Energy Minister Under Siege: Australian Businesses Refuse to Shut Down During Wind Power Collapses

Business operators have just worked out that Australia’s renewable energy policies are deliberately designed to destroy them. Concepts such as ‘demand management’ (state-ordered deliberate blackouts) are the natural result of seeking to run an entire economy on sunshine and breezes.

This country wouldn’t be debating Josh Frydenberg’s National Energy Guarantee, the Australian Competition & Consumer Commissioner’s report on price gouging or the latest demand by AEMO’s Audrey Zibelman for coal-fired power plants (which her favoured policies are deliberately designed to destroy) to keep chugging away for at least another 20 years if it was not for the weather and the daily rotation of the planet.

When the sun sets and/or calm weather sets in wind and solar power output collapses, like night follows day.

When wind and solar capacity represented a tiny fraction of total demand, their daily disappearance was just a minor irritant to grid managers – and of no real concern to anybody keen to consume electricity, including energy hungry industries and businesses.

However, with 5,000 MW of wind power capacity connected to the Eastern Grid and 7,800 MW of solar capacity, sunset and calm weather have become the key determinants of whether power consumers get power, at all. And a daily nightmare for grid managers.

The closure of baseload coal-fired power plants – like Victoria’s Hazelwood and South Australia’s Northern and Playford plants – have eroded capacity where it counts: ie, the kind of power that can be delivered any time of day or night, irrespective of the weather.

The NEG has absolutely no hope, and Josh Frydenberg knows it. It’s been hit from all sides, left and right. Including from within the Coalition.

The version being pushed by Frydenberg (gutted and redrafted by renewable energy rent seekers) included the (oh so ‘millennial’) notion that Australia’s biggest and most profitable businesses could go and get stuffed.

On top of the idea that every business and household will be treated as ‘demand resources’ (aka pre-determined victims of demand management), the top 100 energy users will be left to scramble to find their own power supplies.

Suffering back to back and year-on-year power price increases in the order of 20% presents as a mortal threat to businesses, both large and small.

No one (save Frydenberg and the eco-zealots that pass for his ‘energy experts’) believes that the NEG has any hope of reversing the ever-upward trajectory of retail power prices in Australia.

With absolutely no reliable reserve capacity in the system (and not keen to structure their businesses around the weather), Australian businesses have gone on the offensive.

NEG too costly, say big industry energy users
The Australian
Perry Williams & Joe Kelly
18 July 2018

Australia’s largest industrial power consumers, including Dow Chemical, Brickworks and Rusal, have warned the national energy guarantee will fail to ease surging electricity prices, with onerous ­reliability rules and high levels of ­intermittent renewables distorting the market.

US giant Dow said power prices may remain elevated under the proposed energy policy as high levels of renewable power need to be supplemented by costly dispatchable power sources that may often be unused by the grid.

“Although the technology is evolving, batteries are not ready for widespread grid-scale application for extended periods and pumped hydro is not available in all areas,” Dow’s Australian president, Louis Vega, said in its submission to the Energy Security Board. “Similarly, there is insufficient demand response to offset rapid changes in supply. To recover the cost of large capital investments over short periods of operation, a high power price is required — which challenges the affordability goal of the NEG.”

However Mr Vega said the manufacturer was a strong supporter of the NEG as the best framework to deal with the issues of cost, security and sustainability of the electricity network.

Industry was joined by the ­labour movement’s industrial arm, which attacked Malcolm Turnbull’s signature energy policy, arguing it will increase prices and fail to reduce emissions by locking in soft targets for the first 10 years of the scheme. The ACTU warned the government’s policy would adversely affect power industry workers, without a plan to transition them into new jobs. The union body also argued that the policy would “increase prices” and entrench the “market power of large retailers” while struggling to enforce emissions and reliability requirements.

“While these issues remain, we are not in position to support the NEG,” the ACTU said.

The plan to make Australia’s biggest energy consumers responsible for the reliability of electricity supply has re-emerged as one of the biggest concerns of industry, which remains concerned it will have to foot the bill and ­absorb new costs. Rusal, which owns 20 per cent of Rio Tinto’s Queensland Alumina refinery, said the government’s energy ­reform would increase the market power of the big three “gentailers” — AGL Energy, Origin Energy and EnergyAustralia — as they became responsible for both reliability and emissions targets ­disadvantaging independent generators and retailers.

