Labor's carbon tax lie

[So_Cynical]

90 minutes into the tax and things are settling down somewhat. Main electricity generation changes now as follows:

Price = averaging $50.20 across the 5 states (Qld, NSW, Vic, Tas, SA) which compares to $20.80 for the same system loading at a similar time early yesterday morning.

Vic - Generation is sharply lower, down about 20%.

Tas - Generation is sharply higher, up 28%. It would be even higher if not for the limit of transmission between Tas and Vic which is running at beyond firm capacity and to literally its' absolute limit. That will have to be reduced within a few hours to avoid overheating. Also generation can not be sustained at that level, since doing so would in due course drain the entire Hydro generation system (though it would take quite a while to do so given that storage is presently at 52.5%).

SA - Generation is about 4% higher.

NSW - Generation is 9% higher.

Qld - Generation is 2% lower.

Thus far, the short term operational effect is basically a drop in brown coal output in Vic as the main impact. Load has been transferred primarily to NSW and Tas, though the latter is operating at an output level unsustainable beyond a few hours.

The short term price impact is a 140% increase in the spot price.

Good... that's exactly what was supposed to happen.

-----------------------

Is it beneficial to the TAS economy that there hydro power is in demand?

Do you think that the carbon tax will drive demand to renewable's?

 

[Eager]

90 minutes into the tax and things are settling down somewhat. Main electricity generation changes now as follows:

Price = averaging $50.20 across the 5 states (Qld, NSW, Vic, Tas, SA) which compares to $20.80 for the same system loading at a similar time early yesterday morning.

Vic - Generation is sharply lower, down about 20%.

Tas - Generation is sharply higher, up 28%. It would be even higher if not for the limit of transmission between Tas and Vic which is running at beyond firm capacity and to literally its' absolute limit. That will have to be reduced within a few hours to avoid overheating. Also generation can not be sustained at that level, since doing so would in due course drain the entire Hydro generation system (though it would take quite a while to do so given that storage is presently at 52.5%).

SA - Generation is about 4% higher.

NSW - Generation is 9% higher.

Qld - Generation is 2% lower.

Thus far, the short term operational effect is basically a drop in brown coal output in Vic as the main impact. Load has been transferred primarily to NSW and Tas, though the latter is operating at an output level unsustainable beyond a few hours.

The short term price impact is a 140% increase in the spot price.

Hypothertically, if YPS was running at capacity as it normally is, what would be the effect on the spot price, especially considering that Basslink would not be wrung out?

 

[dutchie]

This carbon tax is no good.

The sky has fallen twice already since midnight!

 

[sails]

Good... that's exactly what was supposed to happen...

WHY?

Why should people suffer cold in the middle of winter when we have cheap and reliable coal fired power?

We know it's not going to do anything useful for the environment. It sounds like an oppressive tax that is otherwise useless.


Here were Swan and Gillard's assurances before the last election (found on youtube):

Julia Gillard, August 2010:

There will be no carbon tax under the government I lead.


Wayne Swan, August 2010:

Certainly what we rejected is this hysterical allegation that somehow that we are moving towards a carbon tax from the Liberals and their advertising. We certainly reject that.
​

This government had no right to impose this unwanted tax. Just because the greens hold the balance of power in both houses doesn't make it right. Shame on them.

 

[dutchie]

If this Government was really worried about Climate Change they would stop all exporting of coal.

 

[sails]

And I wonder how many more deaths for which this government will be responsible. Increases in pneumonia from cold and kero heaters causing house fires are a couple that come to mind.

Their ill thought out border policies have caused people to die. I suspect this will be no different.

 

[drsmith]

This carbon tax is no good.

The sky has fallen twice already since midnight!

It's impact will be felt over time. That afterall is it's objective.

If this Government was really worried about Climate Change they would stop all exporting of coal.

That's the Greens policy objective.

The problem with this is that nett importers such as China will simply import from elsewhere so all we do is impoverish ourselves.

 

[Glen48]

All this is a classical example what happens to the economy when the Feds get involved and will show all sorts of strange results such as increased car accidents because people will turn their A/C off when the windscreen fogs.

