From The ABC
Renewable energy reduces power prices by more than cost of subsidies, study finds
By Liz Hobday
Posted Thu at 3:06pmThu 6 Dec 2018, 3:06pm
Related Story: Renewables ‘heading for 80 per cent of electricity market by 2030’
Related Story: Labor to revive National Energy Guarantee ‘even if it’s not the best’
A landmark study has shown that renewable energy has reduced electricity prices by far more than the subsidies paid for it.
Key points:
- The study’s lead author said the research proved renewables were the key to lower power prices
- Researchers found South Australians were paying, on average, the highest electricity prices in the world
- Gas-fired power is pushing prices higher, while wind and solar are placing downward pressure on prices, the study found
The independent study, by the Victoria Energy Policy Centre, focused on the South Australian electricity market and confirmed households in the state have on average the highest electricity prices in the world.
The report comes as the Federal Government attempts to develop a fresh energy policy after the collapse of the National Energy Guarantee earlier this year.
The Government hopes to pass new laws to force energy companies — especially retailers — to offer customers cheaper electricity.
The study’s lead author, Associate Professor Bruce Mountain, said the research provided verifiable evidence that renewables drive down prices.
“I think in the current climate it’s critically important,” he said.
“We have an evidence base that puts this issue on the table for people to engage with.
“What our study finds unequivocally is the route to lower prices lies with cleaner sources.”
Wind and solar reduce prices by more than subsidies
The study used computer modelling to crunch electricity price data from the past five years.
It sampled wholesale market prices every half hour from 2013 to 2018, and calculated the factors that led to those prices.
It found that even though South Australians were paying the highest average bills in the world, wind and solar generation in South Australia actually brought wholesale prices down — and by far more than the subsidies paid for them.
It found that in the 2017–18 financial year, renewables reduced wholesale prices by an average of about 30 per cent, or about $37 per megawatt hour, mostly due to wind generation.
This was far more than the cost of the subsidies paid for them, which the study calculated was $11 per megawatt hour of electricity produced.
Renewable generators have been able to sell electricity on the wholesale market very cheaply, because the ongoing cost of producing electricity from wind and solar is effectively zero.
These cheap offers from renewable generators on the wholesale market displace more expensive offers from gas generators, effectively reducing prices for the entire market.
But gas generation drives up prices
But the study found the reduction in wholesale prices thanks to renewables has not been enough to offset the high price of gas.
The closure of the Northern and Playford coal-fired power stations has left South Australia reliant on expensive generation from gas-fired power stations, which are needed especially when wind and solar are not producing energy.
The study found electricity sourced from gas pushed prices higher by about 40 per cent on average in the 2017–18 financial year, or $56 per megawatt hour of electricity.
“Every additional unit of production you get from the wind or from the sun, that displaces gas generation, and brings your price down,” Associate Professor Mountain said.
“As long as you have so much gas generation with such inefficient and old gas plants … your prices will be high.”
The Grattan Institute’s energy program director, Tony Wood, said the study was a sharp analysis of the South Australian experience.
“Certainly renewables have benefited the system, and we would have had higher prices in South Australia without renewables, fundamentally because of the high price of gas,” Mr Wood said.
“And that’s a conclusion that I think makes sense and this report shows it very clearly.”
Policy vacuum part of the problem
The researchers also compared the average Australian household prices with those in European countries, which have the next highest residential electricity bills, and found other states on the east coast were not far behind.
South Australia was closely followed by Denmark and Germany, countries which pay by far the highest taxes.
The graph showed high prices were also being felt by households in other Australian states — next in line were New South Wales, Queensland and Victoria.
Mr Wood agreed that South Australia’s current energy mix meant expensive gas generation was setting the price for the whole market.
HT/SMS
Yeh. And pigs can really fly after all.
A if bird strikes were not already bad enough, we now face pig strikes, courtesy of global warming financial lunacy…
No doubt they are factoring into the price of fossil fuels ‘damage’ in the future.
Of course this is BS. What they need to factor in is the BENEFIT of 20% more crops.
Matt.
You are right try telling this BS X1000 to the people who struggle to pay the sky high power rates, they are victims of renewable power. Ontario. Canada. Australia, Etc.. the list is endless. ON top of the Carbon tax con game.
Wow, they entirely ignore the initial huge prices, the cost of the excessive infrastructure for these distributed energy sources, all maintenance of which these is plenty, and the cost of decommissioning as they reach their relatively short lifetime limits. Yep, all that can be ignored because between all those costs, the cost of generating electricity by wind and solar is zero. Wow.
Then, they blame the cost of electricity on the gas-fired power plants, claiming their inefficiency. Again, wow, as it’s the unreliability of wind and sale power generation that requires the use of other reliable power sources when the former fail to produce.
If we were using gas or coal-fired plants in the first place, there would be no need for any backup sources, and forgo all the environmental, geographic, aesthetic, health of animals and humans, and economic damage caused by wind and solar.
Go nuclear and life would be even better, thus minimizing the overall footprint of gas and coal-fired power plants.
Thank you. You have written what I would write, and better than I would have written it. This so-called study is absolute nonsense.
The reason why the wholesale price of “renewable” electricity is so low is that it is generated in quantities and at times and places where and when it is not in demand. Supply and demand is also a law.
