Dunce School: Electricity Generation 101 for the Wind & Sun Worshipper

It takes a special brand of ignorance to still believe that the world can run on sunshine and breezes. Whether you blame a breakdown in the education system or a Trotskyite takeover of the mainstream media, the results are the same: there’s a stubborn rump who continue to turn fantasy into ‘fact’; who are incapable of distinguishing the former from the latter; and who are by far the most rabid and shrill when it comes to the topic of the generation of electricity.

Our good friends logic and reason were sacrificed on the altar of ideology, a generation ago.

Defending those critical attributes of an ordered and civil society is what STT is all about. Of course, the wind and sun cult hate us for that.

You can’t blame them; when you have a child-like belief in something you deeply love (think Father Christmas, the Easter Bunny, talking unicorns) and someone determines to deliver the stark cold reality, the messenger soon becomes the villain.

STT is happy to be that kind of villain, knowing that there is a perfect cure for ignorance. Although, perhaps not where that form of ignorance is necessary for one’s very existence (think renewables rent-seekers and those that spruik on their behalf). But then, that’s not really ignorance, it’s an exhibition of self-interest.

Since December 2012, STT has been laying out the facts and figures which demonstrate that massively subsidised, utterly unreliable and completely chaotic wind power sits in the very same category as gift-laden fat blokes in red suits coming down chimneys, rabbits laying chocolate eggs in gardens and one-horned ponies hopping into the laps of vestal virgins.

Here’s a few more facts and figures from Alan Moran, aimed at remedying the latest form of entrenched and collective ignorance.

Remedial Ed for Renewables Fans
Quadrant Online
Alan Moran
29 March 2018

The fall from grace of the Australian electricity industry has been breathtaking. At the turn of the century, Australia had perhaps the world’s lowest-cost, most competitive electricity industry. This rested on cheap, low-sulphur coal, which was responsible for 85% of generation, ample supplies of gas, and modest but useful hydro-electricity generation capacity.

Reform in the 1990s harnessed these assets to create a low cost, highly reliable system. The reforms included:

  • a national electricity system that required competitive provision of generation and retailing through a spot market and power contracts,
  • privatisation of most of the industry, and
  • disciplined pricing of the monopoly networks.

Seventeen years later the low-cost market-based system had collapsed. Electricity price increases, having risen somewhat less than the Consumer Price Index, started to surge after 2008.

This outcome was due to political intervention in different aspects of supply, including banning gas exploration and raising coal royalties. But above all else, to the adoption of carbon-abatement measures. Those measures briefly included a carbon tax, but their fundamental drivers were increased obligations upon retailers for increasing levels of wind and solar energy under a Renewable Energy Target (RET) for “large scale” mainly wind facilities, and through direct subsidies.

Regulations require retailers to incorporate increasing amounts of designated renewable energy (almost exclusively wind and solar) into customer supplies; tradeable certificates are created and their price shows the RET subsidy is currently about $85 per MWh; there is also a rooftop installation subsidy set at $40 per MWh. The subsidy for large scale facilities is currently capped to bring about a 16% market share by 2020. The rooftop subsidy has no cap (installations are growing rapidly, having doubled in 2017, and now produce the equivalent of 3% of demand). At a time when spot market electricity prices averaged around $35 per MWh, these were massive advantages to intermittent sources of generation.

Additional advantages were provided to these renewables through direct federal government subsidies and measures in place at the state level. In total, the 2016 the value of the subsidies to renewable energy exceeded $4.5 billion. This is considerable in the context of a generation market which had a turnover of less than $10 billion per year.

That $10 billion turnover level more than doubled once the effects of the subsidies started to bite. From under $40 per MWh as recently as 2015, the spot price is now around $90 per MWh.

This price increase is caused by the subsidised renewable electricity, being “must run”, squeezing out coal-based supplies, which need to bid at least their marginal cost. This causes them to operate in uneconomic stop-start modes and forces closure once major capital expenditure becomes necessary. The two most important closures were the Northern (South Australia) in 2016 and Hazelwood (Victoria) in 2017.

The chart below shows the relationship of wind’s market penetration and the spot price.

