Guest essay by Eric Worrall
h/t JoNova – Australia’s increasingly precarious green energy grid is forcing curbs on economic activity, with plans to pay energy intensive businesses to shut down during periods of high demand, to minimise the political risk of voters noticing what a mess their electricity supply is.
Electricity users will get paid to cut energy use under historic new market reform
By Stephen Long Posted Yesterday, updated Yesterday
Electricity consumers will be paid for reducing their power demands under a radical change to the market that will be introduced next year.
Key points:
- ‘Wholesale demand response’ will come into effect in October 2021, allowing large electricity users to be paid for reducing demand
- Big energy generators and retailers had wanted to delay the change, citing the COVID-19 crisis
- Some advocacy groups want to extend the scheme to households and small businesses
The historic rule change announced on Thursday will allow what’s known as “wholesale demand response” — where the wholesale market can pay users for cutting electricity consumption, rather than paying electricity generators to increase supply, when the system is under strain.
The shift, which will begin in October 2021, has been adopted by the Australian Energy Market Commission (AEMC) despite opposition from big energy generators and retailers, who were using the COVID-19 crisis to pressure for delaying the rule changes.
The commission has described the change as “an important reform to the NEM (National Electricity Market)”.
It argues it will reduce electricity prices for consumers and improve reliability on the network, by allowing demand response to compete with “peaking” electricity generators that typically receive very high prices for supplying additional electricity during times of heavy demand.
…
The rule changes are a major victory for a coalition of community and environment groups that fought for the shift to demand response — the Public Interest Advocacy Centre, the Australia Institute and the Total Environment Centre.
…
“Big energy users like factories and farms will be able to earn money by saving energy during heatwaves and at other times when electricity prices are high,” the Australia Institute’s energy lead Dan Cass said.
…
Earning money for shutting down factories and farms and not producing anything – what could possibly go wrong?
The goal of going full renewable is impractical, maybe impossible. A study in 2019 identified the cost of going renewable is an expansion of mining and industry, with increases in industrial activity around 35 – 105% (and in the case of lithium an eyewatering 2700%) just to satisfy existing energy needs.
When you add in the need to increase energy to supply all that additional mining and industry, the upper end of that estimate is likely a runaway equation, in which renewable infrastructure can never catch up with the energy demands of new industry and mining required to build and maintain renewable infrastructure – especially if everything has to shut down and stop producing whenever weather conditions are unfavourable.
“Where Businesses are Paid to Shut Down”
Who is paying?
It’s a market rule change. It allows people who have contracted for energy supply to sell that right on the open market. Details here.
Quote:
“In a sign of rising pressure on power generation, the Federal Government’s chief energy advisor is urging rule changes to allow large commercial and industrial users to easily reduce their demand in peak periods and sell it back into the grid.”
People can sell energy contracts back to the market when energy becomes expensive enough that there is more profit available from selling energy contracts than keeping the factory running.
There was a time when Australian energy was cheap and reliable, when nobody had to shut anything down during periods of peak demand unless there was a major outage, when people built factories and jobs in Australia to take advantage of that cheap reliable energy and abundance of natural resources.
“when nobody had to shut anything down during periods of peak demand”
Nobody has to now. They can choose, under this rule, to sell unused but contracted energy to buyers on the market. Why not?
There is nothing new about demand management. In the 1980’s, the Victorian government strenuously sought investors to smelt aluminium. The big attraction was that they could use off-peak energy, and smooth the diurnal load variation. But the agreements also enabled the SECV to reduce power at demand peaks. Alcoa got credit for doing so in the contract arrangements. This is still part of the deal:
“The contract will provide AGL with additional flexibility including rights in relation to the curtailment of the smelter at times of high electricity spot price. AGL also obtains the certainty of Alcoa’s commitment to the four year contract.”
Off peak electricity is nothing new Nick, plenty of ordinary homes use off peak water heaters.
What is new is the network is now so unreliable that prices regularly spike to crazy levels, and people can now make more money shutting down their plant than producing.
This didn’t happen back in the days when people who built coal plants were seen as national benefactors. Back then there was plenty of electricity.
Nick is correct that demand management has been around for a long time. Any large user, like aluminium smelters, prepared to reduce demand at short notice has gained discounts in the past for that ability but rarely needed to reduce demand. Essentially money for nothing. It was economic in the sense that it reduced the need for installing more generating capacity to meet a short period of high demand.
As supply has become more fickle, the smelters are now being asked to reduce demand on a regular basis. The new rule allows them to participate at the wholesale level on a continual basis, whenever the circumstances offers an economic benefit.
It no longer makes sense to operate an aluminium smelter in Australia unless it has its own power station. Smelters are better placed in countries not dabbling with ambient intermittent energy converters to power their grid. Fundamentally the intermittent generation and present storage options consume more energy than they can ever supply to an on-demand power system. Aluminium is one of the most electric energy intensive metals to produce. It should be made where electricity is low cost and abundant.
The new situation is a symptom of deteriorating supply stability IMO, not something to celebrate.
I’m not sure the new idea is any more crazy than the insane spot prices of the current system.
