How South Australia’s Wind Farm Gamble Led to a Power Crisis

koutsantonis

Tom Koutsantonis: is he just pretending to listen to a State in crisis?

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South Australians dwell in Australia’s economically dismal ‘wind power capital’. Their attempt to rely on these things as a ‘meaningful’ power source sees them not only paying the highest power prices in the Nation by a mile (if not the world, on a purchasing power parity basis) – but sees them glaring at each other through Stone Age ‘gloom’ when its wind power output totally collapses, on a totally unpredictable basis:

Rocketing Prices AND Blackouts: South Australians Lament Their Dark & Dismal Wind ‘Powered’ Future

Wind Industry’s Armageddon: Wind Farm Output Collapse Leaves 110,000 South Australian Homes & Businesses Powerless

May 2015 SA

The consequences are a thoroughly unreliable grid, prone to mass wind power blackouts, and family punishing and business crippling power prices – which will rocket further as its cheapest base-load plant at Port Augusta is closed in April.

While its vapid Premier, Jay Weatherill jetted 16,000 km to Paris to bathe in his own ‘glory’ – describing his State as a renewable power leader – a slightly different take on SA’s energy policy was being bandied about in the press. The most oft used term employed was ‘crisis’ – raining on Jay’s Paris Climate Jamboree Parade.

The scale and scope of its wind power debacle has hit major employers – such as Nyrstar – like a brick dropped on a sleeping forehead.

So serious has the situation become, that Tom Koutsantonis – SA’s Minister for Finance, State Development, Mineral Resources and Energy, and Small Business – was press ganged into meeting business leaders, who have reached a state of furtive panic about SA’s ludicrous power ‘policy’.

Here’s The Australian with a little detail on SA’s looming date with economic and social disaster.

South Australia faces crisis over power availability, prices
The Australian
Rebecca Puddy
21 December 2015

The national energy market regulator has warned that South Australia is likely to face continued price volatility and “significantly lower” electricity availability with the retirement of two gas and coal power stations and an increased reliance on wind.

A report by the Australian Energy Regulator warned that despite the upgrade of the interconnector with Victoria, “current forecasts indicate total capacity (including imports) available to the South Australian region will be significantly lower in 2018 than in 2015”.

The AER said spot prices, which averaged $69 per megawatt hour in the September quarter, were at least 50 per cent higher than in any other state. The warning comes just months ahead of the shutdown of the 546MW capacity Northern Power Station in Port Augusta and the 2017 mothballing of the 480MW capacity Torrens Island A plant, which will leave the state even more reliant on Victoria’s Heywood power station, wind and rooftop solar.

The regulator’s state of the energy market report said wind supplied 33 per cent of electricity consumption from the South Australian grid last financial year and was, at times, the dominant form of generation. “However, wind generation tends to be lower at times of maximum demand,” it said. “In South Australia, wind typically contributes 10 per cent of its registered capacity during peaks in summer demand.”

South Australia’s reliance on the interconnector from Victoria saw power prices spike to more than $9000 per megawatt hour in an incident last month that also saw supply to 110,000 customers cut for 35 minutes.

The regulator said the state was “islanded” from the rest of the country’s energy market after the Heywood interconnector in Victoria was tripped and local generation could not ramp up quickly enough to replace it.

Alinta chief executive Jeff Dimery told The Australian the state had an increased risk of future brownouts because it had failed to create multiple connection points with interstate power generators.

The company’s Port Augusta power station would remain open until April, extending the employment of its 185-strong workforce and providing the state with locally generated baseload power through to the cooler autumn months, he said. Technical issue­s had taken some of the station offline over the past few months, extending the remaining life of the coal stockpiles.

He said he was not surprised power prices were spiking in the state even before the station had closed. “The reality is that when we were in the market we were being offered sub $50 per megawatt hour and today there are contracts going for $90. There is no question we were holding prices down from being in the market.”

He described coal-fired stations as “yesterday’s assets”, particularly in lieu of Australia’s commitment to the Paris climate accord.

On Wednesday, the Weatherill government called a crisis meeting of energy users and suppliers to discuss the sharp rises and falls in wholesale electricity prices.
The Australian

22 July SA

The reason for “sharp rises and falls in wholesale electricity prices” is all down to SA’s 1,477MW of wind power capacity and the fact that it can only ever be delivered at crazy, random intervals – if at all.

The volatility of spot prices (what the grid operator has to pay to get generators to supply) is even greater – where total and totally unpredictable wind power output collapses see the spot go from around $70 per MWh to the market cap of $13,800 per MWh.

