South Australia: Proving Wind Power a Recipe for Social & Economic Disaster

The image above is taken from the Collins Picture Dictionary under the definition of ‘chaos‘: complete confusion and disorder : a state in which behavior and events are not controlled by anything.

To be fair, South Australia’s power supply is ‘controlled’ ……  ‘controlled’ by the vagaries of the weather, that is.

Renewables alone a recipe for blackouts
Australian Financial Review
Ben Potter
17 May 2016

Australia faces potential blackouts and poor jobs and environmental outcomes if it relies solely on the Renewable Energy Target, a new report says.

South Australia’s energy security problems show the risks for the nation of promoting wind and solar energy in a surplus electricity market without a firm plan for an orderly phase-out of coal-fired stations, it says.

The report is a challenge to federal Labor, which has an aggressive 50 per cent Renewable Energy Target (RET) for 2030 with an undefined carbon price policy, but also the Turnbull government, which is sitting pat on the current RET of about 25 per cent by 2020.

“South Australia is at the forefront of an [unplanned] energy transition”, the report by Tim King, energy policy director at the anti-fossil fuel Institute for Energy Economics and Financial Analysis, says.

Wind and rooftop solar energy will make up about 48 per cent of the state’s electricity generation after this month’s closure of Alinta’s Northern coal power station, well on the way to Labor’s 50 per cent target, it says.

But the rapid growth of renewable energy has triggered abrupt and “surprising” early closures such as Northern, and the state could now be mainly dependent on wind and solar energy for substantial periods of the year.

“In the absence of any meaningful battery storage, the key risk in these developments is energy security,” the report says. Mr King is a former Deutsche Bank Australasia managing director and head of company research.

If replicated nationally, Australia’s National Electricity Market faces “a disorderly transition resulting in the potential for blackouts and poor social and environmental outcomes”, says the report.

Sub-Critical Australia: Risks from Market Imbalance in the Australian National Electricity Market calls for an orderly phase-out of coal power stations “that allows stakeholders to prepare for the inevitable transition to a cleaner electricity system”.

Over-reliance on the RET will have the result of low cost but heavily carbon-intensive brown coal power stations staying in business while less polluting but more costly black coal plant is retired, the report says.

The Australian Energy Market Operator (AEMO) said last year supply in South Australia should remain reliable as long as the Heywood high-voltage interconnector to Victoria’s brown coal power stations is running, but a statewide outage is possible in a “low probability” worst-case scenario of Heywood failing and no other baseload power being available.

The Weatherill state government has been working on a policy to alleviate the security and stability issues created by its heavy dependence on wind and solar since December.

But time is running out for Nyrstar, the Belgian metals group which is due to recommission the Port Pirie smelter midyear after spending $500 million to refurbish it, part-guaranteed from the SA government. SA futures prices for 2017 and 2018 are $82-89 a megawatt hour, about twice Victorian and NSW levels.

The IEEFA report is the second in a month from clean-energy advocates to acknowledge that increasing the RET on its own, without broader policies to hasten the closure of coal power stations and manage the shocks to the electricity market and regional employment, is a recipe for instability.

The Climate Institute said in a report last month that the SA government and AEMO had been too slow to respond to “changes on the ground” ahead of policy responses.

The institute said even with a carbon price renewables would continue to require subsidies of as much as $2.7 billion a year, and total costs of moving to a zero-carbon economy could be as high as $276 billion over 30 years.
Australian Financial Review

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Nice effort, Ben! He is probably the only AFR reporter with something like a clue about power generation and markets, but his sub-editor did him a disservice with the headline ‘Renewables alone a recipe for blackouts’, which would have been on the money had it simply read ‘Renewables a recipe for blackouts’.

SA hasn’t got anywhere near running on ‘renewables alone’ and it already suffers from a chaotic power supply that has Universities shutting lecture halls and needing to replace damaged electrical gear; and which left thousands of commuters at their platforms for two days in a row, as wild fluctuations in wind power output killed the supply to Adelaide’s electric train service (the City to Tonsley/Seaford line).

Ben’s suggestion that SA gets 48% of its power from sunshine and breezes is bunkum. There are hundreds of occasions each year when SA’s 1,477MW of wind power capacity produces absolutely nothing (see our post here) – and, although SA is a bit ‘special’, we’re told that the sun still sets there every day for a 10-12 hour ‘outage’, just like everywhere else. FYI, Ben – in terms of the essential elements of a power supply: security and reliability – averages are utterly irrelevant.

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AEMO’s line about that a “statewide outage is possible in a “low probability” worst-case scenario of Heywood failing and no other baseload power being available” suggests that they haven’t been paying close attention.

SA suffered precisely such a failure and an almost Statewide blackout on 1 November last year, when wind power output momentarily surged and collapsed:

For how that slice of chaos played out, see our post here: Wind Industry’s Armageddon: Wind Farm Output Collapse Leaves 110,000 South Australian Homes & Businesses Powerless

That debacle occurred when SA still had the benefit of dispatchable power from Alinta’s plant at Port Augusta.