The problem is that the whole problem has been created by a dogmatic drive to a high proportion of unreliable energy production to solve an non existent problem.
Rick, large consumers were given Hobb’s choice: either sign our contract with the mandatory cut to power if the wind isn’t blowing just right, or pay completely uneconomic rates for power essential to running their businesses. Paying these people a few token pennies for the privilege of losing their businesses is just another sign of how disastrous our power system has become under the green sickle.
“It no longer makes sense to operate an aluminum smelter in Australia..” So what happens? No longer to need to mine aluminum in Australia? Tax base gone not only from the mine but from related/support businesses . Is it cheaper to ship the ore out to be smelter. Less of a tax base gone. More displace workers on government handouts. Other effects, tax increases, printing money and inflation. Money for nothing and chicks are free. Chicks aren’t free.
This sound more like a backdoor “Cap and Trade’ deal.
“Nick Stokes June 11, 2020 at 6:44 pm
The big attraction was that they could use off-peak energy…”
Talking crap again Nick. Show me where I can get off-peak energy? I will give you a hint, I can’t where I live and I don’t know where off-peak energy is provided by energy suppliers in Sydney.
POLITICIANS!!
Find the most ignorant person and you have one
Nick is offering to shut off his electricity so others can have some.
Very magnanimous of him, wouldn’t you say.
Or is it just “other people” that are being asked to shut down the electricity.
Cold showers get really tiresome after a little while. Unless you’re a greenie, in which case they are just another of the little homages to greenness you have to make.
Nick,
Can you not see the crazy logic?
They are taking electricity away from some users so they can visualize cheaper supply to other users.
In the extreme, if they took all electricity away, the price would cease to be discussed. That is the trajectory they are following and it leads to disaster.
The oh so obvious solution travels in the opposite direction. It is to build more fossil fuel plants while steadily getting rid of unreliables and rebuilding the industries that have left because of our ignorant energy policies. Geoff S
Goeff,
“They are taking electricity away from some users so they can visualize cheaper supply to other users.”
They aren’t taking electricity away from anyone. The market to now has a big failing. Spot prices shoot up to very high levels when there is a short term shortage, for whatever reason. The reason for the spike is that the spot market is thin; most electricity is subject to contract, so if you are caught short, you have to look to only a small fraction.
This rule change frees up the large contracted part of the market, to allow people to decide whether they can gain by deferring use and selling at high price. That benefits buyers too. The cost is to the people opposing the change “Big energy generators and retailers”. They are the ones who made money from the spikes, and also from energy that they contracted to supply that wasn’t used.
The reason for the spike is that they’ve removed cheap, reliable energy from the grid and replaced it with expensive, unreliable energy because Feelz.
Exactly.
Nick is promoting strategies for management of scarcity, whereas previously there were options for management of plenty.
And the great tragedy is – this current situation is just so unnecessary.
Exactly.
Nick is promoting strategies for management of scarcity, whereas previously there were options for management of plenty.
And the great tragedy is – this current situation is just so unnecessary.
” … Any large user, like aluminium smelters, prepared to reduce demand at short notice … ”
I guess that would be all of those smelters who are still operating and would like to shut down permanently and set up in a country that is not run by idiots. Amazing that any of them are still operating. I seem to recall that aluminium smelters are in trouble if there is loss of power for 2 hours? Don’t think there has been any technical breakthrough that solves that problem.
Hi Nick,
and oh (insert preferred deity here) is there anything you won’t bend over to justify. It doesn’t matter what the subject is, and I’ll hand it to you, you will pick the opposite side every time.
So your comment “Spot prices shoot up to very high levels when there is a short term shortage, for whatever reason” is a little disingenuous and I’m being kind. I grew up in the ETSA era and there were no spot prices, there were no short term shortages, electricity was available and affordable to all and sundry. Now, the ‘for whatever reason’ covers no wind and no sunshine like it was bl**dy optional.
Additionally the comment “to allow people to decide whether they can gain by deferring use” again meets the criteria for NS BS. If you are making something (maybe a cake, maybe aluminium) and your energy is electricity, deferring use means plainly and simply not using electricity. Where and when do you make this production shortfall up?
The program reads exactly like this; you can save money on electricity if you don’t use any – bravo.
Peak demand is generally caused by householders, deferring electricity use to ‘off-peak times’ just moves the bl**dy peak. Unless the work day shifts right across the board from the 8-5 work cycle this will near be impossible.
Give me strength. (if it isn’t obvious I live in South Australia).
Andy
I also live in South Australia and pay around $1500 per quarter for electricity – which was around $200 per quarter in 2000.
South Australia should be Nuclear given we mine it.
We have to Flatten the curve !
“Peak demand is generally caused by householders, deferring electricity use to ‘off-peak times’ just moves the bl**dy peak. Unless the work day shifts right across the board from the 8-5 work cycle this will near be impossible.”
Please explain!!! I fail to see the benefit to the buyer of a high price
To use less of it, and, reduce emissions of CO2. It’s the only reason why a price on fossil fuel derived energy is, artificially, raised high.
