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The Australian magical NEG target which turns black coal to white elephants

Posted By Jo Nova On June 27, 2018 @ 4:49 am In Global Warming | Comments Disabled

Australia is figuring out how to change the global climate and power up the nation. It’s the old “have cake: eat cake: sell cake and build a sea-wall with cake” dilemma. The PM, Malcolm Turnbull, has come up with a plan called the National Energy Guarantee (NEG), which will manage to hurt the environment, jobs and industry at the same time.

Who benefits? Gas companies, Renewables Co. Who loses? Everyone else.

One of the key ideas is that we should have an average emissions target of 0.4 magical tons of CO2 per MWh, because “storms”. Tom Quirk has laid out our current situation below and how (theoretically) we might meet that target. (Especially if clouds start raining money, thinks Jo, preferably in USD and filling Lake Eyre.)

The “good news” is that South Australia can stop already, it’s there. The bad news is that the rest of Australia will need to catch up with South Australia, including the size of the electricity bills (and then some).

In 12 years Australia needs to shut nearly every single coal plant thus turning black coal into white elephants. The one last black coal plant or two will operate barely at break-even point, sitting on a utilization rate of 68% (thereby doing nothing 32% of the time, and being a part time white-elephant).

By 2030 we “need” to build four times as many wind farms as we already have. And four times as many gas plants. Somehow we need to get six times as much gas as we already use and do that without fracking or even exploring for gas in some states where both are banned. Since the Northern Territory has just permitted fracking perhaps we can get it all from there.  Especially if the NT drillers can  get the horizontal frack pipes to extend 2,000 miles underground.

Thanks to Tom for all the data and calculations, and to all the people who helped him.

– Jo


Guest Post by Tom Quirk

NEG – The white elephant in the room

When the King of Siam wished to rid himself of a troublesome courtier, he would send a white elephant as a first sign of oncoming ruin.  Our federal government has served up a troublesome elephant of a plan, the NEG that might ruin our country.

The information used in this analysis is sourced from the Department of the Environment and Energy, Australian Energy Statistics, and gives the sources of electricity generation for the calendar year 2017.  The generation plant data comes from the AEMO.

This note will explore what could happen were one of the key conditions of the NEG was actually met – the condition that CO2 emissions from electricity generation should move to average 0.4 tonnes of CO2 per megawatt hour of electrical energy.

South Australia has already achieved this NEG goal but at great cost to consumers whether domestic or business.

The table below lays out the mix of generators. Coal fired generation has ceased, wind farm energy takes priority in the market and the inter-connectors to the Victorian power system keeps South Australia from having too many blackouts by supplying some 15% of demand.

Renewables meet 37% of demand while Victoria supplies 15% and the NEG target is achieved with an average of 0.38 tonnes CO2 per MWh.


NEG, South Australia, generation, Table.

So turning to the other states, New South Wales, Queensland, Tasmania and Victoria that are in the National Energy Market, the table below is for the same period as the South Australian analysis above.

In these states renewables generate 15% of supply with half coming from hydro plants. Coal and gas provide 85% of supply and the CO2 emissions average of 0.89 0.78 tonnes CO2 per MWh is well above the NEG target of 0.4 tonnes CO2 per MWh.


NEG, Table, NSW, Tas, Qld, Vic, Generation.


So what might happen if this same energy were to be generated under the NEG target of 0.4 tonnes CO2 per MWh?

The final table shows what changes to generator plant might be made up to 2030 to reach the NEG emission target while generating the same energy as in 2017.


NEG, Table, Generation, renewables, 2030, NSW, Vic, Tas, Qld.

NEG, Table, Generation, renewables, 2030, NSW, Vic, Tas, Qld.

A comparison of the present and the desired outcome points to the following:

  •  15,000 MW of black coal burning power stations have been closed. This leaves 3,000 MW of plant that operate with 71% utilisation (in AEMO speak – Capacity Factor). For low cost base load power, these plants need 70% or more utilisation, ideally 87% (IEA figure).
  •  1,000 MW of brown coal burning power station (Loy Yang B) remains in Victoria. As a base load power station it will only supply 25% of the steady 4,000 MW demand during the early morning hours in Victoria.
  •  Natural gas usage has increased six-fold with a four-fold increase in plant, much of it OCGT (Open Cycle Gas Turbine). Generators are no longer simply meeting demand changes in periods of high demand but are having to meet sudden changes from intermittent supply sources. How the extra gas will be sought is a mystery with governments stopping the search for new gas sources. Perhaps LNG will be shipped from Queensland or Western Australia.
  •  Wind farms have increased from 2,600 to 10,000 MW. The Victorian government wants to add 4,000 MW of wind farm. This is sufficient to destroy the high utilisation necessary for baseload generation. Other states may be just as ambitious. The southern states of New South Wales, South Australia, Tasmania and Victoria all share common weather patterns so there will be periods where correlated wind farm generation will fall towards zero. This has already been seen. No allowance for backup supply has been considered in this analysis but new inter-connections will not be much help balancing coherent wind power variations.
  •  Hydro has been increased assuming “Snow you too” is built. This scheme, like batteries in South Australia, depends on buying low and selling high where you must buy 20% more energy than you sell. If there is little baseload pricing in the wholesale market this may be an NBN-like venture as the operating surplus will have to meet financing costs.
  •  Small scale solar photo voltaic systems are a completely uncontrollable source of demand variation. Encouraged by direct state grants this has been a religious indulgence for the better-off.

No attempt has been made to estimate the costs for these changes or the prices consumers would pay. But if South Australia is setting an example then the prices will be amongst the highest in the world. The consequence will be smelters closing and other energy intensive processes moving elsewhere in the world.

The conclusion from this analysis is that the political and policy-making class have taken us and the white elephant into a labyrinth of regulations that will further disrupt electricity supply. Whether we meet the Minotaur or the elephant, like Theseus has a piece of string to help us escape remains to be seen.

*Edited 6pm with more accurate numbers, highlighted in tables.

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