Wind ‘Powered’ South Australia Pays $14,000 per MWh for Power that Coal-Fired Plants Can Deliver for $50

The cost of accommodating the chaos delivered by wind power is utterly staggering. And provides half the explanation as to why South Australia, Australia’s ‘wind power capital’ and the world’s ‘renewables leader’, pays the highest retail power prices in the world. The massive subsidies included in the cost paid by retailers for wind power, provides the other half.

In our recent posts, we’ve focused on the desperate scramble to find electricity when wind’s promised megawatts go missing; and how Victoria’s hospitals and dozens of energy hungry businesses have been forced to power down to prevent a complete grid collapse.

In this post we hand over to Jo Nova to focus on the cost to power consumers of finding electricity from meaningful, but very costly, sources which are meant to operate at the margins, rather than as centre-stage performers.

The owners of diesel generators and Open Cycle Gas Turbines charge like wounded buffaloes for their power because they’re both costly and inefficient, and are only designed to run for short periods or dire emergencies.

The model was set by Enron in California in the late 90s and early 2000’s: engineer an outage and screw the market for every last cent to prevent the grid from collapsing (see our post here).

Thanks to the fact that wind power output collapses, every other day, on a total and totally unpredictable basis (see above the entire output from SA’s 19 wind farms with a combined capacity of 1698 MW from 1 to 26 January), the owners of peaking power plant in Australia don’t need to deliberately engineer the outages from which they profit so very handsomely.

No, Mother Nature joins in the conspiracy against power consumers and allows them to charge $14,000 per MWh for a product that can be delivered by coal-fired plant, all day, every day for $50 per MWh, at a profit.

Remove heavily subsidised wind power from the equation and base-load generators would be free to deliver the goods at prices a tiny fraction of what’s charged by peaking power operators, whenever wind power output collapses.

Jo Nova fills in the details below. STT has thrown in a couple of graphics courtesy of Aneroid Energy and some comments thereon to help them make their point.

Summer heat — electricity prices hit cap of $14 per KWhr in SA, almost there in Victoria
Jo Nova Blog
Jo Nova
18 January 2018

Watching the AEMO dashboard as a hot summer day hits – is this the summer crunch-time that the the National Grid managers have been fearing?

Today things are not running smoothly in the green states of Victoria and SA where prices this minute have hit $14,000 per MW hour, or $14 per KWh. These are wholesale prices. Right now heads of major industries are watching the dashboard, turning off everything they can turn off, or switching on the diesel generators, or counting hundreds of thousands or even millions being added to their bills if production cannot stop.

Demand Management schemes (a form of load shedding) will be running to reduce demand — air conditioners will be remotely switched down.

How much of the productive brain power of Vic and SA is distracted from more useful tasks today?

The AEMO has put out an Actual Lack of Reserve Notice (LOR1) saying that Victoria is 300 MW short: “The contingency capacity reserve required is 1100 MW. The minimum reserve available is 815 MW”. Another notice of a “non-credible contingency event” (a code for “something broke”) reports that a busbar, transformer, and line have tripped or opened in Victoria, unplanned.


[Here’s what Victoria’s 16 wind farms and their notional capacity of 1,516 MW were up to on 18 January (see below) – note the 800 MW collapse starting at Noon coincides with rapidly increasing demand, as the day warmed up, and leads to spot prices topping out at $13,000 per MWh – see above]:


[Here’s what SA’s 19 wind farms and their notional capacity of 1,6898 MW were ‘delivering’ on 18 January (see below). For a brief spurt before breakfast output hits 1,100 MW, there followed a 500 MW collapse that took less than 90 minutes. Over the course of the afternoon output collapses a further 650 MW – from 700 MW to 50 MW; precisely as demand for power peaked. And, surprise surprise, the spot price rockets all the way to the market cap of $14,200 per MWh – see above.]

The notices and forecast for tomorrow are worse

With a few hot days in a row, as buildings get warmer and tempers get shorter, people use more electricity. Hence even if temperatures don’t rise, the longer a hot spell goes, the higher the electricity demand.