“I fail to see the benefit to the buyer of a high price”
The sellers are selling into a market with temporarily short supply. They benefit from the generally higher prices. Buyers benefit because the prices aren’t as high as they would be without that extra supply.
You first, Nick..!
“Nick Stokes June 12, 2020 at 2:54 am”
Given Nick has worked all his life for Govn’t, he has no idea how the real world market works. Nick, join our world…y’know, the real world, not some made up sh!t paid for by others!
Nick,
Please look at the history of aluminum smelters in the Pacific Northwest. The aluminum industry thrived in the region because of low cost electricity generated with hydropower. The industry along with thousands of jobs has disappeared because the electricity has been diverted to California to satisfy their no-carbon mandates.
“for whatever reason” Give me a break. Please state what the real reasons would be. Anything to do with no wind or no sun? We used to have very reliable cheap electricity in South Oz
For Christ’s sake Nick, you have bent the meaning of “market” so far out of shape as to be absurd.
There is no “market” when government imposed conditions have provided perverse incentives that reward industries to not produce goods and services.
In the past I have respected your contrarian insights but you can’t really believe that what is happening in this situation has anything to do with the traditional meaning of markets.
Nick does that. Possible he just enjoys trolling, but he’s on the wrong end of every argument.
Surprising at it may seem, in this case Nick is correct. Australia runs a spot market for electricity backed up by contracts for supply at a fixed price and an options market for the right to call on generators at a fixed price (this provides hedges and is an effective way of paying a capacity fee to small peaking generators).
What Demand Management allows is for a large company to decide that it is more profitable for it to not take its contracted supply (and to produce less) than to pay the marginal price and to get paid for this. Many companies taking supply from the spot market do this as a mater of course. I can think of several in West Adelaide that do this regularly (no names due to commercial confidence).
What will change, is that those companies (and a number of others) will now do their existing actions under contracts and get paid for their actions. This will provide a more formal mechanism and will help AEMO (the Australian Energy Market Organisation) with its reserve calculations.
Some typical numbers. Average MWh spot rate is between 80 and 120 AUD. Peak rates are typically 5,000 AUD and may reach 14,000 AUD per MWh at times of exceptional peak demand. That’s about 2 AUD to boil the jug for a cup of tea.
Note that these prices have little to do with off peak power or renewable energy. A lot more to do with climatic extremes and a fragile transmission system due to Australia’s geography.
“Old planning engineer June 12, 2020 at 1:07 am”
We, in Australia, typically call that price gouging. And the people who implemented this policy are making money out of thin air.
“Note that these prices have little to do with off peak power or renewable energy.“
I agree that the prices have little to do with off peak power but I disagree about renewable energy. It is renewable energy along with government policy that has caused the closure of cheaper generation capacity so that in times of high demand the peaking generators usually gas and diesel can bid the government regulated limit of over $14,000 MWh as they are required to meet the energy demand otherwise load shedding is required. BTW load shedding did happen in VIC last summer. A big problem with the current system is that every generator regardless of the price they bid in at gets the price of the highest bidder that is required to meet the demand. This is allowing the system to be gamed by some of the big generators with both coal and renewable assets.
Planning must be to engineering, what climate is to science. In other words, a complete oxymoron. No company could possibly make enough money by selling their power rights to make up the cost of plant, labour, etc. It’s just a recipe to go bankrupt.
Have you any idea how to tell 1,000 employees that they won’t get paid on Thursday because you sold your power rights? On Thursday morning after they’ve already turned up to work, because that’s as much warning as you’ll get?
Perhaps the “market” is setting the profits of selling their rights to electricity higher than the profits they’d make smelting aluminium?
Of course, this money has to come from somewhere (they’re not banks: they can’t create it out of thin air). So the question is: who, ultimately, is paying it?
They are busy destroying the tax bases and all the convoluted buying and selling will not increase the energy supply or the tax base. I wonder if they realize that “renewable” energy sources cannot exist without fossil fuels.
If you have to pay people to NOT use a system, then there is something seriously wrong with your system. Just think about the demand reduction concept wrt the COVID situation, its like paying the patients to not go to the hospital in order to ‘flatten the demand curve’. People and companies do not buy electricity because the lights are so pretty when they are on.
This new policy is just another example of how renewables make energy ‘cheaper’ for the consumer.
Try to become sane,
Willem
Nick is very sane. He works for government, and his economic interests are served when government pays him, pays his health care costs, pays for his retirement. A vote for sensible coal powered electricity generation cannot be allowed, or it could put his entire “industry” (the climate alarm industry) out of business. If that happened, Nick’s ride on the CSIRO gravy train could come to an end. Nick is exactly the person being referred to in the famous quote by Upton Sinclair.
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Sorry to be following up my own post, but this point is enough different from the above that I didn’t want to mix the two issues.
