an autodidact meets a dilettante…

Canto: So now we’re going to explore base load. What I think it means is reliable, always available energy, usually from fossil fuel generators (coal oil gas), always on tap, to underpin all this soi-disant experimental energy from solar (but what about cloudy days, not to mention darkness, which is absence of light, which is waves of energy isn’t it?) and wind (which is obviously variable, from calm days to days so stormy that they might uproot wind turbines and send them flying into space, chopping up birds in the process).

Jacinta: Well we can’t think about base load without thinking about grids. Our favourite Wikipedia describes it as ‘the minimal level of demand on an electrical grid over a span of time’. So the idea is that you always need to cover that base, or you’ll be in trouble. And an electrical grid is a provision of electrical service to a particular community, be it a suburb, a city or a state. 

Canto: Right, I think, and what I like about Wikipedia is the way it sticks it to the back-facing thinkers, for whom base load always means provision from traditional providers (coal oil gas). 

Jacinta: Yes, let’s rub it in by quoting Wikipedia on this. 

When the cheapest power was from large coal and nuclear plants which could not be turned up or down quickly, they were used to generate baseload, since it is constant, and they were called “baseload plants.” Large standby reserves were needed in case of sudden failure of one of these large plants. Unvarying power plants are no longer always the cheapest way to meet baseload. The grid now includes many wind turbines which have such low marginal costs that they can bid lower prices than coal or nuclear, so they can provide some of the baseload when the wind blows. Using wind turbines in areas with varying wind conditions, and supplementing them with solar in the day time, dispatchable generation and storage, handles the intermittency of individual wind sources.

Canto: So the times are a-changing with respect to costs and supply, especially as costs to the environment of fossil fuel supplies are at last being factored in, at least in some parts of the world. But let’s keep trying to clarify terms. What about dispatchable generation, and how does it relate to base load?

Jacinta: Well, intermittent power sources, such as wind and solar, are not dispatchable – unless there’s a way to store that energy. Some renewable energy sources, such as geothermal and biomass, are dispatchable, but they don’t figure too much in the mix at present. The key is in the word – these sources are able to be dispatched on demand, and have adjustable output which can be regulated in one way or another. But some sources are easier, and cheaper, to switch on and off than others. It’s much about timing; older generation coal-fired plants can take many hours to ‘fire up’, so their dispatchability, especially in times of crisis, is questionable. Hydroelectric and gas plants can respond much more quickly, and batteries, as we’ve seen, can respond in microseconds in times of crisis, providing a short-term fix until other sources come on stream. Of course, this takes us into the field of storage, which is a whole other can of – what’s the opposite of worms?

Canto: So this question of base load, this covering of ‘minimal’ but presumably essential level of demand, can be a problem for a national grid, but you can break that grid up presumably, going ‘off grid’, which I’m guessing means going off the national grid and either being totally independent as a household or creating a micro-grid consisting of some small community…

Jacinta: Yes and this would be the kind of ‘disruptive economy’ that causes nightmares for some governments, especially conservative ones, not to mention energy providers and retailers. But leaving aside micro-grids for now, this issue of dispatchability can be dealt with in a flexible way without relying on fossil fuels. Energy storage has proven value, perhaps especially with smaller grids or micro-grids, for example in maintaining flow for a particular enterprise. On the larger scale, I suppose the Snowy 2 hydro project will be a big boon? 

Canto: 2000 megawatts of energy generation and 175 hours of storage says the online ‘brochure’. But the Renew Economy folks, who always talk about ‘so-called’ base load, are skeptical. They point to the enormous cost of the project, which could escalate, due, among other things, to the difficulties of tunnelling through rock of uncertain quality. They feel that government reports have over-hyped the project and significantly downplayed the value of alternatives, such as battery electric storage systems, which are modular and flexible rather than this massive one-off project which may be rendered irrelevant once completed. 

Jacinta: So let’s relate this to the South Australian situation. We’re part of the national grid, or the National Energy Market (NEM), which covers SA and the eastern states. This includes generators, transformers (converting low voltage to high voltage for transport, and then converting back to low voltage for distribution), long distance transmission lines and shorter distance distribution lines. So that’s wholesale stuff, and it’s a market because different companies are involved in producing and maintaining the system – the grid, if you like.

Canto: I’ve heard it’s the world’s largest grid, in terms of area covered.

Jacinta: I don’t think so, but it depends on what metric you use. Anyway, it’s pretty big. South Australia has been criticised by the federal government for somehow harming the market with its renewables push. Also, it was claimed at least a year ago that SA had the highest electricity prices in the world. This may have been an exaggeration, but why are costs so high here? There are green levies on our bill, but I think they’re optional. Also, the electricity system was privatised in the late 90s, so the government has lost control of pricing. High-voltage transmission lines are owned by ElectraNet, part-owned by the Chinese government. The lower voltage distribution lines are operated by SA Power Networks, majority-owned by a Hong Kong company, and then there are the various private retailers. It’s hard to work out, amongst all this, why prices are so high here, but the closure of the Northern coal-fired power station in Port Augusta, which was relatively low cost and stable, meant a greater reliance on more expensive gas. Wind and solar have greater penetration into the SA network than elsewhere, but there’s still the intermittency problem. Various projects currently in the pipeline will hopefully provide more stability in the future, including a somewhat controversial interconnector between SA and NSW. Then there’s the retail side of things. Some retailers are also wholesalers. For instance AGL supplies 48% of the state’s retail customers and controls 42% of generation capacity. All in all, there’s a lack of competition, with only three companies competing for the retail market, which is a problem for pricing. At the same time, if competitors can be lured into the market, rather than being discouraged by monopoly behaviour, the high current prices should act as an incentive. 

Jacinta: I don’t know about that, but before the Tesla battery came online the major gas generators – who are also retailers – were using their monopoly power to engage in price gouging at times of scarcity, to a degree that was truly incredible – more so in that it was entirely legal according to the ACCC and other market regulators. The whole sorry story is told here . So I’m hoping that’s now behind us, though I’m sure the executives of these companies will have earned fat bonuses for exploiting the situation while they could. 

Canto: So prices to consumers in SA have peaked and are now going down?

Jacinta: Well the National Energy Market has suffered increased costs for the past couple of years, mainly due to the increased wholesale price of gas, on which SA is heavily reliant. It’s hard to get reliable current data on this online, but as of April this year the east coast gas prices were on their way down, but these prices fluctuate for all sorts of reasons. Of course the gas lobby contends that increased supply – more gas exploration etc – will solve the problem, while others want to go in the opposite direction and cut gas out of the South Australian market as much as possible. That’s unlikely to happen though, in the foreseeable, so we’re likely to be hostage to fluctuating gas prices, and a fair degree of monopoly pricing, for some time to come.