“The environment will remain too risky for new investors in low-cost dispatchable generation,” Rusal chairman John Hannagan said. “Consequently, more high-cost, open-cycle gas or storage will be built to firm renewables, pushing up electricity prices.”

Brickworks, a large electricity user in the national electricity market, did not believe large consumers were well placed to manage the reliability obligation under the NEM. “Mandating large consumers to individually contract to their peak load would result in gold-plating generation capacity and a higher cost pass-through to consumers,” Brickworks said. “Instead, a large consumer should have the flexibility to voluntarily opt-in to directly manage their reliability obligation where they believe they can meet this obligation at a lower cost than their retailer.”

The Business Council of Australia called for the government to reject the stipulation in the NEG design that big energy users would be responsible for ensuring the reliability of their power generation.

It did not “see the need to transfer the obligation onto large users”, and urged that retailers retain the responsibility to ensure dispatchable generation. The peak business body called for generators to be able to use Australian and international carbon offsets to enable “flexible compliance” with emissions cuts at least cost.

“Access to external offsets will be of increasing importance if, and when, the electricity emissions target is scaled up,” the BCA said in its updated submission. It called for a system of “flexible compliance” that allowed year-to-year variations by retailers without affecting the entire energy market target.
The Australian

Big power users eye national energy guarantee deal
The Australian
Joe Kelly & Perry Williams
19 July 2018

Big power users are close to winning a major concession on planned moves to force them to guarantee electricity supply in a crucial “circuit-breaker” that would remove one of the key industry objections to the government’s energy reform blueprint.

The potential breakthrough comes as the Turnbull government’s energy adviser looks set to stare down concerns that power prices could remain too high under the proposed national ­energy guarantee.

The Australian has learned that the government’s energy advisory body, in a bid to lock in support from big electricity consumers, is looking at removing a contentious requirement for the nation’s 100 largest power users to be held accountable for ensuring the ­reliability of supply by either managing their own electricity use or holding suitable financial contracts for electricity supply.

The Energy Security Board — which is responsible for the design of the NEG — has signalled to heavy electricity users it is willing to move on the proposed ­“reliability obligation” that is aimed at creating an incentive to invest in dispatchable generation and applies to the largest power users as well as retailers.

The move to lock in support from big power users comes as the government faces the task of convincing Labor state governments to sign off on the plan at a key meeting of the Council of Aus­tralian Governments next month.

It also faces backbench concerns and a noncommittal position from Bill Shorten and federal Labor, meaning it would take only a handful of Coalition MPs to cross the floor to defeat the plan if Labor decided to oppose it.

ESB chairwoman Kerry Schott said she was open to changing the design of the NEG after receiving a series of submissions from business and industry. She noted there were “some helpful ideas in there that we are considering”.

Dr Schott declined to say whether the ESB was considering changes to the reliability obligation which — as currently proposed — would operate on an “opt-out” basis that would force companies to ensure their own supply unless they contracted out the obligation, an outcome that would increase their costs.

However, The Australian understands that instead of operating under an “opt-out” model, the ESB is considering replacing it with a mechanism that would ensure the retailer would automatically manage the reliability obligation on behalf of the business, unless the business chose to “opt-in” and manage it themselves.

Energy Minister Josh Frydenberg has held meetings with many industrial power users about how the reliability obligation would ­affect them and was open-minded to the possibility of changes.

In its submission to the Energy Security Board, the Australian Industry Group said the “most significant outstanding issue that has been raised” was the proposal that “large energy users be responsible by default for their share of the ­reliability obligation, with an ‘opt-out’ to pass responsibility to a ­retailer by agreement”.

“Large users are concerned that this would put them in a weaker negotiating position with retailers, exposing them to costs that would outweigh the benefits that the ESB hopes to achieve by encouraging longer and more predictable contracting,” the Ai Group said.

“We are not fully convinced of the benefits of default responsibility for large users (‘opt out’), and are concerned about the potential costs … Most large users are poorly placed to manage the reliability obligation themselves (and) they will be in a weak negotiating position when asking retailers to take this on.

