- JoNova - https://joannenova.com.au -

In a fluke moment SA and Vic have got cheap electricity (but only thanks to Black coal, and a screwed market)

Posted By Jo Nova On In Electricity,Fossil Fuels,Global Warming,Grids,Renewable,Solar Power,Wind Power | Comments Disabled

Map Australia, National Energy Market. NEM.

Yesterdays free advertisement for the Renewables Industry comes from Peter Martin, ANU, and was swallowed whole by The Conversation, and then repeated by The ABC. (If only the ABC had three million dollars a day to spend on checking things before it published them, they might have warned the economist that he doesn’t understand much about the grid or even the energy market.)
This kind of anti-coal PsyOps might work on teenagers:

Yallourn, in the Latrobe Valley, provides up to 20 per cent of Victoria’s power. It has been operating for 47 years. Since late 2017 at least one of its four units has broken down 50 times. Its workforce doubles for three to four months most years to deal with the breakdowns. It pumps out 3 per cent of Australia’s carbon emissions.

And here’s Macarthur Wind Power plant, Victoria’s largest at 420-never-attained-MW. It breaks down nearly every single day:
Macarthur Wind farm, Graph, March, 2021. Generation.

Fig 1: Anero.id Macarthur Wind output 

Martin goes on in a non-stop infomercial for wind and solar

He must be aiming for 12 year old voters, or perhaps dogs and cats, with genius comments like this:
 Nationwide, wind and solar including rooftop solar supplies 20% of our needs. It turns on and off at will.
Even 12 year olds know he can’t turn on the sun and wind. Though the AEMO appear to be happy about this level of national debate, as do The Conversation and the ABC editors. Perhaps it’s worth asking if they even read what they publish?
As for his understanding of maintenance: coal plants can be continuously refurbished. If one turbine at Yallorn isn’t being maintained properly perhaps that’s got something to do with the forced transition to random generators which strips profits from reliable power? Maybe ramping up and down this generational infrastructure “with the wind” costs more to maintain?
The bottom line:After closing two coal plants then spending four years installing renewables at world record levels, for one whole quarter, South Australian retailers have finally paid lower wholesale rates than QLD and NSW. Proving that if you take a jagged line and draw a line to a cherry picked point you can find any kind of trend you want.
Coal-fired plants close, then prices fall
Before Northern closed, South Australia had Australia’s highest price. Five years after the closure of Northern in 2016, and four years after the closure of Hazelwood in 2017, South Australia and Victorian have wholesale prices one-third lower than those in NSW and two-fifths lower than those in Queensland.
Something happened after the closure (largely as a result of the closure) that forced prices down. South Australia became a renewables powerhouse.
“Something happened”? Something indeed. Wholesale rates fell from a crisis peak, while retail prices and other costs rose (like storage, stability, and emergency control). What matters is the total cost and South Australians on average, pay 33 cents per kilowatt hour, nearly 60 percent more than people in Queensland. The closure of coal plants doesn’t cause a renewables boom, only Big Government junk subsidies can do that for junk generators.

And the closure of coal plants doesn’t cause prices to fall either. More coal means cheaper electricity.

Retail cost of electricity in Australia. SA, Vic, NSW, and Qld. Graph.

Fig 2. SA consumer still pay more.

None of our grid now is as cheap as it was for years before renewables were added to the system
Peter Martin has cherry picked with a surgical scalpel. The last quarter, where South Australia was finally cheaper (on wholesale rates) than NSW and Qld, was the first time this has happened in eight years.  For the last four years during the rapid rise of renewables, the cheapest electricity comes from the black coal state of Queensland.
NEM National Prices, electricity, coal, renewables. Graph. Wholesale prices.

Fig 3: All those renewables, and yet prices are still not as low as what they were when we didn’t have them.

South Australia might be a renewables superstar but guess where their cheapest reliable power comes from …  black coal

The only thing cheaper than black coal is brown coal. Most of the hours of the day the price in South Australia is not being set by solar or wind power.