This is the 30 minute graph including price and demand, and the forecasts for tomorrow. As far as I can tell, often the shocking forecasts which look like being 3 solid hours of $14,000 electricity will  instead resolve to smaller shorter spikes. But millions of dollars of productivity is likely to be burned.


Times here are Western Standard Time 3 hours behind actual. (It’s an unhelpful thing the AEMO site does).

 In SA:

Times here are Western Standard Time 3 hours behind actual. (It’s an unhelpful thing the AEMO site does).

Jo Nova Blog

Bonfire Electricity Bills! Two day heat wave burns nearly $400m: $45 per head in Vic, $70 each in SA.
Jo Nova Blog
Jo Nova with Paul Miskelly and Tom Quirk
21 January 2018

While geniuses are bragging that the Australian grid survived two normal hot summer days without falling over, they don’t mention the flaming spectacle of the cost.

Tom Quirk and Paul Miskelly, after a couple of suggestions from me, have calculated the full staggering electricity bill at $119m for SA and $267m for Victoria, making it nearly a $400 million dollar bonfire — for two days that were neither the hottest ever, or records for peak electricity use.  See their work and details below.

To put this in perspective, a whole new gas plant could have been built for around $230 million. Instead of vaporising this money, Australians could have constructed one whole new gas generation plant, paid it off, and had money left over to give away free electricity.

Every household of four in Victoria just lost something like $170 of productivity for two days of electricity, and in South Australia, $280. Respectively, $45 per Victorian and $70 per South Australian. While businesses also share this burden, ultimately companies are made of people, and this is productivity lost to both states. The losers are shareholders, customers, and employees. Some will be interstate, but the pain flows back. The price is also paid in higher cost items, lower investment, and fewer jobs. Coles and Woolies still have to cover the cost of keeping the fridges running. The money will be squeezed out of citizens one way or the other.

And this is not the total bill, it’s the excess electricity bill above and beyond the normal but inflated January prices of the last few weeks. Even normal prices now are twice what they were in 2015. Back then, the average price in Victoria and SA was $35 per megawatt hour and the average peak price was $49/MWh. Now the average on a January day are $82MW/h, and $87/MWh respectively.

But wait, it’s worse than that. Even above this excess electricity price, there is the price of buying the diesels (a secret ’til the $400m bill was revealed), plus the cost of all the businesses which bought their own diesel generators (aren’t we a first world country any more?), plus the cost of all the “Demand Response” — the mini blackouts required to stop the system breaking (more on that tomorrow).

Then, then, there is the awful cost of all the businesses that were affected — the stress, the lost production, the investments that won’t happen, and the bizarre spectacle of Australia not having enough electricity to keep the lights on at our hospitals. We are leading the way to the third world!

Ponder the bureaucrat brain that asked hospitals to turn off spare lights

Victorians were using nine billion watts of electricity at the peak on Friday. How much difference was it going to make to turn off some 100W lights at hospitals? (Aren’t they using the horrid blue-white sleep-destroying-LED’s, in which case, how many 18W globes do you need to turn off to save a state? It would take 2.7 million globes to get 50MW of safety margin).

At this point, the people making decisions were either desperately afraid of a meltdown, or not very good with numbers. Either way, it’s bad. The message has gone out to the world that this leading vanguard of renewables doesn’t have enough electricity to run lights at hospitals. A “gift” to skeptics. (Yeah, thanks a lot).

Fergoodnesssake?! Why didn’t the SA government run those diesels — Could’ve saved millions?

Businesses everywhere were running their diesels. Yonniestone reports that ” Fairfax press rural Victorian factory had two shipping container sized diesel powered generators running complete with black exhaust smoke.” (They were probably printing newspapers telling everyone of the evil of fossil fuels, and advising they turn their air conditioners down.)

Can South Australia waste even more money? Yes. it. can.

Meanwhile, the SA Energy Minister seems proud that the diesels “weren’t needed”. Reader Andrew writes: What if they’re right, and while BHP et al turned on the diesel, Weatherill didn’t, to preserve his “battery miracle” story?? That would mean he has spent $400m on diesel – diesel that is purely decorative and he never plans to use! Electricity at $14,000 a MW? Not an emergency. Load shedding? Not an emergency. Businesses like smelters closed? Not an emergency. Economically, the diesel should be on whenever the price reaches $300/MW.

