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February 11th 2017 print

Tom Quirk

Behold SA and Be Scared, Very Scared

The latest Australian Energy Market Operator report on the state's electricity market illustrates much more than the inevitable problems associated with integrating intermittent renewables, it also highlights the assault on logic that is part and parcel of the great green dream

solar windThe Renewal Energy Target (RET) scheme is a splendid example of a policy cancer that, if not checked, will continue to inflict substantial economic damage. The green vision of the perfect, Gaia-friendly electricity-distribution system was introduced during the Howard government with the modest target of a mere 2% contribution from renewables. Since then the target has grown tenfold at the federal level while the states have gone much further, with the talk now of seeing renewables contribute as much as 50% by 2030.

The consequences have been dire: the wholesale electricity market has been distorted by the emphasis on and subsidies for roof-top solar and wind, impairing the financial basis for operating traditional and reliable sources of baseload power.

What follows is an examination of the lack of logic informing the RET scheme and uses South Australia as the textbook example of what not to do when mixing renewable energy into electricity-supply systems.

The logic of RET subsidies

Generators of renewable energy, mainly wind farms and solar, are being paid a subsidy of $85 per megawatt hour (MWh) for wind and $40 per MWh for solar, as well as state subsidies in the order of $20 per MWh. These sources displace that generated by conventional power plants — the indirect equivalent of a carbon tax. If one MWh of electricity from black coal is displaced, that stops the emission of one tonne of CO2, meaning the carbon tax is $85 per tonne of CO2. For brown-coal electricity, with 1.5 tonnes of CO2 per MWh, the equivalent tax is $57. When we consider gas-powered turbines, things get seriously weird, with equivalent taxes of $170 to $213 even though gas is a lower emitter than black coal generation! The tax equivalents for these energy sources are shown in Table 1 for wind and solar PV.

tom fig 1

The intention of having renewable sources in the electricity supply system was to drive out the highest emitters of CO2, but the cost structure of the wholesale electricity market is such that, while coal-burning power stations are the lowest-cost generators they have become more vulnerable and more ikely to be being stood down.

So the wholesale market is distorted by energy from roof-top solar that simply varies the demand to be met by the wholesale market. Meanwhile, wind farm energy goes into the market to take the going price and, in addition, the RET subsidy. This is the case for either non-dispatchable or semi-dispatchable wind power, as a suitable bid prices ensure the bid will be accepted. Finally, the RET scheme has a price structure that promotes the very opposite of the intention to drive the highest CO2 emitters from the market. Were that not the case, gas-powered generators would not be penalised more than those using both black coal and brown.

The example of South Australia

The latest Australian Energy Market Operator (AEMO) report on the performance of the electricity market in South Australia illustrates the major and inevitable problems associated with integrating intermittent energy generation into a state supply system.

South Australia has the highest installed renewable energy supply in Australia. This can be seen in Table 2, which shows where wind supplies 30.0% of demand and roof-top solar 6.5%.

The subsidies are paid to wind farms and solar suppliers, but these costs are passed on to all consumers. The average subsidy for the year was $72 per MWh for wind and $40 for solar PV. Spread over all consumers, this becomes $21.5 per MWh from wind and $2.6 per MWh from solar PV. This is the equivalent of a $24 carbon tax on CO2.

tom fig 2

There are three problems that can be seen developing in South Australia, as shown in Table 2:

  • The coal-fired baseload power stations have low utilisation, with a capacity factor of 39%. The high capital cost of a coal-fired power station should have a capacity factor of about 80% so that it can supply low cost baseload power. But this is not the case in South Australia, where the intermittency of wind power has all but eliminated steady baseload power.
  • A consequence of the intermittent wind power has been the reliance on interconnectors to draw power from Victoria. This is also intermittent demand and can be as much as the interconnectors are capable of delivering. This stresses the Victorian power supply system.
  • Worse still is that, on those occasions when there is plentiful wind power in South Australia, the surplus is exported to Victoria where it adds supply variations to a system with the much larger demand of some 6000 MW, with some 300 MW from wind farms. These events tend to occur in the early morning, between midnight and sunrise, and can be as much as 200 MW, which is a substantial disruption of the best time for baseload generation.

