More Australian Wind Power “FAILS”

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Renewables in the doldrums
The Australian
Graham Lloyd
2 August 2014

A spell of calm weather exposes a fatal flaw in the case for wind power

FOR Australia’s multi-billion-dollar renewable energy industry, marooned in the doldrums of investment uncertainty, the big calm before the renewable energy target review storm came last week. For two consecutive days a high-pressure system becalmed southeastern Australia, stranding the nation’s entire fleet of wind turbines.

Figures provided by the Australian Electricity Market Operator show that on July 21 registered wind generation in the National Electricity Market fell to a low of 23 megawatts. The minimum average for any two-hour period was 24MW. That is the power production figure for all wind turbines in South Australia, Victoria, NSW and Tasmania, which have a combined capacity of 3300MW.

The crash in supply from wind was repeated the following day.

There are two ways to look at last week’s collapse of electricity supply from wind. AEMO said there was no generation “shortfall” from the perspective of the National Energy Market because there was more than 36,000MW of electricity available from other sources of generation to pump into the system when wind dropped.

But for others the forced withdrawal of wind energy highlights a fundamental weakness of renewable technology. In oversupplied electricity markets, such as Australia’s, the shortfall may be easy to absorb. But as the penetration of renewables grows the impact of when it goes missing multiplies.

While political attention has been on rising domestic electricity prices there are much bigger issues at play in the federal government’s review of the MRET. Behind the intense ideological and self-interested lobbying for zero-carbon technology, the government ultimately must balance the same competing environmental and economic conflicts bedevilling policymakers worldwide.

Is an MRET the best and most cost-effective way to make the transition to a carbon-constrained world? Can it deliver? Will affordable storage technology evolve quickly enough to beat intermittency issues? What role is there for gas as a transitional fuel and economic game-changer, as it has been in the US? Put simply, is there a better way?

Despite strong support, there have been warnings on the pitfalls of forcing renewables into the system, most notably from Germany. But a discussion paper prepared for the Energy Supply Association of Australia says, like Europe, industrial competitiveness is a major policy topic for Australia, with cheap US shale gas on the one hand, and cheap Asian labour on the other, making competitive energy prices vital to the future wellbeing of the Australian economy.

A new paper prepared for the US electricity industry by Swiss consultancy Finadvice provides some valuable insights.

The Finadvice paper concludes: “The lessons learned in Europe prove that the large-scale integration of renewable power does not provide net savings to consumers, but rather a net increase in costs to consumer and other stakeholders.”

Sound familiar? And this: “Overgenerous and unsustainable subsidy programs resulted in numerous redesigns of the renewable support schemes, which increased regulatory uncertainty and financial risk for all stakeholders in the renewable energy industry.”

More significant for Australia’s current RET inquiry, due this month, is confirmation of the problems posed by “intermittency” of renewables. Renewable energy operators, including Infigen Energy, claim the German comparison is unfair because of the different regulations and poorer quality wind and solar resources in Europe compared with Australia.

But last week’s wind drought in southeastern Australia shows there will always be a need for power generation equal to entire demand for times that there is no contribution from wind. In Australia, this can be compensated to some extent by interconnection of the national market and the addition of quick-response peaking gas-fired turbines.

But electricity industry experts warn there is a hidden long-term cost. The Finadvice paper documents the financial and technological squeeze that market transformation is imposing in Europe. Fossil and nuclear plants are “now facing stresses to their operational systems as they are operating under less stable conditions and are required to cycle more often to help balance renewables’ variability”, the Finadvice report says.

As renewable penetration grows and the wholesale market is crunched by oversupply, new subsidies are required in the form of “capacity payments” to keep fossil-fuel generation available on demand. Engineer Paul Miskelly claims the report justifies concerns he raised in a 2012 paper in the journal Energy and Environment. “Not only does intermittent, and highly subsidised wind completely ruin the financial returns on the still essential coal and gas-fired generation, thus decreasing incentives to replace this essential generation as required, it causes actual mechanical damage to the existing plant, resulting at the very least in a significant reduction in both plant reliability and operational lifetime,” Miskelly says.

“Perversely, the (Finadvice) report also shows too clearly coal and gas-fired generation remain essential to back up wind.”

For Australia, the issue will become greater as the percentage of renewables in the system inc­reases. It is one of the core arguments towards reducing the 2020 RET to a “true” 20 per cent rather than the existing set figure of 41,000 gigawatt hours by 2020, which on present estimates would equal closer to 30 per cent.

Energy company GE says gas has an important role to play, telling the RET review the relationship between gas and renewables will evolve to complement each other rather than compete. “The partnership between gas and renewables is build on supporting each others’ weaknesses,” GE says.