As a result of the output collapse on 22 July (seen above), the spot price reached $2,296.07/MWh for the trading interval (TI) ending 1830 hrs; and the 5-Minute dispatch price reached $13,481.81/MWh in South Australia for dispatch interval (DI) ending 1810 hrs.

What started as momentary market rorting, has become a routine feature of SA’s power market:

South Australia’s Unbridled Wind Power Insanity: Wind Power Collapses see Spot Prices Rocket from $70 to $13,800 per MWh

The “supply cut” to 110,000 SA homes Rebecca refers to occurred on Sunday 1 November 2015, when wind power output collapsed by over 500MW in the space of an hour or so; the collapse overloaded the interconnectors, which shut down to avoid permanent thermal meltdowns – and the almost state-wide wind power blackout lasted a whole lot longer than “35 minutes”. Many Adelaide suburbs and regional centres were without power for over 3 hours.

Another little furphy Rebecca Puddy falls for is the line about wind power supplying “33 per cent of electricity consumption from the South Australian grid last financial year and was, at times, the dominant form of generation”.

SA 1 Nov 15

Although Rebecca might have considered wind power the ‘dominant form of generation’ on the afternoon of 1 November 2015 – when output spiked at around 700MW – its ‘dominance’ lasted less than an hour that day.

During the first part of the day – 4am to noon – output was generally less than 100 MW (or 6.7% of total capacity), falling to a derisory 10 MW around 10am; hardly what you might think of as ‘dominant’!

As an afternoon coastal breeze whipped across the state, output managed to briefly spurt (for around 60 minutes) to 700 MW (or a whopping 47% of total capacity). And that was the ‘best’ output SA’s wind farms could muster: less than half of total capacity for barely 1 hour out of 24 – or 4.16% of the day.

As a briefly benevolent sea breeze worked itself into a tree-tickling zephyr, output plummeted to around 150 MW by midnight; an interconnector killing drop in output of 550 MW, over a span of less than three hours. With the most rapid drop of 250 MW seen in the 20 minutes before 9pm; and a further 150 MW drop from that point to midnight.

The end result was a notionally First World State being plunged into Sub-Saharan African darkness for hours.

Power is one of those things that people (used to having it on tap) tend to take for granted. But deprive them, for a time, and the ‘romance’ of a dimly lit evening with candles soon turns to frustration and anger: as perishables start to perish; iphones lose their charge; and the flat screen TV looks like an expensive impressionist work in lifeless ebony.

Funny, you know, that power punters – selfish lot that they are – tend to consider having power available when they need it, as a “here and now” kind of thing. And that those hanging on in the ICU aren’t so very keen on “averaging” out their even more pressing power needs:

ICU Respiratory_therapist

Nope, sorry, no power today. Hang in there, the wind’s bound
to pick up tomorrow, and things will eventually ‘average’ out.

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The next piece from the AFR, is also peppered with the same type of rookie error: that power is supplied and consumed in terms of ‘averages’.

SA nov 15

True, the output from SA’s 17 wind farms (notional capacity of 1,477MW) – as that shown for November last year – could be ‘averaged’ over the month.

However, that same type of meaningless result can be achieved by sticking your left foot in a bucket of boiling water and your right in a bucket of ice. Sure, the temperature you’re exposed to can be ‘averaged’ out – it being no doubt correct to say that the lower extremities are being exposed to 50C, on ‘average’: but, despite that seemingly pleasant ‘average’, for some strange reason, you’ll need treatment for both burns and frostbite.

Averaging wind power output to a grid designed to be both reliable and secure, holds just about the same level of statistical pointlessness. For some stats with relevance and meaning:

South Australian Wind Power “FAILS”

The Wind Power Fraud (in pictures): Part 1 – the South Australian Wind Farm Fiasco

Eastern grid3

Even with the most geographically widespread grid-connected set of wind farms in the world (the 3,669 MW of wind power capacity connected to Australia’s Eastern grid across SA, Victoria, Tasmania and NSW) there are dozens of occasions each year when total wind power output struggles to top 2% of installed capacity – and hundreds when it fails to muster even 5%:

The Wind Power Fraud (in pictures): Part 2 – The Whole Eastern Grid Debacle

And see our posts here and here and here.

Now, here’s the AFR’s take on SA’s wind power debacle.

Renewables: Calling the limits on green power
Australian Financial Review
Mark Lawson
15 December 2015

Problems with electricity supply in South Australia show the practical limits to the use of renewables in Australia.