“Retailers could simply exploit this position to extract more favourable terms, without benefits for overall system cost.”

However, Dr Schott stared down concerns from a range of business and industry groups about whether the NEG would achieve its stated outcome of reducing power prices.

“I don’t understand their concerns on prices. The modelling we did on the previous version showed wholesale prices would come down. And there is no particular reason why the world has changed,” she said.

Mr Frydenberg said yesterday that the wholesale price of electricity would decline by 23 per cent on average over the decade to 2030 and referenced modelling undertaken for the ESB.

“For households, it means they will be some $300 a year better off under the Coalition when compared to Labor’s plan,” Mr Frydenberg said.

The Australian Chamber of Commerce and Industry — which is supportive of the NEG framework — said while early modelling suggested prices might fall, it was “concerned that the draft detailed design does not sufficiently specify how this will be achieved”.

“We note that the NEG contains an emissions target and a ­reliability obligation, but is silent on a cost target or obligation,” ACCI chief executive James Pearson said.

BlueScope used its submission to the ESB to throw its support behind the NEG, saying it supported the objectives of delivering more “reliability, affordable and cleaner energy to Australian consumers”.

Rio Tinto said it “strongly ­supports the principles of the guarantee, including governments in Australia agreeing to a framework that integrates energy and climate change policies for the NEM”.

The Energy Users Association of Australia said Australians were “desperate to see a lasting national energy and climate change plan that puts downward pressure on electricity costs”.
The Australian

Following Audrey Zibelman’s panicked lead, the Energy Security Board’s Kerry Schott has worked out that retreat is often the better part of valour.

They know this is very serious: million dollar a year salaries, whopping superannuation packages and gold class travel entitlements are at stake here; no wonder these ladies have started backtracking on their more zealous fantasies about Australia’s all RE future.

Both of them keep talking about the ‘inevitable transition’; and, until recently, both of them have announced with unshakeable certainty that ‘coal is dead’. Audrey’s order to coal-fired power plants to keep running for at least another 20 years, suggests otherwise. Kerry’s back down to big energy users, will not be her last retreat.

As we started out this post, at the heart of all of this bureaucratic bungling and backpedaling is sunset and the weather.

It doesn’t take a graphic for people to appreciate that the sun drops over the horizon, every single day. And, with it, that 7,800 MW of solar capacity does little more than gather dust and pigeon poop. Cloudy weather does the same, even when the sun is up.

As STT followers well-know, wind power is even more erratic.

On the Eastern Grid, Australia’s wind farms are located in 4 States – Tasmania, South Australia, Victoria and NSW – and spread from: Hornsdale in the Mid-North, west to Cathedral Rocks on lower Eyre Peninsula and south to Millicent in the South-East of South Australia; down to Cape Portland (Musselroe) and Woolnorth (Cape Grim) in Tasmania; all over Victoria; and in New South Wales, at Broken Hill in the far west, and right up to Glen Innes in the New England Ranges.

There are over 1,800 turbines in 80 odd wind farms (which range from 20-30 turbine clusters right up to the largest collection of 140 at Macarthur in Western Victoria) – that are spread out over a geographical expanse of 961,335 km².

That’s an area which is 4.19 times the combined area of England (130,395 km²) Scotland (78,387 km²) and Wales (20,761 km²) of 229,543 km². Or 1.75 times the 551,394 km² covered by France.

RE zealots claim as an article of faith that the ‘wind is always blowing somewhere’ and that, by spreading turbines far and wide, there will always be an opportunity for ‘green’ energy virtue signalling, even if that means sitting freezing or boiling in the dark.

Australia’s big energy users are a little more hard-nosed than that and, selfishly, expect to have electricity as and when they need it. The nerve, hey?

The 1,800 or so wind turbines hooked up to the Eastern Grid have a combined nameplate capacity of 4,980 MW.

With the help of Aneroid Energy, we’ll finish up with snapshot of their performance over the last few months. As you read on, bear in mind that 200 MW amounts to a trifling 4% of total capacity.

No wonder Australia’s big energy users aren’t prepared to go it alone and rely on the weather. Welcome to your wind powered future!