“The variability of renewable sources can be complemented with flexibility of gas-fired power.”

“At the same time, the zero fuel cost associated with renewable generation can provide a valuable hedge against potential gas price volatility.” The gas industry, however, has argued the RET is an economically inefficient policy that should be discontinued.

A report by BAEconomics for gas industry lobby group APPEA found the RET forced higher-cost renewable energy into the electricity generation mix at the expense of lower-cost emissions abatement opportunities from gas generation and elsewhere.

Renewable energy companies have tried to turn the cost argument on its head, claiming low cost wind generation has pushed prices down overall in the wholesale market. Infigen Energy told the RET review the low marginal cost of renewable energy was reducing wholesale electricity prices to the benefit of consumers.

But the consumer benefits of the low running cost of renewables is hotly contested. A discussion paper on wind power in South Australia for ESAA says wind farms are able to bid into the National Electricity Market at low prices in part because they receive payments (in the form of renewable energy certificates) from outside the market.

“This distorts the otherwise efficient operation of the NEM,” the paper says. In effect the savings on the wholesale market are a mirage because of the high subsidy built into power purchase agreements and RECs through the RET ultimately is passed on to consumers.

Outspoken West Australian Liberal senator Chris Back has told parliament power purchase agreements, which are needed to finance renewable projects, lock in prices of up to $120 a megawatt hour compared with the average wholesale price of between $30 and $40 a MWh.

“The price set by the PPA is paid by the retailer irrespective of the wholesale price and passed on to retail customers along with retail margin over the life of the PPA, which is usually 15 and up to 25 years,” Back says. He also takes issue with industry claims of sovereign risk, which has been widely cited as a reason not to wind back the RET, saying the RET system was always subject to review that might result in a decrease in value.

Renewable industry lobby group the Clean Energy Council says a reduction of the RET would affect $10 billion of existing investment and imperil $15bn worth of projects now in planning.

Nonetheless, when the federal government finally makes a decision on what to do about the RET, it is expected to be sympathetic to existing renewable energy projects. The likeliest outcome would be to scale back the RET to a “true” 20 per cent and exempt “special” cases such as Tasmania’s aluminium industry.

Despite pleas for investment certainty, the review is unlikely to solve the issue for the long term. A clue to the future is contained in the RET review submission lodged by the Australian Energy Market Commission, which makes and amends the rules for the National Electricity Market and elements of the gas markets.

The AEMC says energy and environmental policies have different objectives and it is important they are developed in a manner where any efficiency trade-offs and costs are well understood. The AEMC says it does not consider the present policy of a fixed 2020 target sustainable. It has recommended moving to a floating 20 per cent target to shift the allocation of demand risk from consumers to investors.

AEMC’s alternative suggestion is more radical but ultimately may prove more durable. It is to move the RET to an emissions intensity-based scheme under which generators below a defined emissions intensity level are able to create certificates that generators above the level are liable to purchase.

AEMC says this type of approach will encourage all lower emissions technology options, not only renewable energy, and therefore is likely to meet any emissions reduction target at a lower cost. It is an approach that avoids picking technology winners and AEMC hopes it may contribute to the policy certainty necessary to provide industry with confidence to continue to invest in the energy sector.
The Australian 

The Finadvice paper – referred to above – has tipped a bucket on a swathe of wind industry lies and myths; not least claims that wind power is a substitute for fossil fuel generation sources (see our post here).

The reason is simple: the wind stops blowing almost every day and for days on end. But don’t take our word for it, let’s have a look at the Australian wind power output scoreboard courtesy of http://windfarmperformance.info/.

Here’s data for the entire Eastern Grid – which covers every wind farm in Victoria, Tasmania and New South Wales, as well as including the 1,329 MW of installed capacity that comes from Australia’s “wind power capital” – South Australia. All of these wind farms are connected to the Eastern Grid and together have a total installed capacity of 2,952 MW. Oh, and if our data looks a little fuzzy, click on the image, it will pop up in a new window, use your magnifier and it will look crystal clear.

Entire Eastern Grid – 20 July 2014 – from 12 noon to 6.30pm (6.5hrs):

Total wind farm output: never more than 140 MW; generally less than 70 MW; collapsing to less than 20 MW for 2hrs.  (Note the collapse of over 600 MW between 4.30am and 3pm).

Output as a percentage of total installed wind farm capacity: 12 noon to 6.30pm – 4.7%, generally less than 2.3%, falling to 0.67%.

Total demand (average): 22,000 MW.

Contribution to total demand as a percentage: 12 noon to 6.30pm – never more than 0.64%, generally less than 0.32%, falling to 0.09%.

