Report: Green Energy Incentives are Failing to Keep the Lights On

Guest essay by Eric Worrall

h/t JoNova – An Australian Government AEMO commissioned industry report has suggested that while government incentives make renewables preferable to coal, the new renewable capacity isn’t helping grid stability.

One of their recommendations; more government incentives, to encourage renewable businesses to add battery backup to their solar and wind farms.

National Electricity Market lacks ‘holistic thinking’ and risks ‘failing to keep the lights on’

By business reporter Stephen Letts
Updated Fri at 9:01am

However, the report has identified the new battleground as “anytime/anywhere energy”, or wind and solar, versus “keeping the lights on services”, or traditional synchronised generation from the big fossil fuel utilities.

The declining cost of wind and solar farms has made them the default choices for additional capacity, however the new generation is seldom integrated with “keeping the lights on services”.

“We have structured market incentives in such a way that it promotes this increasing divergence. A rapidly increasing number of commercial businesses have ‘followed the money’ to what was disproportionate value due to scheme design,” the report said.

“There is a glimmer of hope there with people putting in batteries, but it still just a ‘toe-in-the-water’ exercise,” Global-Roam’s Paul McArdle said.

It make sense wind and solar farms should invest in some form of battery storage, but there is still a fair bit of commercial risk without greater incentives [to build them],” he said.

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.

Occasionally “cheap” power may sound good for consumers, but they are bids from price-takers who find it either cheaper to keep plants going, or are happy enough to take whatever price is going — but average prices across the curve keep creeping up.

Read more: https://www.abc.net.au/news/2019-05-31/nem-20-year-report-card-points-to-big-challenges-ahead/11164014

A paywalled copy of the report is available here.

Many Australians hailed the recent electoral victory of the Conservative Morrison government as a victory over the wild green socialism of their political opponents, but I see the Morrison win as a very qualified victory for affordable energy.

Despite years of Conservative dominance of Australian federal politics, a deluge of cash is still flowing into the pockets of green energy rent seekers.

Green energy optimists tout an expensive Morrison government scheme to massively increase hydro capacity as the solution to renewable intermittency. But hydroelectricity in a dry country like Australia is not entirely reliable; the catchment where the grand new hydro scheme will be based suffered a severe drought in recent years, which placed substantial pressure on water users.

Squeezed between these expensive new hydro schemes and calls for new renewable energy incentives are Aussie businesses and voters, who are becoming increasingly impatient with watching “average prices across the curve keep creeping up”.

Correction (EW): The report was not commissioned by the AEMO, it was produced by industry analysts (h/t Rick Will).

52 thoughts on “Report: Green Energy Incentives are Failing to Keep the Lights On

  1. “Declining cost” for wind and solar? As the utility users and the taxpayers are usually the same people, shifting money from one account to another is pure spin. Clearly, they are acting as if subsidies actually reduce costs.

    • They rely on the “levelized cost of energy” to make the claim of competitive costs of wind and solar with coal. It’s a specious argument.

      Levelized cost of energy is just a measure of how expensive the plant is to run. As solar and wind plants don’t have any fuel costs, it’s cheap to run them.

      Levelized cost of energy doesn’t take into account the costs of intermittency and grid destabilization, the generally low overall capacity factors of wind and solar, or the lower service lifetime of their power plants.

      Factor all that in and wind and solar are 4-10 times more expensive than coal or gas power.

      Most greens are too clueless to figure out the levelized cost trickery. But there are lots of folks who know it’s a fake argument and make it anyway.

  2. Installing large grid size batteries aren’t going to solve the problem of grid stability either, since a grid requires a massive spinning inertia/torque to maintain frequency and voltage stability, so as the utility power dozen’t trip off causing a black out. Solid state inverters just don’t work the same way as huge powerful synchronous generators for obvious reasons. And batteries won’t supply a lot of current for any length of time without spending a gazillion dollars, and spending that kind of money would be better spent on hydro, or a combination of hydro and pumped hydro storage at the same storage location, similar to the Oroville Dam in California. Even if there is a drought, it still has the potential to pump water uphill during times of excess wind/solar and cycle that daily and supply that as a massive synchronous spinning reserve that a grid requires for stability, so is a much better investment option than installing a gizzilion laptop batteries that have a limited cycle use and will need to be replaced in 12-15 years when their usefulness starts to degrade.