If there were not government diktats or subsidies, the unwanted demand would not be supplied and the price would remain at true market levels.
Further the ultra low prices for “renewables” are less than the capital cost of creating them, which means that they are not sustainable if there are no explicit subsidies or subsidies in the form of required purchases.
Let’s address something else, Capitalism. Trump and other capitalists along with most conservatives consider this study beyond credibility; because if this study were accurate the fossil energy sector of the economy would already be in the business of renewable energy. If there is a profit to be made subsidies are not required.
What ever is not profitable is a drag on the economy; for example consider government.
some of the fossil sector companies dabble in the renewables and when you look at it, it is because of the tax breaks and subsidies they can soak up, not because how viable they are. With the breaks and subsidies the resulting losses being written off help offset the increases in taxes on their carbon fuels based side of the business. It also is often a PR program, considered the same as advertising, and hey, the Greenies in the Gov’t will slide some monies their way for it.
What the story in reality is, “If we didn’t force folks to buy renewables, stopped penalizing the fossil fuels, and stopped all the subsidies, rates would be massively lower, but we would instead tax and fine the fossils even more if you block our renewable green boondoggles.” Cue up the Monty Python skit: “Nice economy you have there. Be a shame if something were to happen to it”
LA Time’s did an article discussing how solar power generators were actually paying other states to take electricity. What a weird world.
The conclusion is based on the simplistic analysis of correlating the wholesale price of electricity in the national market with the amount of wind and/or solar generation. What they have found is that when intermittent generation is high the wholesale price is lower and when generation low the price is high (how clever is that). They provide a straight-line fit to that data and determine a price sensitivity to the contribution of intermittent generation in lowering the price.
They do not consider higher cost of transmission and distributions (networks in new suburban developments in Australia are being designed for peak generation not peak load) During the first weekend in December the South Australian grid demand midday Sunday was 1136MW; 800MW was being supplied from small scale rooftop solar. Wind generators were restricted but gas plants were still on-line and being paid for the stability service needed. The so-call FCAS (frequency controlled ancillary services) have skyrocketing costs as gas plant needs to be spinning to provide the system inertia but not producing much electricity. The paper does not mention FCAS costs.
There is some mention of reliably flexible generation (meaning mostly gas but also hydro if the pondage is adequate) displacing caseload (meaning coal) generation. In Australia, the marginal cost of coal is about AUD30/MWh while gas is about AUD120/MWh. And this substitution is already occurring.
There is no mention of the RET (Renewable Energy Theft) whereby electricity consumers pay owners of intermittent ambient generation for the privilege of using non-carbon based generation. For grid scale generation the additional transfer payment is more than the wholesale price and for rooftop solar it averages about the same as the wholesale price. None of the intermittent generation is economic without these transfer payments.
The paper did look at the price sensitivity to wind generation in the USA but has no comparison with the actual US prices because that would beg the question – why is electricity price so much lower in the USA than Australia and Europe?
This paper demonstrates why Australia’s electricity supply is in such a mess – analysis is inept. If battery prices ever approach an installed cost of USD200/kWh then there will be no owner occupied house in Australia taking power from the grid. The linked chart demonstrates the collapse of grid demand in SA:
https://1drv.ms/u/s!Aq1iAj8Yo7jNgxTbiGs9ZlZ85uZW
Grid prices are so high that rooftop owners are stacking them with panels. On a mild sunny day the grid demand collapses through the middle of the day. All the grid scale intermittents have no load because gas is needed to be running to provide frequency stability.
The fundamentals are (a) that there is no benefit of scale with solar and wind generation (b) the very slight benefit of geographic diversity is offset by increased cost of transmission and distribution.
Hey, this is a valuable report. Use it well and we will all benefit. First up, write to your MP, to ScoMo, to The Minister for Energy, demanding that all energy subsidies and mandates must be removed immediately. Renewable power is so cheap that it will blitz the others and save us all that money and we don’t need to bog them down with form-filling or to hold their hand any more. We don’t have to even worry about whether the reort is completely correct – if the power companies build new coal and gas stations because they’re even cheaper than renewables (the report didn’t address that possibility) then we all still win.
“Hey, this is a valuable report. Use it well and we will all benefit.
Good. Tell me how!
“First up, write to your MP, to ScoMo, to The Minister for Energy…”
That is not at all what I expected you to recommend, which was more along the lines of composting, bird-cage lining, and similar. But you’re absolutely right. This report proves that there is no need for subsidies. We should all see that this information gets into the right hands. Or the Left hands.
There IS another way to get really cheap power – I should be able to require power companies to cut OFF my electricity whenever the cost of reserve power needs to be added whenever the wind doesn’t blow (enough or in the right places) or when the sun is down or behind clouds. That would solve the problem It is called interruptable power.
What IS the cost for your so called excessive infrastructure? What IS the maintenance cost of wind and solar PV? Before YOU speak again, look up the statistics on the TESLA energy storage system installed across the Neoen wind farm. The French company that financed the project claim they loaned $66 million for the project and the energy storage system created $17 million in grid regulation costs the first year of operation. The article said something to the effect of “old” power plants, so what is the difference in efficiency and therefore amortization of an old gas fired plant as compared to a new technology gas fired plant? What are the decommissioning costs to get rid of an old natural gas fired plant? You do understand that even nuclear is NOT a source of generation that can be throttled like coal or natural gas fired generation? You will still need energy storage constructed along the grid to accommodate proper operation of nuclear.