Conclusion

Intermittent wind power in South Australia is correlated with wind power variations in Victoria. So if the government of Victoria has a renewable energy target similar to South Australia then that may — almost certainly will — lead to the destruction of baseload operations in Victoria.

The conclusion from this analysis is that renewable energy policies have not been well thought out and, if continued without some thoughtful modifications, may have severe economic consequences.

Capping the RET scheme now might dissuade green-minded state governments from encouraging and adding wind farms to meet their 50% renewables aspirations. That would be the logical response, hence an unlikely one from a political class in the thrall of “sustainable” visions.

As the great American journalist H. L. Mencken put it, “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” No one was talking about global warming when Mencken was in his prime but, were he casting his sceptic’s eye over the growing mess that is Australia’s power network,  he would recognise such a condition and its consequences in an instant.

Tom Quirk trained as a nuclear physicist at the University of Melbourne. He has been a Fellow of three Oxford Colleges

Comments [38]

  1. Ian MacDougall says:

    Tom:

    From your last paragraph, I take it that you believe that AGW is one of Mencken’s hobgoblins, deliberately confected to stampede the population into the arms of the greenies, the Greens, the solar power industry, windmillers, and assorted barnacle politicians.
    However, AGW is also supported by the CSIRO, the Royal Society, the AAAS and all the other 198 scientific organisations listed at my next post.

    Now of course, it is always possible for a minority viewpoint to be right and the majority wrong. The classic example of this in the history of science is Lavoisier: being for a short time in the period before the French Revolution (in the course of which he himself was executed) the only scientist on Earth who understood combustion. But tellingly, it took very little time for the chemists of Europe and of the rest of the world to come to agreement with Lavoisier’s position .

    I have also seen it argued (here at QO) that the memberships of those organisations have been inadequately consulted if not hoodwinked outright on this matter; which I (ahem) find hard to believe.

    As the list includes both the Australian Institute of Physics and its American counterpart, I find it to be stretching credibility somewhat for you to maintain that their members are effectively a bunch of Homer Simpsons.

    But I am always ready to be persuaded otherwise.

    • Real Oz says:

      Firstly the problem is not AGW it is CAGW – where the C is for CATASTROPHIC – and to me at least there is a real difference. I am prepared to believe that AGW is caused by human generated CO2 emissions into our atmosphere. The question is how much AGW is so caused and how much is catastrophic? This immediately goes to the question of CLIMATE SENSITIVITY and what is it value.
      If the IPCC and all the believers are wrong in their assigned values to this metric then the whole hypothesis collapses.
      MY understanding is that most if not all attempts to empirically set a value on climate sensitivity finds it to be well below the 3-4 deg C that the alarmists want us to believe. AND so there is evidence that there is not the problem the CSIRO et al want us to accept.
      AND does anyone who lives in our fair land need further evidence that we are impoverishing our Country by replacing abundant reliable cheap coal fired electrical power with intermittent hugely expensive windmills ( the technology of the 1600s if my memory serves me aright). AND when we return our economy to that which existed on our infamous “Invasion Day” just how much of the dreaded CAGW will we have stopped?

  2. Ian MacDougall says:

    Scientific Organizations That Hold the Position That Climate Change Has Been Caused by Human Action

    from https://www.opr.ca.gov/s_listoforganizations.php

    NB: I have posted this separately to avoid it spending the rest of Eternity in the ‘moderation’ bin.

  3. Bill Martin says:

    People, whether politicians or of any other ilk, who promote unreliable, intermittent renewable means of electrical energy generation ought to be charged with fraud or, where applicable, consigned to a secure mental health institution. They are unquestionably imperiling the wellbeing of Australian society and the society has the right to protect itself.

    Hopefully, there will be a time, sometime in the future, when people will find it all but impossible to believe that there were people in power in the past who worked feverishly to destroy all that mankind achieved over centuries in order to save the planet from a purely theoretical danger of which there was no empirical proof whatsoever. Provided, of course, that their demented efforts can be reined in before they succeed in annihilating as all.