As a result of these developments, Australian prices — the white bar on the chart below — shifted from their very low levels in 1999 to present and ruinously expensive ones. Compared with other countries, as illustrated below, Australian prices are now among the world’s highest.

Source: ESAA Electricity Australia 1999

 

In addition to their high cost, wind generators are inherently unreliable and this caused a statewide blackout in South Australia in September 2016. Wind and solar require additional ancillary services expenditures to fortify their reliability. Partly as a result of the realisation that renewables bring a deterioration in reliability, Australian governments have doubled-down in seeking to paper over the cracks that their policies have brought about in the market.

They have:

  • sought to suppress some effects of high energy prices by supporting subsidies to aluminium smelters, a policy that largely shifts the burden to other electricity customers;
  • provided subsidies to batteries, most notoriously the giant Tesla battery in South Australia;
  • set in place a process whereby regulators are optimistically seeking to devise a market that incorporates the energy price, its reliability and its emission levels;
  • led the federal government to buy out state government holdings in the 4500 GWh a year Snowy Hydro system; the price values the entity at $8 billion (a sharp rise from the $2 billion it was worth 5 years ago, prior to the rise in electricity prices); that purchase is to pave the way for an incremental pump storage at a cost between $4.5 and $10 billion to offset the unreliability of a renewable-dependent system.

Those supportive of renewables argue that energy subsidies are simply a bridge to an inevitable triumph of that technology. Over the past 40 years there have been endless forecasts that wind/solar will soon be cheaper than fossil fuel generated electricity. With good reason, those publicising such forecasts never argue for the corollary: an abandonment of subsidies.

For Australia, wind costs are at least $100 per MWh – contracts signed at less than this include the RET subsidy (the forward price of which is $50 per MWh). Solar and batteries are even more expensive, though batteries will likely have a role in providing ancillary services in a renewable system.

Coal-based generation with existing plant can be profitable at well under $40 per MWh — although, as discussed, not once refurbishment becomes necessary. Some studies estimate new coal based investment in Australia requires a price exceeding $75 per MWh though studies by The Minerals Council of Australia estimated that a High Efficiency Low Emission plant would be economic at under $50 per MWh and experimental work involving gasification put the costs even lower.

All this said, the ultimate test is that of the market and the way to explore this is to allow markets to operate without government subsidies and other interferences, just as they did in Australia 15 years ago. This will provide the most efficient mix of generation.
Quadrant Online

And the virgin said to the unicorn, “don’t worry, what looks like complete chaos is really a perfectly predictable system of power generation” …

About stopthesethings

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

Comments

  1. Reblogged this on Climate Collections.

  2. A couple of comments here use the term “pre-Edison”. Edison’s power supply was DC – impractical for large scale distribution and supply. The term should be “pre-Tesla” or “pre-Westinghouse”, as the inventor and developer of AC systems.

    • We like the term ‘pre-steam’ to describe weather (and subsidy) dependent wind power. It is a power source that was made redundant when we harnessed thermal power to generate motive force, it’s still redundant.

  3. A nice exposition of the basic problems. Base Load coal being crippled by forced running as swing producer. Nameplate wind being really a measure of the size of periodic disruption spikes. Subsidy Farming being the main advantage of “renewables” driving actual customer prices through the roof.

    I’m in California and we are well along this path. At present my electric tariff is US 19 ¢ / kW-hr basic “lifeline” jumping to 32 ¢ / kW-hr as soon as you do much beyond enough light to read your bill… There has been a tariff filed with the Cal.-PUC to jump to 50 ¢/kW-hr “soon”. Some places, like the Great Central Valley, have very hot summers 110 F / 40+C mid day. They have a time of day rate of almost $1 / kW-hr during peak (i.e. just when you need to run your A/C )

    Well, some of us can still do math… That TOD / peak tariff means it is a profit maker to run your own generator to power your AC. (This rule of thumb depends on USA units but it is so useful, bear with me…) If you take the price in $US/gallon for Diesel and move the decimal point over one, you get the rough cost / kW-hr for running your generator. Diesel is presently selling for $3.65 / gallon, so makes electricity for 36.5 ¢/kW-hr fuel costs. It is ALMOST profitable for me to run one today to get below lifeline cutoff (once the $1/2 tariff hits it will be) and it IS profitable for the TOD summer AC users.