    • Manufacturing grid-scale batteries has its own environmental costs that greens want to ignore.

      • Liquid metal batteries at grid scale size are very promising. They run at +400 C and have massive capacity. Check out the MIT technology. They also have a nearly unlimited number of charge cycles per lifetime (many tens of thousands).

        The heat of charging and discharging keeps them warm. We can invent our way out of the storage problem. Wind and solar power are fine except for the storage problem – just expensive. It will be solved. The EROEI problem will remain even at scale, however.

        There is talk of a new thermoelectric generator material with five times the efficiency of the current best material blend, with time to market of two years. That will be a major disruptor. I would not want to be invested in wind or solar when it hits the market – we are talking about conversation of 35% of hot to cold energy flow. These things are typically operating in the 400-700 C range. A few will work at 900, even 1100. A solar concentrator with a TEG is much better than any solar PV available. Plus heat is much more available than sunlight.

        I have no confidence in lithium or PV as long term grid scale power systems. TEGS and liquid metal will be just too cheap and efficient to compete.

        • But none of that solves the frequency and synchronization issues that are endemic with non-spinning generation sources. We would have to convert our entire A/C system to D/C, which is theoretically possible today since converting D/C to high voltages and back down again is not nearly as difficult as it was 100 years ago, but it would be a monumental undertaking. And even then, in order to address the unreliability of wind and solar, you would have to massively overbuild so that you could keep the monstrous sized batteries charged/recharged for those worst case scenarios of low wind and solar (like calm winter days in the higher latitudes). Given the diffuse (low density) nature of those power sources, it seems like a bad idea.

        • It’s promising technology when you see the factory being built and sales starting to lay contracts.

        • Ambri promised a demonstration battery in 2014, Crispin. What happened?

          A liquid magnesium electrode better not ever see air. The explosion and fire would be catastrophic.

          Absent politics, nuclear is the best and cheapest form of power. Everything else is partisan hyperbole.

          • Pat F

            He demonstrated a multi-kW one and is supposed to unveil a MW one, according to his video of July ’19.

            I don’t know more than that.

    • The biggest battery on earth, the one built by Tesla in Australia, can replace the nuclear power plant where I work for 4-1/2 minutes at full power.

      That pretty much sums up the problem with batteries from the utility perspective. They simply cannot carry the freight.

      For batteries to be practical storage devices on the grid, battery technology needs a breakthrough comparable to the switch from vacuum tubes to transistors — absolutely ginormous.

    • My understanding that the batteries use rare metals. Rare means very limited supply or we go back to what, lead batteries?

      • Ceramic capacitors will drive all but liquid metal batteries off the market. Consider that a ceramic capacitor the size of a briefcase weighing 20 kg is capable of storing the same energy as a Prius battery. It’s a no-brainer.

        Don’t invest in lithium.

  3. “Green Energy Incentives are Failing to Keep the Lights On”

    Well they’re obviously just not high enough……

  4. So, they’ve discovered that it matters that renewable power is intermittent. Now they have a chance to discover that the available storage technologies are way too expensive.

    One of my friend’s kids kept doing something dangerous. He told her not to do it because it was dangerous. She said OK, and when his back was turned … When she appeared later, covered with blood, he said something like, “You just had to try didn’t you.” Yep, some folks have to learn the hard way.

      • “Experience keeps a dear school, but men will learn in no other.”
        —Ben Franklin

  5. The newest scam is pushing battery backup. But batteries are of limited capacity, whilst renewable power generation can be reduced for days, weeks. Batteries only store power, they cannot generate power

  6. The statement “There is a glimmer of hope there with people putting in batteries” shows how out of touch they are with the reality of grid electricity. That “glimmer” is really a fantasy and will remain such until/if/when new technology steps in unless they go nuclear. Hydro storage in flat and dry environments is just more of the same as sun and wind.

