Essay by Eric Worrall
First published JoNova; But the financial model which demonstrates coal is cheaper is a state secret.
NSW confirms Eraring closure delay driven by fear of pre-election price shocks
Giles Parkinson
Aug 6, 2024The NSW state Labor government has confirmed that its controversial decision to delay the closure of the country’s biggest coal fired power generator at Eraring was primarily driven by concerns over a possible jump in wholesale electricity prices.
The 2.88 gigawatt (GW) Eraring facility on the central coast was due to close on August, 2025, but under an underwriting deal with the state government which could be worth up to $450 million, Origin Energy will now keep at least two units open until August, 2027, a few months after the next state election.
…
But the failure of Eraring owner Origin Energy to build any new capacity in NSW before the 2025 closure, and delays caused by planning, connection, and commissioning holdups to other projects forced the state government’s hand.
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The full report by Endgame remains commercial in confidence, and so apparently the full modelling and the assumptions it was working on won’t be released. That’s unfortunate, because it is pretty clear that the modelling has already been mugged by reality.
…It means that the wholesale price benefit is more likely to be less than $3 billion under the deal actually negotiated, and it is not clear that those benefits will actually occur.
Read more: https://reneweconomy.com.au/nsw-confirms-eraring-closure-delay-driven-by-fear-of-pre-election-price-shocks/
…
If one single coal plant can shave a billion dollars per year over 3 years ($3 billion until 2027), imagine how much money two coal plants could save.
The models also suggest keeping the coal plant open will accrue just over a billion dollars in negative benefits, presumably because CO2 bad. But given all the recent news about global greening, I think we can safely conclude that model based claims that CO2 has a net negative impact on human wellbeing are not backed by observations.
One curious omission caught my eye, Renew Economy reporter Giles Parkinson somehow forgot to ask Origin Energy why they have not invested all that profit from running Eraring coal plant into the expected renewable and battery backup capacity which is supposed to replace Eraring coal plant. Perhaps readers can propose a theory.
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Global Greening is Becoming so Obvious That Climate Alarmists
are going to Start Arguing “We Need to “Save the Deserts”!
__________________________________________________________________________
Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha!
Good one. +10²³
multiply that by 6.02 and you have Avagodro’s number!
No joke – it’s already happening.
https://www.science.org/content/article/deserts-threatened-climate-change
There’s this quote from the IPCC:
Almost everywhere, daily minimum temperatures are projected to increase faster than daily maximum temperatures, leading to a decrease in diurnal temperature range.
IPCC AR4 Chapter 10 Page pdf4
The joke here at WUWT has been,
“Pretty soon we will see climate science
warning us about extreme mildness.”
I suppose you will find a link that shows that’s also not a joke.
Something like this?…
https://e360.yale.edu/features/global-stilling-is-climate-change-slowing-the-worlds-wind
(Yeah, I know it’s about wind, not temperature )
Or maybe this?…
https://www.mississauga.ca/city-of-mississauga-news/news/milder-winter-and-dreary-weather-highlight-climate-change-concerns-for-mississauga/
There’s this:
The U.S. coast is in an unprecedented hurricane drought – why this is terrifying The Washington Post August 4th 2016
I’ll say it again (regarding slowing the wind) – Did they give a moment’s thought to the possible detriment effects of extracting energy from the wind on weather patterns?!
Nope! Full speed ahead with the stupid, damn the consequences.
Ironically, they are also falsifying their own “warmer climate means worse weather” bullshit – in a warmer climate, extratropical storminess declines, not increases, because of reduced temperature differentials between the tropics and the high latitudes.
We all know green energy is cheaper. Obviously, Big Coal got to somebody. No other explanation is possible.
There is no climate crisis, CO2 is not the control knob for our climate, we are not going to reach a tipping point and suffer runaway global warming. Wind and solar are not green, they are not affordable, they can not replace fossil fuel and nuclear, they are a hazard to the grid. Wind and solar must be removed from the grid. Fire up all fossil fuel and nuclear generators, build new fossil fuel and nuclear generators and update the grid.
I greed with every word you wrote. That’s exactly what should happen if we want to get back on the right track.
Since, apparently, the cooling scares in the 1970s was due to sulfur, perhaps all we need to do is stop the prohibitions on diesel cars, ships, etc. Give it a year or two and if it is not enough, remove the sulfur scrubbers from the coal power plants.
FYI, rain is naturally mildly acidic. The ration of sulfur to water will not alter that much, but it does require a careful analysis to ensure we are not curing one problem by creating a new one.
That, of course, is not the approach of the green madness. They not only are determined to throw out the baby with the bathwater, they are also intent on simultaneously throwing out the bath tub.
I did some quick research. Eraring is 4x Toshiba upgraded 720 MWe units. Originally brought on line between 1982-1984. So the youngest is 40 years old, the oldest is 42. In the US, the average age of steam coal plant retirement for maintenance cost reasons is 42. So quite rationally, Eraring was scheduled to close in 2025. That the government is paying to keep it open is technical and economic nonsense, not to mention the unplanned grid outage risk. Smacks of grid desperation concerning dispatchable power covering renewable intermittency.