The Paris climate conference may have come up with a feel good statement about reducing emissions, but as the problems of the South Australian electricity market in integrating the state’s large supply of wind power show, there is a practical limit to the use of renewables in Australia.

As reported in The Australian Financial Review on Monday the state’s wind generators produced 30 per cent of its energy needs in 2014-15, with wind and solar combined producing 38 per cent. But that high level of supply from intermittent power has played such havoc with the supply that South Australian Treasurer Tom Koutsantonis has called a crisis meeting of energy users and suppliers.

These problems are no surprise to power engineers, although few have been willing to make public statements for fear of the storm of criticism from powerful green and wind lobbies.

As those engineers have been saying for years, although electricity grids have to be balanced for both voltage and frequency 24 hours a day, small amounts of wind, solar and photovoltaic power can be absorbed relatively easily as the grids are operated within certain design tolerances. Tweaking the output of other generators can widen that tolerance.

High levels of alternative energy supply also can be achieved by individual countries in Europe, where the grids are much larger, denser and geographically compact than the widely spread Australian grids. If the many photovoltaic panels in Germany are buried under snow for weeks, as happens every winter, then the power authorities can buy electricity from coal plants across the border in Poland or from nuclear power stations in France. When the wind stops blowing in Denmark, that country can import hydroelectric power across the Baltic from Sweden and Norway.

Another category

South Australia is in a different category. The state can always import power from Victoria’s brown coal plants over an interconnector which can supply up to 28 per cent of the state’s needs, but if that interconnector falls out of service and the wind stops blowing, spot prices for the state will spike to almost $2000 a megawatt.

When the wind is blowing strongly wind farm power will flood the market to pull prices down to minus $20 (generators pay retailers to take the power). This is obviously uneconomic for conventional generators, but wind and solar generators can still make some money under the renewable energy target.

This volatility can also gravely complicate the problem of maintaining supply. As a report by Deloitte Access Economics to the Energy Supply Association of Australia, which notes this price volatility, says, this high level of renewables is “already challenging the sustainability of the system”.

This volatility and instability, which have also resulted in wholesale prices not much short of double those of Victoria and NSW is set to worsen as more conventional capacity is withdrawn next year. But few investors will be interested in building new plant to supply a market that has such a price lottery.

At the same time, major users interested in building employment-generating projects, such as the redevelopment of the Port Pirie lead and zinc smelter, are being deterred by what promises to be an unreliable supply. Doubts expressed by Nyrstar, the Dutch company developing the Port Pyrie smelter, prompted the emergency meeting.

None of this will be acceptable or even acknowledged by the many, vocal proponents of renewable energy, which can include politicians. South Australian premier Jay Weatherill used the meeting as a venue for announcing that Adelaide would be carbon-neutral by 2050. However, the SA experience shows that renewables have their limits on Australian grids.

If activists have their way and renewables take over the whole market, the result will be brownouts, energy poverty and job losses all in the name of saving the planet.
Australian Financial Review

In his his very last observation, Mark Lawson scores a direct hit:

The Cost of Wind Power: Killing Jobs and Crushing Families – SA’s Biggest Smelter Under Threat with 750 Jobs at Risk

However, apart from satisfying wind-cultists, these things don’t ‘save’ anything, let alone the planet. See our posts here and here and here; and:

Wind Industry’s CO2 Abatement Claims Smashed by Top Physics Professor – Dr Joseph Wheatley

But we feel obliged to unpack Mark’s comment about revenue for wind power outfits under the LRET when he says:

When the wind is blowing strongly wind farm power will flood the market to pull prices down to minus $20 (generators pay retailers to take the power). This is obviously uneconomic for conventional generators, but wind and solar generators can still make some money under the renewable energy target.

In short, wind power outfits collect the same amount of revenue, irrespective of the spot price. However, conventional generators receive the prevailing price – and, unlike wind power outfits, do not receive any form of subsidy for what they dispatch: the market perversion driven by the LRET and subsidies for wind power is what has caused SA’s conventional generators to become unprofitable; and it’s that lack of profitability that led to Alinta’s decision to close its Port Augusta plant.

The Power Purchase Agreements (PPAs) struck between wind power outfits and retailers (which you’ll never once see the likes of Infigen or Trustpower talk about publicly) are built around the massive stream of subsidies established by the Large-Scale Renewable Energy Target (LRET) – which is directed to wind power generators in the form of Renewable Energy Certificates (RECs aka LGCs).

Under PPAs, the prices set guarantee a return to the generator of between $90 to $120 per MWh for every MWh delivered to the grid.

