Via the AFR:
Labor states – or a future federal Labor government – that pursue more ambitious renewable energy targets than those set under the Turnbull government’s proposed new Reliability and Emissions Guarantee will face more costly reliability standards, which could increase the cost of electricity in their markets.
Energy Security Board chairman Kerry Schott said a future Labor government would be free to set a more ambitious trajectory for greenhouse gas emissions, which would likely lead to a higher share of wind and solar energy in the mix, “but it would lead to an adjustment in the reliability standard”.
Labor governments in Victoria, South Australia, Queensland and ACT have much more ambitious renewable energy targets than the 28-36 per cent the ESB says the Reliability and Emissions Guarantee would bring about by 2030, and the same principle would apply.
“The thing that’s important here is that those two things [reliability and renewable penetrations] go together,” Ms Schott said.
Her remarks came as Labor states threatened to block the proposed changes to the national electricity rules saying they were blind-sided by the alternative to the Clean Energy Target unveiled on Tuesday.
National Electricity Market prices are set at different levels in each state but the Reliability and Emissions Guarantee could exacerbate the differences by adding to the cost of power in states with more renewable energy because they could have to pay for more storage or gas peaking plants.
CSIRO’s Paul Graham modelled the cost of “firming up” variable wind and solar power and found that at penetrations of up to about 40 per cent – the level in South Australia today – it modestly increases generation costs.
But as renewable penetration climbs to 80-90 per cent around 2050 more batteries, grid-stabilising devices and gas power need to be provided and the cost climbs to $120-$130 per megawatt hour, Mr Graham found.
It’s not going to be new gas peaking plants. They’re already more expensive than batteries. Moreover, since when did the NEG or NEM operate on state boundaries? Storage systems function on the basis of two business models. They sell power when supply fall short owing to intermittency. And they arbitrage frequency constantly as demand waxes and wanes at regular intervals all day and night, buying low and selling high. In an open grid there is no reason why these two functions won’t cross borders and roughly levelise the cost. Moreover, the more it pushes out gas as the grid stabiliser the better and cheaper for everyone. Prices will keep falling a lot with battery costs over time.
As the AEMO says:
Australian Energy Market Operator CEO Audrey Zibelman has signalled the Turnbull government’s new national energy guarantee would have helped prevent the South Australian blackouts, where the energy agency was forced to intervene to deliver stable electricity supply.
“What we’ve discovered through our experience in South Australia is when you get to certain levels of renewable intermittent generation, the system itself becomes less stable,” she said.
Ms Zibelman said AEMO had found itself in a position in SA where it had to direct generators to come online to provide stability, which was “quite expensive”.
“Recently, we’ve been intervening quite a bit, and that’s because we’re at a period of time in the system where particularly on weekends, we’re seeing very low levels of usage because of the level of photovoltaics and a lot of wind energy,” she said.
“So we’re actually intervening to put on gas energy to maintain the stability of the system.”
Ms Zibelman said the NEG was appealing because it prioritised affordability and reliability.
“What we like about this mechanism is it actually signals what the system needs, which is that we need a portfolio of resources that meet all of the objectives of policy.”
That’s the tech. Now the politics, via Laura Tingle:
It seems appropriate that Malcolm Turnbull and Josh Frydenberg’s energy and climate plan should now depend on the only structure more impenetrable to the average voter than the national energy market: the relationship between the federal and state governments.
Whatever the virtues of the Energy Security Board’s proposals, the dilemma for a prime minister whose credibility has been so damaged by what voters thought he would deliver on climate change is that it is hard to believe voters will be able to understand what is proposed here.
The policy developed by an eminent group of energy market regulators and experts gives the federal government a model which can conceptually deliver on the three aims of affordability, reliability of supply and the capacity to meet our international climate agreements, without any of those blasphemous words ‘target’, ‘clean energy’, or ‘carbon price’ .
…getting the states to agree to legislate in their own parliaments to put new reliability and emissions reduction guarantees into the national energy market legislation.
If the states – and even federal Labor – do come on board it will be just the start of the fun. The complexities of this system are considerable, given it aims to give each jurisdiction the capacity to set their own emissions and reliability standards based on their current energy mix.
The signs are not good, via The Australian:
South Australian Labor Premier Jay Weatherill blasted the new policy as a “subsidy to the coal industry” that would conflict with his government’s plans for more renewable power.
Queensland Labor Energy Minister Mark Bailey said it was a “pathetic outcome” that would make it harder for the state to achieve its target of 50 per cent renewable energy by 2030.
Victorian Labor Premier Daniel Andrews called the plan the work of Mr Abbott, given the former prime minister’s calls throughout this year to end subsidies for renewables. “It would seem that Professor Alan Finkel has been replaced as the chief scientist and we’ve now got professor Tony Abbott as the chief scientist,” Mr Andrews said.
NSW Liberal Energy Minister Don Harwin welcomed the package but said there was “still a bit more work to do”.
Central to the federal plan is the argument that subsidies are no longer needed for renewables, given solar and wind power advocates insist their costs are coming down, and that conflicting state targets for renewables will drive up prices and weaken reliability.
Mr Frydenberg will meet state ministers face to face late next month but the full details will take months to emerge after industry consultation, leading to a final decision by Mr Turnbull and state and territory leaders early next year.
So long as the emissions intensity baseline is acceptable, hopefully reason will prevail here. With Tony Abbott out of the way (so far), Labor is now in the position of carbon wrecker.
