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Tag: Energy Plan

Libs Energy Scheme October 2017 Analysis 21/10/17

The Liberal/National Energy Plan is simply a lifeline to non-renewable energy that will keep electricity prices high.
It is getting praise from the Guardian, perhaps because it is a policy at all, and from Bloomberg , presumably because it is a solution that empowers retailers and gives a financial solution to a technical problems that leaves lots of fat for the key players, lots of bills for the consumer and slowed progress on climate change.
Why Have Prices Been so High?
The existing dysfunctional system is responsible for the current high prices due principally to:
1. The regulator permitted agencies to ‘gold plate’ the network of poles and wires so that electricity could be transmitted anywhere on the national grid. They were able to borrow money and build, which is what engineers like to do. The most likely trend with renewables was towards having more ‘embedded generation’ where electricity came from more diversified and smaller sources with fewer large power plants. So resource allocation to the network effectively favoured big existing generators and gobbled up the resources that could have been used for smaller more flexible generation. It also raised prices.
2. A National Electricity Market was created where bids were put in to supply power to the grid at 5 minute intervals, the assumption being that a market would drive prices down. In fact, vertically integrated big companies gamed the system, withholding power so that the price went up at key periods. The system was made ‘fair’ for that every suppliers was paid the latest (highest) price, and suppliers who had put in low bids earlier were not disadvantaged! The public and businesses consuming the power were gouged.
What is the New Scheme?
The new scheme mandates that electricity comes from a variety of sources, ‘reliable’ fossil fuel power, and renewables, which are assumed to be unreliable. The mix of sources changes over time, hence there can be a move to renewables as they as defined as more ‘reliable’. The scheme was devised by the existing companies, particularly the thermal players, which is probably why it has so few critics. But it will lock in the cost and pricing structures which are the cause of the problem.
The problem is that the government has confused reliability and despatchability (?deliberately). Reliability is measure of whether a power source will be working over a specified time period. Despatchability is whether power can be put into the system. Coal fired power is reliable as ‘base load’ in that it can have a relatively constant output. But it is slow to vary that output, so it cannot despatch power quickly in response to a fall elsewhere, and as such is not ‘reliable’ when needed to despatch a greater quantity quickly. Coal is much more expensive than renewables and the plants have to be kept going at a minimum of about 35% capacity to be able to increase, which does not happen quickly anyway. Keeping the coal plants as a ‘system spinning reserve’ effectively puts a base price on energy of about $85 per MWh, i.e. the typical wholesale price of power from a thermal plant. This makes this plan a government mandated, long term price fixing agreement.
Characteristics of Renewables
Renewable energy power systems and hydro have different characteristics. Hydro is despatchable if you have sufficient water. Australia’s lack of water means that all of our large hydro stations do not operate continuously. They are mainly used to handle short and medium length load peaks as they can respond quickly to load changes. Naturally if the water is pumped up when there is spare power they act as batteries. Hence the interest in ‘Pumped Hydro’, which just needs 2 reservoirs, one higher than the other.
Wind and Photo-Voltaic (PV) systems are not fully despatchable as their output is dependent on wind strength and sunlight. They can respond quickly to load changes. With a grid and a lot of different sites wind can be reasonably reliable overall.
A solar thermal plant uses a heliostat field of several hundred hectares of reflectors to concentrate sunlight onto a boiler mounted in a tower to heat a transfer medium, typically sodium carbonate to about 400 deg.C. The molten salt is pumped into a storage tank and then pumped through a heat exchanger to generate steam which drives a steam turbine. One such plant is planned for the head of Spencers Gulf in SA. Here the energy is stored as heat and the molten salt can be drawn from the hot tank to generate steam on demand i.e. the plant’s capacity is despatchable.
The availability of renewables in Australia is much better than the Liberals would have us believe and the ability to forecast wind in the medium term is now very good. Hence their availability is quite high.
Relative Costs
In terms of the economics, a wind farm costs about M$2.00 per MW to install. A 1MW unit running at 40% capacity factor, which is less than most wind sites can achieve, will generate about 3,500MWh pa at $85 per MWh this will be $300,000. Assuming capital costs of approximately $85,000 with service and maintenance of $84,000 this leaves a surplus of $207,000- a very good financial result especially when you compare this to a thermal plant which will cost about M$30 per MW to build and take 10 years in the building compared to about 3 years for a wind farm.
So what is the politics of this plan?
Because the electricity price will be set by the needs of the old fossil fuel plants the coal owners happy will be happy. It will also keep the renewable generators happy as the high price will give them a massive profit margin. It will keep Labor happy, as they can make a magnanimous gesture of bipartisanship in the short term and when they come in there will be lots of renewables built to get the huge profit levels that have been there for the taking.
The people who will not be happy will be the industries that will go broke because unnecessarily high power prices made them uncompetitive, and the long-suffering domestic consumers.
Alternatives
The alternative, a national bold move to all renewable power has been suggested by the research group, Beyond Zero Emissions (BZE). They have pointed out that Australia has a huge natural advantage in renewable energy because of this abundance of both solar and wind, but as the whole world moves to solar, we can only get the advantage of cheap power and the experience and equipment to export if we move quickly and decisively, which is exactly what we are not doing and what this expensive plan actively retards.
Need for Action
It seems that just as the US cannot go forward because of its gun lobby, Australia is in the same position with its coal industry. We need to demand action now, before this plan is implemented.
The South Australian Blackout
As a post script it is worth looking at the cause of the South Australian blackout. SA was getting about 40% of its electricity from wind, which had been very reliable. It was supplemented by two cables from the East, one of which was down for maintenance. The other source was a French-owned gas plant, which had a ‘pay whether you use it or not contract’ for natural gas. One of the gas exporters from SA had independently sold more gas than they could produce and were in a situation that they needed gas. As the wind was so reliable, the gas plant not generating but was taking gas it could not use and losing money. The solution for the gas plant was to sell the gas to the distressed exporter. Thus when the wind blew too hard, the link to the East blew over at the time the gas plant has no gas and the wind turbines had shut down as the wind was too strong. This was an unfortunate set of coincidences, but hardly a reason to return to coal. But it has been used to talk up unreliability of renewables and get this plan up. Politics!

