The Coalition is a total energy imbecile

The Coalition is a total energy imbecile. And I am being kind. It’s a damn miracle that Australia’s decarbonisation of the grid is going so swimmingly because the Morrison Government and its Coalition predecessors are completely lost.  After yesterday’s excellent news that Yallourn coal-fired power station is going to close in 2028, with seven whole years to be substituted by batteries and other firming power options, this is what the Minister for Energy said at the AFR:

A spokesman for Mr Taylor said Yallourn “will need to be replaced by a significant amount of 24/7 back-up generation and storage, like gas, pumped hydro, and, as we look to the future, hydrogen.”

He pointed to Mr Taylor’s concerns that consumers would see significant increases in prices if Yallourn isn’t replaced, just as occurred with the closures of the Northern plant in South Australia and Hazelwood in Victoria.

“The Commonwealth government will model the impact of the closure on energy affordability and reliability in Victoria,” he said.

Power prices didn’t increase owing to coal plant closures. Coal does NOT set the marginal cost of electricity in the grid because it can’t turn on and off. Gas-fired power sets the price because it can.

When Hazelwood closed there was oodles of spare generator capacity in the National Electricity Market (NEM):

AER NEM capacity

AER NEM capacity

The Australian Energy Market Operator explained this at the time, from Domain:

In an interview with Fairfax Media, the Australian Energy Market Operator [AEMO] said Hazelwood’s closure would be offset by the availability of three mothballed gas-fired stations – one each in South Australia, Tasmania and Queensland – and large industrial businesses agreeing to time-shift their electricity use in the event of an emergency.

“The risk is no greater than it was this summer when you look at the generation that’s available to us,” AEMO chief operating officer Mike Cleary said.

Mr Cleary said removing Hazelwood’s 1600 megawatt capacity could have left a shortfall of between 200 and 500 megawatts in the event of a worst-case scenario – extreme temperatures, mass use of airconditioners and no wind to drive turbines.

But he said if necessary this would be replaced by about 830 megawatts of gas-fired power that has not been in use.

The problem was that the Coalition Government of the day was busy protecting the gas export cartel, which had driven the gas price mad, and hence electricity prices followed. Here’s the chart (the green arrow is the carbon price abolition, red is Curtis Island LNG startups):

'Twas the gas cartel that done it

‘Twas the gas cartel that done it

Again, AEMO made all of this abundantly clear:

Gas sets the marginal cost of power

Gas sets the marginal cost of power

High-cost gas sets the marginal price and when the price of gas is high so is the price of electricity. This is made worse by the fact that the economics of peaking gas plants (turbines) are far more sensitive to input price changes than are coal-fired power.

The ACCC has explained this repeatedly as well. Even Malcolm Turnbull understood it when he eventually imposed the Australian Domestic Gas Security Mechanism (ADGSM) in 2017 to force local gas to be sold locally. Power prices have fallen ever since.

We never needed Hazelwood. What we needed was cheaper gas. Ironically, by not providing it, the Coalition installed an effective privately-owned carbon tax that delivered generators (polluters) huge price windfalls (paid by customers) that incentivised massive injections of new and cheaper renewable power.

So, we come to today. All of that new supply has combined with tumbling gas prices to normalise the price of marginal power. But, the price of renewable firming power has fallen even more so it is now soaking up all of the investment. Also at the AFR:

When directly questioned on the state government’s position on gas power, Ms D’Ambrosio avoided any mention of gas and instead pointed to the massive renewables investment in the state, with $1.6 billion invested in clean energy initiatives in the most recent state budget.

“There will be more than 5000 megawatts of renewable energy coming online in Victoria by 2028, which will more than offset the exit of Yallourn,” she said.

That is, gas generation is now priced out as well:

Australian energy costs compared

And it’s going to get worse:

Price of solar and batteries over next 5 years

Much, much worse for gas and coal:

Price of solar and batteries over next 5 years

More fossil generation closures are coming fast. But chill, that’s the whole point. The replacement clean firming energy will be there because the economics are in place with potential profitability rising with each passing year.

The only thing that is missing in this great transition is the Minister for Energy’s brain.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. Know IdeaMEMBER

    I am sure he understands the landscape perfectly: that party donors, and his career post-political office, are far more important than the long-term interests of the Australian people.

    But I may just be viewing the world through the lens of a grumpy old man.