Reduces power prices? Really?? Hogwash! Baloney! Balderdash!
I have twice gotten a letter from some greenbean group in Washington, DC, offering me the spectacularly low rate of $.095 per kilowatt hour if I switch to THEM as a supplier of electricity, with billing through my regular supplier, ComEd.
Since I check the charges on my electric bill (and you all should do that, too), I can confirm that my current per kilowatt hour rate is $0.065, which is 50% LESS than the greenbean’s rate charge.
Now, since I stick to a strict budget and monitor my household expenses, the idea of a 50% increase in the charge for my electricity is appalling. I haven’t switched to that yet, and won’t because – wait for it! – there is NO guarantee that the rate will NOT go up after three (3 – count ’em) months. They even say so in their promotional sheet, explaining the charge.
And in addition, this fabulous offer of a 50% increase in the KwH rate is from a company that uses “sustainable, renewable” resources from wind and solar farms in my area. Well, I know my “area” quite well, and there are NO solar or wind farms anywhere within 90 miles of me, period. Therefore, this wunnaful-a company is offering an unreliable resource as a replacement for a reliable resource, a coal-fired plant which could easily be replaced by a gas-fired plant if the company chose to do so.
I realize that most people don’t pay attention to this kind of thing. It’s easier to gripe about your electric bill than it is to look at the details, but if a 50% rise in just one thing is ignored and an unreliable source replaces a reliable source because you decided that green virtue signaling is more important than an affordable electricity bill, don’t expect sympathy from me when your power shuts off. I will just say “Told you so, numbskull”.
Unfortunately, when their power shuts off, like so will yours because you are both connected to the same grid that their virtue signaling helped de-stabilized. Hope you have yourself a good reliable private portable fossil fueled backup generator to run while you are telling them “told you so, numbskull”
I do Sara.
I have automated a spread sheet, i put in the reading around midnight.
quite amazing 6.5 cents a kwh, i pay 0.163, 16.3p………plus vat 5%.
so £0.17……..thats what $0.28………..450% more than you Sara.
I use 4.4 kwh a day, average last 3yrs only 3 things plugged in 24/7 fridge/freezer computer oil central heating hot water pump.
i cook electric 5 days a week and 2 x 9 kilo laundry washes a week .. kettle microwave all the usual.
I Bet no-one here can beat that 4.4 kwh’s a day,
Just think of the $0.03 differential as a stupidity tax.
those folks are delusional. they sure don’t live in my neighbourhood.
Forthcoming “diversity laws” will see to that. Every neighborhood will be required to house 10% people who are barmy in the crumpet. Better make that 15%.
When the wind is blowing, it does indeed displace (say) gas-fired generation. That drives down the spot price of energy because the fuel cost for wind is zero. That reduces both the price and the volume of energy produced by the gas-fired generation. But it still has fixed costs and it produces less and less energy over which it can recover them, so the per-MWh price of gas generation goes up. According to wind and solar proponents, that means wind and solar are getting cheaper and gas is getting more and more expensive. Of course, if they want electricity at night when the wind is not blowing, they might want to cover the fixed costs of that gas plant. That’s a cost they typically don’t factor into their “wind and solar are cheaper” studies because they rely on the “unenlightened” buyers of non-green energy to pay them. Here’s a document that busts the “renewables are cheaper” myth.
https://blog.friendsofscience.org/wp-content/uploads/2018/11/In-the-Dark-on-Renewables-FINAL-Nov-18-2018.pdf
Regarding, “The Government hopes to pass new laws to force energy companies — especially retailers — to offer customers cheaper electricity.” I’m sure that will work out well.
Porcine aerobatics are all the rage in Professor Molehill’s mind, along with other unlikely things.
Why compare with 2013. Before renewables were in the mix one did not have the silly market price which fluctuates hour by hour, day by day? This is the wrong metric to see to what extent renewables have added to the price of electricity. One needs to go back to an earlier point of time, rather than when governments had already skewed toe market to the detriment of the consumer.
What the computer programme needs to do is to ascertain the price of electricity before any renewables were in the mix, and then forward adjust that price to assess what the present day price would be if no renewables were in the mix by taking into account the change in price of coal and gas (pro-rated as appropriate) and adjusted for the increase costs of employing personnel in the power production industry. That price could then be compared to actual present day prices with renewables in the mix.
The computer programme could also check what the supplier’s profit margin was, at the time before any renewables were in the mix, and then when forwarding to assessing the present day prices for electricity without renewables (but adjusted for change in price of coal/gas) ensure that the supplier keeps the same notional profit margin as the supplier factually had in the past.
“Renewable energy reduces power prices by more than cost of subsidies, study finds.”
Go tell that to the Yellow Vests, I dares ya.
Let’s test that claim by shutting down the gas plants and discontinuing the subsidies for wind and solar. I mean in the real world, not the computer model world.
I like the idea. Let’s give it a try in France.
France is different because more than 70% of their electrical power comes from nukes.
Currently. They’re working to reduce that to 50% in favor of “renewables”.