The entirety of CSIRO, NOAA, NASA, the US NAS, the BOMs of the UK and Australia should ALL be laboring against the “CO2 is driving global warming.” The long ice cores from Antarctica clearly show that the CO2 increases follow the warming that leads to the end of periods of glaciation, and they clearly show that CO2, lagging behind by 600 to 1000 years, and they clearly show CO2 reaching maximum concentrations AFTER the decline in temperature into the next period of glaciation has begun. To me, these two facts disprove the notion that CO2 is driving climate change, at least on the big scales of glacial to inter-glacial regimes. And if that is true, then how can we claim they are going to trigger 3, 4, or 8 C warming now? The explanation of WHY CO2 follows is completely sensible and easily understood. Oceans outgas CO2 as the begin to warm. They dissolve CO2 as they cool. The lag period is simply the time it takes for the buffering effect to reach “equilibrium” (which is never really attained). This is just the same way the coldest part of winter does not generally occur on the solstice, but in the few months following the solstice, and just as the warmest months of summer come a month or so AFTER the summer solstice, the buffering explains all these delays. Ergo, seasonal weather and glaciation to inter-glacial climate regimes match up beautifully. There is no mystery. The oceans spit out CO2 after warming. They suck it up after cooling begins. There is a consistent delay due to buffering of the “flywheel” of climate, the heat sink of the world’s oceans. ALL OF CSIRO should agree with this. That they don’t is a horrible testament to their own self-hypnosis, their own service to their own economic interests, their own power as would-be political influencers. C’mon, you so-called scientists, pull your damn heads out.
Correct – atmospheric CO2 is a function of temperature, not vice versa. This is the formal, logical disproof of the whole CAGW scare.
at the same time they are planning to install meters to block pv rooftop solar FROM entering the grid to stop instability
ie the hottest sunniest days, when everyones fridges aircons and all shops pools etc are using the highest amounts???
uh?
of course the homeowners who thought they could merrily use power all day at cheap rates/free didnt understand their daytime rates are high and what they get paid is less than half the cost..
Ive found it amusing;-))
now theyll get zero back AND pay high peak rates
and be in debt for the systems as well
as for Dan Andrews belt n rd signup
guess that extra busines hes talking up was US buying Chinas shoddy PV cells for more useless green energy 15bil$ new spending planned he reckons.
Aussies wont see much work off of it all.
Woo-Hoo! Sign me up! I’ll take my cut in free beer! Oh…wait, I wouldn’t be able to cool it. Never mind.
Didn’t someone do a song once…”Money for nothing and your beers for free.”? No that wasn’t beers was it. But still, it could be their theme song.
I used to think the coo-cu’ist politicians were in California, but Australia seems to be determined to give them a run for their money (no pun intended).
Most people think Australia was settled by convicts, but there were actually three kinds of settlers – convicts, a handful of free people who wanted to try something new, and well connected gentry who had done something so unspeakably depraved back in England that they could no longer show their face in the civilised world, and had to hide out in the remotest outpost of the British empire they could find.
Give you one guess whose descendants now run our governments.
“well connected gentry who had done something so unspeakably depraved back in England that they could no longer show their face in the civilised world, and had to hide out in the remotest outpost of the British empire they could find.”
They were known as “remittance men,” because of the money they received regularly (usually from from relatives) to stay away.
funny I had to point out to friends after scomo got slammed for no slavery and the islanders bitched about slavery/indentured workers
that a large chunk of white aussies are from slave labour then indentured servants who were white irish uk and scots used and abused to build and clear our nations land
wonder how we’d fare claiming heritage and ancestral woes and we wanna go back to “homelands” and get homes food n handouts as our right?
hmm?
“On the cover of the Rolling Stones”, by Dr. Hook and the Medicine Show
“Money for nothing and the chicks are free”
Dire Straits
Robert. Germany has entered the race but you will not see the results as it will be to dark ( check the net most expensive electric in tbe world)
,
Here in Alberta on Sunday we had a blackout of some residential areas in edmonton, calgary and red deer as AESO was running too lean when the BC inter tie tripped due to a lightning strike.
We have an industrial load shed scheme as well where industry agrees to be able to shed for $$$ but it rarely happens.
But this time the amount bid to shed was not enough to counter the loss of import so AESO had to shed houses.
At the time this occurred all our wind was at 40% and solar just above zero
In other words, completely useless.
People need to be fired
“Electricity consumers will be paid for reducing their power demands”
Sounds simple doesn’t it? But:
1. A lot of industrial processes depend on running continuously and will face costly and time-consuming repairs if they have to stop on short notice. Lost product, lost time, costs involved in re-starting, will all mean a lot of added cost to factories, mines, mills etc.
2. Where exactly is the money going to come from? Let me guess: consumers and taxpayers perhaps?
The logic seems to be: selling less electricity at a cheaper price is going to generate enough cash to pay industry to shut down when the wind stop blowing. What could possibly go wrong with such a brilliant scheme?
“will face costly and time-consuming repairs if they have to stop on short notice”
This is a market scheme. No-one has to stop at short notice. They can choose to make money on the market by curtailing use now, and presumably making it up later.
“Where exactly is the money going to come from?”
Real question. No, the government is not shelling out money. Users with contracts are choosing to sell to buyers at times when the spot price would otherwise be very high.
Nick, sensible people know how this will work.
If not enough businesses opt in as being willing to shut down on a moments notice they will be forcibly cut off
Like happened in AB Sunday.
