Albo’s cowards deliver energy failed state

By in Australian LNG, Australian Politics

| 43 comments

Australia’s east coast energy markets have failed. In point of fact, the gas market failed seven years ago. The electricity market has now failed as well:

Power generators have been accused of adding to the uncertainty and chaos of the electricity supply crisis by taking capacity out of the market to access increased compensation payments, with almost 4000 megawatts of supply sitting on the sidelines as the NEM faces a blackout threat.

On Wednesday the Australian Energy Regulator released a letter sent to generators warning them they must bid capacity into the market despite a $300MWh cap put in place by the Australian Energy Market Operator.

AEMO said on Wednesday it believed 2000 megawatts of power in each of Queensland and NSW has not been bid into the market – a situation which has helped trigger warnings of blackouts in all NEM states – Tasmania, Victoria, South Australia, Queensland and NSW – on Tuesday and Wednesday nights.

AER chair Clare Savage wrote to generators on Tuesday reminding them of their obligations to bid available generation capacity into the market despite pricing caps introduced by AEMO, suggesting some generators were withholding supply in order to access higher payments when they were then directed to return to the market by AEMO.

Basically:

  • all competition incentives in both the gas and power markets have now failed;
  • energy unmarkets are disintegrating into pricing fiefdoms of dominant market power;
  • the energy regulator is failing as it imposes price caps that are rendering power production uneconomic and so
  • energy production is failing.

The end result is I may not be able to write this for you tomorrow morning:

Australia’s power shortages now threaten five states after the Australian Energy Market Operator (AEMO) warned of possible power interruptions from late this afternoon.

An update published on the AEMO website cautioned of maximum power load interruptions in Queensland, New South Wales, Victoria, South Australia and Tasmania.

The warnings were initially sent for the east coast of Queensland and NSW, but have now spread to hundreds of thousands of additional households across the nation.

On Monday, AEMO ordered electricity generators online in a bid to avert widespread blackouts, although there were outages in entire suburbs in Sydney’s north.

But now, AEMO is warning of more pain ahead thanks to an energy shortfall predicted in Queensland and NSW tonight as a result of plummeting temperatures and skyrocketing energy prices.

Some are already there:

Entire suburbs were plunged into darkness last night as power outages hit Australia’s east coast.

Areas in Sydney’s Northern Beaches and north of the city were affected, after energy officials warned that huge swathes of New South Wales and Queensland were facing the threat of losing power.

Parts of Beacon Hill, Frenchs Forest, Narraweena, Cromer and Dee Why were all without electricity on Monday night, Ausgrid said, although power was expected to be back on by the morning.

Millions of homes were told to switch off appliances to conserve electricity earlier in the night as the Australian Energy Market Operator (AEMO) warned of outages.

Not to worry, Bovver Bowen is onto it:

Energy Minister Chris Bowen says Australia has enough reliability in the energy market for the foreseeable future, as long as there are no further unexpected closures of coal-fired power stations.

Riiiiight. To be clear:

  • Bovver Bowen has ruled out any “ad hoc” interventions and sees “no legislative basis” to do anything.
  • Mad King is parroting gas cartel propaganda daily. Bizarrely, Albo is about to hold a Cabinet meeting in Gladstone, the capital of the gas cartel not nation.
  • There will be no super-profits taxes.

In other words, all three levels of the governance of energy in eastern Australia have now failed:

  • market structure;
  • regulatory structure;
  • legislative intervention.

I might add the fourth estate, the media, which also appears to have no idea how severe is this energy meltdown.

Eastern Australia is now an energy failed state and, I’m sad to say, where energy goes everything else follows.

Houses and Holes
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Comments

      • BillMEMBER

        Nah. We know the boys at MB don’t like us, and think we are a failed state, so we are quite happy where we are. Thanks for the offer though.

    • Ollyboy

      Premier McClown just announced he wants to shut down coal-fired power stations and replace them with so-called renewables which means WA will go the way of the eastern states. Unbelievable stupidity.

        • Ollyboy

          But why take out 1.4GW of baseload power out of the system?? Surely that will only drive up the price of energy. He obviously isn’t paying attention to what’s happening in the eastern states, Europe or California.

          Clearly, this decision by McClown is based on ideology, not economics.

          • BillMEMBER

            Ideology in politics? That would be a first…
            Yes, he is making some strange decisions. The forestry plan is completely deluded.

      • Peter SMEMBER

        WA has a lot of wind along to coast morning and evening. Plenty of sunshine when we need it too.
        Those coal-fired plants are aged and very inefficient, burning crap coal.
        Given 7 years of run-room, that 1,200 MW of capacity can be built out with rebuildable solutions and storage.
        The Harvey Dam, whose water is too salty for consumption, could be converted into a pumped storage project with the addition of a lower holding dam and could possibly add a desal plant to make more water available for agriculture in the summer.

        • Ollyboy

          Wind and solar don’t cut it. Neither does pumped hydro. They are expensive, inefficient and intermittent. Baseload power is needed. That’s the lesson from this debacle.

          The coal-fired plants can easily be upgraded. But why would Synergy spend money when politicians like McClown and others have openly said they will put those plants out of business?

          Bottom line: politicians need to stop interfering in the energy market. That’s how we got into this mess.

  4. ITAgMEMBER

    We should give credit to the LNP for delivering for their donors’ pennys. They created the mess that our current gov is trying to work through.

    DLS should stick to facts, not hyperbole.