Alan, if France had legislation like Australia’s RET they would suffer the same result. I have never seen such cunningly designed legislation, which takes billions a year from electricity consumers and gives it to the owners of renewables generators. It’s not called a tax, or a subsidy, but what else is it? Whoever dreamed this scheme up is an evil geniius.
But, first provide names and addresses of all people associated with “The independent study, by the Victoria Energy Policy Centre”.
Then, based on the recommendations of the “independent study” shut down the “inefficient” power sources for a 1 month trial basis.
Then (in the name of good risk management policy) apply for grant $ to assess which specific properties were more likely to be trashed during the initial protest movement, and how in the future property damage can be mitigated during such protests.
Here is a link to their Advisory Committee – Prof Ross Garnaut and Anna Skarbeck stand out as fully paid up CAGW cheerleaders.
https://www.vepc.org.au/advisory-committee
What do you expect? These kinds of hollow, unsupportable claims are all the alarmists have left.
Beware, study paid for by Watermelon Labor Party of Victoria. Spruiked by solidly Maoist ABC.
Warning bells should be going off. I leave it to my betters to punch the holes in this cunning argument.
just read the article and you can quickly poke holes in it yourself. You don’t even need to be a PhD in physics to see the inherent flaws.
When you pay for a study to be done, it is amazing how often the results of the study are exactly those that you wanted. The ‘independent’ study, by the Victoria Energy Policy Centre, focusing on the South Australian electricity market confirms that households in that state would have had even higher prices without amazing ‘renewable’ power being introduced because of the high price of gas.
Years ago, where South Australia power was produced from coal, its electricity was amongst the cheapest in the World. Now with intermittent ‘renewable’ power in South Australia requiring back-up, gas has replaced cheap coal by government fiat, and the power is the most expensive in the World..
Well, there you go then! We should then subsidize even MORE and our electricity costs will surely find its way to zero. Come on, professor! Why didn’t you answer, or at least ask, the inherently obvious question…
Why gas prices are so high to begin with… Or what caused the price of electricity to be so high in the first place.
“But gas generation drives up prices
But the study found the reduction in wholesale prices thanks to renewables has not been enough to offset the high price of gas.
The closure of the Northern and Playford coal-fired power stations has left South Australia reliant on expensive generation from gas-fired power stations, which are needed especially when wind and solar are not producing energy.”
And there you have it. Close coal-fired generation stations increases electricity prices.
Now, frankly I’d LOVE to know why the price of gas is so high in South Australia but the good prof doesn’t seem all that interested. Wonder why? hmmm….
That is a valid question.
The power plant north of the IL-WI state line was a coal-fired plant, and put out a steam stream that could be used as a wind sock, telling you just which way the wind was blowing (among other things.)
It shut down earlier this year, because that electric company had completed the construction of a gas-fired plant, and they were ready to make the switch-over. They did this, because gas is cheaper as a fuel source than coal, which has to be hauled in by freight trains.
Aside from not building new, more efficient gas-fired plants in Australia, what is the real reason for not using gas to generate electricity? (I know the answer, but…..)
”The closure of the Northern and Playford coal-fired power stations has left South Australia reliant on expensive generation from gas-fired power stations, which are needed especially when wind and solar are not producing energy.”
Well blow me down with a feather. Who would have thought that by closing down the cheapest reliable energy source and replacing it with unreliable intermittent power its all of a sudden more expensive.
What were the power prices in comparison when the coal fired power stations were still operational I wonder.
Up to around 2003, Australian consumer power costs followed the cost of living increases. After this time, renewables were added and subsidies paid to the renewables. Australian power costs in some eastern states have now skyrocketed and have doubled since 2008. Other Australian states that have less renewables (Western Australia has only 11%) have a lot lower power costs than South Australia. So please don’t tell me that renewables lower power costs.
knocking down pt agusta and privatising power
the single most stupid moves ever for SA
short of paying ditherall not jailing him.
makes even the statebank debacle look less smelly
just chaged powercos
same comapny Vic price is high but bearable
sthaus prices are eyewatering.
and this is maybe THE cheapest provider of about 12 or so listed
Yep, just install evermore sustainable renewable energy and pretty soon energy costs (like availability)will be at zero, while everyone pays all their money into maintaining the system.
Enjoy as we enter an exciting new era of exchanging everything you got for nothing you want! 🤣
*computer modelling*
As soon as I saw that I gave up reading. Also knowing the exact opposite is true.
Yep
Then why do they need the subsidies?
I’d like to sell the author a bridge I have just acquired in San Francisco.
This isn’t a random pattern:
Part of Australia already has the most expensive electricity in the world…
Although the causes of Australia’s high electricity prices are a bit more complicated than Germany’s or Denmark’s. The costs are skyrocketing due to a lack of investment in fossil fuel infrastructure and the inability of wind & solar to actually replace coal…
This sentence is 100% disingenuous:
And despite the frothing anger from the shock jocks, it has nothing to do with the rise of renewables.
The “rise of renewables” may not be the direct cause of Australia’s high electricity prices. However the transition from coal to [fill in the blank] is the direct cause.
Unlike the US, Australia doesn’t produce enough natural gas to export large volumes of LNG without driving up domestic prices. Australian LNG landed in Japan is actually 40% cheaper than natural gas produced and sold in Australia.