It’s a reaction to an unstable utility caused by useless intermittent power.
Any other excuse is just BS
“If not enough businesses opt in…”
At the moment, no one can opt in. Opting in makes more power available, and acts against cut offs. Businesses can choose to help out, and will make money in the market by doing so. The rule change is for a freer market and helps everyone except those who benefit by cornering the market.
Opting in makes more power available
So does building a new coal plant Nick, or a nuclear plant if it has to be zero carbon. Renewables not so much.
Eric,
“So does building a new coal plant Nick”
Building a new coal plant (and mine) costs money. Investors are not coming forward. Freeing up the market with this rule change costs nothing.
Interesting – a capacity shortage, high prices available, and no investors to fill the gap in the market.
Why do you think that is, Nick?
“Nick Stokes June 11, 2020 at 9:06 pm
Investors are not coming forward.”
Why would they when they know the market has been “gamed” by Govn’t policy?
Nick Stokes; There is a consortium in Queensland that want to build a Coal Power Plant at Collinsville. Bottom line, they cannot get the permits.
This is Australia. There is funding for coal plants, there are investors willing, but Government Green Tape means there will be no new coal plants. ie, the only reason coal plants cannot be built is political. The politicians admit it.
In my region, as electricity retail prices double every few years from the increasing penetration of renewables, as the grid becomes increasingly unstable for the same reason, there are thousands of jobs about to be lost, and billions of dollars in tax, royalties etc from exports lost. The planned hit to our economy is just staggering.
In southern states, if not enough consumers voluntarily opt in when the wind does not shine and the wind does not blow, the grid collapses. This happens. It is called a blackout.
“Bottom line, they cannot get the permits.”
Just not true. It hasn’t reached anywhere near that stage. The consortium is looking for government assistance to proceed. The government has promised some funding for a feasibility study.
“Nick Stokes June 12, 2020 at 2:45 am
“Bottom line, they cannot get the permits.”
Just not true.”
Not just cannot, won’t. That is true.
Yes Nick, it sounds simple, but the practical issue is the inability of the grid operator to know in advance what their available supply will be. When a grid has heavy dependency on wind power, total available electricity is going to vary by the hour and by the day. Industrial operations don’t run well with starts and stops at such short notice. In the current era of “just-in-time” supply, it could play merry heck with an integrated industry. Big stockpiles would have to become the norm again, and that’s just one thing that comes to mind to make your domestic industry less competitive.
Closing a factory for a few days or a week – what happens to the work force? They get paid to come to work and sweep the floor, clean the windows for a week? They get paid to stay at home or go to the beach? Or do they not get paid? I would hazard a guess that not many industrial operators will choose to participate in this scheme. Truckers waiting around for product to deliver? They would have to be compensated too.
It does sound simple, but when you start thinking about what could go wrong and how would the details work in practice, you realise it could get messy. Getting messy is what will inevitably happen when the base load of an electricity supply system gets eroded in favour of intermittent generation.
“Users with contracts are choosing to sell to buyers at times when the spot price would otherwise be very high”
Any users that do choose sell under this scheme will need to receive enough cash to offset all the costs and inconveniences they will bear of shutting down or slowing down; not just the cost of the electricity they avoided using. To this skeptical observer, this would seem to mean that they would normally (in their own self-interest) choose to wait for very high prices, with the object of avoiding the spot price being “very high”. To make it really work to avoid price spikes, some degree of compulsion would be required from the grid operator to force shutdowns or slowdowns. That will sell like the proverbial lead balloon.
“Smart Rock June 11, 2020 at 8:49 pm
Closing a factory for a few days or a week – what happens to the work force?”
When energy supplies were short in the UK in the late 60’s and early 70’s, due t coal miner strikes, the Govn’t forced a 3 day working week on every one. That’s a 3 day working week with a 40% drop in pay. The same thing is being talked about in the UK today to reduce energy demands and thus reduced CO2 emissions.
So, no energy consumption, leads to no energy production, leads to no economic activity, leads to reduced CO2 emissions (No it doesn’t as COVID-19 proves). This is all about control!
Unreliable coal.
That’s absurd Nick. Ageing coal plants might be a bit decrepit and cranky, but new coal plants are reliable enough – far more so than renewables.
“Nick Stokes June 11, 2020 at 9:15 pm
Unreliable coal.”
What an idiotic comment. Coal is reliable. Dig it up, and leave it in piles until needed. Coal miners were, deliberately, unreliable. Y’know, it was called “industrial action”. The great British work either funnily summed up in the Peter Sellers film called “I’m alright Jack!” Have you sat beside a coal fire in a house? It’s a wonderful thing! Keeps a whole house warm and dry, which is important for health.
Wind on the other hand is unreliable if you need to depend on it, sailors have known this for centuries.
“Any users that do choose sell under this scheme will need to receive enough cash to offset all the costs and inconveniences they will bear of shutting down or slowing down; not just the cost of the electricity they avoided using.”
