NEG – The white elephant in the room

Guest essay by Tom Quirk

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 (National Energy Guarantee) 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.

South Australia Electricity Generation 2017

GWh %







Non-renewable fuels
Black coal
Brown coal
Natural gas 7,699 47% 2,853 31% 0.48*
Oil products 110 1% 1
Total non-renewable 7,809 48%
Renewable fuels
Biomass 92 1% 0
Wind 4,803 29% 1,810 30% 0
Hydro 3 0% 0
Large-scale solar PV 5 0% 0
Small-scale solar PV 1,091 7% 0
Geothermal 0% 0
Total renewable 5,995 37%
Total generated in SA 13,804 85% 0.27
Interconnects to SA 2,600 15% 0.95
Total consumption SA 16,404 100% 0.38

* Weighted average for CCGT, OCGT and thermal gas plants

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 tonnes CO2 per MWh is well above the NEG target of 0.4 tonnes CO2 per MWh.

NSW, Qld, Tas and Vic Electricity Generation 2017

GWh %







Non-renewable fuels
Black coal 109,890 54% 18,286 69% 1
Brown coal ** 38,313 19% 5,285 83% 1.5
Natural gas 22,372 11% 8,759 29% 0.48*
Oil products 2,137 1% 1
Total non-renewable 172,712 85%
Renewable fuels
Biomass 3,351 2% 0
Wind 6,337 3% 2,656 27% 0
Hydro 13,711 7% 7,939 20% 0
Large-scale solar PV 708 0% 0
Small-scale solar PV 5,852 3% 0
Geothermal 1 0% 0
Total renewable 29,960 15%
Total generation 202,672 100% 0.89

* Weighted average for CCGT, OCGT and thermal gas plants

** Hazelwood operated for 3 months of 2017

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.

NSW, Qld, Tas and Vic Electricity Generation 2030 with NEG target

GWh %







Non-renewable fuels
Black coal 17,938 9% 3,000 68% 1
Brown coal 7,300 3% 1,000 83% 1.5
Natural gas 120,000 59% 40,000 34% 0.48
Oil products 2,137 1% 1
Total non-renewable 147,374 73%
Renewable fuels
Biomass 3,545 2% 0
Wind 24,000 12% 10,058 27% 0
Hydro 20,000 10% 10,000 23% 0
Large-scale solar PV 761 0% 0
Small-scale solar PV 6,991 3% 0
Geothermal 1 0% 0
Total renewable 55,297 27%
Total generation 202,672 100% 0.43

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. 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.

34 thoughts on “NEG – The white elephant in the room

    • Too true. Wanting something to work despite the inherent nature of the method employed is something out of Lewis Caroll that tends to lead to Kafka or Orwell.

  1. White elephants were considered sacred and as such couldn’t be used for labor.
    However they still had to be cared for and fed.
    A white elephant wasn’t sign of economic ruin, it was economic ruin.

  2. Anti-wind and anti-solar doom and gloom folks are starting to sound like the AGW warmists they hate so much. Personally, I abhor the views of the landscape and sky in the central US cluttered by miles and miles of wind farms. Let’s keep the doom and gloom in perspective, please.

    • No, they’re not – unless you equate unrealistic fantasy (AGW Eco-Nazis) with facts that are (forgive me) “inconvenient” (anti-renewable stupidity crowd).

    • A couple years back Google commissioned a study with their top engineers to analyze the green revolution. They concluded that it didnt pay for itself and was a total scam.

    • ” Let’s keep the doom and gloom in perspective”

      The perspective is your electric bill. You may not object to $0.45/KWh. But for a lot of folks it is a very steep tax.

    • Would you care to specify exactly what has been gotten out of perspective.
      The fact that expensive energy is currently causing poverty in many countries has been well documented.
      What’s wrong with pointing this out?

  3. A minor quibble, but when you begin articles with “Our Federal Government” it might want to be stated to whom “Our” refers.
    It took me a bit to understand which federal government was being stupid yet again.

    • Yes, I had a small heart attack for a moment there thinking some hidden BS had somehow gotten codified into law in the U.S.

  4. I would wager that if you were to factor in the amount of Coal Fired Energy SA utilizes that is generated in Victoria and the CO2 produces on the behalf or SA, the SA figure would then pass the magic 0.4 tonnes CO2 per MW.
    Just because you aren’t producing the CO2 doesn’t mean you aren’t benefiting from its production

    • As I read the calculation, that is factored in. Amd imported power is just 15% of the total.

  5. Are generation numbers for renewables the nameplate or the actual/predicted output? You say “No allowance for backup supply has been considered in this analysis,” so I’m guessing output. Wonder how it looks cost-wise if you consider that for every MW of renewable that’s installed, you need a MW of quickly dispatchable fossil fuel generation?

  6. “No attempt has been made to estimate the costs for these changes or the prices consumers would pay.”

    And there’s the rub. In addition, they don’t point out the increased brownouts and blackouts, nor the landscape blight that will necessarily occur for such needless expansion of poor quality electric generation capacity to be built and employed.

    Because if they did, the virtue-signaling support such “renewable” stupidity currently enjoys would quickly be replaced with rage.

