Desperate Measures: Renewables Rush Leaves Australians Scrambling for Reliable Power

Act in haste, repent at your leisure: Australia’s self-inflicted renewable energy fiasco has sent power prices through the roof and all but destroyed its once reliable power supplies.

Over our Southern Summer, grid managers have been tearing their hair out, as they attempt to keep the lights on in South Australia, Victoria and New South Wales.

Western Australia goes it alone, happily running on coal and gas. Queenslanders are still chugging merrily away on coal, albeit with the largest concentration of domestic rooftop solar in the country. But in the South-Eastern States of SA, Victoria and NSW – with heavy concentrations of wind power and domestic solar – power consumers are playing a game of musical chairs: every time the sun goes down and/or the wind stops blowing, somebody, somewhere is simply bound to miss out [Note to Ed: they’re calling it ‘demand management’].

To put it mildly, the situation is thoroughly desperate.

The National Energy Guarantee was put forward as one method by which power consumers might avoid boiling in the dark during summer, and of freezing to death in winter: PM’s Reliable Power Play Spells Disaster for Unreliable & Intermittent Wind Power

But that policy is some way off: SA’s vapid Premier, Jay Weatherill has sought to scuttle it, in order to protect his wind industry mates and his reputation as the Grand Poobah of Wind.

Here’s former Queensland Nationals Senator, Ron Boswell with another suggestion on how Australia might keep the lights on and air-conditioners running this summer, and beyond.

How to energise power suppliers to cut prices: stiff competition
The Australian
Ron Boswell
21 December 2017

The lesson from AGL shutting the Liddell coal-fired plant is to bring on competition

A few days ago, AGL rejected the Turnbull government’s request that it extend the life of its coal-fired power plant at Liddell in the Hunter Valley and said it would replace it with a mix of wind, batteries and solar energy.

Case closed, said the renewables lobby and many of its urgers in the media. Energy security problem solved, and by the way, coal-fired generation is dead, they said.

Nonsense.

While this may be good for AGL shareholders, it’s a disaster for struggling families and businesses being punished by some of the world’s highest energy costs. It guarantees higher profits for AGL by locking Australia into high-cost energy sources.

At a time when emergency diesel generators are being placed in the Latrobe Valley next to the recently closed Hazelwood Power Station, it’s clear there is a real problem with electricity supply in this country.

With due respect to the Turnbull government, it asked the wrong question of the wrong company.

Several months ago, the Australian Energy Market Operator advised the government of a looming shortfall in baseload power supply in the early 2020s, and highlighted the closure of the Liddell power station, operated by AGL, in 2022.

The government’s response should have been simple: it should have issued an ultimatum to AGL — if you’re not prepared to maintain that level of power generation at Liddell, then let someone else.

The government could then have commissioned a reverse auction to provide 1000 megawatts of synchronous baseload power under a long-term (15 to 20 years) power purchase agreement, with first delivery in 2022 or 2023 (depending on Liddell’s closure date).

No energy source should have been preferred or excluded. No energy provider preferred or excluded. And consistent with the approach of the National Energy Guarantee, no subsidies for any energy source. None for wind, solar, coal or gas.

AGL should have been allowed to bid, like any other provider (or consortium of providers).

The auction should have been conducted in close co-operation with the NSW government so that access to land and infrastructure would be available to other energy providers, so there were no artificially high barriers to entry for new players.

And the winning bidder should have been the lowest bidder.

That would have been the best and most logical way to put downward pressure on energy prices while ensuring supply. It would have sent a signal to the market that new players were welcome in the sector.

It would have underlined that the government took a genuinely technology-neutral approach to its primary task of lower energy prices and reliable energy provision.

It also would have established a lowest-cost template for replacing the other 5000 or 6000 megawatts of baseload power that is due to retire along the east coast, because of age, before 2030.

The problem with the government’s ultimatum to AGL is that it implied the latter had an advantage over others. It implied that AGL was the only, or at least the best-placed, provider to keep the lights on and industry going in NSW.

It gave an incumbent a head start in a market that desperately needs new players to add some chill winds of competition and bring down prices.

After all, new data this week showed that more and more households are spending more and more of their disposable income on electricity.

Meanwhile, one of the biggest handbrakes on jobs and wages growth in small and medium businesses is the cost of energy.

The bottom line is that the government must use all the available policy levers it has to drive down energy prices.

The good news is that it is not too late to fix the oversight. The government should say to AGL that it is great that you have plans to replace the energy currently provided by Liddell. But let’s apply some competitive market pressures.

If your plan will provide secure energy at lower cost than anyone else, then you will win the tender.

But if other players can provide lower-cost energy securely and reliably, they win.

It’s a policy approach entirely consistent with the direction of the National Energy Guarantee. The one gap in that policy framework is how to bring on new, secure baseload energy.

The reverse-auction model would be a success in replacing the baseload from Liddell.

It could do the same in Queensland and in Victoria, when the next brown-coal power station prepares to close.

It would do this without picking winners. It would prioritise price and security in energy provision. And it would herald a new era of competitive energy markets in Australia.

Most importantly, it would underline that the federal government, working with its state counterparts, is determined to ensure that electricity prices no longer adversely affect the living standards of Australians.

Ron Boswell was a Nationals senator from 1983 to 2014.
The Australian

Ron Boswell: desperate times call for desperate measures.

About stopthesethings

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

Comments

  1. Jackie Rovensky says:

    What people and MP’s seems to forget or ignore is that many of our so called renewable plants will be coming up to ‘end of life’ periods over the next year or so, so even the unreliable sources will be more unreliable. The sooner the toing and froing stops the more likely we are to have a secure reliable cost effective source of energy supply in place when that happens.
    What the Federal Government needs to do is get off their backsides and start insisting reliable sources of energy are on the go asap. If it needs them to intervene in State’s ‘rights’ they need to do it to ensure the ‘peoples’ rights to a reliable cost effective ESSENTIAL SERVICE is met..
    The news that in the UK renewables are again being paid millions to shut down when their is too much being produced to maintain a secure Grid, only encourages companies to continue to push to get more and more projects up and running. This can be seen as something not yet achievable here but if the push for turbines in Victoria and elsewhere continues at the speed they are now being approved, it won’t be long before these money hungry companies are in a position to ask for the same consideration here. We already know that ‘constraints’ are put on projects here when there is a danger excess intermittent, unsteady production is likely to occur.
    This is the only reason they stay here, the only reason AGL will not relinquish the Liddell site as they see it as a certainty they will be able to use it for their renewables without any planning problems.
    Turnbull wake up and remove the green/red coloured shutters from your eyes. Start looking to the future and work out the simple truth, these companies are here only because of the money they can make out of us. They care nothing for our energy security, our health or our ability to operate as a modern world nation.

  2. More political rhetoric. Any alternative electricity source not sanctioned by current providers or eco-activists is going to need a location for infrastructure. This location will need an environmental impact study prior to construction. If Boswell doesn’t think that any impact study will be tied up in government red tape, multitudes of frivolous submissions and legal challenges for years, then he has another thing coming. Probably way too late now, but the required government regulations will be a barrier to any proposed competitive market expansion.

    • Meanwhile, Liddell made the news for saving the day over the weekend and not plunging more residents into a widespread blackout. Vesey just tacked another $20M onto the cost for the Federal and State governments to keep Liddell operational past 2022. This is entertaining to watch. I should buy stock in AGL.

  3. David Winterflood says:

    Well said Mr Boswell

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