Yes. That is a calculation that they will do. AEMO spot prices are capped at $14,000 per MWh. The have been known to reach that, although not I think since the SA Tesla battery came into operation. But there is plenty of space for the price to offset those costs. Especially for, say, an aluminium smelter whose business is to convert 10.7 M coulombs into a kg of Al. It’s well worth buying those coulombs when they are cheap.
Prices shouldn’t be hitting $14,000 / MWh Nick, that’s a sign something is badly wrong. And capping the price when there is a supply shortage just creates empty shelves.
And where do you store those coulombs for when you need them genius?
“And where do you store those coulombs for when you need them genius?”
You store them as aluminium. Congealed electricity.
“Nick Stokes June 12, 2020 at 2:34 am
You store them as aluminium. Congealed electricity.”
You are an idiot!
“Nick Stokes June 11, 2020 at 6:51 pm
This is a market scheme.”
This is a Govn’t controlled sc@m. There fixed it for ya Nick.
It’s called a bludgers’ market. The people who can make money will sell to people with no money.
The big power users in Australia are aluminium smelters. They have been the first call for rapid load shedding for decades. One phone cal can take out 20% of the regional demand. Some smelters in Australia were directly controlled by their regional control centre.
The only change is to allow the smelters (and other large consumers) to participate in the wholesale market so they get the full benefit of load shedding because there are increasingly being asked to load shed. Most smelters can operate at about 20% demand without serious risk up to about 4 hours. Also they much prefer to reduce demand to the 20% stage than being blacked out.
The smelters will be looking at forecast prices and if there is a likely spike they will bid in blocks of load like 500MW for 2 hours at $X/MWh and another 2 hours at $YMWh, for example. With prices capped at $14k/MWh there is a lot of wriggle room. If their bidding arrangement is the same as generators they can bid in up to 10 blocks of energy each day; say each hotline or a number of hotlines for up to 4 hours. A block of 1000MWh, at $14k/MWh, is reasonable compensation for the risk taken by reducing demand for a couple of hours. It could become challenging if it occurs every day for a week. The troops might become restless with the growing risk of something not settling down once powered back up.
Well price should always reflect scarcity as you can control quantity or price but not both at the same time you’ll quickly discover should you try. Basically if you don’t like the price outcome you shouldn’t mess around restricting quantity in the first place- https://anero.id/energy/wind-energy/2020/april
You’ll just get in deeper and deeper and way over your head with that stuff.
One problem is that the major energy users are generally heavy industries which by their very nature are incapable of smoothly shutting down at times which are generally variable according to uncertain variations in load at widely dispersed parts of the grid. Nor are they capable of easy starts at the instant the load on the grid eases sufficiently. And who is to say that the reduction in load will now allow particular loads to come back on line? The whole thing will be a mares nest. All it will do is allow the system to stagger slightly closer to the edge where it collapses.
The entire point of these rule changes is to make electricity cheaper. How? At high peak loads diesel generators, or gas peakers have to be switched on. These are very expensive. Cheaper is to ask businesses that can shed some load, to shed it. It is voluntary.
As a result of more cheap solar entering the grid, niether the gas nor diesel peakers are likely to be needed nearly as frequently as before.
Business will not locate to jurisdictions with intermittent power
That’s how it is
“As a result of more cheap solar entering the grid, niether the gas nor diesel peakers are likely to be needed nearly as frequently as before.”
It was the spread of ‘cheap solar’ and wind in the UK that required the government to pay companies to keep diesel generators on standby for the times when there was no solar power. Just like other third-world countries.
I think the whole point is to maintain flow to the voters in the suburbs …..companies with contracts for products are expendable….if they can’t keep the workers employed and paid, watch the unions, NGOs and governments jump on the employers …..if energy companies can’t keep the supply coming to voters then the RE game is up…..
I think the large energy suppliers should just reduce their supply to match any demand reduction, lower their costs, and keep the price up for less electricity. They might be able to make more net profit by playing the system which seems designed to play/stiff them. If suppliers are not required to be “reliable”, then those with the capability to be reliable ought not play the game until it becomes very profitable for reliable supply.
That’s pretty much what they are doing.
I worked with power engineers for a while, they had a real sense of mission, like doctors, teachers and police.
Now it is no longer possible to deliver a reliable service, I suspect most of them have come to terms with the new reality, and just want to retire somewhere quiet before it all falls in a heap.
“Eric Worrall June 11, 2020 at 7:49 pm
I worked with power engineers for a while…”
Same here in Sydney, and I totally agree with you. When the last of the power engineers retire there won’t be the skills needed to fix what fails, and it will fail! And only when it fails big time will people realise renewables are a sc@m.
The large dispatchable generators in Australia have been gaming the dispatch system since Hazelwood shut. At that point, the system became dependent on gas generators. It meant that the coal fuelled generators could bid in a block of power at the floor price (minus $1000/MWh) to push out wind and solar when they were cranking, in the full knowledge that the coal generators could recover any losses when the system was dependent on gas. That avoided the high cost of taking coal fired plants off line.
The days of merit order bidding have gone in Australia. All generators are gaming the bidding system to maximise income.
The recent rule change allow the large consumers to get involved in the bidding system. More players should reduce the wholesale price of electricity until the next coal plant is forced to closed.
