The hole in Labor’s energy donut

Via The Australian:

The nation’s largest single electricity user has questioned how it will keep power running at its Tomago aluminium smelter under Labor’s 45 per cent emissions reduction target and ­$10 billion plan to turbo-charge investment in renewables, declaring that “batteries are not a solution”.

…Energy Minister Angus Taylor warned yesterday that hundreds of thousands of jobs dependent on the supply of affordable and reliabl­e power could be jeopardised by the Labor plan, including the 1100 jobs at Tomago.

“We are layering in inter­mittency, with more and more wind and solar coming in, displacing coal,” Mr Howell told The ­Australian.

“What I think about it (the Labor policy) is, there is in­sufficient detail. How will we achieve the 45 per cent emissions ­reduction across the country and 50 per cent renewable target and keep the lights on for energy-­intensive manufacturing? If Aust­ralia wants to be a nation that makes things — bricks, glass, cemen­t, steel and aluminium in particular — you’ve got to have inter­nationally affordable and reliabl­e energy. We are deeply, deeply ­concerned that our smelter is being called upon to load-shed when there is insufficient reserve margin in the National Electricity Market.”

It’s true that batteries are not a solution, yet. But they will be as prices keep falling and accelerating that via subsidy is not terrible policy even if it is not the most efficient mechanism.

But the bigger issue for Labor now is not the battery subsidy. As said yesterday, Labor has not confronted the gas cartel yet and that is a gap that the Coalition loons are going to swing their wrecking ball through. The idea that Labor is “layering in inter­mittency” is right, though the CEFC will no doubt be helping fund storage as well.

Labor’s hidden assumption for higher reliability and lower prices to offset greater intermittency is its reform of the east coast gas cartel. That is where the incoming government has provided little detail, really only declaring vaguely that it will use domestic reservation and lower prices further than current ranges. It is gas that is marginal price setter in the National Electricity Market now and it is gas generation that must provide the dispatchable power to stabilise renewables. From the ACCC:

Every $1Gj rise in the gas price adds $10MWh to power prices. And gas prices have been rising again. They’re hovering at $11-12Gj today up from $9-10Gj for much of the year.

There is no avoiding it. The gas cartel must be broken or Labor’s energy policies will kill it swiftly in office. Wider reform policies are going to lower the Australian dollar and that will make local gas more expensive as export net back rises.

It’s understandable that Bill Shorten does not want to poke the resources bear before an election, and the Coalition will make hay out it, but Labor must prepare for the confrontation when it takes power or energy will again be the millstone around its neck.


  1. Good point
    Anyone with any contacts with labor have any insight as to labors predisposition / attitude toward the gas cartel or are the cartel boards filled with labor alumni?

    Under a scenario where PV + storage uptake is huge (and where we with residential wind turbines – WW? Would love a small one at mine for when the ECLs and ex TCs hit) what does the coal plant requirement to fulfil residential and SOHO and small biz ie retail look like?

    • HOw much wind at yr place today
      dont be misled by residential wind, if you read their fine print they are all rated at a wind speed which will almost blow yr house down
      at normal conditions they are ineffective.
      Huge solar and battery, and a back up gas generator

  2. Thank goodness we have hydro – or the whole state will shut down!

    Surprised wind doesn’t make a larger contribution…

    • % of time where fuel type is marginal – which means when the fuel type is the price setter, me thinks.

      The surprise then is that hydro is the price setter for so much of the time.

  3. Wow, Australia still has aluminum smelters!
    Making stuff is a mugs games, seeking rents is where it’s at. These 1100 people should become property investors instead.

    • Tomago like Gladstone is well past its useful life, and commercial benefit
      they are holding out for a huge govt assisted bailout.
      Same as Pt Henry

      • Nah! Angling or not. It’s decided on impeccable logic. We don’t need no damned smelters! We don’t need no damned stinking environment wrecking factories and we sure as hell don’t need no damned factories to make all these damned Batteries. Everything is going to happen by magic as we sit on our arses at our Gold Coast apartments, drink and watch the ocean!
        Labor paradise is finally going to be our reality.