The Freon gas market will go the same way as alcohol did in the prohibition years, any one now buying second hand car will want to know how long since the the Freon has been topped up in the A/C and how long it lasts rather than any other info.
Here in the Philippines and any other 3rd world place there is some sort of Fridge A/C repair shop on the streets all using the basic equipment if you opened a shop selling Freon recovery units here, you would go broke as there is no market for them.
At the bottom of all this you will most likely find Dupont is pushing it to make a bigger profit and using the Ozone layer as an excuse to introduce CT.
Don't worry I won't tell any one here what is going on there as it will be to embarrassing for me.

 

[noco]

Hypothertically, if YPS was running at capacity as it normally is, what would be the effect on the spot price, especially considering that Basslink would not be wrung out?

It has recently been quoted in Queensland the cost of power will increase by $400 per annum and that equates to an extra $100 oer quarter.

 

[sails]

If this Government was really worried about Climate Change they would stop all exporting of coal.

It's clearly about money and control. Nothing to do with the environment.

And what's with the $50 million bailout to a Coal briquette supplier. Again, it's clearly nothing about reducing co2 or the environment. It's clearly about money and control.

To bring this oppressive tax in against the majority will of the people is clearly shameful.


http://www.theaustralian.com.au/nat...-50m-aid-package/story-fn59niix-1226412309782

 

[noco]

It's clearly about money and control. Nothing to do with the environment.

And what's with the $50 million bailout to a Coal briquette supplier. Again, it's clearly nothing about reducing co2 or the environment. It's clearly about money and control.

To bring this oppressive tax in against the majority will of the people is clearly shameful.


http://www.theaustralian.com.au/nat...-50m-aid-package/story-fn59niix-1226412309782

One Steel in Wyalla has a bail out of, I think, something like $64,000,000. Without that money to back up One Steel Abbott may have been right when stating Wyalla may have to close due to the Carbon Tax.

$64,000,000 represent 3years of carbon tax collection. Looks like the UN Climate Change committee of which KRudd is a member may have to miss out on the 10% of the collection promised by this government, something Gillard and Combett never mention.

Gillard says Wyalla won't be a ghost town after all and no wonder why?

 

[Smurf1976]

Is it beneficial to the TAS economy that there hydro power is in demand?

Do you think that the carbon tax will drive demand to renewable's?

The Hydro system in Tas, or anywhere else (including the Snowy), is constrained in output by available water.

Contrary to popular belief, the dams do not "fill and spill" each winter. Indeed in Tas they haven't been full since the 1970's and it is highly unlikely that 100% storage will ever be reached again given that the largest system storage, Great Lake, was raised in 1982 with the intention of ensuring that it never spills.

So whilst there is massive flexibility in short term output, total energy produced over the long term is a function of water inflows. All that is happening at the moment, is that output is being pushed up at the expense of it being lower than it otherwise would at some other time since there's only so much water available.

It's no secret that the Hydro does indeed tinker with the weather, aiming to produce man-made rain, and that this does work to an extent. But that can only go so far (and I'm sure that residents on the West Coast think it goes plenty far enough already....). So any long term increase in output necessarily involves building something new be it wind, hydro or whatever.

In the short term, the easiest (physically, financially and politically) option is large scale wind farms. They are the cheapest renewable option to build. There is no serious opposition to them on environmental grounds (at least not in Tas) and there's no real hassle in externally financing them. And yes, in the context of integration with the hydro-electric system, they can indeed provide baseload energy.

But there are practical limits as to how far you can go with wind and integration and it is not unreasonable to expect them to be reached in due course (possibly as early as the 2020's). Once that happens, and it will, well that's when things get difficult in every way....

I'm not going there now, indeed I don't think any sane person is in a hurry for that debate, but equally I do think that a lot of people expect to see a re-run of the great dams debate at some point in the future. It's not something that anyone really wants to push now, and there is no reason to do so, but I do think there's a thinking which says it will come back in due course.

I say that knowing that attitudes on both sides have changed a lot compared to 30 years ago. Environmentalists find it hard to ignore that hydro is clean as such, and there's a degree of acceptance that not every river warrants World Herritage listing. Those on the other side see that there are indeed physical limits, and that flooding the wilderness in order to make aluminium cans is a dubious sense of priorities at best. And of course the Hydro itself no longer has any construction machinery (or a workforce to operate it) and even the huge workshops are gone.

Sometime around 2030 is when it all gets exciting. Wind is likely to be tapped out here in Tas. There is the closure of Morwell and Yallourn mines in Vic as they reach their limits. Bass Strait gas will be on its last legs then too (the oil is already pretty much gone). And the world will almost certainly have faced peak oil sometime between now and then too.

So then what? I do think that there's a debate about nuclear power (uranium) somewhere in our future. Likewise there's a debate about a new major brown coal power station and probably one about dams too. I won't predict the outcomes, I'm just saying that we'll have those debates at some point unless there's an actual revolution in energy.

 

[Smurf1976]

Hypothertically, if YPS was running at capacity as it normally is, what would be the effect on the spot price, especially considering that Basslink would not be wrung out?

The comparison I used was with the same output from Yallourn in both cases (a day apart).

It's hard to be precise about the long term, but the reduced output from Yallourn has certainly pushed up prices generally in recent weeks. But as I said, both days I used were with reduced output from this plant.

 

[Julia]

The Opposition's new television advertisement:

http://www.youtube.com/watch?v=St_VK2p-WmU&feature=youtu.be

 

[Smurf1976]

OK, politics aside, here are the practical changes in power generation.

I have used the same load, 19407 MW (fairly low in the middle of the night), on 30-6-12 (2:20 am) and again on 1-7-12 (1:55am am). There is nothing "magic" about those times or that load, it's just that it's an identical load that occurred at roughly the same time on both days.

My intention is to show the change in baseload supply, hence using low loads during the night. Obviously there wouldn't be much change during the peaks, since just about every plant has to be online anyway.

Total available supply was 36067 MW on the 1-7-12, and 37599 on the 30-6-12. There is nothing significant in this change, it is not unusual to take a plant offline especially on a weekend. This is just to show total available supply relative to actual demand.

Brown coal = 4162 MW (5232 MW on the 30-6-12) = down 1070 MW

Black coal = 11233 MW (10437 MW) = up 796 MW

Oil = 10 MW (0 MW) = up 10 MW

Gas Open Cycle = 130 MW (180 MW) = down 50 MW

Gas Steam = 177 MW (160 MW) =up 17 MW

Gas Combined Cycle = 1799 MW (1375 MW) = up 424 MW

Wind (scheduled dispatch plants only) = 367 MW (740 MW) = down 373 MW

Hydro = 1632 MW (1320 MW) = up 312 MW

Figures may not add due to rounding.

Notable points as follows:

The reduction in brown coal output occurred primarily at Loy Yang (863 MW) with reductions also at Hazelwood (200 MW, almost all of which was due to taking a unit offline for maintenance) and at Northern Power Station (75 MW due to the seasonal shutdown of one unit (thus far) for carbon tax related reasons). The notable point here is that the vast majority of the reduction has occurred at Loy Yang - the most efficient and least polluting brown coal plant, whilst it is business as usual at the less efficient (and more polluting) Hazelwood and Morwell plants apart from a single maintenance outage.

The increase in gas-fired generation occurred primarily in SA, and to a lesser extent Tasmania. Noted that the only combined cycle unit in Tas, at Tamar Valley, was running at 100% of capacity.

Hydro output increased in Tas and to a limited extent Qld. Noted that output in Tas is running at unsustainably high levels.

The increase in black coal output occurred primarily at the more modern plants in NSW. There was a reduction at some plant in Qld, and at an older plant in NSW.

Wind generation change would be due to the intermittent nature of that source and is not in itself a response to the carbon tax.

 

[Eager]

It has recently been quoted in Queensland the cost of power will increase by $400 per annum and that equates to an extra $100 oer quarter.

That has nothing to do with the question I asked; I can only assume that you didn't understand it.