  7. The renewable scam would work if western scocieties would accept blackouts and brownouts. However we will NEVER accept blackouts nor brownouts. Therefore renewables are an Alice in Wonderlaqnd fantasy. The only reason that Germany can do it is because of Swedish hydropower.

    • “we will NEVER accept blackouts nor brownouts”

      No brown outs here. But plenty of ice storm and wind storm black outs. Once I had to charge my phone off the car battery. We survived without problems.

      I wonder if people had Tesla Powerwalls, brown outs and black outs would not be a problem at all.

  8. You’ve five columns of data, two being %s, and my browsers both show just four column headers. I think I’ve puzzled this out, but a redo on the headers would be appreciated.

  9. Guarantee, indeed.
    We guarantee that energy will be more expensive, less available and less reliable.

  10. “Small-scale solar PV 6,991 3%”

    IEA and the EIA include all small scale solar private installations in their small scale solar lines, including black piping solar hot water heaters.

    All of these are small scale solar installations unmonitored and unmeasured by the agency; plus they are assumed to always operate, never expire, never fail and are always utilized 100% by the owners. i.e. the reporting agency assumes every private installation works forever at maximum nameplate energy collection.

    The small scale solar energy production numbers are “estimated” by the energy departments. All of whom happily convert thermal hot water solar systems into numbers usable for their inputs.
    Also ignored in this boondoggle are cloudy periods, weather anomalies, etc.

    It is always frustrating when viewing Australia’s MWhr costs, to notice MWhr bid prices hit over $10,000. Yet, one never sees those costs included in the pristine isolated energy generation summary charts.

    Other accounting lines that are not included are energy losses to transformers, converters, frequency and voltage control equipment necessary to bring Renewable energy into electric grids. Leaving us to assume the sums presented are before conversion to grid frequency Alternating Current and line voltages.

  11. 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.

    Horrible mixing of mythical and elephantine metaphors!

    But a sound analysis, the Australian Khmer Vert leading their country to the killing fields, starting with energy.

  12. Oh by the way, Australia has a shortage of natural gas due to bans on exploration and a mad rush to build LNG export terminals. That which is not committed to export is the dregs available to us, also at vast expense. So where’s all this mythical extra gas coming to come from?

  13. And here’s a further perversion in the iniquitous Australian electricity market.
    Business (small to medium) pay more than residential:
    Our manager’s residence in Melbourne AUD0.184/kWh.
    Our company’s development centre in Melbourne AUD0.23/kWh.
    We raised hell about this inequity but no politician or Government regulator/department would touch it.
    We approached the five largest electricity retailers and they all have the same policy; it’s not negotiable.
    It’s a straight-up cartel pricing policy and the regulator (ACCC) is aware of it; however, they won’t touch it because the Government has told them to stay clear.
    Now why would that be?
    So now all our new machines are installed in the USA or China.
    Our factory in Oklahoma currently pays USD0.0423/kWh.
    Our factory in Shenzhen USD0.0551/kWh.
    NO ONE IN THEIR RIGHT MIND would install an energy intensive machine in Australia.
    And Turnbull’s Government couldn’t care less; we know this first hand.

    • WARREN :
      THAT is why AUSTRALIA’S new fleet of Destroyers and Submarines
      are going to be MADE IN SOUTH AUSTRALIA to take advantage of
      the LOW COST OF ENERGY………from “Elon’s MAGICAL BATTERY “.
      “South Australian taxpayers will spend up to $50 million subsidising the 100-megawatt battery.( when the windmills and solar power plants don’t deliver !!!! )
      The new battery will produce enough energy to power about 30,000 homes for
      a little over an hour.”
      According to :The Census usual resident population of South Australia in 2016
      was 1,676,653, living in 767,267 dwellings.
      Assuming that South Australia has STAGNATED ( which is probable )
      we will assume that there are still 767,267 dwellings and 30,000 can
      be supplied for 1 hour then that gives them ABOUT 2.5 MINUTES EACH
      and then they have to wait for it to recharge …from the Windmills !!!
      OF COURSE , if the WIND FAILS , then THAT is not guaranteed either.
      GOSH ! ……… What a GOOD USE of A$100 MILLION !!!
      NOTE : “The plan also included a fleet of diesel-powered backup generators,
      which have already been installed ahead of summer.”

  14. “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.”

    not to “rid himself of a troublesome courier” nor a “sign” of ruin but a form of punishment

    White elephants are sacred. they must be fed and taken care of but they can’t be used for labor or war. The receiver of the gift can’t refuse it because it is from the king and so he must feed it and take care of it even if it drives him to financial ruin. (it will)

  15. I hate to say this to my Aussie friends, but we need these kinds of policy failures for people to wake up. That assumes, of course they are rational in the first place…

  16. How is it that the AEMO can factor in hydro power as a contributor to the energy suite? As I remember it, Tim Fannery spent quite a bit of time telling us that the rains were going to end. He even was even given the Australian of the Year award. All the major cities built desalinization plants because of his rhetoric. One would assume that hydro cannot be part of the energy mix if the warmists are right.

    Any inclusion of hydro power in Australias enery mix is a subtle concession by the government that CAGW is a fraudulent theory.

  17. The Real question is; How did politicians take control of energy generation? This should be a private enterprise. Let us heed Milton Friedman’s warning about sand in the desert: If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.

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