “the community” — the small but dominant capitalist minority — are to control and profit from society’s resources through the “highly concentrated ownership” that Courtice mentions. But this runs counter to the interests of the majority section of “the community” — working people — as has been shown by the Solar Systems collapse. Capitalist governments represent and advance the former kind of “community interests”, including when they own and operate industries.

Yes, “public” ownership could “enable governments to ensure that jobs are created where people live”, make “sure that ‘green jobs’ are going to be there for the long haul” and “re-train and re-deploy the workers without changing their pay rates, years of service or entitlements”, but only when the government is based on the mass organisation of working people and oriented to serving their interests, not those of the capitalist class. In the hands of a capitalist government, “public ownership” is a means to subsidise capitalist businesses and screw over working people.

But in the SA statement distributed at the Hazelwood protest, the difference between these two very different types of governments vanishes. Under a sub-heading titled “Rudd ain’t gonna do it”, the statement argues, “History has saddled ordinary working people with the responsibility to force governments to challenge powerful vested interests and to take action to cut carbon emissions.” This suggests that governments are independent bodies floating above two class forces — “powerful vested interests” and “ordinary working people” — and that working people can solve history’s big problems, like catastrophic climate change, by pressuring governments made up of pro-capitalist politicians a bit more forcefully to outdo the capitalists’ influence.

The real “responsibility” that “history has saddled ordinary working people with” is to get rid of capitalist governments and capitalist control of society’s and the planet’s resources. Capitalist governments may make limited concessions to the interests of working people under strong pressure from mass protest action if they get worried about the stability of capitalist rule. But mass protest movements wax and wane, and the capitalist rulers are always on the lookout for ways to roll back such concessions.

The purpose of building mass movements that put demands on capitalist governments is not just to pressure these governments to implement these demands but, more importantly, to encourage “ordinary working people” to see the solution to their collective problems in taking collective action in their own political interests, which ultimately requires creating a working people’s government. Only then will working people be able to reorganise society in a way that ensures “that ‘green jobs’” — and an inhabitable planet — “are going to be there for the long haul”.