And to think, that all they had to do was ask a sailor …

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:

    All this crock about the NEG etc is loosing sight of the true problem.
    At one time AEMO was in charge of a basic system of energy supply and demand across a Grid. They had production facilities that could change quantity on demand.
    Now there’s a myriad of energy production sources, and the reliable ones have been pushed to the brink, with some having gone over the brink and shutdown with others loosing money hand over fist.
    AEMO is now juggling the supply of our ESSENTIAL energy service, attempting to keep the ‘lights on’ and not only that, the cost of energy supply has risen to a degree people can no longer afford to switch the lights on.
    Now companies are being asked to shut down or go on a work slow regime when the reliability of supply is on a knifes edge. With them having to take control of securing backup energy supply – individually!
    This came about since the introduction of unreliable, inefficient and costly so called ‘renewable’ energy production sources. Production services that rely on Nature which cannot be controlled, or asked to ramp up or down as the need arises.
    Though AEMO does ask Turbines to be shuttered down when the wind blows too hard, but then have to ask reliable sources to ramp up if there is more demand than production at the same time.
    When did it become sensible/rational to use and continue to increase the use of something that has caused so many problems.
    Why in the name of energy production and a secure future for industry and life in Australia, is it important to create a Grid system which is so chaotic it’s causing energy prices to rise, industry to shut down and politicians to become impotent?
    It seems the answer to that question is when Politicians began to listen to money hungry ‘renewable’ industry campaigners without considering if what they were offering was rational, reliable and affordable. That is politicians being coned into believing in an ideological dream.
    Surly it’s sensible to have a production control system that’s simple to operate and secure with the ability to keep the ‘lights on’ for everyone at the cheapest price possible.
    Surly a modern society that prides itself on its modernisation can create such a system – well it did before – before the introduction of completely unreliable large scale energy production facilities.
    Why was it not realised by those who operate the Grid system that adding such unreliability to the grid would create dangers to supply. The answer again ideological clap trap taken on by our politicians.
    If unreliable ‘renewables’ are to be a part of our energy mix then they should NOT be connected to the Grid they should have remained an addition to individual homes or businesses who could adopt much like rooftop solar, to offset the cost of their personal energy use.
    Trying to connect large scale so called ‘renewables’ has caused and could have been predicted to cause chaos.
    Well done all those ideologically challenged you have done a great job of destroying a good reliable system of energy distribution and created a situation where rural/regional areas have been destroyed with health, lives and livelihoods destroyed, jobs and industries lost and homes where power use is unaffordable.
    You have managed to destroy the Australian Dream
    and brought about the end of the Australia as having the title of ‘The Lucky Country’.

  2. wal1957 says:

    We have enquiry upon enquiry. Years of increasing electricity prices. Yet we are continually told that RE is cheap, cheap, cheap. AND getting cheaper!

    WHEN?

    As for supplying base load power? What an absolute corker of a joke that is! Governments of all persuasions have created this monster and as usual we, the taxpayer are going to bear the brunt of it, one way or another.

    Gawd, how I hate politicians!

  3. Son of a goat says:

    Several years ago, I went with a mate to a clearing sale at a deceased estate at a nearby farming property. Before the big ticket items of farm machinery went under the hammer they auctioned off housing goods and chattels.

    As the bidding started on a set of Encyclopaedia Britannica, my mate gave me a nudge and and suggested that we go half’s in buying them.

    I guess his narrative was to save money but he certainly didn’t see the bigger picture.

    Similarly the AEMO’s Lovely Audrey as CEO has tried to shape Australia’s power generation under her narrative of Renewables. Unfortunately for the Australian power consumer up until now she has failed to entertain the bigger picture of power reliability and price.

    I would like to suggest the Lovely Audrey give South Australia’s former energy minister Young Tommy Kouts a ring and ask him how he is enjoying his life long legacy as being known as the energy minister who blacked out an entire state and brought it to its knees.

    Careful how you frame the question Audrey, otherwise he might bite your bloody hand off, it doesn’t sit real well with the lad.

    Dear Lovely Audrey blacking out a states one thing, doing it to a whole country is another. Think about it.

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