Paul Murray: Follow the money on Labor’s renewables push and brace for the power bill shock

A generation of journalists was educated by the Watergate catchphrase: Follow the money.

It became part of the script for the film, All The President’s Men, purportedly said by the whistleblower Deep Throat, but wasn’t taken from any factual documentation of the scandal.

However, the concept is not a fiction. It evolved into an invocation to reporters that money trails can reveal the true motivations behind corporate and political decisions.

No one should be in any doubt that there’s a lot of money caught up in the renewable energy revolution which is supercharged by the singularly political imperative to decarbonise by 2050.

In WA, Labor’s promise to get out of coal generation faster than is prudent has added further urgency and, consequently, lots more potential reward for those investors needed to turn ideology into electrons.

It has also recklessly imperilled the reliability of our electricity network.

Labor’s latest Collie bailout this week — on top of the $308 million already tipped into Griffin Coal — shows the transition is apparently at any cost to meet a point-scoring timetable.

And the Premier’s rhetoric has suddenly gone from making WA a “renewable energy powerhouse” to just “keeping the lights on.” Hardly reassuring.

“If we did not intervene, it would have meant we were switching the lights off in Western Australia,” Cook said on Wednesday. “That’s not acceptable.”

What an admission. But the bailout is one small part of the massive total cost to taxpayers and consumers of Labor’s renewables transition which remains hidden. It shouldn’t be.

The renewables sector is now awash with government subsidies from top to bottom. No one in government owns up to the full impost on taxpayers and consumers.

While Australian governments have been far from transparent or truthful in informing the public about the huge subsidies to induce private investors to build the renewables infrastructure they need, companies are legally required to be more accountable.

Two weeks ago, the proponents of one of the biggest renewables undertakings in south-west WA, Frontier Energy, updated the Australian Stock Exchange on plans for its solar and battery project at Waroona, 120km south of Perth.

In doing so — obviously to attract more money from investors to get stage one of its project off the ground by July 2027 — Frontier gave an insight into what attracts corporations to the renewables honey pot.

So let’s follow the money. Because at the end of it there’s a potential $2.3 billion bill shock that most West Australians know nothing about.

Frontier’s ASX announcement appeared under this heading: “Record high electricity prices in 2025 point to an urgent requirement for WA generation projects.”

Hasn’t Labor been telling us for many years that renewables would make power cheaper? By last year, according to Anthony Albanese.

The statement said “wholesale electricity prices and reserve capacity prices” in the WA electricity market — which Frontier described as “the two major revenue drivers for stage one of the company’s Waroona project” — hit record highs in 2025.

“In response to these higher prices and the forecast shortfall in electricity generation, the company is accelerating the stage two study,” Frontier said.

Frontier exposed the dollars flowing from a disguised subsidy, the so-called Reserve Capacity Mechanism, which is unique to WA, a Gallop Labor government invention. Socialist, interventionist and not designed for this distorted renewables market.

Under the renewables transition, electricity suppliers are paid a weekly reserve capacity fee for agreeing to make their energy available to the grid during peak periods — on top of what they get for actually selling their power.

Australians who have swallowed the line from politicians like Federal Energy Minister Chris Bowen that power from the Sun and wind is essentially free might measure his words against what Frontier told the stock market in the following series of dot points:

. The average price on the wholesale energy market (WEM) during 2025 reached a record high of $88/MWh, 10 per cent higher than 2024.

. Energy prices during peak periods (4pm to 10pm) averaged $120/MWh in 2025. The project will discharge most of its energy through its co-located BESS (battery) during these peak energy periods.

. The Reserve Capacity Price in 2027/28 was $360,700/MW, a 67 per cent increase on 2024. Frontier secured 88.06MW of capacity credits for the first five years of operations from 2027.

. Owing to the WA Government’s commitment to the closure of State-owned (Synergy) coal-fired power stations by 2029, there is an urgent requirement for additional generation capacity.

For its 88MW of capacity credits, effectively for being on standby, Frontier says it will make $160m over its first five years. Money for jam.

But Frontier is just one player. The network operator, AEMO, released 6,375.141MW of Peak Certified Reserve Capacity credits to about 30 generators of electricity last year for 2027-28.

And Frontier says that price has extraordinarily risen 67 per cent in a year.

Theoretically, at $360,700/MW for every participant that would come to $2.3b a year. It won’t, because some longstanding participants are paid less under transitional arrangements. It might be closer to $1.77b.

But that’s the scale of this market-distorting madness. No one, not even AEMO, calculates the real cost of the reserve capacity mechanism two years out. I know because I asked.

Check out what the Cook Government’s own energy gurus say about how this reserve capacity system works. Just to ensure that enough generating capacity is available because of the inherent unreliability of renewables.

In an online Q&A, Energy Policy WA answers this question: “Why would customers ‘subsidise’ renewable generators with a wholesale energy price guarantee?” Note even the government implicitly admits it is a subsidy.

“The Reserve Capacity Mechanism Review modelling has indicated that the profitability of wind and solar decreases in the later part of the decade, resulting in insufficient Wholesale Electricity Market revenues past 2030,” the government’s energy adviser says.

“This is driven by a decrease in average wholesale electricity prices. As renewable generators have very low variable cost, the WEM energy prices are likely to rapidly decline once fossil fuel plant exits the WEM.

“The objective of this initiative would be to top up the energy revenues for renewable generators so they equal the revenues of renewable generators before WEM prices started to decline.

“This will create revenue certainty to renewable generators, while not increasing energy prices.

“These top-up revenues will be available to renewable generators which can demonstrate in the Reserve Capacity Mechanism certification that they have firmed up their capacity by, for example, contracting with a storage facility.”

In other words, battery operators will clean up. A system guaranteeing the reserve capacity price for 10 years to help out renewable projects began last year. It works to lock in current high power prices for participants.

These subsidies are designed to attract investors to the renewables transition — although the results have been underwhelming — but what they will do is work to keep power prices high.

The key to it is the government’s intention “to top up the energy revenues for renewable generators so they equal the revenues of renewable generators before WEM prices started to decline”.

In other words, you will be paying to keep power prices high.

The promise that renewables will bring down power prices is not only exploded, but taxpayers and consumers will be funding the need to keep them high so that other businesses will invest in more unreliable renewables.

Frontier said it will initially sell its power into the SWIS system during peak hours only. The reason? In their own words, average power prices are $88/MWh, but peak prices are $120. Do the maths.

Frontier CEO Adam Kiley told the ASX wholesale electricity prices in the SWIS increased 11 per cent last year, making it a 33 per cent jump since 2022.

But even with the huge RCM subsidies on offer, he observed the WA transition was stuck: “In 2025, the SWIS continued to be highly dependent on carbon emissions generation, which accounted for approximately 57 per cent of electricity supply, coal (28), gas (29).

“Renewable energy accounted for approximately 40 per cent of electricity supply, which represented a one per cent increase on 2024 and significantly short of the Australian Government’s target of 82 per cent renewable energy generation by 2030.

“During the year, there was only one new renewable energy generation facility added to the grid – the Cunderdin solar/BESS Project (128 MW solar, 55 MW 4-hr BESS), which was just the second renewable energy generation facility to be developed on the SWIS since 2021.”

And there’s less than four years to the government’s boasted exit from coal-fired power — despite this week desperately bailing out Bluewaters by extending Collie coal mining into the 2030s.

No one should be fooled.

Cook backflipped on subsidising a broke Indian-owned coal miner and a Japanese-owned power plant because Labor will need both in 2030 and beyond to keep the lights on. At any cost.

But who’s counting? Or following the money.