    • Ian MacDougall says:

      Bill:

      “…purely theoretical danger… no empirical proof whatsoever… (etc)…”

      IF you were writing that at a time when polar and Himalayan ice was increasing and sea levels were accordingly falling, then I would agree with you. But regardless of current heatwave conditions in Australia, globally the opposite is happening. The Earth is warming: spelt W-A-R-M-I-N-G.

      It is about 230 years since Phillip established the colony of NSW. Our coal deposits will last about as long again into the future, and that is the planet’s entire stock. We need it for road tar, as a feedstock for chemicals and plastics, and for dunderhead politicians to pass around in Parliament House. The last thing we should be doing with it is burning it to generate steam to run turbines in power stations to make electricity when we now have ways of doing it that are much cleaner and more direct, and can use the endless supply of energy available from our local star; and at around the same cost per unit.

      • Bryce M says:

        Ian Mc…..A few years ago a little company called Central Petroleum but four exploratory drill holes down in the Perdika basin, in NE South Australia, near the border zone. A square of 50 km. The drill holes showed coking coal in the first kilometre of about 300 metres in total in all of them with coal seam thicknesses in some approaching 200 metres thick.

        Estimated over the whole area, which is indicated, that would produce a quantity of coal greater than the total known reserves in the rest of the world put together to date. I’m an economic geographer by passion, professional statistician and economist and investor. I make it my business to know such things.

        It has not been developed because there is ample coal much closer to the coast. It is called at the present time a “stranded” deposit as it is uneconomic at current prices to extract due to cost of haulage.

        This year the Greenland ice shelf has added even before the first half of the build up season, an amount equal to 10 tons of ice for every human being on the planet. Warming? Lysenko science. 95% scientists? That’s pure propaganda. There is big money behind it. They are raking it in.

  4. ianl says:

    > “If one MWh of electricity from black coal is displaced, that stops the emission of one tonne of CO2, meaning the carbon tax is $85 per tonne of CO2. For brown-coal electricity, with 1.5 tonnes of CO2 per MWh, the equivalent tax is $57. When we consider gas-powered turbines, things get seriously weird, with equivalent taxes of $170 to $213 even though gas is a lower emitter than black coal generation!”

    Thanks for that, Tom. We’d gone through the same exercise a while ago and emerged with pretty well the same numbers – which we found hard to understand. Now I see they’re not meant to be understood.

  5. Keith Kennelly says:

    Numbers are not facts Ian.

    It is likely all those organisations and individuals, who have not produced one shred of proof of the link between human produced Co2 emissions and Global Warming and whose science cannot explain the 20 year pause are wrong.

    Thanks for listing them. They should be the first unfunded.

    • ianl says:

      > “They should be the first unfunded”

      That’s not how it works, Keith. The executive committees of these various scholarly institutions, in most cases a very narrow group of people “elected” to the executive by a very small percentage of fee-paying members, used the prestige of the various institutions to proclaim the CAGW hypothesis as overwhelmingly scientifically evident. The constitutions of these institutions did not require that the actual members be polled as to their view of the proclamations (because, I have been reliably informed, no-one had ever anticipated ungentlemanly behaviour in such organisations). This refusal to poll membership views caused a quite large number of resignations from highly regarded individuals after many years membership – but very few executive committees backed away. Eyes on the prize stuff.

      Where does the funding come in, then ? Funding is not sought by the institutions themselves per se, but rather by various Govt and NGO groups (the green blob) – to which the executive committee people may well belong. The learned institutions themselves cannot be unfunded as they are not funded to begin with, except by membership fees. The prestige cachet from the proclamations creates an atmosphere of overwhelming consensus (FakeNews) conducive to extracting funding for the activist green blob groups.

      In the aftermath, individual views of members on the proclamations have been sought in some institutions, but again the executive committees have resolutely refused to release the results, even (especially ?) to their own membership.

      • ianl says:

        I should have noted that individual member views may or may not support the executive proclamations. Ordinary members have no way of knowing the entire situation, of course, and in most cases actual membership lists, phone nos and email addresses, were not released by the executive committees.