In a company report last year, AGL (in its capacity as a wind power retailer) complained about the fact that it is bound to pay $112 per MWh under PPAs with wind power generators: these PPAs run for at least 15 years and many run for 25 years.

Wind power generators can and do (happily) dispatch power to the grid at prices approaching zero – when the wind is blowing and wind power output is high; at night-time, when demand is low, wind power generators will even pay the grid manager to take their power (ie the dispatch price becomes negative)(see our post here). As noted in the AFR piece, wind power outfits have been paying the grid operator up to $20 per MWh to take power with no commercial value.

However, the retailer still pays the wind power generator the same guaranteed price under their PPA – irrespective of the dispatch price: in AGL’s case, $112 per MWh.

PPA prices are 3-4 times the cost that retailers pay to conventional generators; retailers can purchase coal-fired power from Victoria’s Latrobe Valley for around $25-35 per MWh.

Underlying the PPA is the value of the RECs that are issued to wind power generators and handed to retailers as part of the deal.

The issue and transfer of RECs under the LRET sets up the greatest government mandated wealth transfer seen in Australian history: the LRET is – without a shadow of a doubt – the largest industry subsidy scheme in the history of the Commonwealth. That transfer – which comes at the expense of the poorest and most vulnerable; struggling businesses; and cash-strapped families – is effected by the issue, sale and surrender of RECs. As Origin Energy chief executive Grant King correctly puts it:

“[T]he subsidy is the REC, and the REC certificate is acquitted at the retail level and is included in the retail price of electricity”.

It’s power consumers that get lumped with the “retail price of electricity” and, therefore, the cost of the REC Subsidy paid to wind power outfits. The REC Tax/Subsidy has already added $9 billion to Australian power bills, so far.

Between 2015 and 2031, the mandatory LRET requires power consumers to pay the cost of issuing 490 million RECs to wind power generators. With the REC price currently $72 – and tipped to exceed $90 as retailers get hit with the shortfall penalty set by the LRET – the wealth transfer from power consumers to the Federal Government (as retailer penalties) and/or to the wind industry (as REC Subsidy) will be somewhere between $40 billion and $50 billion, over the next 16 years:

What Kills the Australian Wind Industry: A $45 Billion Federal Power Tax

With more wind power capacity per head than any other State, South Australians are going to be lumbered with a disproportionate share of the ludicrous cost of the REC Tax/Subsidy, set by the LRET.

A cost that is already forcing major employers like Nyrstar to consider shutting up shop – with the immediate loss of 750 jobs in economically depressed Port Pirie. And more than 50,000 SA homes to do without any power at all, now (see our post here).

During his stint in Paris SA’s Premier, Jay Weatherill – in talking up SA’s ‘leadership’ in wind power – reckoned that “you can’t hide your light under a bushel”.

With ‘leaders’ like Weatherill in charge, South Australians will be fortunate to have any kind of light at all, let alone of the kind that’s worth hiding under a bushel.

blackout

Jay, would you mind lifting your bushel for just a while?

About stopthesethings

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

Comments

  1. leanne twilley says:

    Why would you build a wind farm so close to a major town like port augusta. Why not on the opposite side of Port Augusta where it will not be obtrusive to the magnificent views of the flinders ranges. How would you like it if these towers were built near your suburb/town. But once again you will not listen to people like us and use common sense. How long will the jobs last not as long as a permanent power station at Port Augusta i bet.

  2. Reblogged this on Climatism.

  3. Christine Crawford says:

    Seen on the hills of Waubra on 10/01/2016 at 7.30 pm -all those big white monster blades MOVING and around! What were they doing? We’ll, not pumping water that’s for sure… Mrs Chips

    • Thanks for your report, Christine.

      We guess your attention was drawn at 7.30pm because Waubra wind farm had managed a piddling Zero to 40MW until that time. The magnificent burst you noticed lasted for less than 3 hours.

      Good job Victoria has meaningful power sources chugging away in the Latrobe Valley. Otherwise you (and Mrs Chips et al) would have been cooking your breakfast and lunch on a wood stove and reading a book by candlelight when the turbines at Waubra and across Victoria took their daily sabbatical after 9pm.

      So for around 21 of the 24 hours that passed that day, Waubra’s whirling wonders weren’t ‘pumping water’ or doing anything at all, for that matter.

      And Mrs Chips was doing what she’s done for nearly a century; and that’s being reliably powered by gas, coal and hydro – meaningful power sources because they don’t depend on the weather. Wind power is patent nonsense.