Australia’s coal-fired plants are shutting down and being replaced by unreliable wind & solar and expensive natural gas plants. Claims that wind & solar are now less expensive than coal per MWh are wholly irrelevant. Solar and wind have to be 1/4 to 1/2 the price of coal per MWh to compete. And, even then, they can’t actually provide base load, because they are non-dispatchable.
Even if we assume this is accurate, neither storage nor back-up is factored into the cost of new power generation.
Let’s assume that they can purchase battery backup for $140/kWh and the Li-ion cells last 10 years. Over ten years, $140/kWh works out to about $38.50 (US) per MWh of generation.
Over the twenty year lifespan of the wind and solar power plants, the batteries would have to be replaced once. That brings the storage cost up to $77 (US) per MWh of generation. Convert to AUD and it’s $99/MWh. Tack that on to the LCOE:
Wind & solar only appear to be affordable…
Until you add in the cost of storage…
(CCGT = combined cycle gas technology. OCGT = open cycle gas technology, a common type of “peaker” generator. AUS $8/GJ ~ US $6.30/mcf)
Even with Australia’s high natural gas prices, combined cycle natural gas and coal are much cheaper than wind & solar, if you factor in the storage costs.
Australia’s electricity rates have skyrocketed because they didn’t maintain their base load capacity (mostly coal-fired generation). Perry’s resiliency pricing plan would prevent this from happening here. While allowing natural gas to kill coal & nuclear would be very good for my industry, in the long run, it wouldn’t be good for grid resiliency, electricity consumers or our nation’s energy security.
https://wattsupwiththat.com/2017/10/19/doe-secretary-rick-perry-resiliency-pricing-rule-for-coal-fired-and-nuclear-power-plants/
Thank you David.
The subject study by the Victoria Energy Policy Centre is false nonsense. Wind and solar power are too intermittent and too diffuse, and to date grid-scale power storage is an expensive delusion.
See
https://wattsupwiththat.com/2018/09/30/germanys-energiewende-program-exposed-as-a-catastrophic-failure/
https://www.thegwpf.com/has-the-cost-of-germanys-energiewende-entered-a-critical-phase/
If a OCGT is 35% efficient, the cost of the power produced is higher by, at least, the lower efficiency of the unit. Add to this the added cost to maintain a system that is mostly in a dormant status has to drive up the cost of power significantly. And probably greater than the cost of renewable energy.
If South Australia is bidding $2,000/MWh for power from where ever it can get it, that cost is not a reflection of the energy value used to generate that electricity but a representation of the desperate need for power to keep the lights on. A political requirement, not a demand requirement.
The need for this added power is driven by renewables, yet is higher than the cost of renewables because of the need to fill a hole in power demand quickly.
And if those renewables were not in the power mix, the need to fill that hole would not require the desperation that it now does, and power costs would be significantly lower.
“and the maintenance costs of the plants is low.”? I don’t buy it.
I was going to post your first graph, Electricity Price vs. Installed Renewable Capacity. You saved me the effort.
The graph shows all you need to know. Anywhere they have installed a lot of renewables the price goes up a lot.
It looks like Australian electricity is more expensive than it needs to be anyway.
If data and analysis is required for any political purpose, someone will find a way to produce it. The more money is involved, the more corrupt science.
Also:
Science has its fair share of fake news, and then some. The study that says renewables reduce electricity prices is fake news. It’s easily contradicted by the evidence of what has happened every time countries pushed more renewable energy.
Australia replaced inexpensive coal generation with a combination of wind and OCGT generation needed as backup to the wind power.
Comparing the cost of 100% OCGT power to the cost of a combination of OCGT and wind power makes no logical sense. You would only add the expensive OCGT generating capacity because you needed a backup for wind power. OF COURSE you’re going to show a savings by adding wind power.
Ha. I said the same thing, only my comment was more clumsy and less direct!
Nice analysis. SA is doubling down on stupid.
Natural gas supply in Australia is a logistics problem, not a question of inadequate quantities. Most of the gas is remote from centres of demand, so it’s more akin to shipping Alaskan crude to Texas, as used to happen. Gas production around Geelong that supplies the pipeline to Adelaide is in decline.
What does it mean by cost of storage? It certainly cannot be batteries. The $140/kWh is a theoretical level for low cost autobatteries at cell level. We are talking about high quality batteries with a lot of power output and high frequent charge/discharge cycles. Last years first, but small battery park in Australia, made by Tesla was assumed to be sold at $400/kWh. To assume declines of the costs in the future might be realistic though not necessarily. Material prices (cobalt) have been skyrocketing the past 2 years and energy prices will keep rising with rising shares of renewables. Both, material & energy costs, are the biggest contributors to battery prices.
The very technology needed was developed in Australia in 1988. There are several (flow) battery companies that can design and install a solution for utility scale energy storage in the MW to GW range. Companies like ESS Inc., Primus, UET which is now constructing a 800MW storage system in China. Energy storage IS the answer, it allows overgeneration from renewables like solar PV and wind generation AND also allows fueled generation plants to run in a mode that allows amortization of their plant assets instead of running in “spinning reserve” mode then “ramping” up to supply electricity at premium prices per kWh. Getting rid of or decreasing “fuel” charges on the electric grid can be handled by distributed energy storage at less cost than (another) Peaker plant.