    • Ian MacDougall says:

      Numbers are not facts Ian.

      Where do you want me to begin? Better still, can I recommend that you tune into a lovely TV program called Play School?

      To unfund all those organisations, I am afraid you will have to wait till Donald Trump has resigned or been deposed from his position as Chief Pussygrabber and has become Supreme Commander of the World.

      Frankly, I can see no other way.

      • Ian MacDougall says:

        Keith:

        I suggest you have a look at this rather well informed blog:
        Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can’t by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you’ve served Her. Take care. Be humble. And don’t blame me.

        From my perspective, he’s right on the money re AGW.

        http://volewica.blogspot.com.au/2016/10/40-years-on.html

      • en passant says:

        Jody,
        Is this just safe space banter or IanMacD’s usual Ad Hom rants?
        “Better still, can I recommend that you tune into a lovely TV program called Play School?

        …. you will have to wait till Donald Trump has resigned or been deposed from his position as Chief Pussygrabber and has become Supreme Commander of the World.”

        I would call it bullying and denigration, but then you would know better what it is.

        • Jody says:

          More projections!! You people are old, or older, and climate policy is of most interest to younger generations who have to live through any adverse weather/climate conditions. The total self-interest of all these comments is what gets younger generations angry about baby boomers in the first place. I’m more concerned about my children and their children and the world they’ll live in to any ideas from superannuated armchair experts who have an agenda which is largely set in the past. Stop the rants and argue the case – if you have one.

          • Peter OBrien says:

            Jody, if you don’t think CAGW sceptics have been ‘arguing the case’, then you have not read the many articles published on the subject on this site alone. Sceptics are thinking about the future. Costlier and intermittent power hits the younger generation just as much, if not more than the older generation. What you are saying is that sceptics (who are not all ‘old’ by the way) should just shut up because they don’t matter anymore. Yes, I could just keep quiet because before too long I’ll be gone and can probably survive OK but you might as well use the same logic about every subject of public interest – government debt, the erosion of free speech, security of our borders etc etc.

          • en passant says:

            Jody,
            Help me learn. Name three GOOD things resulting from a warmer climate and three GOOD things resulting from a doubling of CO2.

            Oh, and were Ian’s comments just humorous banter (“I recommend that you tune into a lovely TV program called Play School” and “[Trump] deposed from his position as Chief Pussygrabber”) or troll bullying?

        • Jody says:

          And as for Chief Pussgrabber – that’s a moniker Trump gave himself through his locker-room bragging. Unpresidential, to say the least.

  6. Ben says:

    The concept is right but there are a few probs with the detail. The AEMO table is confusing as you do not mention that Northern coal-fired power station in SA closed in Mar 2016, which may account for the low capacity (?). Still it was running at low capacity because the plant was old and also Leigh Creek mine which supplied the station was running out of coal. When Playford built SA’s coal-fired power stations he wanted them to be fueled by brown coal – brown coal from SA which excluded importing black coal from NSW and Qld. The major problem is that that coal had to be railed 200km. Very expensive. Alinta/AGL leased that rail line from the state to transport this coal. Without a capital input Leigh Creek was at the end of its reserves.

    There were a few things behind Northern’s demise. Sure the renewables were taking the peak profits out of Northern. But all in all a replacement for Northern was, and still is, due. In this environment only the state could be expected to build a new coal-fired power station there. Even if they do they will have a problem with coal supply ie do they build one with black coal in mind and import coal from NSW, Qld (you have to specify your boiler)? Or do you build it for brown coal and inject a lot of capital in building a new mine in SA where the fuel is likely to have to be transported hundreds of kms and where it is likely to have to be subsidised by consumers anyway?

  7. en passant says:

    Tom,
    To remind the world of the extent of the madness of Australians, the Andrews Government was proud to announce the loss of 750 jobs with the closure of Hazelwood in March.

    There goes 20% of the Victorian electricity generating capacity and 100% of the interconnector to SA, so that means NSW will have to pick up the load. I hope they do not or cannot as we need to keep SA as a Petri Dish Experiment demonstrating the Green Dream.

