Archive for July, 2018

Edging towards a precipice

As 2017-18 financial year slides in to 2018-19, there’s an awful lot energy-wise up in the air, waiting on reports and responses to them as well as on political decisions that tend, too often, to be rather reactionary (eg the goings on over Liddell in particular and the broader issue of whether, where and when to build another coal-burning power plant).

One of the frequent distractions in this environment is the tendency of some to push their barrows without being too fussed about what the data really shows.

For example, in the past week, there’s a claim in one of the greener websites that the majority of the replacement for Hazelwood has come from renewable energy – leaning on capacity developments when, so far as consumers are concerned, what matters is available energy.

In the 12 months to March this year, using EnergyQuarterly numbers, NEM black coal generation rose by 5,940 gigawatt hours, output from the remaining brown coal plants went up a bit too and gas-fired production increased by 5,192 GWh in a period where wind farm output actually fell slightly, utility-scale solar went up 79 GWh and hydro’s contribution, because of rainfall issues, was 4,141 GWh lower than in the same period 2016-17.

The point of that claim, of course, is to boost perceptions of a growing presence for weather-driven generation as part of the anti-fossil fuels game, but it is all a bit trivial from where I sit. Real life dictates that NEM generation from now to 2030 is going to go on being a mix of all its present ingredients with conventional plants (coal, gas, hydro) remaining the backbone of supply in Victoria, New South Wales and Queensland, home to most of the market’s residential and business demand.

Trebling wind energy production on the east coast and increasing big solar output 10-fold will still only push renewable contributions to around 35,000 GWh a year in a market needing some 200,000 GWh. (And what will this do to total system costs? But that’s a different conversation point.)

One of the thoughts being offered in a paper recently pushed out by Hydro Tasmania to boost its “Battery of the Nation” concept tosses an interesting soundbite in to the debate: “It is forecast that in the 10 years from 2028 to 2037 about 35 per cent of our existing generation capacity will retire simply due to age-related deterioration. This would be the equivalent to Hazelwood retirement every year for a decade. As older NEM plant retires, new plant will need to be built. The late 2020s is forecast to be the precipice of a rapid change.”

Which engenders in me the thought that marching (or meandering) up to this precipice without all due care is truly risky business.

(For example, will some of the ageing plants be refurbished to extend their lives or will a mindset shift open the door to nuclear SMRs, changing the nature of the transition challenge? Will carbon capture and storage emerge as a genuine option for some existing and new coal plants?)

Unfortunately, a lot of the current focus is on precipitate action – and, if, like any number of people with whom I communicate regularly, you are heartily sick and tired of the argy-bargy, the bad news is that it isn’t likely to stop or even diminish any time soon.

The carrying-on in the public debate in June has been par for the course and will very likely intensify as we get closer to the key CoAG Energy Council discussion about the “national energy guarantee” in August.

The heading on a statement put out by the Australian Energy Council in the past week – “Facts, not exaggerated claims, needed in energy debate” – is exactly the point but many of the protagonists in politics, the media and activist bodies are far more focused on rhetorical flourishes and “fake news” than facts, not leaving much room for conservative (lower case C) voices.

In this context, I have been interested to read a commentary by Robert Barr, president of the Electric Energy Society, in a trade magazine that landed in my mailbox a few days ago. In it, he queries just how much power system engineering know-how is going in to the present push on the NEG, opining that, for a very complex engineering system (the NEM), there seems too much faith that all the separate components of the proposed measure can operate independently of each other without adverse outcomes.

He adds: “Confidence for changes like the NEG often comes from modeling. Building models of this type requires both detailed power system engineering and market economic knowledge. The complexity of the NEG makes it almost impossible to model with any degree of confidence. Where the electricity industry will be in 2022 and beyond is very difficult to predict. Unwinding the NEG in 2022 and replacing it with something simpler is too awful and expensive even to contemplate.”

Which jells, it seems to me, with another observation in the Hydro Tasmania paper: “The future NEM is expected to bear little resemblance to the historic operation of the market and work is required to understand future options.”  I’d interpolate “lots more” ahead of “work” in that sentence.

None of this is an argument for abandoning the present endeavors on the NEG – something seemingly equally sought by green activists and the discontented members of the Coalition’s parliamentary backbench – but it is for further careful assessment of the version the Energy Council may agree on 10 August rather than hastening to legislate it in the last third of the year, which obviously is the federal government’s intent.

Actually, I won’t be surprised if the CoAG energy ministers push back and ask for further and better particulars next month. This may not be what politics dictate as desirable for the Turnbull government, but the past decade surely should have taught us the risks inherent in headlong policymaking.

Getting carts and horses in the wrong order in energy policy has been perhaps the biggest problem over these years and the chances of this continuing to be an inherent flaw are not zero.

Happy new year!