There is only ONE energy fix

Via the AFR comes five solutions:

One priority is to ensure the existing coal fleet which will supply the bulk of our power for a decade or more as we continue the transition to clean power is as efficient and reliable as it can be…Engineers at GE – a traditional power engineering giant now heavily into renewable energy – say our coal fleet could be made to yield 1000-1500MW of extra power and 19 million tonnes less CO2 at a cost of no more than $57 million-$114 million.

…Natural gas is a better transitional fuel than coal because it emits about half the CO2 of comparable coal plant and is easier to build in small, flexible units.

…Critics rightly point out that the big 100MW battery being built by Tesla and Neoen at Neoen’s Hornsdale wind farm in South Australia will only cover SA’s power needs for an hour – if that. But this misses the point. Distributed energy resources in a decentralised grid will involve dozens of batteries, gas plants, pumped hydro storage and “behind the meter” assets. As the grid becomes smarter these can conducted – like an orchestra, to use AEMO chief Audrey Zibelman’s metaphor – to plug the gaps in the system and avoid blackouts and outages like the ones that plagued SA, NSW and Victoria last summer.

…Household and small business scale batteries such as those offered by Tesla, LGChem and Sonnen are better value than grid scale batteries because they compete with the retail price of electricity, which is three to four times wholesale.

Demand response is how we knit all these distributed energy resources together into an orchestra that can hit the high notes when the grid is under most strain. Behind the meter energy includes not just batteries and solar panels but electric vehicle chargers and smart thermostats on energy hungry appliances such as pool pumps and air conditioners. Bloomberg New Energy Finance says behind the meter energy could be 45 per cent of system capacity by 2040.

An admirable effort and aspirational list to be sure.

But only one item can do anything within three years and probably longer: gas. There are idle gas resources across the network. Give them cheaper gas and they will spring to life.

Moreover, gas sets the price of electricity in the National Electricity Market owing to where it sits in the wholesale electricity market bid stack. See Australian Energy Market Operator description below:

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There is no way out of this without using a “sledgehammer”. The government’s gas reservation facility, the ADGSM, is too slow and weak to bring down prices enough. It must be seriously boosted.

If it wants to see results, the government will need to nationalise somewhere along the supply chain. Buying Santos and shutting one LNG train is one option. Buying (or expropriating) and force developing reserves in a national gas company with mandated rates of return is another. Either of these options would benchmark east coast prices. The simplest and quickest solution is plain old price controls.

There is no gas market anymore so quibbling about sovereign risk is pointless.

But no:

A federal plan is under way to ­encourage more capacity at the nation’s biggest coal-fired power stations as the Turnbull government prepares for a report on ­future electricity shortages while fielding backbench complaints about the shift to renewable ­energy.

The government has prioritised ways to expand existing coal power stations as soon as possible if the report warns of dangerous shortfalls in the electricity grid stretching from South Australia to Queensland.

Backbenchers are pushing for a drastic shift in the energy debate to put reliability and price ahead of the need to meet climate-change targets, with some Liberals and Nationals determined to oppose any scheme that favours renew­ables over coal.

It won’t happen in time for the election and won’t boost output enough to impact the marginal price set by gas.

It’s gas, you idiots.

Comments

  1. During the Potato Famine in Ireland, people couldn’t afford food and starved to death by the hundreds of thousand.

    Ireland, meanwhile continued to export food overseas (including to England).

    History sure does rhyme!

  2. Meh Draconian regulation coupled with sovereign risk OR legislative certainty for Off-grid systems developers.
    For the Residential power I’ll take the long term certainty and work around whatever short term consequences this decision introduces
    As for Aussie Industry…They’re f’ed over the long term, they’re F’ed short term, put simply they’re f#cked.
    Australia needs to return to the real world where Actions have consequences and stupidity is always appropriately rewarded.

  3. There is not really any discussion of how this meshes with climate change targets which renders the whole thing useless analysis.
    There is almost absolute unanimity among climate scientists that climate change is occurring and that it is an existential threat for many species and many human populations.
    Any analysis that doesn’t provide at least an analysis of it’s impact on the pathway to reduced greenhouse gas emissions is fundamentally flawed.
    And there are several ways to approach analyses of the issues
    1. from the user perspective of cost of electricity and certainty of supply
    2. from the overall effect on greenhouse gas emissions
    3. from the point of view of owners of what may become stranded assets
    4. from a generational point of view of the present under 10’s and future borns
    5. from a national vs a global perspective
    6. from the viewpoint of a capitalist, coal rich, lower total emissions political system (because of lower population) with no control over total global emissions who might develop and sell coal while ever it can at a profit
    All of these provide conflicting courses of action.
    Balancing the political choices (and their foreseeable impacts from each of these differing points of view is a black art that also has to be balanced (because of the nature of our political system and the desire of parties and people to hold power) among a myriad of other cultural and economic issues and values with which significant segments of the population identify,
    The outcome of our political system is that the greatest power is held by the swinging voters in about 10% of the seats in the federal government and energy and other policies must win these voters. That means progress on energy and climate change will be fraught with uncertainty for decades to come. Get used to it!
    And when did the Liberals abandon economic rationalism? (Not that I am disappointed – we have been plagued by market failures and abuses of olgopolistic and monopolistic power for years!)

    • DarkMatterMEMBER

      The only thing that matters with climate change is that over the next decades we (globally) move away from the growth and consumption model. Unless our global financial systems sees reason or has reason forced upon it, there isn’t a sensible argument. In Australia, we are so small that what we do with energy (globally) is less than a rounding error. The worst thing we can do is shoot ourselves in the foot, freeze out the pensioners and let energy cartels accelerate the destruction of productivity.

      Of course, if we intend to go to a 100m population, then we will have a completely new set of problems. Worrying about slowing climate change while quadrupling the population is very crazy. If Australia kept its population at 25m or less, kept our coal mostly in the ground, then we would could be completely guilt free about wrecking the atmosphere. Think about CO2/Km2 as a better metric.

  4. Our chinese “partners”, in this case CLP of Hong Kong, owners of EnergyAustralia, appear willing to further exploit the situation by “gearing up for a tilt at IFM Investors’ gas-fired power stations in Victoria…..EnergyAustralia is keen to keep control over the offtake from the plants even after its existing contract expires at the end of March 2019” ie vertical integration. Ironically, CLP was a power co. built by burning Australian coal in Hong Kong, and expanded internationally just as Kennett was dismantling the SECV.

  5. The simple fix that can be done tomorrow is abolish the RET and limit all intermittent generation as is being done in SA now with wind output capped at 1200MW. It is too late for that state to avoid further cost increases because their only reliable fuel source is gas as all their low cost coal sources have been abandoned. But limiting impost of wind and solar in other states will contain costs to present level. Adding more wind and solar capacity guarantees higher power costs.

    SA provides the best possible evidence of how expensive unrenewable so-called renewables actually are. Power costs in that state fit the trend in the linked chart; sitting in the very top right hand corner:
    https://gailtheactuary.files.wordpress.com/2016/08/euan-mearns-europe-electric-price.png