SA system costs keep rising

Another record!  South Australia had to spend $15 million last quarter on “system security directions”. The AEMO were very busy ordering the Gas Powered generators (GPG) to stay on.

In 2020, total costs for directing South Australian generators for system strength was $49 million (or
$4/MWh), $23 million higher than 2019. During the quarter, AEMO continued to issue directions to GPGs in
South Australia and initiated directing hydro generators in Tasmania to maintain system security.
In contrast to falling wholesale electricity prices in South Australia, out-of-market costs in the region have been rising. This quarter, South Australian generators’ time on directions reached a record quarterly high of
64%, surpassing the previous record set in Q2 2018 (45%). This resulted in South Australian system strength
direction costs reaching near record quarterly levels of $15.6 million (Figure 40).

AEMO quarterly report. 2020.

Fig 5: The AEMO has to manage the system, and the costs of keeping back up on standby are rising.

 

NSW prices spiked because 3,000 MW of coal power was out of action (mostly planned maintenance)

The spike in NSW electricity prices that Martin builds his case on, was minor and temporary. According to the AEMO Quarterly report, the wholesale costs went up in NSW last quarter because it was the quietest quarter of the year, and plant managers decided to catch up on maintenance (see figure 6). Up to 3,000 MW of  its black coal generators were offline. Thus, it follows, if they had more coal they would have been even cheaper than SA and Vic. Doesn’t fit the narrative…
It also follows that the AEMO knows Peter Martin is wrong. When will they speak up and serve the public that pay them?
Why is that left to unpaid bloggers?

Figure 6. Look which state turned of it’s cheap black coal supplies last quarter for planned maintenance.

More solar PV is the system vandal that makes coal power more expensive

Solar PV on rooftops in Australia, photo.

…

Critics may argue that Solar PV on rooftops doesn’t bid, but “sets” the price by reducing demand. But renewables and coal are not swappable services. Being cheaper at noon can mean being more expensive at most other hours of the day. Random “free energy”, just steals profits from coal, makes a whole lot of infrastructure and staff sit around doing nothing on a long lunch, and run less efficiently when it tries to fill in for the energy vandal forced on the system. When the sun goes down the whole solar team and capital sit around powering nothing too.

Coal plus solar can not possibly be cheaper than coal alone. It takes more people, more capital, more land, more maintenance. In the hours solar runs, all the useful coal infrastructure has to still be there, waiting to step in. The only cost “savings” to the large coal plants is a few truckloads of coal. All the other costs are the same or higher. The solar electrons are simply surplus random supply that “is the part of the jigsaw that doesn’t fit in” (to use Peter Martin’s words).

Coal also used to provide all that frequency stability we need for free and on call 24/7 and then feed our crops free fertilizer as an unlisted bonus.

How to create market chaos and a price spike

After Hazelwood shut in 2017, the cheapest form of electricity (brown coal) suddenly couldn’t supply enough electricity to set the final price of supply very often. That’s why the system price leapt. Hazelwood was in Victoria but the effect can even be seen in South Australia in Figure 3 above, where brown coal stops setting the price as often from Q2 onwards in 2017. That was “the Hazelwood effect”.

Brown coal fired generators are still sometimes setting the final winning bids at under $10/MWh. Its unbelievably, unbeatably cheap. No wonder all the junk expensive system vandals want to close brown coal stations.

The screwed market — a world of negative prices

The low quarterly prices in South Australia were partly due to negative prices, which “cut South Australia’s average by $8.7/MWh.”

This is a graph below of the main fuels setting wholesale prices in South Australia.  The brown coal average winning bids are so low they are hard to see. Gas power and hydropower are obviously setting higher prices. The black coal winning bids have settled now in the new post Hazelwood bountiful world of renewables, at a higher price than they were. Genius.

Price setting wholesale electricity, SA, Australia, Graph. Coal, Gas, Hydro.

Fig 7: Some fuel sources set the price all the other fuels earn. Lower bars mean cheaper winning bids.  Black coal wins bids at higher costs now that cheap brown coal plants closed and renewables have been added. | Click to enlarge.