Entire Eastern Grid – 21 July 2014 – from 11am to 8.30pm (9.5hrs):

Total wind farm output: never more than 120 MW; generally less than 60 MW; collapsing to less than 20 MW for 2hrs.  (Note the collapse of 580 MW between 3am and 3pm).

Output as a percentage of total installed wind farm capacity: 11am to 8.30pm – 4.1%, generally less than 2%, falling to 0.67%.

Total demand (average): 24,000 MW.

Contribution to total demand as a percentage: 11am to 8.30pm – never more than 0.5%, generally less than 0.25%, falling to 0.08%.

Entire Eastern Grid – 22 July 2014 – from 3.30am to 6.30pm (15hrs):

Total wind farm output: never more than 140 MW; generally less than 70 MW; collapsing to less than 20 MW for 5hrs.

Output as a percentage of total installed wind farm capacity: 3.30am to 6.30pm – 4.7%, generally less than 2.3%, falling to 0.67%.

Total demand (average): 24,000 MW.

Contribution to total demand as a percentage: 3.30am to 6.30pm – never more than 0.58%, generally less than 0.29%, falling to 0.08%.

Entire Eastern Grid – 2 August 2014 – from 4.30am to 9pm (16.5hrs):

Total wind farm output: never more than 165 MW; generally less than 140 MW; dropping to 80 MW.

Output as a percentage of total installed wind farm capacity: 4.30am to 9pm – 5.6%, generally less than 4.7%, falling to 2.7%.

Total demand (average): 22,000 MW.

Contribution to total demand as a percentage: 4.30am to 9pm – never more than 0.75%, generally less than 0.63%, falling to 0.36%.

Bear in mind that the wind farms covered by the data above are spread over 4 States.

On the Eastern Grid Australia’s wind farms are spread from: Jamestown in the Mid-North, west to Cathedral Rocks on lower Eyre Peninsula and south to Millicent in South Australia; down to Cape Portland (Musselroe) and Woolnorth (Cape Grim) in Tasmania; all over Victoria; and right up to Cullerin on the New South Wales Tablelands.

Those wind farms have hundreds of fans spread out over a geographical expanse of 632,755 km². That’s an area which is 2.75 times the combined area of England (130,395 km²) Scotland (78,387 km²) and Wales (20,761 km²) of 229,543 km².

One of the wilder claims made by the wind industry is that if you erect thousands of giant fans over a large enough area wind power will produce base-load power and replace on-demand sources such as hydro, gas and coal: the “distributed network” myth.

Nowhere else in the world are so many interconnected wind farms spread over such a large geographical expanse. If there was a shred of substance to the distributed network myth, then we’d see it in the data above. But it just ain’t there.

When you have 2,952 MW of installed capacity – connected and spread over an area more than twice the size of Great Britain – producing less than 140 MW for hours on end – and, on plenty of occasions, less than half that figure – the idea that wind power is providing (or could ever provide) “base-load” power – or even power “on demand” – by having wind farms spread far and wide is infantile nonsense. For a solid debunking of that and other wind industry myths see our post here.

Oh, and if you think the data we’ve picked represents a few “unlucky” days for wind power generators see our posts here and here and here and here and here and here.

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).

The application of a modicum of logic and a little hard data puts paid to the claim that wind power can lower power prices across the board; or at all. Just what impact did wind power have on the market for sparks on 20, 21 and 22 July and 2 August when total wind power output was contributing less than 0.75% (and generally half that) towards total demand on the eastern grid? At those levels of output, wind power has no commercial value and is regarded by grid managers as nothing more than a nuisance.

That brings us to the wind industry’s last line of “defence”: that wind farms are saving the planet.

The need to have fossil fuel back-up constantly running in the background (spinning reserve) and fast-start up Open Cycle Gas Turbines to cover routine wind power output collapses means that wind power cannot and will never reduce CO2 emissions in the electricity sector (see our posts here and here).

The data above (and which we’ve covered in numerous posts) make it plain that 100% of wind power’s installed capacity has to be backed-up 100% of the time: if it wasn’t, there would be widespread blackouts across the entire Eastern Grid (see our post here).

To the contrary of wind industry claims, the result of trying to incorporate wind power into a coal/gas fired grid is increased CO2 emissions (see our post here and this European paper here; this Irish paper here; this English paper here; and this Dutch study here). Which means that what started out as a sop to well-meaning feel-good “green” politics, has monumentally failed to satisfy the only justification for the extraordinary cost of the mandatory RET and the REC Tax/Subsidy (see our post here).

This circus has to end: the mandatory RET must go now.