    Roll on the green insanity, it is fun watching it from my all-electric air-conditioned condo with a monthly electricity bill of $50. Oh, did I mention that 30km away is a huge (and I mean HUGE) coal-oil-gas-fired power station supplying cheap reliable electricity to more people than there are in Oz. It is being expanded as I write.

    Where in Oz is there such a mythical beast? Well, there isn’t, so I left the asylum and moved overseas to where sensible people live and work in a vibrant and expanding economy. When Oz could no longer ‘hide the decline’ (of its economy, culture, security and way of life) it was time to move.

    The Green Blob and the MacD’s have achieved their aim, but the stink of failure is now on Josh Frydenburg’s desk (“I just unsaid what I just said, so I never, ever said it”). Having to go through that to defend Tumbril was cruel.

    However, I have been cheered by BREXIT, Trump, the Italian Referendum and the coming Tsunami in France and the Netherlands. Now I can hardly wait for the new Bernardi Conservative Party (which I have joined) to start draining the Liberal Swamp. TurnBULL Team or Tumbril, they are just the same as they both end with the extinction of those who ride in them.

    You will not be missed when you take up your next position in the UN World Government Environmental Gulag.

  8. Keith Kennelly says:

    Ian

    Begin by answering the questions about proof of a link between man made co2 emissions and agw as well as explaining the pause.

    Nothing else, just that.

    Can’t do that? then you are merely ranting and mouthing crap.

    Your world is dysfunction and full of usury soaked low achievers. Mine is not.

    • en passant says:

      Keith,
      The thrust of Tom’s article was that the bias towards hugely subsidising unreliables had made the grid unstable and was unable to guarantee the baseload, when required. In that assertion he is correct.

      IanMacD ambushed the debate once more by repeating his mantra, like he always does. He CANNOT answer your question (the CSIRO could not answer the same question when asked by the Senate, so how could IanMacD).

      He CANNOT answer the two questions I posed about the ideal temperature he seeks and the ideal concentration of CO2, but what he can do is chant his Ad Hom! Ad Hom! mantra in answer to every article on any subject, no matter what. Ask him the time of day and you will be referred to the Colorado beachfront rising seas url and the receive the usual “you are all in the pay of big xxx”.

      Reality and doubt. Consideration and reflection do not apply in the minion world of the MacD.

      By the way, the good news is that I found the meaning of the term “IanMacD” in the Encyclopaedia of Irrelevant People. It defined an IanMacD as an:
      “An inconsequential online troll of low esteem who gets his jollies by throwing insults and ad hominens at all and sundry to overcome his inadequate personality.
      An IanMacD never answers questions, because he cannot, but always ploughs ahead with new insults and new faux data as his online denigration’s and chats substitute for having no friends, no social life and no self-awareness.”

      The proof of the above definition is that an IanMacD will ALWAYS make the last comment.”

  9. Zedaus says:

    Climate is a complex interaction of many variables yet the only one that is being discussed is carbon dioxide.

    The earth does not spin perfectly to the sun otherwise we would not have the 4 seasons. Nor is its orbit around the sun a perfect circle. As the sun is the dominant force on our climate you would think that the relationship of the earth to sun would be high on list of study.

    This year the southern hemisphere is hotter than normal while the northern hemisphere is colder with snow falling in places not seen for decades. My simple logic says that this not caused by carbon dioxide but by a change to the tilt of the earth. The change does not need to be much to have a marked effect.

    But what would I know, I am not a climate scientist.

  10. Keith Kennelly says:

    Zedaus,

    They are called Milanovitch Cycles.

    It’s a naturally occurring variation.

    Don’t tell McDoug, he’d say they are caused because only one half of the Artic and Antartic are melting because of heat and the other half are increasing because of heat. He’d also say the change in the concentrations of ice in those regions are causing the tilt.

    Zed if the tilt is decreasing then the Artic circle would move west and the Antartic would move east. The resulting effect in the worlds system of currents would cause the extreme weather events we are seeing today.

    Very little to do with co2?or agw.
    I’ve known about this for years but of course my points have been ignored or crushed under the warmist plethora of fake science and majority rule in science.