Now that critical piece in SA’s security of supply is gone, what SA can look forward to is plenty of regional outages. And, when the interconnectors inevitably fail (as pointed out below), the whole State can look forward to sitting freezing (or boiling) in the dark.

As a taste of things to come, our South Australian operatives inform us that over the weeks since the Port Augusta closed there has been a noticeable uptick in unscheduled outages, at times when storms and downed lines couldn’t be at fault.

Tim King seems to think that SA could avoid a date with the Dark Ages if it had “meaningful battery storage”.

Let’s see how that might play out.

SA is now coal-free – could batteries fill the gap?
In Daily
Roger Dargaville
16 May 2016

South Australia’s last coal-fired power station closed on Monday last week, leaving the state with only gas and wind power generators. The Northern Power Station, in Port Augusta on the northern end of the Spencer Gulf, has joined Playford B – the state’s other coal-fired power station which has already been retired.

The coal mine at Leigh Creek that supplied brown coal to the power stations also closed earlier this year, so there is no easy option for re-opening the power stations.

The immediate impact of the closure was a brief wobble in wholesale electricity prices, with more energy brought in from Victoria’s brown coal power stations (adding to carbon emissions).

But how could it affect the state in the long term?

Could South Australia run out of power?

Average electricity demand in South Australia is 1.4 gigawatts, and the state record for peak demand of 3.4 gigawatts was set in January 2011. In the past two years the highest demand was 2.9 gigawatts.

Rollout of rooftop solar panels is one of the reasons demand from the grid has been going down. The impact on the peak demand – the time of day when most people are using appliances – is less clear, because if the peak occurs after sunset, solar panels will not reduce it.

With the closure of the 520 megawatt Northern Power Station, South Australia is left with 2,800 MW of capacity in its gas-fired generators, which can be fired up when needed, and 1,500 MW of wind farms, which of course produce energy only when the wind blows. Most gas generation capacity comes from the Torrens Island A (480 MW) and B (800 MW) installations, built in the 1960s and 1970s, respectively.

There have been discussions about retiring Torrens Island A (it was mothballed for a period in 2014), but the departure of Northern appears to have delayed those plans.

The state also has a total of about 600 MW of rooftop solar, but, as noted above, this technically counts as reducing demand rather than adding to supply.

South Australia is also connected to Victoria via two transmission lines, one at Heywood (recently upgraded to 650 MW) and one at Murray Link (220 MW). This gives the state access to a potential 870 MW of Victorian power.

If South Australia gets close to record demand, the state clearly outstrips the capacity of the local gas generators. If the wind isn’t blowing, then the state will depend on the interconnectors.

But there is an unfortunate factor that transmission lines tend to fail under very high temperatures, which correspond to the times of highest demand.

It may sound unlikely, but South Australia is at risk of failing to meet demand. This would depend on a very specific set of circumstances:

• record demand (despite the increase in rooftop solar reducing demand)
• no wind
• failed interconnectors (or failure of local generators).

A role for storage?

This situation means the state is the most likely location for investment in storage. The Australian Renewable Energy Agency (ARENA) recently published a report on storage that identified several locations in South Australia that would be logical places to install commercial-scale batteries.

We at the Melbourne Energy Institute have previously written about pumped hydro storage options, in particular the novel approach of using salt water. This may be of particular use in a very dry state such as South Australia.

But batteries are only going to be attractive investments if there is sufficient volatility in the market to provide arbitrage opportunities. Arbitrage, put simply, is the process of buying low and selling high.

Storage systems need be able to be charged with low-cost energy (for instance, overnight when demand is low, or when the wind is blowing hard) and dispatch the power back onto the grid at a sufficient profit to cover the investment costs.

We are currently in a low-demand period of the year (the shoulder seasons have both low heating and cooling requirements).

This means there has not been much shift in electricity prices coming out of South Australia with the removal of Northern. It might not be until next summer, with hot temperatures and increased demand from air conditioners, that we are able to see the true magnitude of the impact of this exit on electricity prices and market volatility.

To date (only days since the closure), the wind has been blowing hard and there has been no need to increase substantially the generation from other fossil generators. Likewise, there have been no discernible shifts in the spot market prices.

Finally, the impact on carbon emissions will also be interesting. This will depend on how the remaining generators respond. The gap left by Northern may be filled with South Australian gas, in which case total emissions will fall, but more likely the gap will be filled with Victorian coal power via the interconnectors, resulting in no reduction in net emissions.

We will know the net result in due course – watch this space.
In Daily

Roger might like to keep a close eye on the spot market and watch what happens when SA’s wind power output collapses totally, and on a totally unpredictable basis – as it does hundreds of times each year: South Australia’s Unbridled Wind Power Insanity: Wind Power Collapses see Spot Prices Rocket from $70 to $13,800 per MWh

And we would love to see Roger’s cost/benefit analysis of either wind power feeding pumped hydro or battery storage at grid-scale volumes, which has never been achieved anywhere in the World (see our post here).

South Australians have been left with an electricity fiasco: the highest retail power prices in the Nation, by a factor of 2; and a grid on the brink of total collapse. The last one out won’t need to turn out the lights – they’ll be out long before they reach the exits.