      • its way too late for the smelters they are 20 years outa life
        their technology is way outa date
        and their emissions are way too poisonous, almost none of em run thier scrubbing systems, just blow it into the air,
        and that doesnt include the alumina refineries
        ever been to gladsone

        Sold yr business yet,
        no good being correct about all this
        and bankrupt.

    • And just a point on smelting aluminium. The power consumption is something like 15kWh per kg – per kg! You need to be really close to a hydro dam or geothermal and have heaps of subsidies to make it stack up. Always has been the case. Basing energy policy on the needs of an aluminum smelter is to conform 99% of the population to one very distant outlier

    • Jumping jack flash


      I think the correct response to their whinging is “Well, goodbye, toodle pip. Have fun in China, I hear its nice! Excuse me, but I have some debt to take on now to attach to my next IP”

  4. The problem with Residential Batteries is that the houses still generally stay connected to the Grid.
    If you decided to stay connected than the ideal (most cost effective) battery size is just enough to get you through a typical night. (somewhere between 5kwh and 10kwh).
    These batteries are tiny compared with the peak grid demand that a house might have during a really hot summers day. which can be over 100kwh. So this means that over a typical day these houses will buy almost no electricity (matter of fact most with PV solar will export net power to the grid) but on that special day they also want their 100Kwhs of electricity.
    Electricity retailers only make money if the Average daily electricity usage is something like 20% or 30% of the households Peak electricity usage they definitely loose money if the residential client only ever uses electricity at the same moment that every other client in the state wants their full allocation..
    It’s a big problem for the grid
    It’s a huge problem for major energy users like Tomago
    The only politically palatable choice is for heavy industry to shed load so that everyones AC can run on high.

    • No need to worry. There are more than enough second class people who shall not have solar or batteries. They’re called tenants. It is only right that they should subsidise the electricity grid for all.

      • Many of the aluminium smelter workers are poor tenants too.

        On days that it gets really hot, the smelting plant will shut down to shed load & these workers can go back to their rented apartment without a pay check.

        The can then sit in their rented apartment without solar and without a battery and without being able to afford air conditioning.

        Hopefully this model of shared sacrifice will ensure that the high rises full of fakestudents in sydbourne continue to be comfortable with aircon at full blast. Oh, and Santos head office, too!

      • I’m happy to be a tenant, the tech for solar is expensive rubbish that needs replacing every ten years or so and it’s an ecological disaster waiting to happen, wait until all those houses need to replace aging panels.

        Same goes for batteries.

        There is no such thing as renewable energy.

      • Chris – what good are the panels after 10 or even 20 years?

        If they are still good for 50% of the output and can be obtained free (as they are being scrapped) – a large array of solar panels somewhere out bush becomes a very affordable proposition for off-grid life.

    • Looking at the above FUD posts in this thread, we can see that the Minerals Council still has astroturfing as a budget line item. 💩

      • Is it possible you can rebut the bits that are incorrect.
        I have no idea whether those comments on solar and the grid are true or not.
        If they aren’t true a dispassionate rebuttal would help.
        The vast majority of your posts are just abusive and really unhelpful.
        Without realising it you are a really great Minerals Council asset.

    • Fisho the Astro said:

      So this means that over a typical day these houses … also want their 100Kwhs of electricity.

      Bullshyte alert! The average household in Australia consumes from 7 to 40kWh, so I stopped reading right there.

      • Let me add: “These batteries are tiny compared with the peak grid demand that a house might have during a really hot summers day.”

        Which is not true.

        But ‘we’ need to change the demand load as well. The idea is the you cool the house and run the smelter when the sun is shining – which it does EVERY day. We need to change the price structure and feed in tariff to make the daytime ‘off peak’ and the ‘duck curve’ time the peak time and peak feed-in tariff rate as well. The other thing you do is to not run the hydro systems during hot days until we get to the ‘peak’ time (which is done by pricing).

        With battery prices dropping by more than 20% per year for the last 5 years means that by 2030, almost all houses will be self sufficient in power (with maybe 2-3 days a year where a house might need external grid/car top-up). Plenty of time to shut down all the coal power plants.