Another sign that Australia is the crash test dummy for renewable energy.
No, not a test dummy. Just a dummy. There has been no test, but there will be a crash.
I think it’s far more likely that the Chinese are just paying politicians to destroy Australia’s economy so the PLA can walk in and loot all their stuff.
I mean, it’s much cheaper than an actual war.
This 👍.
“Under the change, large electricity users (such as big farms, factories and commercial enterprises) will be able to bid reductions in demand into the wholesale market and get paid for taking their demand out of the system.”
They will get paid for shutting down and cutting their worker’s shifts so the bosses get paid and the workers get screwed. There won’t be a huge social outcry until there’s not enough power to produce turmeric lattes.
Soooo . . . As a government favored crony capitalist, if I just vertically integrate my windmill equipment production with my assembled wind farms, I can get paid for shutting down the factory when deliverable power is insufficient due to the grid’s increasing dependence on such means of generation and I’ll be paid to shut down wind generated electricity production at times when the power is in excess of what is needed by the grid. Suuwweeet!! All those rate paying consumers are going to keep me sitting pretty either way at their expense. Thanks guys, this is brilliant!
Eric makes a good point.
Power Engineers have/had a real sense of mission and worked their butts off to make sure the lights stayed on and the power as supplied did not fry your toys.
Now the idiot politicians have decreed that the power may fail,but the lights must stay on.
I guess the Engineers did their work so well that the politicians do not comprehend failure and what if looks like.
Next they will repeal the laws of gravity.
There is a lot of stupid people out there
It’s amazing to me how far nick will go to excuse the fact that there simply isn’t enough power all the time anymore
Because of stupid decisions
That’s all this is
It’s corollary is what the insane are trying to do with oil
Choke demand instead of reducing demand
It’s all so stupid
Meant choke supply
We used to have triple redundancy in transmission protection
So people got used to it being there all the time.
Bad times coming
There is a real Atlas Shrugged feel about this situation.
The Australian reports that Ashley Dodd of Shine Energy claims there is no reason his company cannot build a coal-fired power plant in Queensland because as a ‘First Nation Traditional Owner’ company they did not sign the Paris Agreement.
https://www.shineenergy.com.au/about-us
Whatever the outcome he shows admirable chutzpah, interesting to see how the Guardian or ABC report it, if at all.
Hope it works.
They would never get the planning consents to build it and if they did I am sure there would be protests and obstructions to construction. Australia rates 11 out of 10 on the dumb scale!
I am fortunate to have learned today that after 24/08/20, there is nothing to keep me here.
“Big Farms” can just cut their power? How?
Don’t milk the cows? Don’t ventilate the hen houses and let the poultry perish? Don’t process the harvest and let it rot? Discontinue refrigeration of the product and toss/recycle it? Cut-off the heat to the brooders and let the chicks shuffle-off the mortal coil?
Sure, one can cut-off the lights and music; but most power intensive farm activities have got to run. I suspect most of the mission-critical activities have stand-by generators. Great, the rate-payers get to buy really expensive power (just look at the fuel burn of most stationary gensets + the capex/maintenance cost of the running hours…..) with a nice mark-up.
And please don’t observe that the grain farmers have few of these activities and can curtail power pending harvest. Cutting-off the kegerators may fall a bit shy of what’s needed to keep Sydney powered-up. I’m not getting the warm-fuzzy that this plan has been thought-through.
Or, perhaps it’s brilliantly planned. I get paid to dump valuable product and increase the selling price on what’s left. Sweet. The Government saves on crop support and keeps a floor under commodity prices. Win-Win. Well, except for the rate payers; but, they were already getting clobbered in the Green Energy Shuffle. Why not kick’em while they’re down?
Have you been to the ACT and Canberra? The only thing that has ever been thought about there was the border.
The Lunatics are now not only in charge of the Asylum, but they have gone further and now the only building type to be built is the Asylum, and everyone is confined forcibly in one. As proof of this we repeatedly are hearing people like Nick Stokes speaking from their Fundament from within their own prototype.
Here in Southern Arizona today (Thursday afternoon), the town of Green Valley (south of Tucson Arizona) experienced a major “electrical spike”. The local grid in the community apparently sent out of phase voltages to a substation causing electrical surges and fires at many businesses. We have lots of Green virute solar farms around here and lots of roof top setups as well. Ultimately, the frequency issue will arise with all these distributed systems feeding power into the grid on a sunny day, with more power than needed being pushing in.
The winds were very light all day, but temps were about 102F when the surge occurred. So there’s no blaming a situation like lines banging together and arcing limke in NorCal PG&E problems. The surge resulted in burning out A/C motors in businesses across the community of Green Valley and starting some small fires and smoke in businesses that had to then shut down for the day to clear the smoke and call in A/C repair.
I suspect the culprit is too much solar power surging into the system causing a phase instability at a substation serving the community.
This is the kind of poor electrical service reliability that communities across the world will experience more of as the solar and wind lunacy continues.
Help Mods. What happened to my #comment-3013748?