The ‘right’ grid answer would be to close it as planned and then use the same site (since T is already in place) to quickly (~2+ years) build a CCGT replacement as FPL has done with old obsolete resid fired steam generation plants in both Palm Beach and Fort Lauderdale. (FPL investment included a new natgas pipeline from near Atlanta (tapping the Louisiana to NYC major natgas pipeline corridor) down I75 and then the Florida Turnpike rights of way to supply the major new South Florida natgas demand). Only right of way taking cost was east from Florida Turnpike to Palm Beach. The east to Fort Lauderdale leg was simply along the pre-existing I595 right of way.
Our electricity rates lowered once the new more efficient CCGT Fort Lauderdale facility came on line. (Demolition, construction, startup in less than 2.5 years.) And our air is cleaner since no resid sulfur scrubbers necessary. And the tall polluting smokestacks are gone leaving a safer FLL airport from east approach. And the cooling water harbor footprint is 1/3 of before.
This solution has been mired by the requirement that any CCGT in Australia must be able to run on green hydrogen.
The debate was lost over an earlier gas generator that has delayed the project:
https://www.abc.net.au/news/2022-08-27/ex-snowy-hydro-boss-paul-broad-clash-minister-chris-bowen/101379278
The “green hydrogen” fantasy is alive, maybe on life support after Twiggy’s smack with reality, but economic reality has never been a concern for Labor governments. Ten years of a Labor government and the coffers will be empty so inflation is rampant. UK has only just started with their Labour government. US was delayed by Trump years.
Let’s hope we can change “was” to “is” in the near future.
Nice point.
“the average age of steam coal plant retirement for maintenance cost reasons is 42”
Is that still true given the extreme costs for any new power plants? Just asking ’cause I have no knowledge of the subject. I would think it’s best to spend $$$ on maintenance and keep it going, as being cost effective.
I suspect there are big problems with metal fatigue if you try to keep the plant open too long, eventually metal crumbles when it is vibrated and mechanically abused for years.
Most steam units eventually succumb to much dreaded tube leaks.
This will certainly happen if maintenance is dropped because of messages of impending early closure etc.
Eg Hazelwood and Liddell where units progressively closed/died.
One would think that a major part of the power plant infrastructure could be reused intact. Put the new generator hardware in the existing building, use the same power lines, transformers, etc., that pass inspection. Definitely cheaper than starting from scratch.
Just thinking aloud.
Yes, it’s good that ‘thinking’ is “allowed”.😎
This is where renewables come into play.
CCGT plants cost ~$1,250/KW, so $1,250,000/MW, or $3.75 billion for a replacement 3GW plant.
The economics only makes sense if these plants are run 24/7, or at least with minimum interruptions, in part because it takes time for the plant to reach peak efficiency, but mainly because if it’s not in use, it isn’t generating money, and thus the payback period is extended far into the future.
The problem is that with the push for renewables, and their intermittent generation, these plants will only be operated as peakers, perhaps only for a few hours at a time (low efficiency), certainly a fraction of their annual availability, which will diminish over time as more renewables come online, and all the time they’re still having to pay their staff as well.
So in a rational world, you would be right, but in a world where renewables are distorting the market, it makes no sense to spend money on a capital asset with a 30-year lifespan, that might be out of business in 5 years, and in fact trying to stagger on with whatever thermal capacity we still have until that becomes broken beyond repair becomes the rational answer.
After that, cheap to build, low efficiency OCGT plants might be the way to go, but even then they might need to be subsidized to become economic.
Get rid of all the worse-than-useless wind and solar and then we won’t need to subsidize anything worth building.
What a concept!
Which is my basic point.
If we’re serious about net-zero (not that I am), then nuclear base plus gas peakers is about as close as we can get, intermittent wind/solar destroys the economics for both, and by crowding out nuclear perversely results in more CO2 emissions due to the need for gas backups.
Your points are worth considering, but you left out the expected (or realistic) lifetimes of wind and solar and the lifetime costs associated.
It is a complex problem and the devil is in the details, much like the weather.
Climate is not a thing. It is a (per modern definition) a 30 year average of weather.
Climate change is not a thing. It is a comparison of current weather to the 30 year average.
I don’t see how the lifespan of wind and solar is relevant so long as the government is committed to more of them, the problem remains, it’s not economic to build gas plants, especially CCGT, that are only going to be used for a fraction of their available hours.
The best we can hope for from wind/solar is that we can eke out the life of our remaining thermal plants until alternatives can be constructed, be that SMR/nuclear or just new thermal, but that can never be achieved if the government wants to subsidize intermittent sources that otherwise would never be viable.
Lifespan of wind and solar is about 5 years, which is comparable to your estimate of a new power plant going out of business in five years if force to only provide peak loading.
Not often discussed is that wind and solar capacity degrades with time and with lack of maintenance. As the W/S degrades the new power plant will be needed more extending it’s 5 year out of business death toll.