      • @R2M whatever dude
        @Glamb Not sure I got you’re point.
        I agree that we need to completely reengineer the Residential Demand side of the equation to align with the reality of PV feed in causing the so called Duck-Curve. Household AC systems need to have some form of supplemental Thermal storage (cold / hot water heat sinks) that can be used to average the really hot day demand over a longer time line. The problem is there’s zero demand for such a thermal storage system while the alternative of simply switching on the AC at will (at about the same time as everyone else) and letting it blast cold air into the room..
        The crux of the problem is that at a Residential level Peak grid demand is paid for indirectly by higher than necessary Average Gird prices, however if you’re not participating in the purchase of typical electricity on an Average day than you will be costing the Electricity Retailer money (just to be clear I’m not going to shed a tear for those B’s let them go under as far as I’m concerned) Now in any rational business you dump clients that cost you more to service than you can ever make from them ….just to be clear this problem exists with or without the Retail end of Aussie Electricity.
        In the end it becomes an engineering problem of building a machine (the grid) that can cope with very high Peak to Average ratios, which are worsening rather than improving with the introduction of technologies like PV and Batteries.

    • demand that a house might have during a really hot summers day. which can be over 100kwh

      That figure is obviously made up.

  5. Pumped hydro at a number of the thousands of suitable environmentally friendly sites that are ready and waiting around the nation is an easy solution to provide the required back-up and consistent supply.

    Each of these pumped hydro sites can easily be developed and connected to the grid.

    Each of these sites can function independently and therefore increase reliability of 24 hour supply as well as provide a wide diversity of providers to maintain competitive pricing between suppliers.

    This proposed pumped hydro system can be owned and operated by a variety of oranizations including local government and small business.

    Pumped hydro is a cheaper means of electricity generation than most. It is frequently claimed that it is the cheapest means of electricity generation.

    Pumped hydro is already used successfully in many countries around the world.

    Australia is well behind in the development of pumped hydro.

    • Snowy Hydro 2.0 civil works (tunneling) component is coming in at around $6 billion.
      Excluding the major equipment and the billions for those new transmission lines which have to be built to Snowy (to run those pumps to pump the water back up into the higher lake) and out of it to Sydney and Melbourne!

      • meanwhile the murray at mildura is near mt
        there is no way that project will ever be built
        this feasability is a hoax

      • Snowy 2 might not be viable because it requires so much work but what is the problem with relatively small reservoirs separated by a drop serving small or medium sized towns?.

        Here is a quiz puzzle for all the STEM folk.

        How much power storage would a town of 50,000 people require to provide power for 2 days.

        How much water would need to be stored to provide that amount of power storage.

        I appreciate that depends on the drop between the 2 reservoirs so I will let you choose the drop distance.

        Perhaps calculate for 25m, 50m and 100m.

        Keeping the reservoirs filled might be the challenge.

        An alternative, if reservoirs will not work, is to lift large baskets of rock into piles using renewable power and then lower them when power is required.

        As gravity is free surely storing power just means lifting stuff and then letting gravity pull it down.

      • Pfh, you could probably get some good data if you dug into the Tas hydro material. They have a multitude of turbine sizes, dam sizes and varied drops.

      • @PFH
        “might not be viable because”
        My guess is they aren’t viable as a standalone commercial proposition and probably never will be. By the same token not sure too many power stations are either, at least until their is a significant deficit in power production, or it significantly undercuts current generation costs. How many days a year is your shiny new power station going to run if the existing stations can generate enough power to meet demand on all but a handful of peak days?
        Buying the existing stations off the government was a no brainer, but how many have been built with purely private investment since?
        I think all the issues stem from privatisation of the network and won’t be solved by anything less than conversion back to public ownership.

      • Bjw476,

        I meant by comparison to smaller decentralised storage options.

        My understanding is that are lots of sites that meet the requirement of a decent drop and low reservoir construction costs.

        Dam at top of valley and reservoir at bottom with some pipes, pumps and a few fields of solar cells.

        Wired to the local town.

        Perhaps they are low hanging fruit that can be bagged with a giant scheme is built.