    • surfbeach2536

      All previous governments have stuffed it up including the privatisation shambles of state Liberal and Labor governments but you really know something is terribly wrong when Sarah Hanson-Young is calling for gas reservation. With the Liberal hope that Labor would gain full control of the house denying the crossbench a say, the reign of the foreign cartels continues…

    • HixtarMEMBER

      Sure, but in case you hadn’t heard – Labor are in government now and don’t seem to be doing anything to un-stuff it.

      If only they didn’t have a majority – we might be seeing something akin to action right now.

  5. Jonathan Rubenstein

    I get the feeling Australia is becoming a third world country:
    – battling to keep the power going
    – politicians easy to bribe/lobby and owned by resource extraction companies
    – crowded cities, roads, trains, hospitals
    – third world Internet infrastructure

    Perhaps I’m just pessimistic?

    • Fishing72MEMBER

      It’s more simply that the corporations have realised that the low hanging fruit profits found in existing 3rd world nations have either been already extracted or lost to the rise of China. Therefore more focus has been placed on extracting the wealth of the Western sphere’s middle classes, which have until now been either useful or overlooked in favour of less politically powerful victims.

      We are now merely experiencing the treatment felt by Latin American, African and other vulnerable populations over the past decades since WW2.

      Once the corporate plutocracy has you in its sights it’s lights out for your living standards.

  7. dodgy as

    It’s just a market going through a once in its lifetime change.
    Everything we think we know about Electricity systems is likely to be proved wrong over the next 20 years.
    There’s a core within the Power systems community which still strongly believes that “Base load power” is the only really important metric (everything else is fluff). Day by day we’re proving this whole concept wrong, just completely wrong.
    Who can blame them when their response is to say F’it then lets see how you do if we don’t produce power.
    This is the junction that we’re at. Solar is way cheaper but we simply don’t have the storage in place to use it after the sun goes down. So after the sun goes down the pricing party starts.
    The long term solution is electricity storage and lots of it.
    We need Pumped Hydro (including pumped hydro sea water systems)
    We need big batteries
    We need cheap but less efficient storage (compressed gas, offshore underwater, lots of options)
    We need houses and businesses to redesign just how their heating and cooling systems work and when they work.
    We need to eliminate off-peak hot water as it exists in today’s residential power system.

    That’s just a short list and until we get serious about our side of the equation I think the big generators will profit handsomely from our laziness.

    • Robert

      Solar isn’t cheaper when you need to install 5 times the nameplate capacity and batteries to actually match the demand curve. It does have its place in supplying peak load. Then you need to account for increasing electric car demands on base load as the are charged overnight. We will require more base load, not less. Now if you could use renewable energy to produce fuel, then and only then can you replace something that is going to become increasingly expensive. Of course algal fuels using CO2 feedstock may be the most cost efficient means.

      • The Claw

        Unless the electric cars are actually driving, they should be charged during the day via solar energy.
        Why charge them at night?

        An alternative would be two sets of batteries. One stays at home to be solar-charged, and the other is in the car.

        • dodgy as

          Using Electric car batteries to support the grid at night is still a tricky problem.
          I know I’d be beyond PO If I had my car one the Charger all night only to discover that I had half the charge I started the night with. and maybe couldn’t get to work or travel wherever I had planned. So in general I’d say that Car batteries can only be used to levelized the demand peak, something like they provide charge from 5pm till 10ppm and then get fully charged from 10pm till 6am.

        • drsmithyMEMBER

          Because during the day they’re probably in a car park without any charging facilities.

          That said most people don’t drive very far each day, so if they are putting it on to charge daily, in most cases it won’t have to charge for very long to be full.

      • dodgy as

        Installing 5 times nameplate seems a little over the top (at a grid level) although it probably makes sense at the individual residential level. For Residential level “off-grid” I would target PV nameplate at 3 to 5 times average household demand and then still make sure I had a reliable backup generator.
        Many of the localized problems that occur with small scale Off-grid disappear in larger national grid connected systems, so you get to scale back on the level of PV within the system.

  8. call me ArtieMEMBER

    The power cartel watched the big banks stop lending in response to the Banking Royal Commission, saw the government collapse and capitulate and learned their lesson well…

  10. NorthMEMBER

    Just relax MB. This will all work out.

    Punters have to feel the pain and be demanding the gas industry be destroyed.

    Labour know what to do because as MB points out, and I completely agree, it’s easy and obvious.

    Right now they are waiting for the pain to hit voters and are busy working out how to get the demonisation of the gas sector to stick.

    Once that’s done the policy / legislation will quickly follow.

    There’s just no material public outcry yet. It will come and with it will come politics and action.

    • dodgy as

      Interesting perspective, giving the gas exporters enough rope that the public hangs them with it.
      Maybe I’m wrong, but isn’t there a chance they’ll hang the politicians first?
      No great loss either way I guess and a win win situation if the public lynch’s both

    • RomulusMEMBER

      Nope – public anger is there. Perhaps they need to run a few focus groups/surveys on the issue. Run an ad campaign if they need to while putting out the policy saying they are reducing gas prices etc.
      All Bowen has been saying is there is no quick fix and King has been saying we need more Santos gas.
      If they wait too long – the question will be – Why TF did you not do that earlier. If its not legislated on in the first few sitting days of parliament its too late.
      Labor will wear any damage to industry/customers if they wait too long and it turns out there is actually a quick fix.

  11. NorthMEMBER

    On another point generators and retailers have run out of risk limits to enter into CFDs with each other.

    The value of the FWD markets has ripped through all available credit risk limits. The industry is stalled for trading.

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