      Waubra fail

  4. Big wind is a ponzi scheme, wholly dependant on government enforced subsidies. The minute subsidies for new towers are refused, the whole pyramid scheme collapses

  5. Terry Conn says:

    Another well researched and well written post STT. Your ‘posts’ need to be ‘mandated’ compulsory reading for all journalists.

  6. Jackie Rovensky says:

    South Australians are in a state of total apathy, they are so used to being disappointed by Labor Governments, they have forgotten what a well run State is like to live in. State elections have become so predictable its impossible to see we will ever get rid of Labor. The manipulating of our vote, the ignoring of our calls for caution/consideration and a Fare Go has ensured the people of this State are going to suffer the worst recession they have ever seen. The Great Depression will look like a well run celebratory party, what is heading our way is more than the Recession we had to have its going to be more like the worst most painful and soul destroying event of modern times.
    For a Government to pursue a policy so obviously wrong and stupid has to be a sign that graft and sloth are going hand in hand within our Government.
    If they stopped supporting wind energy and started working hard to encourage proper industry to this State, that is industry that can produce jobs and increase the number as it prospers, industry which produces profit not sitting with its hand out for public funding we would be able to see a future.
    As it is there is no future for SA, it has gone ‘To the Wind’, it has been blown away in a storm of massive destructive proportion. Weatherill and his ilk have ensured SA is going to find it hard to recover, the recovery will be harder than any we have had to face when Labor has been removed from Government in the past. SA has gone from a prosperous well run State under a long running Liberal Government of the past to one that since people started voting Labor in, back in the Dunstan era to one of utter dependence on hand outs from Canberra and stripping every cent they can from the people in the way of taxes and Levy’s and now we are facing the loss of an Essential Service, a service which every other State and western nation takes for granted Electricity – affordable and reliable electricity.
    We cannot call to force the Government out because here in SA there is a legislated 4 year term and I cannot see Weatherill or any of his week kneed co-authors of the devastation stepping down and seeking help from the other party’s in an effort to bring us back from the long fall into darkness we are in.
    Today we were meant to have strong north winds creating a Fire Danger, hence the calling of a Total Fire Ban day what we have where I live is calm gentle breezes and pleasant easy to live with temperatures – we cannot predict the wind no matter how often and forcefully wind energy supporters say we can – but we can predict the dangers of supporting reliance on wind energy for our supplies of electricity – SA is living them.
    The Federal Government needs now to step in and stop the death of this State, it needs to prevent it from happening to other States, it needs to take the reigns and lead the nation to wealth and comfort, it needs to stop funding wasteful projects and start funding truly new technology, technology that WILL bring jobs and increasing numbers of them, and support industry’s which are truly innovative, industry’s which will not rip the heart out of the Nation but build a stronger heart.
    Turnbull and his Government supporters needs to stand up and be counted, to be seen to be doing what is necessary and be seen doing it well. If he can’t he and his supporters need to step back and let those who can take control.

    • Being able to predict the wind (and sunshine) still doesn’t let you run a normal, demand driven grid (as required by industrialized society). You would still have to resort to widespread load management (localized blackouts) when dispatchable generation capacity (and interconnects to remote generation) are exceeded.

      • Jackie Rovensky says:

        I concur, but it was said in the recent Senate Hearings that the industry and its mates believe it is now possible to predict the wind, we of course know that is not so.
        The only thing predictable about reliance on wind energy is we are destined to fall further into despair.
        Wind energy will ensure blackouts become the norm, interconnectors will become something of the past as each State looks to its own needs.
        SA has begun removing the ‘dreaded’ coal and gas production of energy without having any large scale solar, Thermal or Hydro to ensure security of our supply. Even if the Government decides tomorrow to go the Nuclear way nothing will be ready in time to stop or reverse the damage to this State. SA is in a serious situation that the Government cannot find a way out off. What they will have to consider at the very least is to find funds to assist people to install rooftop solar which may take the pressure off a little. That will be a huge ask as the State is Bankrupt – well we have no money in the kitty and a massive overdraft.
        No matter we will still be reliant on unpredictable wind energy. Our Government will be sitting with everything crossed hoping we have gale force winds day in day out month in month out to ensure we can keep some industry and commerce running.

  7. I pointed out this AFR article in another post but it seems very relevant for this one too.

    http://www.afr.com/news/politics/sa-government-in-energy-market-crisis-talks-with-industry-suppliers-20151214-gln55j

    One wonders how Giles Parkinson was ever an editor at The AFR, given that they seem to present some of the best analysis of the failings of the renewables economy.

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