Wang Wang and Funi to the rescue

South Australians have – since 1 July this year – been paying the highest power prices in the world.

And it seems that SA’s power-price-punishment has troubled a crowd called “WWF” – here’s a link to their site.

WWF

Retail power prices really are “black and white”.

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This group – not renowned for knowledge of Australia’s energy market – is apparently headed up by pandas.  Greg Bourne used to be one of WWF’s head pandas but he’s now the Chair of the ARENA Fund instead – which wind weasels have been treating as a personal piggy bank for some time now – it can be fairly called a “wind industry slush fund”.  What’s that you say about looking after your own panda den?

WWF’s head pandas have just called in aid a couple of their operatives – beloved Adelaide locals, Wang Wang and Funi to work out why South Australian power prices have hit the roof.

wang wang and funi

SA’s leading energy market economists – Wang Wang & Funi.

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Here’s what Wang Wang and Funi came up with.

Policy Briefing: The LRET and the Australian Carbon Price
Reputex
12.08.2013

This brief, prepared by RepuTex and commissioned by WWF-Australia, examines the relationship between the Australian carbon price trajectory and renewable energy generation.  The examination is based on modelling the impact on renewable energy generation should a price and limit on carbon pollution, referred to here as the Australian Carbon Price Mechanism (CPM), be repealed.

Key findings include:

  • The Carbon Pricing Mechanism (CPM) and the Large-scale Renewable Energy Target (LRET) are complementary market mechanisms that together support Australia’s transition to a low carbon economy.
  • With the CPM in place, the long-run cost of wind energy in the National Electricity Market (NEM) has become lower than fossil fuel-fired generation.
  • Higher carbon prices, which lead to higher wholesale electricity prices, reduce the price of Large-scale Generation Certificates (LGCs). Conversely, should carbon prices fall, the price of LGCs would have to rise to ensure there are enough renewable credits available to cover the LRET liability of energy companies.
  • To meet the legislated Large-scale Renewable Energy Target (LRET) of 41,000 GWh by 2020, around 7 GW in new wind build would be required from 2013, or around 1 GW of new capacity added each year. Repealing the carbon price would limit investment in additional onshore wind energy, resulting in a capacity shortfall. Large-scale renewable energy development is not currently supported by the alternative Direct Action policy.
  • With carbon pricing in place, even at low prices, we anticipate that the LGC market will continue to support the development of onshore wind energy.
  • While wholesale electricity prices would be lower if the carbon price is repealed, retail customers would be unlikely to receive the benefit of these lower prices, as electric providers would continue to pay for the LRET scheme. The outcome of this dynamic would likely be higher retail electricity prices, without the additional competition from wind energy.

By Wang Wang and Funi for the WWF.

Now – we don’t like to be picky – but the term “carbon pollution” used by Adelaide’s favourite pandas had our Spidey-senses tingling straight away.

We think they’re talking about “carbon dioxide gas” – an odourless, colourless, beneficial trace gas essential for life on earth.  Next time you’re talking to the trees ask them what they’re breathing?

Hysterical and misleading eco-fascist language aside – let’s deal with a couple of the furphies tossed up by these panda-panjandrums.

The pandas clearly haven’t been paying attention to the energy market news in Australia – when they claim that “the LGC market will continue to support the development of onshore wind energy”.

Even at the current REC price the wind industry in Australia is on the ropes – the 90 fans being built at the minute – with no further construction planned – hardly signals a rush to develop “onshore wind energy”.

And the power industry’s big retailers have made it very plain that they have no interest in supporting intermittent and unreliable wind power – they’ll simply pay the shortfall charge (fine) – currently set at $65 per MWh – and pass that on to their customers.

The other thing the pandas have missed is that the Green-Labor government is about to be relegated to the political dustbin – to be replaced by the Coalition who have made it very clear – and for a very long time – that the Carbon Tax and the Emission Trading Scheme will be scrapped altogether.

But it’s this piece of “panda-piffle” that had the STT economics department wetting themselves with laughter:

 “While wholesale electricity prices would be lower if the carbon price is repealed, retail customers would be unlikely to receive the benefit of these lower prices, as electric providers would continue to pay for the LRET scheme.  The outcome of this dynamic would likely be higher retail electricity prices, without the additional competition from wind energy.”

Hold the phone?  Did these pesky pandas just claim that retail electricity prices would be higher in the absence of “additional competition from wind energy”?

drunken_ben-r_jpg_600x345_crop-smart_upscale_q85

So we’re up against pandas now?!? No wonder I’ve got a thirst.

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Let’s break that down.

When the wind is blowing – wind power generators can happily supply to the grid at or less than $zero.  But power punters couldn’t care less about the wholesale market when the wind is blowing.

The reason they can “giveaway” power in the wholesale market is that wind weasels sign up their retail customers under Power Purchase Agreements (PPAs).

The price retailers pay is set by the PPA – a guaranteed price in the order of $90-110 per MW (retailers stopped signing PPAs around November last year – hardly a sign of unqualified support for wind power).

Once a wind power generator dispatches power to the grid it’s entitled to collect a REC currently worth around $35.  The wind power generator is then entitled to claim a “supply” to its retail customer – it hands over the REC to the retailer and collects the difference between the price fixed under the PPA and the dispatch price.

The wind power generator nets around $60-90 per MW on the trade.  The retailer pays the PPA price and passes that on to its customer – the value of which includes the cost of the REC.  The REC – therefore – is a Federal Tax on all power consumers.

The supply price of a MW of wind power at $110 per MW/h compares with the average dispatch price of less than $40 per MW/h and with coal fired power out of Victoria at $25 per MW/h.  For a breakdown see this post.

But here we’re only talking about those rare occasions when the wind is blowing and there is a meaningful supply of wind power to the grid.