  2. I was interested to read a story today about vaccines and some potential issues. What i found really interesting was Dutton’s comments about trusing scientific opinion. I wish they would adopt the same attitude with climate change, but i guess as a liberal politician you only decide to use science to justify policies in one of 2 situations. 1. you paid for the research. 2. it backs up what your donors have paid you for and you were going to do it anyway.

    I wasnt alwsys this cynical.

  3. Think if you dig into it and compare with UK data, its about people not having 2nd doses. But the length of protection and the impact vaccines will have on transmission are a worry. Seems to me that NPI measures are still the real golden bullet if we want to reduce cases and prevent mutations.

    • Just received notice of impending all-org AZ vaccinations. Will report back with more re: phases and eligibility.

  4. I notice figures for renewables “full battery” and “partial battery”.
    Here’s the question — how long does a ‘full battery’ and ‘partial battery’ respectively last?
    Half an hour? Hour? Day? Week? Month?
    Given the intermittent nature of renewables, what is considered ‘long enough’?

    • Intermittent …………….. I had to laugh a few weeks ago when huge banks of solar panels and quite a few wind farms in Germany were either covered in snow or froze solid …………… they cranked up the coal-fired supply asap.

      • Display NameMEMBER

        Meanwhile in Australia we have a couple of million square km where it never rains or snows and our government is fighting the transition like every multi-nationals useful idiot.

        • The irony is all the other multi-billion dollar multi-nationals gagging to install hordes of renewables in Australia yesterday. Tens, hundreds of billions of dollars of foreign capital wants to come here. The LNP are foolishly looking after only certain multi-nationals, and the toxic ‘humbug’, ‘protect the status quo’ stoic tendencies, whilst letting an utter fortune slowly slide away. Crazy.

          Thank goodness the states have realised the above about disfunctional federal energy management, and are doing it themselves – they might just pull it off (though federal leadership and investment would set up the next couple of generations…)

      • Meh. Details.

        Weathise future installations to melt snow off the panels, etc. Conventional energy systems do the same sorts of things.

        Fixed. It’s not the level of issue people are making it out to be.

      • UpperWestsideMEMBER

        And I had to laugh because in Texas it was the gas and nukes that went offline but the politicians of a certain bent made a lot of noise about renewables being the issue.
        The gas well heads froze ( there is water vapor in the gas stream ), and the nuke wasn’t built for subzero temps and its water lines froze – go figure.

        • Exactly. They just weren’t weatherised, despite previous experience and recommendations to do exactly that. The same weatherisation can (and will) be done for renewables, were required/beneficial. Details.

  5. scottb1978MEMBER

    It is difficult to get a man to understand something when his (mates’) salary (and his sweet retirement deals) depends upon his not understanding it…

  6. Physics doesn’t allow you to compare NEM-wide generation capacity against the removal of a single generator. E.g. You can’t rely on the excess capacity of QLD generators to be available to VIC since there’s dynamic capacity constraints in the transmission system.
    And of course gas started setting generation prices in SA and VIC once their lowest-cost baseload generators closed.

      • If you’re not comparing NEM-wide then what does the first graph show?
        Coal is cheaper. Prematurely closing down your cheapest generation plants that have remaining useful operating life in favour of an alternative fuel source that has always been more expensive is economic insanity. Causing that to happen by subsidising even more expensive sources of generation so they can undercut your cheapest source of generation is the height of economic insanity.

        • Coal plants have sunk costs, and this keeps their prices today down. They are generally old, and on their last legs; they are being run into the ground. They need upgrades and additions to go on much longer…but it’s not worth doing because of lower-cost new build renewables. Coal capacity is already being wound back due to cheap prices during the day because of renewables.

          Coal plant owners aren’t shutting these things down, and planning to shut them down for the fun of it – whatever you think your seeing, it’s not there.

  7. Pity that most articles on this site are biased (massively to the left) – doesn’t leave any room for sensible debate

    • These are just power facts. If you don’t want to face up to your favoured party being an idiot then don’t put that on me!

      I hate Labor just as much as the Coalition. My own politics is clearly centre right. That is, real right, not this bullshit fake stuff that trashes markets for interests wherever it goes.

      • Can you please show us the workings for your table. There is no doubt SA power bills are much more expensive than the Eastern States. I would hope to be able to work out why.