    • It is more like the glimmer on a long hot stretch of asphalt; no matter how fast or long you drive, it just never gets closer.

  7. “…One of their recommendations; more government incentives, to encourage renewable businesses to add battery backup to their solar and wind farms…”

    Having trouble putting the fire out? You’re not pouring enough gasoline on it.

        • I would like to know what the Tesla wall weather protection is like because if it is anything like the Tesla car, I would be worried. I have shored out two 12v/dc 400aHr lead/acid batteries in series at 24v/dc…goes off pretty well. A 6kWh Li-ion battery?

          • “I would like to know what the Tesla wall weather protection is like” From what I’ve read it works well up to its’ limitations. If you have AC to run at night or a car to charge you probably want at least two units. Some people have more. Think about how many it would take to run a multi story office building with AC, elevators, and lights. Any building engineers know the formula? But it’s all a moot point if the sun don’t shine.

  8. Why are wind and solar risk somehow granted a leave pass from “commercial risk” they are businesses aren’t they?

    Why do they need to be “encouraged” to implement infrastucture that well allow them to get closer to delivering the supply they publicise?? why are they allowed to get away with random dumping of power on the grid??

    The mindset and language of this report is mind boggling,

  9. The Morrison Government wants two bob each way. Its the Broad Church
    way of thinking. Every vote counts, but in the case of so called” Renewables “”
    the problem is one cannot say that they are for “”Saving the Planet”” any
    more, when such generators of electricity still requires a backup system of
    fossil fuel generators. That’s not saving anything, except perhaps a
    government.

    Such a double system of electricity generation creates even more of the
    dreaded CO2, plus the high prices of electricity to both the households
    and businesses plus industry. The result is that not only the direct cost of
    electricity, but the passing on to all of us the higher costs of everything. The
    result of course is the higher costs of living.

    So instead of the cry from the Labour opposition about something must be
    done about the “”Sluggish wage growth,”” they should be saying, “”Why is
    the cost of living so high.

    But wait, that would men that the high cost was clearly the result of the
    renewable,s and Labour does not want to hear that.

    MJE VK5ELL

  10. It’s tricky, choosing between keeping the lights on and not bankrupting everyone, and saving the planet. Yes, that’s a poser. What to do?

  11. I was told many years ago in New Zealand that they had imported Elk from North America and then discovered that trees and shrubs weren’t capable of surviving browsing by these beasts which were multiplying like crazy. Some “thinker” in the wildlife ministry thought that they should import mountain lions to keep them under control. Fortunately, with 10 or 20 million sheep, this idea died on the order paper.

    Batteries will simply make electricity from renubles more expensive. Also a ver large battery fully charged would seem to me to be a bomb in disguise. Lightning, a forklift accident, a hunter’s bullet, wildfire….

    • Some of those shrubs were imported too, and are a massive problem. IIRC, been a while since I lived in NZ, there is still an annual cull of the Elk.

  12. “Renewable energy” sounds good until you run the numbers. The problem with electrical power is that the numbers are too big for the average person to understand. Most people think you can keep a few gigawatts in a small box in a Delorean’s back seat. The reality of what is required is totally beyond them. When you try to explain you just sound like an adult on a Charlie Brown cartoon or a “Grups” for you Star Trek fans.

    • It’s the same when talking about CO2 concentrations. Most people don’t understand what 410ppm/v in relation to the total atmosphere is. They understand giga-tonnes and that sounds too much, too big, too nasty, too scary and very bad.

      • There used to be a photo making the rounds where they painted 400 grains of rice and put them in with a million grains of rice as a visual aid. Works wonders for those who don’t understand the numbers.

        • Also the 1m x 1m grid paper analogy works well…and a lot easier to work with too.

  13. An Australian Government AEMO commissioned report has suggested that while government incentives make renewables preferable to coal, the new renewable capacity isn’t helping grid stability.

    This report was not commissioned by AEMO. You can get your own copy on this link for AUD3300:
    http://downloads.global-roam.com/WattClarity/GeneratorReportCard-OrderForm-v4.pdf
    The authors commissioned the report for their clients.