    But wait, there’s more…

    I have an All Electric Kitchen (AEK). I’ve figured out it is cheaper for me to use my camping stoves and fuels than electricity. A gasoline / white gas stove is cheapest, but used on the patio as it smells a bit. Kerosene is close to the same (useful for things like canning where a lot of power is needed). The Amish still use it so nice stoves for the home are available. I’m presently using a Trangia brand “spirit burner” to make morning coffee and tea (really all day…). Due to the heat to warm up the AEK burner it wastes a lot, and the Trangia uses less total energy. It is also silent and sits nicely on the counter.

    There is a flat Asian stove used commonly in dinning table cooking that uses a butane fuel canister about like a hair spray can in shape. These can be bought cheaply at restaurant supply stores, Smart & Final, and some Asian grocers. It works very well and fairly cheaply. Similarly the Propane camp stoves are pleasant and easy to use. For both of them, the cost is close to $20 / gallon. I can get fuel alcohol for $10/ gallon though. So while very easy and pleasant, these are not as economical.

    The point? Folks will start to “do the math” and figure out that it’s a good deal to just skip the electric company. Especially with Time Of Day pricing and graduated punitive tariffs if you cross certain thresholds of consumption.

    For me, gasoline / white gas is already competitive when I’m above baseline; so in good weather I’ve been cooking on the patio on my Coleman camp stove. This directly cuts my “over baseline” exposure. But it is slow to start (i.e. wastes gas in warm up) and a little Trangia is much more efficient for just making a single cup of tea. One now sits on the kitchen counter and gets used through the day for coffee and tea. Between these two, I’m basically only using the AEK for baking, and large / multiple pots when the weather is unpleasant.

    Propane is also economical (especially in the larger 10 kg bottles). I have a Webber BBQ but need to get the tank filled. It will be seeing much more use.

    So I was very aware when Ertimus said “Given a few more decades and Australians will be relying on pre edison days for their power supplies.” as I’m already making that transition here in “Silicon Valley”…

    It really is a bizarre thing when it’s cheaper to cook on camping equipment than use central power generation… but there it is. At 32 ¢ just barely, but once the 50 ¢ tariff hits, it’s pretty much guaranteed.

    BTW, I did actual measured times to heat 8 ounces of water to the boil and measured fuel use to determine costs. That’s where I discovered the huge heat wast in starting up an AEK burner for a short use. I’m using “store bought” alcohol at $10 / gallon but were I motivated enough, it’s about $5 / gallon at drag race tracks and down near $1.50 / gallon industrial suppliers. Folks will figure this out…

  4. Reblogged this on Tallbloke's Talkshop and commented:
    The incorrect demonising of carbon dioxide has poisoned the minds of many political leaders. Painful reality is bound to catch up with them and their misguided energy polices sooner or later.

  5. Reblogged this on UPPER SONACHAN WIND FARM.

  6. I have to totally disagree with the statement that the forced privatisation of all Australian state’s electricity industries by the broke Hawke Keating government meant cheaper electricity prices is wrong, wrong, wrong. This started the rot and since then not one base load power station has been built anywhere in Australia because it was only the state governments that could finance and build one.Given a few more decades and Australians will be relying on pre edison days for their power supplies. Amazing how such a highly educated country can be so stupid but there it is for all to see, a country cannibalizing the once cheapest and most reliable generation and distribution system in the world at the whim of a bunch of climate change believer fools.

  7. And with wind ‘power’ currently hovering just above ground zero, at an astonishing 5% of nameplate, the States clamouring for an increase in renewables don’t have a lot going for them, as they head off to the COAG meeting tomorrow! Sincerely hope the federal government are suitably armed with the current wind power outputs! And with calm conditions expected right through until Monday, the immediate future is not looking very bright! It would be very hard for the RE crowd, to crow about their fantastic windmills, when they are basically just sucking power from the grid, just to keep their internal pumps and ancillaries ticking over!

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