    • Jumping jack flash

      Tidal lagoons > pumped hydro.

      But yes, there’s still the argument that we couldn’t organise coitus in a house of ill repute, so how are we going to set up any kind of large-scale renewables? Wait for the private sector?

      Then, there’s still the problem of the gouging. All this does is move the gouging from one private company/cartel to another. That gargantuan debt isn’t just going to go away, and while there’s the debt, there’s going to be gouging of essentials and wage theft.

  6. “But they will be as prices keep falling and accelerating that via subsidy is not terrible policy even if it is not the most efficient mechanism.”
    Can we have some evidence of this BS at some stage????? PLEASE!!!!!!
    1. These things are not computers. They are heavy industrial products requiring huge amounts of resources.
    2. There’s not enough Cobalt to actually make batteries for everyone planning them
    3. The environmental and health impacts of Lithium ar reasonable serious /sarc So we get more BS alongthe same lines that they will get cheaper that we will magically solve all the problems and suddenly be able to reclaim all the materials in the batteries
    4. I don’t think there is a single battery, of any size, manufacturer in Australia So we are going to ban Coal exports. We are going to smash the livestock industries as a scacrifice to this BS religion. Any guess as to what the A$ will be worth by the time we do all that A$ = USD 0.10 ????? or thereabouts. The average household battery is going to cost about $100K – assuming their price doesn’t go up as the Europeans, whose bureaucracy started this stupid bloody religion, absorb a major part of the resources available. Then we have China who will be using heaps of these things for purely practical reasons. Guess what??? China will have the money!!!

    I could go on for a while but devoting time to BS is just a waste.

    • 1. Look at PV panel price over the past 20 years.
      2. Battery design is removing cobalt as an ingredient.
      3. The Environmental and health impacts of burning anything handy for power is immeasurable.
      4. If we had been smart we would have created PV factories, Turbine factories and battery factories twenty years ago. Australia has the best energy resources in the world, both Solar and Wind. We could be the engine room of the renewable world of the future, all smelters and other high energy industries should be here using our abundant renewable resources. Instead those that could decided it was easier to suck blood from their host rather than develop it.

      If we all had been adults and started this transition 20 years ago instead of eeking the last bit of blood out of the punters we could have made this transistion easier, but the new world of power is renewables, batteries, Hydro, pumped / traditional.

      We’re dead as a dodo if we don’t, so get onboard and find solutions rather than whining that its not all sown up yet.

      • mambarino embraces all this,yet he has been bankrupt twice
        and is now here living on the handouts of strayan social security and free medical
        mambarino is probably best used for his contribution on how to survive bankruptcy and move to straya
        the land of the free handout.
        he has no knowledge at all of anything renewable cept the dole and medicare

      • Lay off the meth, Wiley.

        I’ve never been bankrupt (and never had to join you in your trailer park lifestyle!)
        Never received the dole (lol)
        Paid into Medicare for many years, now retired

      • 3ris, nice effort, but the astroturfers here don’t listen because that’s not their job. I learned that a while ago and stopped trying to argue with them, for the most part. They are fighting a losing battle.

  7. Jumping jack flash

    The best solution is everyone provides their own electricity requirements.

    The days of centralised electricity generation were over as soon as the government sold it off. Its tempting enough for private companies, that only exist to create profit, to gouge at the best of times, but now, when everyone is saturated with enormous debt of simply insane proportion, it is irresistible.

    Let the aluminium guys build their own reactor/gigantic solar farm next door to their plant, or something.
    They could offset some of the cost by selling the electricity to the communities around them. Since their main business isn’t electricity, they could sell it at cost.

  8. Those ACCC charts require a bit of effort to understand. What’s the reference link?
    The charts presumably indicate the monthly average order of merit of power sources to the Vic/SA markets, including via the inter-connectors. Trend 2013 – 17 suggests Hydro (from TAS???) is replacing closed Brown-coal generation. Snowy 2.0 may have to be built as a ‘national infrastructure” project rather than as an ROI investment, as the NBN should have been, but Mr Murdoch demurred,