    • bolstroodMEMBER

      Best to remove the log from your eye before complaining of the mote in your neighbours eye.

    • Left? Do you mean economic or social?

      And, this site left? DLS is a self-confessed centrist. The writers are capitalists, with Austrian lenses. They are no further left than about the economic centre-right.

      Are you referring to their concerns about a healthy balance between capital and labour? That’s just sensible. It’s not centrism that causes problems – near-laissez faire, neo-liberal rentier and financial capitalism has caused most of the economic problems we have today.

      As for your comments in reference to energy: it’s just tech. It’s just better, cheaper, clean tech, and it is legitimately crushing the old paradigm because it is better in just about every way. Tech moves on, and we can, too.

  8. Booo! Booo! They say.

    Prices will rise because a coal plant will close…due to prices being crushed by renewables…in the context of prices continuing to be crushed by renewables. Prices won’t rise because we’re fast approaching the point where coal generation during the day is barely required.

    So many knee-jerk ignorant comments.

    Seriously, just accept that the new tech and economic regime is here, and galloping at an extraordinary pace – it’s a legitimate stampede.

    We’d best embrace the new paradigm as a nation, so we van really benefit and profit from it, because it’s coming whether we want it to or not and, other than the foolish national stoicism that has captured our culture for so, so long, we are in prime position, ready for another rainbow to hit us up the arse.

  9. MarcusOzMEMBER

    When the lights go out due to too much intermittent supply and not enough reliable supply (as happened in SA a few years back and would have happened earlier this year – were it not for interconnectors from reliable coal supply in VIC) I will come back to say I told you so

    The unicorn of batteries is just a joke – SA would have needed more than $100billion worth of batteries during the week of Jan 18-25 were it not for the interconnector with VIC

    https://newmatilda.com/2021/01/27/delusion-and-dirty-neighbours-help-sa-cruise-through-another-heat-wave/

    “How many “world record” batteries would we have needed fully charged at the start of the week to get us through till the end? Meaning to fully cover the gap between what wind and solar were giving us? Just over 700.

    And a quick reminder, we have one. Not 700. And it cost about $161 million to construct.”

    • We’ve been discussing this for years. Those sorts of analyses are willfully narrow, blinkered and backward-looking.

      Why do people keep only focusing on batteries, and omitting the deployment of pumped hydro, stored hydrogen, stored solar thermal, etc, etc deployment? Coal and gas are stored energy – and so are all the others…so just use them.

      Batteries are just part of the mix. It’s a new coming paradigm – not just coal, set and forget…we are looking at a mix, which produces and stores, releases and ‘charges’. Intermittency is smoothed out via a more decentralised system: over-produce energy during the day, cheaply, and consume and store simultaneously; then produce and release during the night, also cheaply (remember that the wind doesn’t stop during the evening!).

      • MarcusOzMEMBER

        Nice try – Solar Thermal is rubbish – there’s a reason why there are few if any new projects and you don’t hear about it anymore. Pumped Hydro has major problems – not the least being the sparcity/scarcity of serious sites that are anything other than tiny (and you need a weeks worth of storage according to the best available science if you want to cover periods of cloudy/windless days which happens far more often than people realise and are often spread entirely across the NEM) – not to mention the huge cost of additional transmissions lines to charge them and then extract from them.

        Storage simply isn’t a viable long term answer at grid scale (except for smoothing out on the short term)

        Despite the myths of “models” showing otherwise – there simply isn’t a viable grid scale solution that involves renewables only – with or without storage

        https://www.sciencedirect.com/science/article/pii/S1364032117304495

        “none of the 24 studies provides convincing evidence that these basic feasibility criteria can be met. ”

        https://onlinelibrary.wiley.com/doi/abs/10.1002/wcc.324

        “We find that all of the scenarios envision historically unprecedented improvements in energy intensity, while normalized low‐carbon capacity deployment rates are broadly consistent with historical experience. Three scenarios that constrain the available portfolio of low‐carbon options by excluding some technologies (nuclear and carbon capture and storage) a priori are outliers, requiring much faster low‐carbon capacity deployment and energy intensity improvements. Finally, all of the studies present comparatively little detail on strategies to decarbonize the industrial and transportation sectors, and most give superficial treatment to relevant constraints on energy system transformations”

        https://pubs.rsc.org/en/Content/ArticleLanding/2018/EE/C7EE03029K#!divAbstract

        “However, to reliably meet 100% of total annual electricity demand, seasonal cycles and unpredictable weather events require SEVERAL WEEKS WORTH of energy storage and/or the installation of much more capacity of solar and wind power than is routinely necessary to meet peak demand”

        • I’ve read what you’ve said, and glanced at the articles you’ve posted.