Stupid piled on stupid in the quest for virtue signaling. How much is too much to spend to “look green” and achieve nothing?

Who wants to run a business in South Australia?

Mark M writes about a story in the Advertiser:

More than 800 properties in North Adelaide were blacked out just after 5pm on Friday. Businesses and pubs in North Adelaide were forced to close their doors on a night owners say would have been one of their busiest of the week.

Co-owner of Lion Hotel Tim Gregg said it was hard to have to ask customers to leave after the lights went out. “It is disappointing when you have got people booked in for a meal and you can’t call them because their details are in a system which doesn’t work when the power is out,” Mr Gregg said, sitting in the darkened and empty restaurant area which would have been just starting to fill if the power was on. “We have to ask people to leave because of OH and S issues.  It is lucky that it was between lunch and dinner service but the bar would be losing in the thousands of dollars. Mr Gregg said he had more than 40 staff who were at a loose end until the power comes back on.”

Never forget the point of all this suffering. All these householders, spending up to two or three hundred on electricity for two days, are paying to make the weather nicer in 100 years, according to a theory that no official ever did due diligence on.

Hands up, who thinks residents would pay this kind of money if the government knocked at their door and gave them a choice? Anyone?

Analysis of electricity costs for 18 and 19 January heat wave – Paul Miskelly and Tom Quirk

The cost of electricity for the 18 and 19 January two day heat wave may be found from data on the AEMO website. For January there are half hour demand and price tables for each day. The extra cost of 18 and 19 January can be estimated by finding the cost differences from the average daily costs over the period 1 to 17 January after adjusting these costs to match the higher demand on 18 and 19 January.

The changes in prices can be clearly seen in the figure below with South Australia and Victoria having price spikes at the same time (AEMO data). New South Wales and Queensland had no such trouble.


The table below shows an estimate of the extra cost; The AEMO website dashboard gives average daily prices that are not weighted by the change of demand and price during the day. There are high prices with high demand and low prices with low demand. The costs have been calculated using the weighted electricity prices.

The total extra electricity cost is some $400 million. This is an amazing example of the problems resulting from the introduction of too much renewable energy and the closure of coal burning power stations.


UPDATE: Alan Moran discusses these costs at Catalaxy and argues that with extra coal back up, the loss of any one unit would not cause a price spike. As I mentioned, looking at those forecast graphs, the AEMO was predicting prices to hit the peak cap of $14,200 in SA, and $8,500 24 hours before the single generator failure at Loy Yang B.Commenter David Bidstrup asks some valuable questions about the way our electricity bidding system works:

  • Why does the market call “bids” every 5 minutes instead of contracting for firm power over a longer period, say a year?
  • Who decides that “bids” of 160 times the going rate should be accepted when it is clear that they are just predatory bids made when the generators know the market is caught with its pants down?
  • When are those who “lead” us going to realise that their policies are destroying the country and making ordinary folk electricity paupers?
  • When will the leaders realise that renewables are the problem and not the solution, and when will they realise that there is no climate change problem to “fix”?
  • When will the realisation hit that the electricity crisis is a creation of stupid policy decisions and is a technical problem requiring folk who actually know something about power generation. It is not one to be fixed by intellectually challenged politicians, economists and pet scientists who push their own agendas, egged on by renewable rent seekers and rabid left wing greenies.

Nathan replies:

  • The physical market (i.e. the NEM) is set around 5 minute dispatch due to the need for supply to meet demand instantaneously. Contracting for longer periods of time occurs in financial markets either via over the counter agreements between counter parties or via the ASX electricity futures exchange. These markets are settled purely financially and while they influence what happens in the physical market, they are not a direct component of it.
  • The market decides. A true market however would not place price controls like in the NEM. High prices provide information to entrepreneurs to direct capital investment in the market (i.e. where to build more poles and wires and/or power plants). Labelling the behaviour of generators as predatory seems to imply they should be prevented by force from doing so. This will simply distort the market and lead to adverse outcomes.