David: Thanks for an excellent note…JLC
David
Your analysis is simplistic. It grossly underestimates the cost of intermittents. In the real world you cannot rely on averages and diversity for intermittents. Massive overbuild is required. The capacity factors are much lower than the natural values. Even with storage at USD140/MWh you will not be able to produce on-demand supply for less than USD400/MWh.
Note that South Australian intermittents have now achieved about 50% market share on average. Even with the 120MW HPR battery and and the even bigger battery that is Victoria (640MW and infinite storage) the wind generators are regularly demand constrained. To get to 100% supply from intermittents plus storage the capacity factor for wind will be under 10% and for solar under 7%.
Your charts showing Implied Cost are revealing.
If OCGT gas is needed in combination with wind, then the costs of electricity from those individual technologies is interesting, but what is most relevant is the cost of the combined system of wind with OCGT backup. An inexpensive, low variable cost source is combined with an expensive, high variable cost source and the total cost depends on the mix. Based on the charts, it does not seem likely that wind could be cheaper than coal because the mix would need to strongly favor wind for almost all power generation, and you still have the fixed costs of both.
It sounds like the authors study did a “what if scenario” of an illogical configuration, comparing the low cost (wind power) component of the system to the high cost (OCGT) component of the system. That comparison makes no logical sense. Sure, if you add wind power to a system that is comprised of only the expensive backup component, then yes, costs will go down. They’ve proven that the low cost component of the system costs less than the high cost component of the system.
The ONLY reason to make such a comparison is to deceive people.
A lot of information in your charts and graphs show prices in Australia are VERY high. What you don’t show is that after about 25 cents per kWh, it is more profitable for the (individual) to install solar PV or wind generation with their own energy storage system. With your very own chart showing 50 cents per kWh for South Australia, everyone should have installed solar PV with energy storage on their property a long time ago. What YOU have done is promoted the same argument that has been used in the U.S. for the past 20 years. YOU are institutionalized into utility scale centralized generation, when it is more efficient to use solar PV generation where it will be used. IF more alternative energy generation is to be the “standard”, then adoption of more distributed energy storage is the correct direction.
The TESLA (small 100MW) energy storage system installed across the Neoen wind farm has proven itself as a smoothing, frequency regulation asset within the grid infrastructure. At the current rate of return, it will have paid for itself in another 4 years of service. Amortization of a coal fired plant or natural gas fired plant will be in the “decades”. THIS IS your problem, it takes too long to pay off old technology that does not serve you well, at 50 cents per kWh you all should be installing some solar PV on your properties. At that rate it should take only 5 years to payoff the generation system.
In my country, about 40% of houses are rented, and the proportion is growing. Landlords are not going to install solar panels. Why would they? It’s just one more thing to maintain, and doesn’t save *them* any money. Many of the rest cannot afford it. For example, one rather optimistic firm claims that I should save X thousand dollars a year if I installed their system, but their system costs 4X thousand, and having lost my job, I cannot afford even X/4 thousand. I’d love to have savings of X thousand dollars a year, but I can’t get there from here. And unlike the next generation, I don’t have swingeing student loans to pay off. For what it’s worth, the current estimate from my power company is 0.25 NZD/kWh. (You can believe that if you want. Spot pricing is very spiky.)
I understand your dilemma and can only hope that you find a new career for your future. As for 40% rentals, IF you as a renter find a “portable” solar PV design that can be “unfolded” and set in place somewhere on the property, then there is still a way to use solar PV to lessen YOUR monthly costs. Solar PV was predicted by one Thomas Edison over one hundred years ago as “the thing” for mankind’s energy needs.
“Thomas Edison, a genius in his own right, was so convinced by the limitless source of fuel from the sun that he said: “I’d put my money on that. What a source of power! I hope we don’t have to run out of oil and coal before we tackle this.”
The U.S. Department of Energy states that 173,000 terawatts of solar energy strikes the Earth every second.”
“That’s 10,000 times the world’s total energy consumption.”
It was the actual “fight” between Edison and his view that all homes should be powered by D.C. and Tesla who worked for Edison at the time believed that A.C. was a better power option. Edison and Tesla butted heads and Tesla took his A.C. design to Westinghouse and developed it for them. NOW we are actually at a crossroads once again. Since we can generate D.C. directly from panels on our property and can store the power for later use, it might just be practical to go (backwards) and use a house designed and wired to use a majority of D.C. driven appliances for one’s personal use instead of all A.C. all the time.
The cost of maintenance of wind turbines is zero? Most are not running in wind farms here in CA.
That’s how it costs $0. Turn it off.
Isn’t it funny, they turn it off, but don’t subtract it from the “installed capacity” numbers.
I would not say “most” however I see far too many non-operating wind mills as I drive around California. It seems that the older the wind farm, the higher the percentage of non-operating units. I am assuming that the problem is bearing failure. I expect that the owners have determined that bearing replacement is too costly to justify the repairs. It difficult to find data on the service life of windmills, but from what I have found, it appears that the MTBF is 8 to 12 years, not the 20 years that used was to model costs. T
The fixed costs of renewables on an annual basis is much higher than the cost models, therefore it’s not surprising that the SA article simply ignored fixed costs. They also ignored the costs of demolition and disposal.