But sometimes solar and wind power win bids too. Have a look at what happens to this same graph when their winning bids are added in (below). The effect of the large deeply negative bids changes the scale of the graph and pretty much defies any sense at all. Why would anyone pay money to provide electricity?  In a normal market we only pay people to take away rubbish.

Is this craziness entirely a product of the subsidies? Is that what makes it possible to bid so deeply negative and “still make a profit” or are some of the players trying to game the system but losing?

Price setting wholesale electricity, SA, Australia, Graph. Coal, Gas, Hydro. Solar and Wind

Fig 8: The Negative price bids are all thanks to solar and wind power and are “off the chart”.   |   Click to wallow in a fake market.

 

On the NEM, suppliers bid in the hope that someone bidding a lot higher than them wins the last successful ticket in the stack. Then all successful bidders all get paid at that same top winning rate. Obviously, generators don’t want to bid too high, or they earn nothing at all. But the race to the bottom seems kinda odd (to say the least). If they win at minus $1,000/MWhr, then they have to supply the electricity AND pay til it burns for it too.

In the end, if the negative bids reduced the wholesale price of electricity by $8/MWh but that’s only due to subsidies, it’s not a savings at all, it’s just a redistribution. Someone else had to pay. It’s false advertising yet again.

The AEMO report remarks on the record amount of negative prices in Q4 last year.

1.3.3 Negative wholesale electricity prices
During Q4 2020, negative and zero spot prices occurred in 7% of all trading intervals, surpassing the
previous record set in Q3 2020 (4.6%), with calendar year 2020 averaging 4.4% compared to 1.7% in 2019.
Negative spot prices were most prevalent in South Australia and Victoria, with both states reaching record
quarterly levels. South Australia’s spot prices were negative 17% of the time during Q4 2020, exceeding the
previous quarterly of 10%, while Victoria reached a new record of 10%.

Despite the record occurrence of negative spot prices, the impact on the quarterly average prices was limited.
Negative prices cut South Australia’s average by $8.7/MWh, while the impact was less in Victoria ($2.4/MWh)
and Queensland ($0.9/MWh) due to fewer very low prices below minus $100/MWh

Peter Martin — economist of some sort, thinks negative pricing means being paid to “turn off”. His junk commentary is “not even wrong” but for 17 years he was the ABC’s economics correspondent. He is so wrong he was awarded an Member of the Order of Australia (AM). Flinders uni taught him economics. They have a lot to answer for.

Peter Martin says:

Being even cheaper than the power produced by the old brown-coal-fired power stations, there is at times so much it that it sends prices negative, meaning generators get paid to turn off in order to avoid putting more power into the system than users can take out.

It’s one of the reasons coal-fired plants are closing: they are hard to turn off. They are just as hard to turn on, and pretty hard to turn up.

He is making mistakes piled on mistakes. Firstly he’s confusing negative prices with something called “Demand management”. Secondly he thinks the new random and volatile grid is progress instead of being an unnatural artificial forced transition that no one needed to have but we were all coerced into paying for.

In the new vandalized grid, no one wants to put money into coal maintenance. Plus the companies that own coal own the unreliables. What could possibly go wrong?

And who said the ABC doesn’t have advertising? It has the worst kind — the sort dressed up as “reporting” and funded –mostly —  through taxpayer dollars. Pace Viv Forbes. Carbon Sense who said this earlier this week.
There are zero comments on this article at The Conversation. And presumably comments will be closed five minutes after I publish this.

REFERENCES:

Australian Energy Regulator (AER) https://www.aer.gov.au/wholesale-markets/wholesale-statistics/annual-volume-weighted-average-spot-prices-regions

Australian Energy Regulator (AER): aer.gov.au/wholesale-markets/wholesale-statistics/quarterly-price-setter-and-average-price-set-by-fuel-source-south-australia

AEMO Q4 2020: Quarterly Dynamics

9.5 out of 10 based on 74 ratings