Politics & power

Reading an editorial in the  Australian Financial Review – which was about superannuation – I came on a comment that really resonates with the energy sector: “While the whole system sits on the shifting sands of political contestability, it will never have the requisite stability to give Australians true confidence in its future.” You can say all that again, with even more emphasis, for energy/carbon abatement policies, as almost every day demonstrates at present.

The point is underlined by Catherine Tanna of EnergyAustralia in a media interview in which she asked “Why is Australian energy policy so politicized?” – adding that such politicization is “disproportionate” here; “other countries seems to solve their energy problems far more easily despite differences of approach.”

The impact of this on the community was neatly made by a recent Newspoll survey showing a quarter of respondents don’t know whose energy policies to embrace and the rest are roughly split between Labor and the Turnbull government.

Sadly, the prospects here for taking politics out of energy, especially with elections approaching in Victoria, New South Wales and federally, while electricity and gas prices remain high on the public agenda, seem less than zero.

Tanna also commented that the competition between coal and renewables should be replaced with a focus on integrating fossil fuel power production with the green technologies. I would have liked to hear her add “at the lowest total system cost” to that view – and just as much to have taken the opportunity of highlighting the current considerable reliance of the economy on fossil fuels for electricity with the rider that “fast tracking” change (the catchcry of the activists and their fellow travellers) is not a practical option. (This has just been underlined by the Victorian Labor government officially setting deadlines of 2032 and 2048 for Yallourn and Loy Yang brown coal mines respectively and requiring the power stations owners to give five years’ notice of any intention to shut. All in the name of energy security.)

In the context of all this, it is interesting to read the new Clean Energy Australia annualreport, just published by the Clean Energy Council, mostly for the mountain of statistics it contains. The CEC, of course, like others in the renewables sector, is eager to promote the allegedly irresistible rise of wind and solar power as part of the policy debate.

Its publication, again, coincides with a report in the past week from the International Energy Agency (Status of Power System Transformation) that includes inter alia this thought: “Decreasing costs for both wind and solar energy, and strong government policy support have contributed to (an) impressive story.” Then the Paris-based agency adds: “These renewable power sources also come with a new set of challenges not faced before by power plants, utilities and system operators. The main one is the variability of renewable generation: how to ensure continuous and stable power when the wind is not blowing or when the sun isn’t shining. This creates uncertainties for the security of electricity supply. The challenge of integrating variable renewable energy in daily operations is compounded by other developments, such as the deployment of decentralised energy sources like rooftop solar and smart loads such as electric vehicles, and the spread of digitalization. Faced with such transformations, policymakers and other power sector stakeholders need a co-ordinated and pro-active response to managing these market changes and ensuring electricity security in modern power systems.”

Our Energy Security Board, the Australian Energy Market Commission and Josh Frydenberg may say “Yes, well, this is what we are trying to do,” and they are, but (in an environment where so much of politics is reacting to perceived public opinion) the messaging reaching community tends to lean towards the Green Pollyanna side – when the media are not being hysterical about the risks of blackouts.

In this regard, the CEC report plays up the national role of renewables in a way that (as presented through the media to the public) tends to create an impression that I feel is somewhat misleading.

The claim for the 2017 role of renewables is supply of 38,172 gigawatt hours out of 225,082 GWh across the NEM and Western Australia. My “yes, but” point is that 12,920 GWh of this was hydro power (ie long-established, conventional generation) and another 3,713 GWh was bio-energy (ie sugar cane bagasse and “black liquor” from industrial sources such as papermaking, both also long-established) and also included is 7,723 GWh estimated for rooftop solar power. Separate out grid-connected wind and large-scale solar power and one finds that they contributed 13,781 GWh in 2017. Take out the WA number and the NEM figure is 11,368 GWh.

Context in this respect is that gas-fired generation in 2017 (using EnergyQuest data) provided 21,375 GWh, brown coal plants in Victoria (with Hazelwood withdrawn in March last year) 38,316 GWh and black coal plants in NSW and Queensland 148,334 GWh. (And, in the current first seven days of wintery weather in the NEM, coal and gas provided 82 per cent of grid electricity.)

Bottom line: fossil-fuelled power remains the backbone of the NEM, which in turn is very strongly the backbone of the economy, notwithstanding a high outlay of money on variable renewables over the past decade. Replacing this spine – or even half-replacing it – with VREs would require a very substantial investment in transmission alone through a decade in which there is every prospect that market demand will not grow, raising issues about end-user costs going up rather than down as the politicians keep promising the community.

This is not a message reaching the hoi polloi and, taken with the thoughts of the IEA (and others trying to make a serious point in the debate here), demonstrates that overheated calls on community sentiment to support a faster rush to wind and solar come with risk – for the consumers.

In passing, I spotted something else in the CEC report – which is an interesting compilation of data, well worth reading – that I hadn’t appreciated until now: if you take out WA numbers for installed rooftop PV capacity in 2017, you find that the NEM total is 929.6 megawatts, which is roughly what it was in 2012 (926 MW) after which it dropped.  Rooftop PVs (according to EnergyQuarterly) provided 6,793 GWh in calendar 2017 versus 5,720 GWh in 2016 and 5,046 GWh in 2015. Steady growth, then, rather than going gangbusters, which is the impression some wish to give

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