    Cheers keep on reading. Climate scientists don’t read they only have faith and lecture and their acolytes abuse.

  11. Ian MacDougall says:

    Don’t tell McDoug, he’d say they are caused because only one half of the Artic and Antartic are melting because of heat and the other half are increasing because of heat. He’d also say the change in the concentrations of ice in those regions are causing the tilt.

    Schoolboy debating 101. First rule: set up a straw man or two by misrepresenting your opponent’s case. It is a technique not only of irresponsible schoolboy debaters, but also of tyrants, including those out of power.

    Donald Trump is presently behaving like one such, proclaiming that climatology is a conspiracy; and that global warming is a “con” and “hoax” perpetrated by trade competitors like China to weaken American manufacturers. So confident is he of this position, that he is defunding US climatology as far as he can, and ordering the destruction of as much climate data as he can. If you believe that Trump is on the money, you probably also believe in the Tooth Fairy.

    The way established by scientists for taking on Error does not involve banning it. On the contrary, the best procedure is to use reason: to show its unjustified assumptions, falsehoods and logical fallacies. But neither Trump nor any of his acolytes feel confident enough to let the alleged merchants of climate error hang themselves, which is what would happen if they were free to debate on a level playing field. No. He wants to shut them up.

    By doing this, he does not display error in their case, but rather lack of confidence in his own.

    https://www.theguardian.com/environment/2015/aug/27/global-sea-levels-have-climbed-8cm-since-1992-nasa-research-shows
    http://europe.newsweek.com/protect-climate-science-data-donald-trump-542416?rm=eu

    • en passant says:

      IanMacD,
      Did not your deniers of reality side want to jail or kill climate realists? As Richard Parncutt, the Oz musicologist from Graz who wanted Death Camps for Realists families.
      What about using the power of State Attorney’s try to cripple Exxon? that is the totalitarianism you support.

      Trump has no such agenda. Lindzen, Lomborg, Marohasy, Spencer, Curry, Michaels and 31,000+ scientists (not to mention Climategate and the current NOAA adjustments) do not agree there is a threat, but do agree that the data has been falsified, the projections consistently wrong and the science so badly tainted as to be useless. But tat matters not to you as you have succeeded in hijacking this and every other debate on QoL into your mantra.

  12. lhissink says:

    The scientific method – a method by which an observation is explained by extant facts, and capable of being tested. The IPCC statement that a doubling of atmospheric CO2 will lead to a 1 to 5 degree Celsius rise in global mean surface temperature is a prophecy or forecast, not an observation. It has been actually falsified. Continued belief in the verity of this statement is the hallmark of the religious mind, which only sees what it believes.

    Tom’s analysis is spot on.

    • Ian MacDougall says:

      Tom’s analysis is spot on.

      Tom’s analysis is spot off.
      Science proceeds along a number of paths simultaneously. Observation and accumulation of data is one path. Theorising about it is another. Devising further observations and experiments to test the theories is yet another. And making predictions based on the theories and testing them by observation and experiment is yet another.
      The IPCC statement that a doubling of atmospheric CO2 will lead to a 1 to 5 degree Celsius rise in global mean surface temperature is a prophecy or forecast, not an observation.
      Put it into whatever category you wish, it is still solidly within standard scientific procedure. And as I recall an announcement was made in the last week that there has been a 1C rise in average global temperature made by some climate agency or other.

  13. Keith Kennelly says:

    Wow a climate agency announcing there has been a 1C rise in average temp.

    Well I’d never have believed that!
    Who would have thought that possible?

  14. Keith Kennelly says:

    Behold MacDougall, and Be Scared, Very Scared

    Hahaha

  15. Bryce M says:

    Seeing various references worldwide on the serious web, contemptuous of the South Australian situation calling them the worlds first full renewable energy crash dummies. Mockery of course, fully merited.
    BHP has called the economics of Olympic Dam with this regime into question. If this were to shut, half South Australia’s economy would disappear. AS managers, like labour parties everywhere systems analysis managerial ability is sorely lacking.It is high time the Commonwealth stepped in and got rid of the pernicious and disastrous SA Labour gerrymander.