Dear consumer: You may want to consider giving us the ability to turn off your smart appliances whenever the sun stops shining and wind stops blowing, because the price of energy at that time will be ridiculously unaffordable. We’ll turn your air conditioner and stove back on at noon when electricity is cheap, cheap. You’re not home then, but look at all the money you’ll save.
Euphemistically referred to as demand response. Coming to a power provider near you.
Why do you even bother to respond to Nick , we all know him to be an agent provocateur, just let his posts die of their own ineptitude!
This scheme sounds suspiciously like a monty python sketch to me , from 40 years ago, it took the “piranha brothers “3 attempts to figure out how to work a standover scheme before they got it right, look it up on u-tube for a laugh…….unfortunately all to similar to this insanity
Jumping through hoops trying to solve the non-existent problem of Human-caused Climate Change.
We have a lot of crash-test dummies involved in testing the theory that unreliable, intermittent energy sources can power a modern economy and those of us not saddled with these problems are appreciative of the pioneering efforts being made which demonstrate that it is a waste of time and money to try to depend on windmills and industrial solar to power our economies.
Unfortunately, it will take a while for this all to dawn on thick-headed politicians, so the people who live in crash-test dummy territory will have to suffer for a little longer.
Eventually everyone will see that windmills and industrial solar are deadends. Poverty producing deadends.
I think deliberately lying about the Earth’s climate should become a crime against humanity considering the insanity and loss that has been spawned by the Climategate Charlatan’s “hotter and hotter and hotter” lies.
Not that far back some badly crafted legislation in Northern Ireland gave rise to growers, for example, leaving greenhouse windows open to keep the temperature down so that they could burn more fuel and gain more Government RHI subsidy.
Nick, like many of the fanatic members of GangGreen, will jump through any hoop and twist into very complex, pretzel-like shapes to explain his religious cult to us heretics and non-believers! The sad part is that when the House of Climate Cards comes tumbling down he will have only two choices; recant or go even farther out on the limb. By that time Australia may well be lost to ChiCom control of their politics like the US is currently battling with quisling DemoKKKrats and RINOs trying to overthrow President Trump and his attempt to clean up crime and corruption in our politics.
It seems very likely that the ChiComs have been funding GangGreen for years now as one way to weaken and ultimately conquer the Western democracies for world hegemony! Australia seems to be No. 1 on their list right now and the people of Australia will pay the price.
“Abolition Man June 12, 2020 at 7:43 am
Nick,…”
His, Govn’t, pension is secured. I am sure he has no mortgage. So, no worries for him!
Tax is mentioned a lot in comments. And no wonder, government paying not to produce, transport and sell because it’s energy solution is deficient seems to be a solution to increase the importance of the poor house. And stupid.
The UK already does this and has done for years, through the electric triad scheme.
Can’t figure out what all the fuss is about here. As A just retired engineer that did pricing for a major electric utility company, we’ve done demand side management in all sorts of manner to various customer classes, including interruptible service to larger companies that find it in their economic interest to have a modest amount of curtailments throughout the year when demand and or price is high. We’ve been doing this for decades in the United States.
Yes, 20 years ago in the UK when I worked in the steel industry (we still had one then) they had “Load Management Periods” during which electricity usage was minimised – mainly cut production at mills, but including turning out the lights despite the mantra “Safety is our number 1 priority”. Apparently this regular reduction in demand during the evening peak allowed a large reduction in the price paid for electricity at other times. The scheme above seems to be aimed at reducing the ability of conventional generators to make a good profit at times when intermittents are not contributing, so will end up with further loss of generating capacity, and subsequently higher prices as the grid further destabilises.
Hey! lets go nuclear which is the only clean energy that gives required baseload power. Professor Barry Brooks in Tasmania recommends portal nuclear power plants!
“Octopus Energy is set to pay its UK customers to use electricity during the day as a result of an increase in solar and wind energy production…”
https://www.power-technology.com/news/octopus-pays-uk-customers-to-consume-green-energy/
NICK we live in the country and there is an 87mw solar farm a few kilometers from our home which feeds one of the rail systems in Sydney. We connected our electricity to our new home the middle of last year, about the time the solar farm went live, and we were given the option for paid periodic shutdowns of our power. We declined, we need reliable power.
We had no blackouts during the drought, clear skies kept the solar farm working, at least in the daytime. The rain returned in January and we’ve had four blackouts since then, each time we had heavy cloud cover. Turns out the power in our area is in the same area as the mines and I assume that they have generators so it’s the local farms who are sacrificing their power to ensure the supply to Sydney.
Nick the reason we declined their offer is that our water supply is tank water. Our water needs to be pumped to our house. Our pumps run on electricity. When the power goes out we cannot flush the toilet, wash our hands, shower or bathe, fill up the kettle, wash the clothes or do the dishes. On top of that if the fire goes out and it’s minus 3C then we can’t turn on the air conditioning either or cook or obviously use any electric devices.
Tell me on what planet are renewables a good idea!
Several years ago in a city nearby to where I lived owns the local electric company.
They asked the users to reduce their consumption to prevent higher bills.
Raised the rates to compensate for the lost income due to lessened demand.