          They are all backwards looking. They look for established precedents for ‘evidence’ or cynically assess forward projections of advancing technologies, of developing scale, of deliberately skewed and targetted over-production.

          Not enough pumped hydro sites? There are literally thousands identified by the ANU, and only hundreds are required as part of the future power suite.

          ‘Weather’ events are cited as if the wind won’t blow, and as if there will be thick clouds everywhere for weeks at a time.

          The critiques touch on hydrogen storage – one of the cornerstones of proposed future renewable-based systems – with hand-waiving. Personally, I find the case for hydrogen-storage and release to be so blindingly obvious that I think the default position really is ‘Why wouldn’t it work?!’ And yet we point to large-scale LNG and LPG as an option…..as if hydrogen can’t be produced on a similar scale…??

          The articles also critique things like power frequency and voltage, as if only turbines can address these issues – all of which are being addressed by techs like big batteries as we speak, and are proving to be superior techs. Again, backwards looking.

          Did the articles even touch on massive wide-scale residential solar and battery systems? Their effect is, and will increasingly be, enormous, as well as a system-stabilising factor via Virtual Power Plant arrangements.

          With respect, the critiques you’ve provided are not nearly as convincing as you suggest.

          The problem with ‘I’m a realist’ cynical criticisms is that tend not to employ technically realistic projections and engineering problem-solving creativity.

          To be frank, I enjoy reading the critiques of cynic ‘realists’ – I make my living by doing and profiting from unconventional ideas they think won’t work.

          Like the renewables-based power system – the cynics can live through their history lesson. They’d be better off using their cynical noses to identify ‘problems’ and then solve and profit from solving them. Instead, they tend to sit there, arms crossed, effectively sulking that things are changing. I’m not saying this is you, but it something I see again and again, and yet the ‘problems’ get solved nonetheless, and tech moves on…

          If my tone is grumpy, I apologise – I am actually a bit grumpy today 😉

          My 2222222c

          • MarcusOzMEMBER

            They are not “articles” they are published peer reviewed science. Nor are they, as you claim, “backward looking”

            They use real world evidence – not opinions which is all you seem to offer. Being grumpy is fine – but being ill informed less so

            The ANU study I grant you is interesting – but it has several serious flaws and has been refuted soundly because of them:
            1) It seriously underestimates the capital costs of the sites it claims to have located – and the political difficulties in acquiring them (nimbys etc)
            2) It makes no serious estimate of the additional transmission infrastructure required let alone the land requirements for that and the even bigger political obstacles to acquiring that
            3) Perhaps most egregiously it assumes only one day of storage is needed – whereas similar studies that cover the continental USA (that I refer to above) suggest at least one week is needed – the notion that Australia is magically different geographically is charming but naïve

            So I’m sorry if that makes you more grumpy but alas your post is full of wishful thinking – I’m sure that’s comforting but it isn’t backed by the evidence – even “forward looking” asyou claim 🙂

        • Further, is solar thermal rubbish? From what I read, costs are also dropping rapidly, and are close to competing with coal.

          I’d say that solar PV, and batteries, have distracted focus for the time being – this sort of ‘lower-hanging fruit’ distraction is common; with the developments there now well and truly progressed and progressing, and utility-scale storage now more of a concern, I’d expect to see more focus on things like solar-thermal – though hydrogen may also distract from that…

    • TheLambKingMEMBER

      “How many “world record” batteries would we have needed fully charged at the start of the week to get us through till the end?

      Said in 2008: “It is impossible to have enough batteries and screens for almost every person in the world to have a smart phone”

      And you don’t need that many batteries. The sun shines every day – particularly in outback SA. With the right engineering you only need the batteries to last 5-10 hours. Battery installation in Aus will at least double every year for the foreseeable future. There will be batteries in homes, in streets, in sub-stations, on the grid and mobile ones in cars. And then for a last ditch effort you might fire up a gas peaking plant a couple of times a year!