    The use of the term anytime anywhere power would certainly not be sanctioned by AEMO. They no longer use the term intermittent when referring to ambient wind or solar generators.

  14. The impoverishment of a first world nation. Had Labor won the election we’d have reached 3rd world status in a decade. The trip will take longer with the conservatives at the helm but the destination will be the same.

  15. In a few years the governments are going to “subsidise” the removal of all the useless or unwanted wind mills.
    As most wind and solar companies will have, by then, declared bankruptcy , the “Removal” companies will have to be subsidised by the governments that paid to put them up in the first place.

  16. Using the term “renewable” when describing the current generation of wind and solar generators is highly misleading. They are NOT renewable. They cannot produce enough energy over their lifetime to enable their replication in modern industrial society.

    Chasing this illusion condemns modern economies to ever increasing proportion of their output to be directed at electrical energy production. Proponents need more subsidies to give a financial return. That is what this report is aiming for. If you want to save the planet give us a larger slice of your output and we will save the planet. It is a sad illusion proffered by dingbats from the church of climatology.

    There are economic applications for wind and solar generators of current technology but they are rare in modern electrical networks. Eliminate all subsidies and let return on investment decide where wind and solar generators offer benefits.

  17. There is an even bigger problem that Aussies, in their rush to install rooftop solar as well as receive the up to AU$4300 rebate (IIRC), substandard panels/systems/components are being installed. Some systems are lasting up to 5 years only of their 20 year lifespan claim.

    Fools are easily parted from their money.

  18. As I have said before, there is a company advertising small, domestic, gen-sets in Australia. I don’t recall their name, but the ads started sometime last year IIRC.

    • Why only ‘recently’? here in rural BC, we expect the odd accident in power transmission that can take a few days to fix. Having a generator to keep freezers cold and some lights on, and an alternative heating source is just normal. The generator has high test gas with preservative and gets run every couple of months. Before this in Quebec, emergency lights and a propane stove were always there.

      • Because we’ve had reliable, coal based, base-load power until recent years. South Australia is a classic example where there are nor coal/gas fired generators operating. The sellers can clearly see where energy generation is heading in Australia and are in early to capture what will be a growing market.

  19. If I’m going to nvest in battery storage why don’t I locate in next to a new state of the art NG plant…charge the batteries during non peak periods and discharge them during the peak hours…

  20. Climate change is nothing but a wealth transfer from the middle class to the GreenBlob investors.
    The Greenblob is invested long on wind and solar schemes. They need to kill coal, nuclear, and natural gas to supercharge their investments and get a fat ROI. And they don’t care what damage that does to the “Little People.”

  21. Just needs a level playing field to end this calamitous State sponsored dumping game. You can only tender electrons to the grid you can reasonably guarantee 24/7/365 or you keep them. They might have to phase that in with 3 equal steps over the term of Federal Govt given the unreliable mess that’s been created to date but the sooner the better if the national grid is not to be a train wreck. Anything else is political window dressing and putting off the day of reckoning.

  22. I can’t believe that people can’t see the solution staring you in the face – just run the economy when there is enough sun and wind.

  23. The problem as previously stated is that all politicians chase votes, so you
    have to make people want to vote for you.

    It used to be “The hip pocket nerve”, but that’s too close to capitalism and
    free enterprise. Not good from a left wing point of view.

    So lets see what works to control people, why there is this 2000 year old
    organization which had the answer. So lets scare people, and then they
    will do what we want them to do. Simple really.

    MJE VK5ELL

  24. How nice it sounds.
    Renewable operators just need to also install batteries.

    And how much are those batteries going to cost? We’re having trouble making enough batteries for all the electric cars the government is paying for. How are we going to ramp up production 100 to 1000 times in order to also make the batteries needed to pave over the deficiencies of renewable energy?

  25. The government is still living in cloud cuckoo land. Battery storage for just 3 days of 100% back up for wind energy would cost 1,000 times as much as the wind installation it is backing. In the unlikely event that new battery technology reduces their cost by 90%, it still costs 10 times as much> The Australian problem is that the government is in denial of the fact that back up is essential to keep the lights on, and that the only economically viable back up is fossil fueled.

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