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A Response to the Libs’ Energy Plan

19 October 2017

The energy plan proposed by the Lib/Nat government has several major flaws based on either their poor understanding of how an electrical network works or wilful misrepresentation.  It is a government sanctioned, long term price fixing agreement.

The current plan is to force energy retailers to buy a minimum amount of energy from “reliable” thermal plant to ensure reliability by reducing the input from “unreliable” renewables. The plan is not a surprise as the thermal plant owners had a big input into it. This effectively puts a base price on energy of about $85 per MWh i.e. the typical wholesale price of power from at thermal plant.

The government confuses reliability with despatchability.

Reliability is a measure of whether a power source will be working over some specified time interval.  A better metric is availability i.e. the time period over which the power source is performing within acceptable parameters.

Modern well maintained thermal power stations have availabilities in excess of 95%.  But for example if Liddell which has 4×500 MW turbo generators has only been able to keep 3 running consistently its total availability would be 95%x0.75 =70% i.e for 70% of the time over the last few years it has been able to despatch, supply when needed 4×500 MW. Its capacity to despatch 3 x500MW has been 95%. Actually Liddell’s performance has been much worse than this.

Base load is the Coalition’s other favourite subject. It takes about 8 hours to start up a large thermal power station and about 12 hours till it comes up to full capacity. These times are dictated by differential expansion of its components. Hence normal practice is to keep these units running continuously. They also exhibit stability problems when run at less than 30% capacity. At night when the demand for electrical energy drops, continuously running operations like steel mills, aluminium refineries, cement works etc. took up this load generally this was not enough to keep the load above 30% hence the low off peak rates offered for water heating.

The problems of differential expansion also mean that thermal plant cannot respond quickly to changes in load especially load increases.

The above limitations meant that in a system dominated by thermal plant you have to keep enough older plant running at low load so that it could take up the power of the largest unit in your system should that unit be forced to shut down in an emergency i.e. trip. This is system spinning reserve.  So the price will be set by the needs of the old fossil fuel plants. This will keep the coal owners happy. It will also keep the renewable generators happy as the high price will give them a massive profit margin. It will keep Labor happy, as thye can make a magnanimous gesture of bipartisanship and when they come in there will be lots of renewables built to get the huge profit levels that have been there for the taking. 

The people who will not be happy will be the industries that will go broke because unnecessarily high power prices made them uncompetitive, and the long-suffering homeowner.

Renewable energy power systems and hydro have different characteristics. Hydro is despatchable if you have sufficient water. Australia’s lack of water means that all of our large hydro stations do not operate continuously. They are mainly used to handle short and medium length load peaks as they can respond quickly to load changes. Naturally if the water were pumped up when there was spare power they would act as batteries.

Wind and PV systems are not fully despatchable as their output is dependent on wind strength and sunlight.  They can respond quickly to load changes.

Their availability here in Australia is much, much better than the Liberals would have us believe and our ability to forecast wind in the medium term is now very good.  Hence their availability is quite high.  We can also use concentrated solar thermal plant. Here a heliostat field of several hundred hectares is used to concentrate sunlight onto a boiler mounted in a tower to heat a transfer medium, typically sodium carbonate to about 400 deg.C. The molten salt is pumped into a storage tank and then pumped through a heat exchanger to generate steam which drives a steam turbine. One such plant is planned for the head of Spencers Gulf in SA. Here the energy is stored as heat and the molten salt can be drawn from the hot tank to generate steam on demand i.e. the plant’s capacity is despatchable.

For example a wind farm costs about M$2.00 per MW to install. A 1MW unit running at 40% capacity factor, most wind sites do better, will then generate about 3,500MWh pa at $85 per MWh this will be $300,000. Assuming capital costs of say $85,000 and service and maintenance of $84,000 this leaves a surplus of $207,000 a very good financial result especially when you compare this to a thermal plant which will cost about M$30 per MW to build and take 10 years in the building compared to about 3 years for a wind farm.

Older thermal stations like Liddell are worn out especially their boilers which from a large part of the capital cost the boiler tubes suffer from stress fatigue and start developing fractures. Coal and ash handling plant starts to wear out and even the turbine blades erode due to the aggressive operating temperatures. Eventually the combination of wear and loss of availability makes them uneconomic. Try keeping a 40 year old car road worthy if you use it as a taxi.

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