YPS (Yallourn Power Station) is severely hamstrung at the moment due to a lack of coal supply, following a mishap in its mine. It is a base load station with a capacity of around 1500MW but is only producing around 200MW at the moment. I correctly surmised that the spot price of electricity would be lower if it was running unimpeded, but as Smurf pointed out, his comparisons from one night to the next were based on the present (restricted) situation anyway, which I accept.

 

[Eager]

Moving right along - Smurf, that is wonderful information, and just goes to show how up and down 'base load' can be.

One tiny point of order (two actually) - firstly, the Morwell plant has a total capacity of just 170MW. It is hardly a biggie. I'm just hoping that the uninformed don't think that it running was majorly responible for Loy Yang running at reduced output. (BTW this plant will be closed within 2 years. it will still raise steam for briquette production but the turbines will be turned off).

Secondly, regarding the significant increase in black coal powered plant output, was this due to increased availability because of units returning from maintenance etc?

 

[sptrawler]

That has nothing to do with the question I asked; I can only assume that you didn't understand it.

YPS (Yallourn Power Station) is severely hamstrung at the moment due to a lack of coal supply, following a mishap in its mine. It is a base load station with a capacity of around 1500MW but is only producing around 200MW at the moment. I correctly surmised that the spot price of electricity would be lower if it was running unimpeded, but as Smurf pointed out, his comparisons from one night to the next were based on the present (restricted) situation anyway, which I accept.

I don't know where you are coming from with this Eager, however if Yallourn is coal fired which I am pretty sure it is. The cost to generate will go up due to the carbon tax, it still may be cheaper to run than other stations but the net cost is higher.
This increase will be passed on and I don't think small business or light industry is compensated.

 

[Smurf1976]

YPS (Yallourn Power Station) is severely hamstrung at the moment due to a lack of coal supply, following a mishap in its mine. It is a base load station with a capacity of around 1500MW but is only producing around 200MW at the moment. I correctly surmised that the spot price of electricity would be lower if it was running unimpeded, but as Smurf pointed out, his comparisons from one night to the next were based on the present (restricted) situation anyway, which I accept.

The difficulty in being more specific is that it depends on how Yallourn management decides to respond to the overall situation. I say that noting that I have thus far identified 4 separate generation businesses, in 3 different states, which have responded in a way that is not simply to raise prices. At least that's how it appears thus far (things may take a while to settle down?).

Company A has a long term situation where beyond a certain point of total consumption (over any time period), their cost of fuel will rise sharply due to the nature of the upstream resource. Their response to the carbon tax appears to be that they have decided to cut production as well as raising prices, deciding to generate only when prices are substantially higher than historic price + carbon tax. In other words, they are interested in running only at a substantial margin, presumably suggesting that the company can cope without the cash in the short term in order to maximise value in the long term. This could also be seen as a bet that the carbon tax will be short lived, conserving the fuel resource for a time when it can be burnt tax free.

Company B seems to be making what amounts to a clear gamble (presumably at least partially covered by some form of hedging) that the carbon tax will indeed be repealed by a future government, and that this will be soon after the next election. They have various fixed fuel supply arrangements, contracts for output etc and seem to be treating the carbon tax as a temporary situation and have changed their physical operation accordingly.

Company C has always employed some rather "interesting" strategies so far as pricing of production is concerned, sometimes producing some absurd outcomes in terms of physical dispatch of their generating plant. They would seem to be doing something of that nature again in response to the carbon tax, leaving unused capacity at a price which would generate a positive margin if it were used. The aim is, presumably, to raise the overall market price.

There's another one that I have left out, since it would likely be easily identified if I said too much. They operate coal-fired generation.

So there's a lot of games going on at the moment which makes it hard to predict anything really (though it's probably safe to say that upstream gas producers will be producing more gas). As for Yallourn, well I dare say that there are quite a few rival generators with the same basic question that I have. What, exactly, will they do once back in production? It's not a safe bet to assume that they just raise price by an amount equal to the carbon tax noting what some others are doing.

 

[sptrawler]

It will be interesting if the coal generators decide to only generate enough to cover costs and see how the system copes?