A big new study by electricity grid nerds (and I mean that in the nicest possible way) shows that after all the money and pain of 20 years of forced transition Australia’s electricity has shifted from 85% coal powered to 75% coal powered, which cost billions and as a bonus, made electricity more expensive and unstable. We drove out some brown coal, but swapped it for black coal. Instead of ousting coal power, the extra solar and wind power replaced some gas and hydro.
The authors are genuine independent experts, and the report is incredibly detailed — so this is rare — but still suffers from serious drawbacks:
- The team doesn’t question the need for an artificial expensive transition. Almost all the problems they describe are caused by government policies that task our grid with changing the climate as well as producing cheap and reliable electricity.
- In a grid being ruined by inept policy, the implied solutions almost all involve more regulation and government policy. If our gas prices are too high we could ban sales overseas, but then we lose the export income. The left hand steals from the right. The free market solution is to use another fuel, like coal or nukes, or explore for more gas. When the new report says “Thermal plants are aging and are highly unlikely to be replaced by new coal plants” they don’t add — but only because government policy prevents this.
- Changing markets and scheme “Design” won’t save us — it won’t make low density energy more dense, it won’t make intermittent supply more reliable, or batteries cheaper, or open up vast land near the demand for electricity. All these are structural problems — and every solution involves throwing money.
This report is very useful for identifying problems but not so much for figuring out solutions — to be fair, Paul McArdle and team are not selling their report as such. That’s not their job — that’s Angus Taylor’s.
Stephen Letts, ABC
Australia’s National Electricity Market and power generators are struggling to come up with a coherent plan “to keep the lights on” due to policy and pricing limitations, according to a major independent study of the sector.
No. The problems are due to policy ambitions — do we want 50Hz or fluffy clouds? Holistic thinking starts with checking those boring assumptions that underlie the whole gig: “is there a cause and effect link” or is our energy policy driven by twitter hashtags and namecalling moviestars? Can anyone, anywhere on Earth find observations recorded by actual instruments that shows that the humble Australian 50GW grid will stop the seas rising? There probably isn’t a validated model on Earth that shows that, or even an unvalidated one.
What they show is that the whole system is chaotic, contradictory, has perverse incentives and isn’t achieving much. Say hello to Problems With Centralized Planning v101.
ABC’s Key points:
- New capacity is being driven by construction and deal making rather than what is needed
- Black coal has been replacing brown coal while solar and wind is pushing out gas and hydro
- Price mechanisms have encouraged ‘bare minimum’ rather than reliable generators
Jo’s key point:
“Mr McArdle said whichever way you look at it, the grid is moving into a higher risk environment and higher underlying prices.”
After 18 years of Renewable Energy Target we are still running on 75% coal
The study’s starting point is that 75 per cent of the “bulk” electricity grid in 2018 still came from the combustion of coal. “Despite the Mandatory Renewable Energy Target [MRET] commencing 18 years ago, the NEM has moved from approximately 85 per cent [coal] in 2007 to its current level in a much slower manner than many people wish to see,” the report said.
Despite wind and solar dominating the new capacity coming online in the past five years, the aggregate level of coal-fired generation in recent years has remained relatively steady. Black coal has largely replaced closed brown coal plants, while wind and solar have displaced hydro and gas generation.
Bid patterns are more volatile (less like a free market):
Changes in ‘bid patterns’ for power are seeing an increasing volatility and a concentration of either extremely low (below $0/MWh) or high (above $300/MWh) prices.
…average prices across the curve keep creeping up.
Batteries are not the answer:
Battery storage is one solution, however it is still a tiny fraction of supply. Even existing pumped-hydro from the Snowy scheme accounts for less than 1 per cent of energy consumed in the NEM.
Currently battery storage is better suited to short, sharp bursts of energy or emergency responses, the report found.
The government has created this bubble. The free market can only solve it if the government gets out of the way.
h/t Peter Fitzroy