Taking supply’s measure

To state the obvious, despite almost three years of thrashing about, Australia is heading in to 2019 without a settled electricity market structure or settled energy policies to balance prices, supply reliability and emissions abatement. One can go on debating this ad nauseam but, until the federal election is over, progress at the political level is out of reach. Whether the next poll will actually deliver a government in control of the parliament in Canberra and whether the collective of federation governments can do sensible business together is another matter.

A sleeper in this situation is whether or not the shaky Morrison administration will pursue a royal commission in to energy – and equally whether a future Shorten government, which the pundits seem to all think is a given, might follow this course.

During the interval, it is useful, I think to adjust the picture of what actually is happening in both gas and electricity supply – and one of my best go to references for doing so is the EnergyQuarterly series published by Graeme Bethune’s EnergyQuest consultancy. The analysis and commentary in the EQ September edition, now published, are particularly interesting.

My particular focus this Sunday morning is the factual oasis EQ provides on NEM generation in the 2017-18 financial year at a time when the latest renewable energy whims of the election-bound Andrews Labor government in Victoria are at least some of the media rage of the moment with simultaneously irritating and boring juggling of numbers by politicians and reporters, the bottom line of which appears to be that the handful of wind and solar farms being supported will generate about 3,000 gigawatt hours a year.

Leaving aside estimates of rooftop solar PV use, Victoria, according to EnergyQuarterly, generated 45,692 GWh in FY18, down from 52,219 GWh in FY17 because of the closure of Hazelwood power station, one effect of which was to see the net flows of electrons from the State to its neighbors slashed from more than 7,000 GWh to a mere 156 GWh.

Just sticking with interconnector flows for the moment, the other notable FY18 feature was the continuing rise of power supply to New South Wales from Queensland – up from 3,560 GWh to 5,504 GWh, which is mostly black coal-fuelled supply.

For the NEM as a whole, EnergyQuarterly reports that (not including rooftop PVs) black and brown coal dominated the market with a combined 146,834 GWh – down, of course, from FY17’s 150,848 GWh because of Hazelwood.

In the rest of the mix, gas-fuelled generation plays piggy in the middle: up when hydro supply is down and down when wind generation is up. In FY18 hydro output was marginally down (at 14,730 GWh) while wind generation was well up (13,000 GWh compared with 10,522 GWh in FY17). Gas turbine output provided 19,219 GWh – up from 17,768 GWh the previous financial year.

Utility-scale solar is still in nappies, so to speak – it can be expected to grow quite solidly on proposed developments in the next few years – and came in at 656 GWh, with oil bringing up the field with 23 GWh.

Rooftop solar PV keeps on climbing – in FY18 it was 7,301 GWh in the NEM, 16.5 per cent higher than the previous year. To which can be added 1,269 GWh calculated to be used in the south-west corner of Western Australia.

If you factor in all forms of power, South Australia is the only mainland State close to providing half of its supply from renewables – 48.6 per cent in FY18. The other shares were Victoria 11.6 per cent, NSW 6.6 per cent and Queensland 4.9 per cent. (Over in the West, the share for the SWIS was 14.8 per cent with fossil fuels, black coal and gas, providing 85 per cent.)

EnergyQuarterly comments that the Labor governments’ renewables targets for Victoria and Queensland “look extremely ambitious.”

That decline in Victorian generation, EQ notes, was offset by 3,000 GWh of wind and gas production in South Australia and 3,600 GWh in the other States.

And, in the context of all the jabber about greenhouse gases, it points out that the Australia Energy Market Operator found FY18 emissions were the lowest in the NEM’s history both in terms of absolute emissions and emissions intensity.

As readers know, one of my hobby horses is that homogenizing the data in to market-wide shares masks the weight of supply and demand on the real east coast, NSW and Queensland.

With (in round terms) 5.2 million household account-holders and 620,000 business customers, the two States are where a very large part of electricity action is, as underscored by the EQ data for FY18.

Between them NSW and Queensland generators provided (excluding rooftop PVs) 125,206 GWh – or 64.4 per cent of NEM production.  Of this, 110,726 GWh was produced by black coal units, 88.4 per cent of the two-State market. Including hydro, utility-scale renewables provided under 6,500 GWh in the two States, barely five per cent of the market, with gas generation bridging the gap.

Having so many houses, it is not surprising that the two States also have the lion’s share of residential solar PVs, which were estimated to involve nearly 4,600 GWh of use in FY18.

This is the real world for a considerable number of Australians but the boosters, busy balancing green angels on non-metal pins, tend to ignore or gloss over it. A rational outcome for prices, policy and emissions can’t be reached without properly factoring this bit of geography in to the equation.

And my friends who want to see nuclear playing a role in our future generation mix would never forgive me if I didn’t add here that it would be a very good thing if technology like SMRs was included in calculating the total system cost of replacing aged equipment in the mix on this side of the continent (and in the south-west, too, home to another million households and some 125,000 businesses almost constantly overlooked in the “debate” about these matters.)

Meanwhile, as a senior academic who knows energy issues very well commented to me in the past week, it seems that more and more we are headed back to (pseudo) central planning but with far more political excitement than we ever had in the days of the State electricity commissions. That’s a thought with which to conjure.


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