We’re planning to spend $5,000 million on something to smooth out the bumps from unreliable generators. It is entirely unnecessary in a system where coal supplies the baseload and we have not created artificial rules forcing people to use green electrons in preference over stable and predictable ones. Most estimates of costs from wind and solar ignore the hidden costs — the destructive effect on the whole grid.
Wikipedia on Pumped Storage Hydroelectricity:
h/t Peter Rees, Michael Crawford, Ian Waters.
Even after Snowy Hydro 2.0, power will cost $90/MWh
Energy project financier David Carland — the executive director of Australian Resources Development Limited — argues that once the Snowy Hydro project is operating it will provide only partial back-up energy at a high cost.
Using Snowy Hydro’s modelling assumptions, Dr Carland’s calculations show the “levelised cost of energy” — or unit-cost of electricity over the lifetime of an asset — will deliver power significantly in excess of $90/MWh, after allowing for the cost of storage, cycle losses and the initial cost of buying energy at off-peak prices.
The effect of “cycle losses” means Snowy 2.0 will have to buy around 30 per cent more power in order to pump water uphill than it can generate when water is released from the upper storage.
“Snowy 2.0 is a pump storage operation that is a net user of energy and therefore cannot resolve the longer-term issues of the lack of baseload supply in the national electricity market,” Dr Carland told The Australian. “Based on Snowy Hydro’s own modelling the scenario in which Snowy 2.0 prospers is a world in which average power prices continue to rise.”
Costs are never coming back down
Kiss goodbye to the old $30/MWh average cost of the NEM wholesale electricity market.
Why is the NSW old average $50/MWh? I think that’s artificially high. Retail prices fell from 1955-1980 and then held stable for decades. They ominously started rising faster than inflation from 2005 which was when intermittent generation began to build on the grid. There was also a major drought in 2007.
On the National Energy Market (NEM), most states, most years could generate electricity for a wholesale price of $30/Mwh.
UPDATE: As it happens today South Australia is having one of those $14,000/MWh moments. Lucky there is a cap eh, or we might see million dollar electricity. h/t Dave B
Those days are gone unless we save our old coal plants and stop favouring green electrons.
The government doesn’t need to build coal plants, it needs to abandon the RET and all pagan attempts to change the weather with our generators.
The market will sort the problem out if the government gets out of the way.