Essay by Eric Worrall
Australia has embraced a worst of both worlds energy policy, in which both renewables and fossil fuel providers will receive generous subsidies to maintain their services.
‘Stakes never higher’: energy board releases capacity market blueprint
Energy Security Board says fossil fuel generators might need to be paid to stay in business to retain capacity
Peter Hannam Mon 20 Jun 2022 03.30 AEST
Coal- and gas-fired power plants could be paid to stay in business to bolster the stability of the main electricity grid and attract enough investment to build the equivalent of 50 times the original Snowy Hydro scheme by 2050, according to a high-level design paper released by the Energy Security Board.
The fossil fuel generators would be required even as Australia continues to decarbonise the electricity sector, the paper released on Monday said.
The report by the ESB backs payments for not just supplying power but also retaining the capacity to do so, as one of the most viable options to reform the faltering energy market after 2025.
It also recommends that states be able to pick technologies suited to their carbon-cutting ambitions, in a bid to mollify anticipated opposition from some regions to the inclusion of fossil fuel plants in a new capacity market. The imperative, though, would be to improve investor certainty and incentives to fund a major revamp of the market.
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“Designed well, the capacity mechanism will enable a swifter, less risky and more orderly transition to a net zero emissions energy system,” the paper argues.
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Read more: https://www.theguardian.com/australia-news/2022/jun/20/stakes-never-higher-energy-board-releases-capacity-market-blueprint
On one hand, this offer of subsidies hopefully reduces the risk of blackouts. The government is effectively directly paying for maintenance required to keep fossil fuel power plants operational.
But this offer of subsidies is a commercial disaster, in terms of cost to taxpayers. Every power provider, fossil fuel or renewable, will have their hand out.
It could all have been so different. There was a time Australia had a technology agnostic electricity market, in which suppliers competed on price, rather than jockeying for handouts. All politicians need to do to restore this low cost market, is to provide a credible bipartisan commitment that they won’t play favourites anymore.
But our politicians have chosen to meddle and favour renewables.
If renewables worked, if they were a viable replacement for fossil fuel, our politicians might have gotten away with their meddling. In a few short years renewables would have replaced fossil fuel, and everyone would have settled into the new arrangement.
But renewables don’t work – Australia will for the foreseeable future require reliable, dispatchable fossil fuel backup to prevent blackouts, for when the wind stops blowing and the sunlight is blocked by clouds.
Fossil fuel providers have their hand out, and have no motivation to show restraint in their demands for government payoffs to keep operating.
Every Australian will pay, and pay dearly, for maintaining the political fantasy that renewables can add value to our electricity grid.
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well the smug “so green” SA govt n public just got told that their bills will rise 1k per yr…because their solar takeup is too good, the actual bulldust behind that is paywalled unfortunately
but it will be the usual rooftop solar high influx to grid story.not enough battery storage at near 10k a pop on homes etc
the batteries they do have are all in the mid north near the birdshredders as far as I know theres few/None? in suburbia etc and 18k homes powered for 1hr at best?
I have a friend who likes options, he has a massive solar system. Lucky we live in a place where you don’t need much heating or cooling, he uses neither unless absolutely necessary. Rooftop solar can just about run lights and fridges, and maybe a little cooking, but forget heating and cooling.
But..but..couldn’t concerned climate changers band together and buy cheap Green power from Gaia instead of the nasty expensive stuff?
Green energy electricity retailer Enova enters voluntary administration – ABC News
Typical left wing logic, force prices lower, realise it is impossible, then tax the consumer to cover the difference.
What a joke.
And all they needed was less CO2 phobia.
Grant Kenny can’t put it any clearer for our gormless overlords-
‘Lunacy beyond belief’: Australia’s energy situation is ‘dire’ | Gold Coast Bulletin
I know next to nothing abut Australia, just what comes up here and what I have looked up as a result.
The key quotes from Guardian piece seem to be these:
I looked up what current generating capacity as supplied is (not raw capacity, but what the source of supply is), and it seems to be about 55GW total, of which about 70% is coal and 5% gas. Wind and solar are about 20%.
It puts things into perspective. The piece talks of 45GW of new storage, but does not say how many GWh this will carry. If its anything like New York State or the UK, it will take at least 2-3 weeks worth of capacity. Just do the math. Its a huge number, and one where there is no working example anywhere in the world of anything like it. Its 45GW times the number of continuous hours you need to provide coverage for.
Well, looking at these numbers as an outsider, I need a lot of persuading. Can they really, will they really, build this much wind? Can they install and manage this many batteries? And in this timetable?
It looks from here like the same disastrous plan the UK is embarked on. Lets close all the reliable generating capacity at the same time as we double demand for power. And lets provide unparalleled amounts of battery storage to back up the unprecedented of installation of wind and solar.
Well, I know how I would be voting. And I’d be buying a big tank and a generator.
The ESB report is more precise:
“AEMO’s Step Change scenario estimates about 122 GW of additional wind and solar (collectively variable renewable energy (VRE)) firmed by approximately 45 GW of new dispatchable storage capacity, 7 GW of existing dispatchable hydro and 9 GW of gas-fired generation will be required by 2050 to meet demand as coal-fired generation withdraws.”
It leaves open how that “dispatchable storage capacity” might be formed, but clearly envisages that it could include gas generation with appropriate response times (and also pumped hydro etc). They are writing from a market point of view – people would bid whatever kind of capacity they can deliver.
The report also notes that this is not a new concept, and capacity is now paid for directly in various ways. But it thinks that should be formalised into a market mechanism.
Australia 1.3% of global emissions, so why?
This is a bad move for Aussie energy; the subsidies will come with government control.
Liberalism truly is a mental disorder. This pain is all self inflicted. Unless the western world leaders will acknowledge in a united fashion that fossil fuel usage is not causing a climate emergency, we will repeat the Australian mistakes over and over.
While the feed in tarrifs and mandates gave wind and solar a great start in getting developed and prices down, the very nature of intermittent power is cancerous to the grid. Green power frequently makes lots of power when no one needs it and drives the price down below zero even. This forces reliable plants to curtail – they can’t run efficiently if they have to shutdown and restart over and over again, or waste fuel by keeping running. And that would happen even if there were no subsidies for wind and solar. If the mandates forcing utilities to take all the wind/solar power available were removed then no one would agree to buy power they don’t need, and certainly wouldn’t pay producers to reduce output.
I love the free market system but I think the nature of electrical utilities really doesn’t allow for spot markets.
The original people that designed most grids recognized that electricity generation and delivery to all, rural and cities, was a “NATURAL MONOPOLY”. This also applied to land-line telephones, water, roads, and sewer provision. They are a mix of private, public, government but still monopolies. Duplicate provision of capital and physical plant would not be the cheapest or most efficient.
That’s why most Western countries at least do not have free markets for the provision of these services. It appears likely that those who hope to make their provision thru free markets are having problems both in costs and in reliability.
Fossil fuels will need subsidization only because the politicians can’t be trusted not to rip the rug out from under their investment as soon as it suits them. As with everything, the politicians are the cause of all problems and the solvers of none.