The siren’s call

I would very much like to back our most egregious political players in the east coast energy system – notably but not solely Andrews & Co in Victoria, Palaszczuk & Co in Queensland and Weatherill in South Australia – in to a corner and not let them out until they have explained precisely what they are trying to achieve (apart from pursuing vote-catching) and have supported their actions with believable expert assessments.

This, of course, is not just an issue for eastern Australia. The same demand could be thrust at successive governments in the UK, administrations in North America and some in Europe.

The vogue right now is for helicopter reviews of power systems – such as Finkel here, Dieter Helm (just starting) in the UK and, interestingly for us (because of the resonance for our own set-up), the just completed review of the American grids by the US Department of Energy, ordered by Secretary of Energy Rick Perry, the former governor of Texas (a state that can be held up as having made a not unreasonable fist of pursuing a competitive, stand-alone electricity market).

The 187-page DoE report, delivered in the past week, is acessible on the Web and can also be seen through the lens of a multitude of critiques quickly published in reaction to it.

I thought one US commentator did a good job of summing it up in this fashion: “The review caused great trepidation among solar and wind advocates because Perry (previously) had singled out the importance of nuclear and coal – a favorite of President Trump – in maintaining grid reliability. In the end, the study said the sharp decline in natural gas prices over the past decade is the primary reason US coal generation has become less economic rather than the spread of wind and solar. The report also found that wind and solar, which provide power intermittently, have not caused any insurmountable problems in the grid’s functioning – yet.”

In a background briefing, an unnamed DoE official told a major American newspaper: “While no day-to-day reliability threats loom in ordinary circumstances, this report is meant as a warning that the nation’s electric grids and systems are at a pivotal point. The replacement of coal plants by gas and intermittent wind and solar generation, and the spread of new digital controls, means the grid’s future resilience cannot be taken for granted. The report doesn’t say coal plants are necessarily required for maintaining reliability but underscores the importance of how various kinds of power interact to affect reliability and resiliency.”

To which one of my friends, who is an expert advisor to a government in Europe, adds in an email over the weekend: “If you scan the report with no preconceptions, the message that comes through clearly is that the USA has a very diverse electricity generation system, including a lot of hydro-power and nuclear, which provides enormous resilience through that diversity.”

Robert Pritchard, executive director of the Energy Policy Institute of Australia, in a note to his members shared with me, has done a yeoman job of encapsulating the DoE document in four points:

  • The continued closure of traditional baseload power plants calls for a comprehensive strategy for long-term reliability and resilience.
  • States and regions are accepting increased risks that could affect the future reliability and resilience of electricity delivery for consumers in their regions.
  • Hydro power, nuclear, coal and natural gas power plants provide essential reliability services and fuel assurance critical to system resilience.
  • A continual comprehensive regional and national review is needed to determine how a portfolio of domestic energy resources can be developed to ensure grid reliability and resilience.

You don’t have to be Einstein to see how this translates in to some messages for the NEM down here, bearing in mind, of course, that we have gone on denying ourselves access to nuclear power past any point of commonsense despite our substantial uranium resources and international developments in technology, we have created a major wholesale power problem with a hysterical reaction in some quarters to gas exploration and development, the storage issue (batteries and hydro) is still up in the air even as some governments chase high levels of intermittent supply – as is the question of greater interstate interconnection – and we seem incapable of discussing advances in coal generation technology without descending to a Punch & Judy show.

The past week has been also notable locally for a ferocious blast for energy policymakers from Tom Parry, former chairman of the Australian Energy Market Operator and before that of the New South Wales regulator, IPART. If you haven’t read it, I recommend doing so. See “Expensive power: brought to you by 20 years of bipartisan federal/State failure” in The Australian.

In his op-ed, Parry declares: “Reliability is now subject to much greater stresses as the mix of generation plants has changed and transmission networks have not adequately adjusted. And the once world-leading NEM, developed some 20 years ago, as well as the three national market bodies that are responsible for the NEM, are now being seriously questioned as to whether the model is still fit for purpose.”

In this context, I am also taken with a comment in a recent paper by Tony Clark, a Washington DC lawyer who was an Obama-appointed commissioner at the US Federal Energy Regulatory Commission after a career at state level as a utility regulator. He writes: “States need to be clear about their goals and take the responsibility of pursuing them. While it can be alluring to think one can maintain the benefits of a restructured market while also reflecting your generation winners and losers, I have come to the conclusion that it is a siren’s call best left unanswered. There may be plenty of reasons a state might wish to exert more control over its generation mix, some of them legitimate, but it must not (be) done haphazardly.”

Readers are no doubt aware that synonyms for haphazard include disorderly, hit-and-miss, arbitrary, slapdash and slipshod, every one of which can be applied to the processes that have brought us locally to where we are today. In fairness, via the Finkel review, the Turnbull government is trying to extract us from some of the worst problems policymakers have caused – but its clean energy target hassles re-ignite the haphazard epithet as do the actions of other jurisdictions.

The siren’s call to mess with the east coast electricity market, as well as the gas market, in pursuit of picking winners in a populist contest is still ringing loud over what Parry derides as our ongoing race to the bottom.

Comments are closed.