What Wang Wang and Funi completely overlooked is the cost of “peaking power”.

Around 80-100 times a year wind power supplies less than 200MW into the Eastern Grid for periods of 10 to 12 hours at a stretch – 200MW represents 7.5% of the 2,660 MW total of “installed wind power capacity” connected to the Eastern Grid.

When wind power goes AWOL – ALL back up comes from fossil fuel sources.

The first line of defence comes from coal fired power stations bringing “spinning reserve” into action – often in a heartbeat and in response to the huge fluctuations in wind power output on a minute by minute basis.

“Spinning reserve” involves a coal or gas thermal plant running its boilers around the clock – but disengaging the generator from the boiler – with the steam produced being “vented” to the atmosphere.  When wind power drops out – steam is fed to the generator which is engaged to make up the shortfall and keep the grid from collapsing.  Keeping adequate “spinning reserve” to back up intermittent and unreliable wind power means that millions of additional tons of coal are being burned in Victoria every year without generating a single spark.  This Dutch study deals with the increase in Co2 emissions due to increased wind power penetration in a coal/gas fired grid.

The next line of defence comes from quick start-up Open Cycle Gas Turbines which cost a bomb to run (in the order of $300 per MW/h) – which are highly inefficient generating systems – but which make their owners a handsome little profit making up missing wind-watts.

Last in the line-up are diesel generators which cost even more to run (in the order of $500 per MW/h) – believe it or not Australia has substantial generating capacity available from diesel generators – which have been installed for no other purpose than to back up the grid when wind power goes missing.

The greater the installed capacity of wind power – the greater the capacity needed from fossil fuel back-up.  So more wind power capacity means more peaking power capacity is needed – not less.

So what does that all cost?  More than what Adelaide spent to get Wang Wang and Funi to leave their Chinese homeland – and that wasn’t cheap.

AEMO has placed a $12,500 per MW/h cap on what generators can charge for supplying to the grid.

The average dispatch price to the grid is less than $40 per MW/h.

When the wind power goes missing the dispatch price quickly hits $1,000 per MW/h.

If there is insufficient “spinning reserve” available from the thermal generators then the “peaking power” generators rub their hands with glee for a veritable power price bonanza.

In South Australia wind power makes up around 40% of its total generating capacity.

When it disappears for hours and sometimes days at a stretch – the dispatch price jumps to $2,000 per MW/h and often hits the capped price of $12,500 per MW/h.

The dispatch price drives retail pricing – the dispatch price ultimately determines what retailers have to pay to deliver power to SA homes and – therefore – what retailers need to recover from their customers.

Little wonder then that SA has the highest power prices in the world; that 50,000 homes have been disconnected –  around 10,000 are expected to be cut-off this year – because their owners simply cannot afford to pay power prices which have more than doubled in two years; and that people have been reduced to lighting their homes with candles and cooking on wood stoves.

And little wonder that AGL has resorted to threatening phone calls – berating its South Australian customers who miss the due date for payment of their power bills by so much as 2 days.  In our next post we’ll cover how AGL has taken to haranguing its beleaguered customers.  STT notes that AGL are the crowd that helped create SA’s power-price-penury in the first place.  A great bunch of lads!

Back to pandas and power prices.

STT thinks that Wang Wang and Funi should stick to what they do best – eating bamboo shoots and sleeping.

With ludicrously costly peaking power a necessary incident of relying on intermittent and unreliable wind power – adding wind power capacity can only INCREASE retail power prices.  Do you think peaking power generators would be investing $millions in OCGTs and diesel generators if they weren’t expecting to cover both the cost of their investments and the exorbitant costs of running them?

No matter how cute the kiddies think they are – making sure the Country’s future energy needs are satisfied is a matter that’s just too serious for pandas.

funi-with-her-wooing-gifts

Funi’s better at looking cute than she is at energy market economics.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. and people want more and bigger government ,……..any question why the world is so screwed up ?

    • Georgia says:

      Thanks for drawing attention to this illuminating article on how starkers the Wind Emperor is. Current as ever.

  2. cornwallwindwatch says:

    Reblogged this on Cornwall Wind Watch and commented:
    great article as ever!

  3. Wang Wang should spend more time fixing up Funi than worrying about the world heating up!!!

  4. It has to be strongly said that the people at the WWF really are a bunch of retards.

  5. Prices UP
    Candle sales UP
    Heaters OFF – I now need to use blankets to wrap up in. I would never have dreamt that I would be using candles and kerosene lamps for light. What Century are we in???

  6. Reblogged this on Mothers Against Wind Turbines and commented:
    Wind energy simply does not make sense.

Trackbacks

  1. […] Another line run by the wind industry is that wind power is decreasing not only wholesale prices, but is reducing retail power prices (see this twaddle dished up by Pac Hydro’s Lane Crockett in the Guardian). Nowhere in Australia have retail power prices been reduced. Australian retail rates went from being among the lowest to among the highest in the world: South Australia – Australia’s “wind power capital” suffers the highest retail prices in the world (see our posts here and here). […]

  2. […] on wind power has led to outright chaos in its power market and it’s only going to get worse (see our post here).  Is it any wonder then that South Australians are paying the highest power prices in the […]

  3. […] it appears, that Butler is keen to give his constituents more of the same.  A large number of the more than 50,000 SA homes that have been disconnected from the power grid in the last couple of years are situated in […]

  4. […] household living standards – he simply wouldn’t have allowed them to end up suffering the highest electricity prices in the world (which they are now) thanks to SA’s recent rush to insanely expensive, intermittent and […]

  5. […] are apparently taking their economics advice from Wang Wang and Funi – Adelaide’s fun loving pandas who were enlisted by WWF work out just why South Australia […]

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