Move Over Cuba: Australia’s Renewables Debacle Leads to Mandated Power Rationing

One mark of a developed economy, is its ability to deliver affordable power, without fail.

Resource rich Australia once enjoyed the cheapest power prices in the world, blackouts were almost exclusively the result of catastrophic storms, and there was no such thing as mass load shedding.

Now, Australia’s self-inflicted renewable energy debacle has left it with a power supply that you’d expect to find in Africa or Cuba, and prices that rank it at the top at the top of the international league table.

While he was alive, the ever-gracious Fidel Castro dictated that Cubans would have power for two hours, every day. When he snuffed it, that edict fell by the wayside, with daily power rationing that’s left millions of Cubans sweltering in the dark.

Our international followers might think that STT is simply being facetious, when we point out that wind powered South Australia and Victoria aren’t far behind Castro’s Cuba.

Unfortunately, the evidence suggests otherwise.

When wind power output collapses, on a total and totally unpredictable basis, hospitals, businesses and a range of essential services simply get chopped from the grid. Of course, it’s dressed up with euphemisms such as ‘demand management’ or ‘demand resources’, but the end result is the same: businesses cease to operate; and hospitals and households are plunged into sweltering (or freezing) gloom.

As between power consumers, it’s become a veritable game of musical chairs.

Those in charge are always happy to squander other people’s money. Indeed, massive subsidies to wind and solar, filched from unwitting power consumers, is what caused the calamity, in the first place. Paying power consumers to not consume power sounds like something you’d hear after you’d followed Alice down the rabbit hole. Instead, it’s put up as the solution to not being able to satisfy consumer demand, because the vagaries of the weather prevent such a result:

Funnily enough, though, there aren’t many (hopeful) power consumers ready to relinquish their right to what was once a guarantee of a decent, civil society – just because the wind stopped blowing (see above).

Here’s JoNova putting a price on dignity.

How much do we have to pay people to NOT use electricity – up to 30 times more?
Jo Nova Blog
Jo Nova
17 February 2018

To understand the real value of electricity, consider the price at which people will give it up. “Demand Response” is the nice euphemism for a voluntary blackout. At what point do people volunteer to go without? For most of the market, apparently, it’s more than $7500/MWh.

If I read this graph correctly, look how fast the prices rise, and how small the response is. For example, in South Australia there is only about 10MW available at less than $300/MWh? (From this AEMO report). For reference the total SA demand is around 1500MW. So 10MW is less than 1%.

Consider how few people are willing to turn the electricity off:

AEMO expects there to be approximately 50 MW of demand response in NSW when the price reaches $1,000/MWh.

The total size of the NSW state market is about 10,000MW. Retail electricity sells for $250 — $470MWh (and only $100/MWh in the US). Hence when the price hits two to four times the normal retail cost of electricity, only about 5% of the market say they will willingly stop using it. When the price hits $7500MWh another 2% will give it up. We can’t take this reasoning too far, but the message is clear that the pain of giving up electricity costs a lot more than generating it. Demand is “inelastic”.

Electricity generation creates wealth. People value the product far above the cost of production.

We could raise prices but business locations are “elastic”….

Here’s the text to go with the graph from that report:

Demand response observed to date
A 2016 survey for the AEMC suggested that there is at least 235 MW of demand response capability under contract to retailers, mostly involving exposure to the wholesale market spot price, with more demand response contracted to specialist demand side-management companies. This survey considered demand response procured by five retailers, and did not quantify the amount of demand response provided by other retailers or by customers who are not on a retail contract. Figure 6.2 shows the level of demand side response that AEMO considered to be currently available in the NEM at the time of publishing its Energy supply outlook in June 2017. It considers the amount of demand response that would be expected at certain wholesale prices. For example, AEMO expects there to be approximately 50 MW of demand response in NSW when the price reaches $1,000/MWh. Further, in the summer of 2017-18, AEMO considers that there is 512 MW of demand response across the NEM, which does not include anything that could be procured through the RERT. AEMO also notes that it expects the amount of demand response in the NEM to continue to increase over time.

The actual extent of demand response in the NEM is not readily apparent. As much of the demand response in the NEM arises from bilateral contracts or a reaction to wholesale prices (as opposed to being scheduled in the wholesale market), it is difficult to quantify exactly how much demand response occurs. Additionally, the amount of wholesale demand response is not static. It depends on the operating state and preferences of loads on a real time basis.

For the record: wholesale electricity is now $100MW/h here (up from $30MWh a few years ago).
Jo Nova Blog

You’d be happy to pay for it, if you could get it, right?

About stopthesethings

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


  1. Is there something in the water in South Australia that prevents otherwise sensible people from seeing that their renewable energy revolution is a headlong descent into misery and insolvency?
    Just a few weeks ago I read that a request went out for proposals and price quotes to provide electricity storage over and beyond the TESLA battery, diesel jets etc. which had to be bought in a hurry to avoid further disasters. The criteria would involve three functions: (1) protecting the grid from excessive demand.
    (2) protecting the grid from excessive supply.
    (3)saving money by buying low and selling high.
    Then came the kicker: the successful bid would do all of these best. No mention of the fact that these functions are largely incompatible with each other. If a battery were chosen, it would have to be kept half-charged to be available for both (1) and (2).
    So, double the quantity and the price to maximize both objectives.
    These batteries would then be unavailable for function (3), except with perfect weather-forecasts and an operator with the gambling instincts of a Las Vegas card shark. So, buy one more battery.
    All of that without adding a single kilowatt of actual generation. I hope that whatever ails your decision-makers is not contagious, but I recognize the symptoms: here in Ontario we having seen the same sort of insanity playing out for a few years.

  2. Son of a goat says:

    Ever noticed how those wind turbine hugging zealots that live in twitter world have a profile picture of themselves on their twitter account that was taken 10-15 years ago, maybe it was meant for Tinder or just maybe their hairline is proportionally linked to the demise of the Artic circle.

    Its a bit like their ranting’s on renewables, the image they portray is one thing, the reality is another.

    Come to think of it, there’s a lot in common with the wind industries snake oil salesmen and those witch doctors who proclaim to have a cure for baldness.

    We’ve all heard the advert for the company that specialises in hair restoration…………” it starts marching back and you worry like hell.”

    The zealots say ……”the Artic is marching back and we are worried like hell.”

    Create the catastrophe and sell, sell, sell the cure.

    Its high time them zealots faced reality, obfuscation of the facts wont save the wind industry.

    A word of advice boys, whatever you do don’t go the rug!
    A mate, against better advice, got himself a hair piece and shortly thereafter decided to give it a run on the town. He went to his favourite Melbourne inner city bar and asked for a pot of his favoured James Boags premium.
    His smile turned to bewilderment went the cheeky young bar maid came back with a pot and a saucer.
    With a wink she said, “A pot for your good self and a saucer of milk for that fricken cat sittin on ya head.

  3. The economic principle you are discussing here is Inelasticity of Demand. When you study the demand and supply cycles of energy you find that in the short term demand is inelastic. That is as the price goes up demand does not reduce and essentially remains the same. There are several reasons for this. The most significant being that without the use of energy nothing can happen. The laws of physics tell us that energy can not be created nor destroyed only used. Therefore when the price goes up the choice is to pay the price or do nothing, so usually we opt to pay the price.

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