Along Altamont pass, rather than fix broken windmills, they got new subsidies to replace them, broken or not, with bigger windmills, some of which are already not spinning. Fossil fuel plants have an expected service life of 50 years or more. Windmills seem to have a service life less than 20 years. After 20 years, solar cells are only at about 80% of their original capacity, if they haven’t already been destroyed by weather. The shorter service lifetimes also need to be accounted for in the cost of generation.
You have taken on the utility bias when YOU say after 20 years solar cells are “only” about 80% of their original capacity. Many of the solar PV manufacturers have 20 to 25 year 80% warrantees on panels. BUT, there are panels that were built in the 1970’s that still are being used, output name plate rated power today some 40 years later. With the new manufacturing, testing, sealing technologies brought forth in the past 10 years, we don’t really know how long a solar PV panel will last, putting out useable power without “fuels”. Even with tariffs, current costs of solar PV panels run from around $1.05 to $0.88 per watt. Get rid of tariffs and one could see a pallet quantity of panels at 50 cents per watt. One can “over design” a solar PV system for their home or business and build in over capacity to use over a 30 year period, 40 year period, 50 year period.
I’m confused by this study. Could someone cleverer than me explain why countries with the greatest proportion of renewables have the highest electricity prices?
The higher rates are due in (large) part to the fact that unreliable renewables require expensive backup from dispatchable (reliable) hydrocarbon sources. This study is just an exercise in deception to hide the reality that an existing, reliable and cheap system was replaced with an unreliable system that requires backup by the reliable system. That added cost of backup is blamed on the backup system itself, rather than on the unreliable system that necessitated the need for backup in the first place.
It’s kind of like blaming experts for higher project costs, after they were hired back as expensive contractors to rescue the project after losing their jobs to incompetent, low wage affirmative action (or whatever) hires who tanked the project.
Thank you. As I suspected, Hobday’s “study” was mendacious and deceptive.
https://wattsupwiththat.com/2018/11/16/stacking-concrete-blocks-is-a-surprisingly-efficient-way-to-store-energy/#comment-2520849
Here’s an even better solution:
1. Build your wind power system.
2. Build your back-up system consisting of 100% equivalent capacity in gas turbine generators.
3. Using high explosives, blow your wind power system all to hell.
4. Run your back-up gas turbine generators 24/7.
5. To save even more money, skip steps 1 and 3.
Ran across an article the other day that said natural gas Peaker plants were “cycling” due to the wind and solar PV generation outputs fluctuating. The Utility status quo still haven’t realized there is a better way to use solar PV and wind generation, even using the same old sorry inefficient grid infrastructure. Instead of cycling fueled plants like natural gas Peaker plants or running coal fired plants in “spinning reserve” a great deal over a 24 hours. With energy storage constructed along the grid would enable the Peaker plants to run longer without “cycling” and the coal fired plant could run in a more efficient mode of operation selling power to the grid instead of keeping a boiler hot until demand on the grid increases. There are companies that design and build flow batteries for large scale grid energy storage, they are ready and waiting for the electric utility industry to catch up to the technology.
Those batteries don’t exist yet. The only way you could convince me those batteries exist is manufacturer’s name and the model number. That is all.
The backup generation needs to be maintained and fully manned so that it is available 24/7/365, since wind and solar is unreliable. The fixed costs of the backup, plus maintenance and manpower will be factored into each MWh of backup power produced. This also increases the cost of nat gas power in SA. This stand-by cost should be included in the wind and solar cost per MWh, but such a realistic cost analysis would not be in line with the author’s agenda.
It’s the institutionalized electric utility business model. These utilities have become accustomed to owning and “controlling” how and when their inefficient centralized fueled generation plants run and when they don’t run. Now there are the (new kids in town). These entities install their non-fueled but intermittent generation resources along the grid. These resources are not immediately controllable by the status quo utility. The old school utility now has to run plants in “spinning reserve” which burns fuel to keep the boilers ready in case grid demand increases. The utility doesn’t get money if they don’t have their plants ramped up to sell you power. So, YOUR electric rates go up with some kind of “fuel” charge tacked onto the electricity rate per kWh to pay for the utility’s operating costs. The utilities are resisting change, the change is to put in distributed energy storage along the grid infrastructure. Then, when wind and solar PV generate excess energy, it can be stored and the energy use “shifted” to other hours of the day. IF a fueled generation plant is online and solar PV and or wind generation peak, the plant can stay online and help charge the battery again for load shifting.
Lea Creek still has plenty of coal, so the solution is to build a new Gee Wizz coal fired power station, possibly at Lea Crreek.
So as we are repeatedly told these days, solar and wind are now so cheap that they do not need subsidies. So stop paying the owners any subsidy. Also tell the utilities that its up to them where they obtain their electricity, so if they do not want the ever so cheap wind and solar, so be it. That is what a free market is soposed to be like.
Of course the varing power supply from both solar and wind might be considered a problem, but according to them, the Green blob, that problem is easily overcome by the use of batteries, but they are to carry the cost of these batteries. Only then with the electricity a nice steady flow, will the utilities be interested in such chap power.
No we not only have the Gawlewr rail line awaiting electrification, but we are going to need power to build the new submarines. The expansion of the steel works at Whyalla also will need additional power , plus the just announced new Space Station. So all of this ever so cheap electricity will find a market.
Of course we know this will happen, as all of the modelling says so.
MJE
As if your added electricity sinks are not enough, include the recharging of the electric vehicles they wish to force us to use.
It must be a joy to be so academically gifted and so well endowed with computing power that you can ignore basic logic and common sense.
Were these “savings” audited by KPMG?
https://www.fin24.com/Economy/gordhan-kpmg-sa-was-a-willing-partner-in-state-capture-20170926
and still not one of them stops to think for a little while and then maybe ask “why do we need so many gas plants anyway” The are soaked in delusional thinking that the answer if more renewables , after all the wind is always blowing somewhere. This is the state that had to panic spend half a billion dollars going into a summer election to ensure the lights stayed on.
Experience would suggest he is wrong that renewables lower prices.
From renewable-crazy South Australia, here are my average per quarter KWh rates for the few years I have been tracking it as I had put 5KW solar on (thanks for the subsidies and feed-in tariffs):
(note Oz formatted dates as dd/mm/yyyy)
24/12/2010 $0.20
28/03/2011 $0.21
27/06/2011 $0.23
26/09/2011 $0.25
23/12/2011 $0.25
27/03/2012 $0.27
27/06/2012 $0.26
25/09/2012 $0.31
24/12/2012 $0.30
26/03/2013 $0.33
25/06/2013 $0.31
24/09/2013 $0.32
20/12/2013 $0.30
25/03/2014 $0.34
24/06/2014 $0.32
24/09/2014 $0.34
22/12/2014 $0.29
25/03/2015 $0.32
24/06/2015 $0.31
24/09/2015 $0.31
22/12/2015 $0.27
24/03/2016 $0.29
24/06/2016 $0.28
27/09/2016 $0.33
21/12/2016 $0.31
24/03/2017 $0.33
26/06/2017 $0.33
26/09/2017 $0.38
20/12/2017 $0.38
23/03/2018 $0.38
23/06/2018 $0.38
23/09/2018 $0.38
A 92% INCREASE over 8 years
I would also add that the RETAIL price is generally fixed for a contract period so is not affected by the intermittent wholesale prices so this study is of little comfort to us peasants that are paying the highest prices in Australia.
Actually you can make even grander claim – the highest price in the developed world!
I gather your figures exclude the connection fee. To get true cost you should average your connection fee over the energy consumed. That inevitably has to rise as energy sales fall due to the amount of rooftop in SA.
With Australia’s RET it makes sense for roof owners to cram solar panels on the roof. That will eventually starve out all the grid connected intermittents. Storage is already close to economic in SA. It would be already if there was no Victoria to act as SA’s big battery.
Once again you are showing that the business model of the electric utility is arcane creating the usury and increase in your electricity rates. WHEN the utility basically threatens you that IF you don’t DO something to save energy, then they will HAVE to build another power plant to service your needs. So, NOW you’ve replaced every light bulb in the home with LED lighting, replaced some old appliances with Energy Star appliances, put a timer on your water heater, etc.. The Utility finds that YOU and the rest have actually decreased your energy use AND they are not selling as many kWh as they used to. The crybabies now create a rate case that they have “lost revenues” due to the public saving energy. Sooner or later your electric rates go up to “absolve” the utility of not selling as much power as before. Lousy economics, the less kWh they sell the more each kWh of electricity costs YOU. Then as more alternative energy goes online, there are times of the day throughout the year that there is more energy generated by solar PV and wind than the grid demand needs. The solution is energy storage constructed along the grid infrastructure not more natural gas Peaker plants. As the technology progresses, flow batteries are very capable in storing and shifting power generation and power demand along the grid, cheaper than building more fueled power plants.
The climate alarmists are nothing if not inventive.
A few years back the EU were debating a trade war with China regarding the supply of solar panels. The EU complained the Chinese were offering panels at below the cost of EU manufacture. This led to severe pressure from EU manufacturers to block Chinese clean energy imports. That would never do as it would drive down the price of solar installations.
It doesn’t get any dafter than the champions of green energy, demand the blocking of cheap green energy, but that was their position.
This is what I have most feared about out a totalitarian world, having to endure the utter absurdity!
It is simply untrue to say renewables cost zero to run; of course!
Essentially, the reality is that they are poaching the market that supports them.
That is because renewables are unreliable and therefore the most important cost of running them is in the price of backing them up!
Above and beyond that is the debt accrued just to create them. They come into being already owing their working lifetime to loans.
Ok, I’ll entertain the idea that it costs nothing to generate power, fine how are you going to payback your massive loans that have shorter terms than the lifetime of the utilities themselves?
I’ll tell you how and it’s not by selling power as cheaply as possible!
The study says “We have an evidence base that puts this issue on the table for people to engage with.”
Morons that can mix metaphors like this, without flinching, need to be sent back to literacy and honesty school.
These people truly are delusional
A slight??? problem here with the logic. Renewables require 100% potential backup and this backup cost is properly to the account of the renewables. Fiddling around with marginal costs contaminated by subsidies and regulation is little more than an attempt to deceive. A deception successfully achieved by the published outcome.
If you own a wind turbine and are required by law to provide a fixed constant energy supply range; then in the event of wind loss you would have to subcontract the supply to others at your own expense. A cost of which you would need to take into account when pricing your product.
That is the principle which should be applied across the grid.