I doubt the lifespan of w/s is 5 years, but even if it is, then the fact that they’re building them faster than they’re going out of service means that it’s still uneconomic to build new CCGT.
“And our air is cleaner since no resid sulfur scrubbers necessary. ” How is the air cleaner, did the coal plant not have scrubbers. Also so you understand a gas has sulfur in it until it removed at a gas plant. Is that not scrubbing the gas?
The numbers do not stack up and the downside risks have multiplied because Dutton has proposed nuclear.
The “Renewable Energy Theft” will end in 2030 without further government guarantees. The theft of $48/MWh through retail bagmen is presently more than the $43/MWh wholesale price the grid scale WDGs get. Eliminating the RET will more than halve their income.
And you cannot push on a piece of string and get a result. The lunchtime electricity market in Australia is saturated. Still winter here but the wholesale price of electricity has been negative in Victoria and South Australia from 9am to 2pm the last two days. Rooftops will likely overtake wind as the highest intermittent source of electricity in Australia this year. Rooftops 11.4%, grid solar 8% and wind 12%. Every new rooftop installation eats away at the available demand for grid WDGs to serve.
The CF od wind farms is declining because every new wind farm takes demand from the existing. The only thing that will change this is to increase storage substantially. At the current rate of tunnelling for Snowy 2, Florence will finish in 2050. Dutton may have nuclear by then.
Florence started moving again on July 19 after being stuck in a rock squeeze for two months. Hard to find its actual advance but over 4 years it has done very little of the required 15,000m.
So investment in grid scale WDGs faces stroing head winds.
The current NEM cumulative price cap is $730/MWh. That is where electricity prices in Australia are headed. Households and businesses can install solar panels and batteries to make their own power at a cost of $560/MWh. So the grid is being set up for accelerating abandonment by those who own a roof and have access to capital.
Distributed PV is the big risk for the grid generators. It gets 42 mentions in the Q2 2024 AEMO report:
https://aemo.com.au/-/media/files/major-publications/qed/2024/qed-q2-2024.pdf?la=en&hash=76583E81CDA7C3B213B77121D4C58E95
Distributors see merit in installing batteries so they are providing a useful service to their customers. If they don’t they might even realise that their custiomers will install their own battery and leave the grid.
their customers will install their own battery and leave the grid – I live just south of the tropics, and have a friend who tried just that. Even with heaps of solar and a good battery he still has to turn the grid on sometimes. He also tries really hard to avoid aircon, which is the major household consumer of energy in my area.
I doubt he did his sums very well. My off-grid system averages a CF of 3.9%. That is set by the sunlight I get in May. I could have improved it a little by optimising for May sunlight. But that only occurred a year after I installed 2/3rds of the panels. The last 1kW array is tilted at 45 degrees; just short of May optimum.
Unless you have particulars of his load and the particulars of his system I cannot tell why it failed but I do know most people fail to install enough generating capacity. “Heaps” has no meaning in engineering! His system design should be based on the worst 4 consecutive days of sunlight. In the tropics, that can be mid summer when a rain depression sits over it.
You could have improved your efficiencies had you installed a zenith tracker. Real time adjustments to the solar array angles.
On a personal scale, solar can work. On a grid scale, sorry, no.
“On a personal scale, solar can work. On a grid scale, sorry, no.” On a personal level it would not work either if it were for government subsidies and excessive regulations screwing everything up. There a a few places in the world were it solar might work but at a high cost. Those are remote places where it more costly to run the wires to hook up to the grid
“But the financial model which demonstrates coal is cheaper is a state secret.”
We’ll all promise to keep it a secret. 🙂
The headline should be amended to:
“NSW Politicians are Keeping Eraring Coal Plant Open to Prevent Voters From Kicking Them to the Curb.”
The big question is…. if they close Eraring,
… is there enough “reliable” electricity supply available to power the NEM on a very hot, or a very cold, morning or evening peak demand when there is no wind or solar available.
How dare you bring reality into the conversation with such a question!
/s/s/s/s/s
“NSW confirms Eraring closure delay driven by fear of pre-election price shocks”
So they are concerned about getting re-elected and care nothing about the welfare of the citizenry.
Got it.
Well the alternative is last minute panic with the diesel gennys like South Australia and Tasmania when it looks like Greenouts. Cmon you gotta give NSW Labor some credit for learning from the past and planning ahead.
I have to? Or do I get to make that decision for myself?
🙂
Perhaps readers can propose a theory.
Obviously busy planning gas import facilities to put into practice-
Origin Energy eyes gas imports, longer life for Eraring (msn.com)
Experienced biz usually goes where the obvious unmet demand is after weighing up the marketplace and cost of capital.
It appears climate alarmists will not be satisfied till Earth resembles the Moon in being devoid of life and absent any form of weather whatsoever.
So they need fossil fueled power plants to prevent the price shock due to “renewables” to “keep the frogs from jumping out of the pot”?
✔ ✔ ✔