Jo says:

The market is already hugely distorted by the RET and other subsidies. It’s not a free market, and will not act like one, and will not send useful price signals anyway. It’s predetermined to send the signal to close coal and open wind farms. It is “succeeding” for bureaucrats and renewables companies, but failing for consumers.At the moment all the successful bidders are paid the price of the highest successful bidder. So it is in every bidders interest to have price spikes, and for the low cost supply to be insufficient. Why do we have that system? Is there any disadvantage in paying only the successful bidders exactly the price they bid?


*AEMO estimates: These are the official AEMO costs, but they assume each hour is equivalent during the day. Quirk and Miskelly instead weight the charges according to the load each hour of the day to reach a more accurate average cost.

Jo Nova Blog

Ever wondered why SA pays the highest power prices in the world? Well, now you know.

About stopthesethings

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


  1. ralphcmnd says:

    I’ve been following the situation in South Australia for a while now. I have to ask do the politicians that created this mess live where their conditions are different, as in have reliable continuous electricity or are they aware of what the rest of the population goes through with unreliable renewable energy?

  2. Hospitals don’t have “spare lights”. And people working in hospitals shouldn’t have to worry about the power grid. I’ve always wanted to visit Australia, but I’ve crossed it off my list for now. I don’t vacation in places that don’t have modern electrical utilities.

  3. C. Paul Barreira says:

    There is much that requires further questions. For instance, what is meant or implied by this phrase: “the people making decisions”. Clearly, there is no such thing as a genuine market regarding electricity supply and distribution so who, by the jobs they hold, are these “people”?

    Or one might recall an overheard conversation at the entrance to a public institution in Adelaide, early in January. It followed the first bout of century heat for the summer. The subject was the electricity bill. One of the speakers remarked that he had, when it was hot, switched off his fan—not air conditioner but fan—in order to keep some control over the coming bill. So, one question that does arise asks after the depth of contempt that the political classes have for the person of such lowly status and modest means. The concept of the person, of irreducible dignity, is dead.

    Of course, in South Australia, where the government apparently wants the starting age for school children to be three years, asking questions is largely prohibited. South Australia, and the public seems to approve, incredibly, is a failed state. It is, de facto, a one-party state—there is no opposition, just a small bunch of useful idiots sitting occasionally on the relevant benches in parliament. There are no electoral alternatives (Bernardi’s Australian Conservatives don’t signify).

    South Australia is a place without hope—and proud of it.

  4. Read this article:
    There are plenty more published in the public domain.
    It’s time to investigate all of these industrial scale wind projects and governments who have ushered them in, for their criminal connections.

  5. Some of our politicians are in over their heads and have no understanding of how this mess happened. Others are so deep in the self-inflicted political/scientific scam, that’s now become a monster they can’t control, that they just hope they can continue to fool enough of the people long enough to keep their political careers going to qualify for their entitlements/perks, or at least buy some time to line up a job in the private sector, perhaps a major bank that will only invest in clean, green power.

    The South Australians have been duped so effectively that they don’t even know they’ve been duped. The hapless S.A. residents I’ve heard interviewed after another blackout still come up with statements like “solar and battery storage is the way of the future”. Then they wander back indoors as the sun sets slowly on their solar panels. But they congratulate themselves on buying their own battery storage, just like their Premier. So they fire up a couple of flat screen tv’s, a computer, an air conditioner, the fridge, the beer fridge, the chest freezer, the hot water and…. the kettle – lights out! No mention of their governments destruction of a once cheap, reliable electricity system. Jumpin’ Jay dodges another bullet. If this fool wins the election South Australians should join together, form a congo line and boot each other up the arse for the next 3 years.

    • Jackie Rovensky says:

      David, that would be 4 years as we have a fixed 4 years election cycle in SA.
      STT, THANK YOU this is a great posting and should be read by every member of the population and especially our Politicians hoping to be voted in or back in in March.
      Non can say we should be continuing down the path we are now on. Not only here in SA but across the Eastern Grid and country.
      The Farce we are living is not a comedy it is life and we need to send the producers into the unemployment office.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: