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some chatter on the National Energy Guarantee and our clouded energy future

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Sanjeev Gupta – making things happen

Canto: I think we need to get our heads around the National Energy Guarantee, the objections to it, and the future of energy in Australia – costs, viability, environmental issues and the like.

Jacinta: Oh no. So what is the National Energy Guarantee?

Canto: Well if we go to the government’s website on this we’ll get a spinned version, but it’s a start. They say it’s an attempt to guarantee reliability, affordability, baseload security, reduced emissions  and further investment into the nation’s energy system. They describe it as a market-based, technology-neutral response to the Finkel Review. They estimate a savings of around $120 between 2020 and 2030.

Jacinta: Sounds a bit vague.

Canto: Well there’s quite a bit of vagueness on their website frankly, but they present information on future projects, such as Snowy 2.0, which sound exciting but we’ll have to wait and see.

Jacinta: So, going to our favourite website on these matters, Renew Economy, I find outrage from the renewable energy sector about the latest government decision on the NEG:

Federal Coalition MPs voted on Tuesday [August 14] to support the National Energy Guarantee that proposes to ensure no new investment in large-scale wind, solar or battery storage for nearly a decade, and also expressed their support for a new government initiative they hope will support new coal-fired generation.

A lot of the critics’ ire is directed at modelling by the ESB (Energy Security Board) – established a year ago ‘to coordinate the implementation of the Finkel reform blueprint’ – which fails to account for major state and corporate investments in renewables.

Canto: And apparently the claimed savings to the consumer are partly based on the reduced cost of renewables which the federal government wants no part of! It’s like not having their cake but eating it too. Interested parties and opposition leaders have asked to see the modelling, and have received nothing beyond a single spreadsheet.

Jacinta: And since we’ve been talking about the OECD lately, this new NEG’s target for renewables puts us behind the majority of OECD nations. Only five of them – including the USA and Canada – have lower targets than us. And yet the potential for reduced emissions here is greater than just about anywhere else.

Canto: Well it’s no wonder that states such as Victoria and Queensland are unwilling to sign up. They have major renewable energy plans in store, and are challenging what would seem to be a baseless federal assumption, that bringing prices down means excluding renewables. In fact the Feds are quite contradictory and confused on the subject.

Jacinta: Well there’s a good chance the conservatives will get rolled at the next election, so I’m hoping that Federal Labor have all their energy plans ready. And speaking of optimism, here in South Australia we’re apparently still on target to be 100% renewable, energy-wise, by 2025. The AEMO has made this prediction in its Integrated Systems Plan, which is a 20-year blueprint for renewables around the country. There are quite a few projects being developed here in SA, including a 280 MW solar plant in Whyalla, courtesy of British billionaire Sanjeev Gupta…

Canto: Yes, Gupta has argued that the Federal proposal, or promise, to underwrite new power stations, which the conservatives have seized on as a way of advancing the coal agenda, can actually be used to build more solar farms with storage – what he calls ‘firm solar’. I don’t think it’s going to be much of a battle though. There’s no appetite for investing in new coal power stations among the cognoscenti. And another company looking to take advantage of the underwriting mechanism is Genex, which is building solar and hydro projects in Queensland.

Jacinta: Yes, the conservative dinosaurs can bellow all they like, and they may even have some popular appeal, but the smart developers and investors are the ones who’ll carry the day, and they won’t be investing in coal. Anyway, Gupta has very ambitious, transformative plans for Australia’s energy system, which he sees – irony of ironies – as being green-lighted by the Federal underwriting proposal, which is neutral as to the source of the energy used. I don’t know how all this works out financially, but obviously Gupta does, and he’s suggesting we could become a truly cheap energy producer, particularly in solar. He envisions 10GW of solar capacity across the country. He’s also keen to build electric vehicles in Australia, which we may have mentioned before, though maybe not in South Australia, which was the original idea.

Canto: And he’s also planning a storage battery near Port Augusta, due to commence later this year, which will out-biggen the recent Tesla battery. And speaking of the Tesla battery, which has been in operation for around nine months now, it might be worth having a look at how successful, or not, it has been.

Jacinta: Well, I’ve found an analysis of its first four months of operation here, on a blog called Energy Synapse, though it’s a bit difficult to follow. It points out that the battery has two essential purposes; first, to provide stability to the grid, and second, to ‘trade in and arbitrage the energy market’. Energy Synapse was only looking at its success in trading. I would’ve thought its first role was more important, but I suppose that’s because I’m not much of a trader.

Canto: What does arbitrage mean?

Jacinta: Well, it’s about trading in a commodity with a fluctuating price. The key for making a quid, of course, is to buy low and sell high. In the battery’s case, you have to buy energy to recharge it, and you sell it to the grid when need arises. That may not be something under your control, so I’m not sure how you can successfully arbitrage in such a situation. From what I can work out, during the period December to March, the battery was getting plenty of use. December can largely be ruled out as a testing period, but January – a high volatility period – and February were pretty successful, March less so. Estimated net revenue for the 4-month period was $1.4 million, which sounds pretty good to me. But presumably the summer months are better for the battery as that’s when the grid is under greatest pressure? It would be great to have a measure of its performance over the winter. In fact, a full 12 month review would probably be necessary, if not sufficient, for testing how well it trades. But the battery’s efficiency, its rapid response time and proven capability in smoothing out the effects of outages elsewhere, has captured the attention of the public and of other investors. People and companies much smarter and more onto this ball than I am, are getting into big batteries – not just Gupta’s Simec Zen Energy, but CWP Renewables in Victoria, and individuals throughout the country who are installing home battery storage to combine with solar.

Canto: And very recently the federal government has been under attack from its ultra-conservative wing for providing any comfort at all to the clean energy sector, and it’s even possible that the Prime Minister will lose his job over it. It’s bemusing to me that a party which always claims to be the pro-business party is at odds with the business community over this, with Abbott arguing for a hostile takeover of AGL’s Liddell coal-fired power station – a kind of nationalisation… It seems Abbott wants the whole nation to be operated on what he calls ‘reliable baseload power’, essentially from coal.

Jacinta: Well, NSW seems to be going through the horrors at present regarding reliable energy. Its a state heavily reliant on black coal, and it’s been suffering power shortages recently because power stations are undergoing maintenance or units are non-operational. It seems the dependence of industry on a few key providers is causing problems, and dispatchable supply from solar and wind is variable. It seems that leadership in co-ordinating the state energy system is lacking. And of course, that’s where Abbott is coming from. So maybe he’s half-right, he’s just hampered by his pro-coal, anti-renewables tunnel vision.

Canto: Meanwhile the NEG is being roundly criticised, indeed summarily dismissed, by all and sundry, and all we can really be sure of is that leadership in the field of energy will come from particular state governments and private corporations for the foreseeable future.

References

https://www.afr.com/news/sanjeev-gupta-crashes-negplus-coal-party-with-14b-green-energy-plan-20180817-h144kr

https://reneweconomy.com.au/gupta-accc-underwriting-idea-may-help-slash-solar-costs-to-20s-mwh-19171/

https://energysynapse.com.au/south-australia-tesla-battery-energy-market/

https://theconversation.com/a-month-in-teslas-sa-battery-is-surpassing-expectations-89770

https://www.smh.com.au/business/markets/tomago-aluminium-warns-of-energy-crisis-as-power-supply-falters-20180608-p4zkbw.html

https://reneweconomy.com.au/full-absurdity-of-national-energy-guarantee-laid-bare-75082/

Written by stewart henderson

August 20, 2018 at 12:38 pm

more on Australia’s energy woes and solutions

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the SA Tesla Powerpack, again

Canto: So the new Tesla battery is now in its final testing phase, so South Australia can briefly enjoy some fame as having the biggest battery in the world, though I’m sure it’ll be superseded soon enough with all the activity worldwide in the battery and storage field.

Jacinta: Well I don’t think we need to get caught up with having the biggest X in the world, it’s more important that we’re seen as a place for innovation in energy storage and other matters energetic. So, first, there’s the Tesla battery, associated with the Hornsdale wind farm near Jamestown, and there are two other major battery storage systems well underway, one in Whyalla, designed for Whyalla Steel, to reduce their energy costs, and another smaller system next to AGL’s Wattle Point wind farm on Yorke Peninsula.

Canto: Well, given that the federal government likes to mock our Big Battery, can you tell me how the Tesla battery and the other batteries work to improve the state?

Jacinta: It’s a 100MW/129MWh installation, designed to serve two functions. A large portion of its stored power (70MW/39MWh) is for the state government to stabilise the grid in times of outage. Emergency situations. This will obviously be a temporary solution before other, slower reacting infrastructure can be brought into play. The rest is owned by Neoen, Tesla’s partner company and owner of the wind farm. They’ll use it to export at a profit when required – storing at low prices, exporting at higher prices. As to the Whyalla Steel battery, that’s privately owned, but it’s an obvious example, along with the AGL battery, of how energy can be produced and stored cleanly (Whyalla Steel relies on solar and hydro). They point the way forward.

Canto: Okay here’s a horrible question, because I doubt if there’s any quick ‘for dummies’ answer. What’s the difference between megawatts and megawatt-hours?

Jacinta: A megawatt, or a watt, is a measure of power, which is the rate of energy transfer. One watt equals one joule per second, and a megawatt is 1,000,000 watts, or 1,000 kilowatts. A megawatt-hour is one megawatt of power flowing for one hour.

Canto: Mmmm, I’m trying to work out whether I understand that.

Jacinta: Let’s take kilowatts. A kilowatt (KW) is 1,000 times the rate of energy transfer of a watt. In other words, 1000 joules/sec. One KWh is one hour at that rate of energy transfer. So you multiply the 1000 by 3,600, the number of seconds in an hour. That’s a big number, so you can express it in megajoules – the answer is 3.6Mj. One megajoule equals 1,000,000 joules of course.

Canto: Of course. So how is this working for South Australia’s leadership on renewables and shifting the whole country in that direction?

Genex Power site in far north Queensland – Australia’s largest solar farm together with a pumped hydro storage plant

Jacinta: Believe me it’s not all South Australia. There are all sorts of developments happening around the country, mostly non-government stuff, which I suppose our rightist, private enterprise feds would be very happy with. For example there’s the Genex Power solar, hydro and storage project in North Queensland, situated in an old gold mine. Apparently pumped hydro storage is a competitor with, or complementary to, battery storage. Simon Kidston, the Genex manager, argues that many other sites can be repurposed in this way.

Canto: And the cost of wind generation and solar PV is declining at a rate far exceeding expectations, especially those of government, precisely because of private enterprise activity.

Jacinta: Well, mainly because it’s a global market, with far bigger players than Australia. Inputs into renewables from states around the world – India, Mexico, even the Middle East – are causing prices to spiral down.

Canto: And almost as we speak the Tesla gridscale battery has become operational, and we’ve gained a tiny place in history. But what about this National Energy Guarantee from the feds, which everyone seems to be taking a swing at. What’s it all about?

Jacinta: This was announced a little over a month ago, as a rejection of our chief scientist’s Clean Energy Target. Note how the Feds again avoid using such terms as ‘clean’ and ‘renewable’ when it talks or presents energy policy. Anyway, it may or may not be a good thing – there’s a summary of what some experts are saying about it online, but most are saying it’s short on detail. It’s meant to guarantee a reliable stream of energy/electricity from retailers, never mind how the energy is generated – so the government can say it’s neither advocating nor poo-pooing renewables, it’s getting out of the way and letting retailers, some of whom are also generators, deliver the energy from whatever source they like, or can.

Canto: So they’re putting the onus on retailers. How so?

Jacinta: The Feds are saying retailers will have to make a certain amount of dispatchable power available, but there is one ridiculously modest stipulation – greenhouse emissions from the sector must be reduced by 26% by 2030. The sector can and must do much better than that. The electricity sector makes up about a third of emissions, and considering the slow movement on EVs and on emissions reductions generally, we’re unlikely to hold up our end of the Paris Agreement, considering the progressively increasing targets.

Canto: But that’s where they leave it up to the private sector. To go much further than their modest target. They would argue that they’re more interested in energy security.

Jacinta: They have a responsibility for providing security but not for reducing emissions? But it’s governments that signed up to Paris, not private enterprises. The experts are pointing this out with regard to other sectors. More government-driven vehicle emission standards, environmental building regulations, energy efficient industries and so forth.

Canto: And the Feds actually still have a renewable energy agency (ARENA), in spite of the former Abbott government’s attempt to scrap it, and a plan was announced last month to set up a ‘demand response’ trial, involving ARENA, AEMO (the energy market operator) and various retailers and other entities. This is about providing temporary supply during peak periods – do you have any more detail?

Jacinta: There’s a gloss on the demand response concept on a Feds website:

From Texas to Taiwan, demand response is commonly used overseas to avoid unplanned or involuntary outages, ease electricity price spikes and provide grid support services. In other countries, up to 15 per cent of peak demand is met with demand response.

Canto: So what exactly does it have to do with renewables?

Jacinta: Well get ready for a long story. It’s called demand response because it focuses on the play of demand rather than supply. It’s also called demand management, a better name I think. It’s partly about educating people about energy not being a finite commodity available at all times in equal measure…

Canto: Sounds like it’s more about energy conservation than about the type of energy being consumed.

Jacinta: That’s true. So on extreme temperature days, hot or cold – but mostly hot days in Australia – electricity demand can jump by 50% or so. To cope with these occasional demand surges we’ve traditionally built expensive gas-based generators that lie idle for most of the year. For reasons I’m not quite able to fathom, at such extreme demand times the ‘spot price’ for wholesale electricity goes through the roof – or more accurately it hits the ceiling, set by the National Energy Market at $14,000 per MWh. That’s just a bit more than the usual wholesale price, about $100/MWh. Demand management is an attempt to have agreements with large commercial/industrial users to reduce usage at certain times, or the agreements could be with energy retailers who then do deals with customers. Of course, bonuses could be handed out to compliant customers. The details of how this offsets peak demand usage and pricing are still a bit of a mystery to me, however.

Written by stewart henderson

December 9, 2017 at 9:07 pm