      • MarcusOzMEMBER

        You have no idea what you are talking about and clearly have not read the link from where the figure of 700 batteries (Grid scale 150MWh) came from – it came from the actual deficit in supply and demand over a week in SA from Jan 18-25. As for batteries doubling every year – look up the figures – even if they did that (which is unlikely given the enormous cost) – and remember batteries produce no energy – they merely shift it in time (and with loses).

        Your post alas is typical of those who have accepted the current narrative about renewables and batteries – entirely innumerate 🙂

    • Lazards models look to be using 90+% fixed CF rates for FF. Australian reality is 50 – 80% depending on locale.

    • Errors in LCOE analyses are well-known, even by those that use them. I honestly doubt they would be used if there were so categorically unreliable. I’d assume an error of 10-20%, which still renders the results as useful indicators. Internally speaking, the trends tell a useful story even if not entirely accurate (few metrics actually are so accurate – but still useful!)

        • Like how large battery systems are proving more useful and profitable than just about anyone thought?

          Is everyone duped except the LCOE cynics?

          Are real-world coal and gas plants being forced to close because of theoretical LCOE ‘mistakes’, or actual real-world competition from renewables? No, they are actually being crushed, despite all the ‘mistakes’, simply because the LCOE are, most likely it seems, really not that far off – the blunt LCOE tools predict the demise of conventional power due to cheaper renewables, and that is exactly what is occurring…fast…with much more to come.

          /end grumpy

          • I do not think you understand what LCOE actually is (at least you don’t demonstrate real understanding). It is a theoretical calculation for an energy production source – IN ISOLATION FROM THE SYSTEM IN WHICH IT MAY BE OPERATING – of the total cost of operation (production etc) divided by the (theoretical) total energy it will produce in its lifetime.

            It takes no account WHATSOEVER of the real world costs it encounters – or that the grid encounters – or the actual energy it delivers to the grid – when it is in operation.

            Comparing LCOEs of different energy sources is like comparing the marginal cost of different items across different manufacturers – almost entirely meaningless when it comes to real word costs.

            While it “appears” the LCOE of renewables is cheaper in the real world this isn’t so – it’s one of the reasons why – empirically – systems with higher percentages of renewables have far higher electricity costs (just compare the costs of – say – Denmark 32c/kWh to France 22c/kWh)
            https://www.ovoenergy.com/guides/energy-guides/average-electricity-prices-kwh.html

            Yet Denmark has a MUCH higher renewables percentage

            The reason for this requires a more subtle understanding of real world costs and LCOE’s than you (or MB) appear to grasp

            In simple terms is that when the percentage of renewables gets high in a grid additional system costs are incurred (notably additional transmission and distribution and also the need for synthetic frequency synchronization – since as synchronous generators (eg Coal/Nucelar) are lost to the system (which have natural systems intertia to help frequency control when there are problems or dropouts of sources in the grid) then additional sophisticated and costly systems must be added to cope with the additional intermittent (more variable) renewables – so that drives up the numerator in the LCOE in real life

            In addition – when renewable percentages are high they are more often than not all generating energy at the same time – in excess of requirements – so that energy is “lost” or spilled (which drives down the denominator of the LCOE). And no – Batteries or storage doesn’t help since this adds further costs (costs of the storage system plus addition transmission) and also loses energy (around 20% in a full cycle).

            When you increase the numerator ($) and decrease the denominator (energy) in the LCOE you drive the LCOE up – sometimes by quite a lot

            So no matter which way you rub it the REAL costs of renewables in a grid – especially as you get more of them – are FAR higher than the theoretical LCOE in isolation reveals

            Anyone with a clear understanding of how the real grid works – and basic economics – understand this.

            Alas you – and MB writers do not – which is a pity since it leads to the sort of ill informed wrong headed opinions you are spouting 🙂

            Whilst I do not hold out much hope you will be willing to disabuse yourself of the notions you hold based your lack of understanding – you might at least take the time to better inform yourself – here’s a good start

            https://www.sciencedirect.com/science/article/pii/S0140988313000285

            “The variability of solar and wind power affects their market value. ► The market value of variable renewables falls with higher penetration rates. ► We quantify the reduction with market data, numerical modeling, and a lit review. ► At 30% penetration, wind power is worth only 50–80% of a constant power source.”