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The future of energy generation and storage

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Yep, no one wants to admit they are wrong or lose their money in coal etc.

Interesting change happening IMHO
 
SirRumpole said:
Will the government's power plan reduce electricity prices ?
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What I see is far more profound than household bills.

My view is that we're going down the track of regulated monopoly utilities. That's probably not the actual intent yet but it's where it'll all end up.

The idea of a "competitive" National Electricity Market (NEM) has been on the ropes for quite a while with various things happening:

*Queensland government owned generators have been pushing out supply at any price that does't actually lose money, lowering market prices being the intent.

*Tasmania decided the national market price was too high and a credible threat to the state's economy so has been ignoring it other than from a purely administrative perspective. It's a money go round as I call it - can't really avoid the market but there's no law saying you can't offer a contract at a cheaper price than the going rate.

*SA intervened by getting a diesel-fired gas turbine plant and also the big batter built. They're planning to privatise the gas turbines now but they're still physically there as a supply source.

*SA and Vic have both launched initiatives which have as their aim a major increase in the use of small scale distributed batteries and/or solar.

*In NSW there's the crap fight over Liddell power station between the Australian Government and plant owner AGL.

*AEMO have brought about various occurrences such as, among others, big diesel generators sitting outside the closed Morwell power station. That's just one example.

*Australian Government threats to prevent gas exports.

And now the big one - price regulation. If the above hadn't convinced anyone that governments were moving toward greater control then it ought to be pretty obvious now.

So for the first time ever we have the Australian government controlling electricity prices via a mechanism which amounts to a price cap in practice. Making some assumptions about politics, well it seems reasonable to assume that they're not going to go to an election promising to raise the price now are they? No, there's far more votes to gain by keeping it down.

Unlike any form of taxation, simply holding down the electricity price has no direct impact on government revenues other than in a very minor way via Snowy Hydro (which is a fairly minor player at the retail level, being concerned primarily with generation).

So on day one we have a price cap.

Go forward however many years and the price is such that no retailer would even contemplate offering anything lower since it's barely profitable anyway.

At that point there's zero practical difference between retailers. Same power. Same price. All that differs is the name.

Then we'll see "unthinkable" mergers and acquisitions actually taking place is my expectation. There won't be resistance from the ACCC or anyone else since that would be pointless in an environment of regulated prices and everyone charging the same.

I won't speculate on the precise actions of listed companies but some things I'll note:

*At Loy Yang there's a mine and 4 generating units owned by AGL and right next door another 2 generating units, burning coal mined by AGL and carried up the very same conveyor belts, owned by Alinta. I can see that changing and one company owning the lot at some point.

*On Torrens Island there's Torrens Island A power station, Torrens Island B PS and the new Barker Inlet PS under construction all owned by AGL. Also on the island is Quarantine PS owned by Origin, who also have Osborne just across the water and just up the road is Pelican Point owned by Engie. All burning gas from the same two pipelines and all feeding the same transmission lines. Another obvious place for ownership consolidation.

And so on.

It'll take years to play out but 20 years from now I wouldn't be surprised if in practice we've got a re-emergence of ETSA, the SECV and ECNSW just under different names and privately owned. Draw lines on a map and carve up who owns what - that's the track I think we're heading down and price regulation is a trigger event.

Where to draw the lines? Broadly speaking state borders would be the answer there and it just so happens that we've got 3 big energy companies and an emerging one, Alinta, which makes 4 and there's 4 mainland NEM states. So split the 4 mainland states between the 4 companies and leave Hydro Tas to its home state and it all adds up rather nicely.

Everyone who isn't one of those becomes a supplier to the big operators - which for the record is pretty much the model being used with the new privately owned wind developments in Tasmania. They're selling their output to Hydro Tas.

The details will differ but broadly speaking that's where I think it's ultimately heading. It'll take many years to get there however.

In keeping with recent discussion regarding the content on ASF I'll point out that there's an awful lot of relevance in the above if you're a shareholder of either AGL or Origin or any other energy industry participant. It doesn't really fit into any individual stock thread but it's not every day that government announces price controls on anything. Today's 1.05% drop in the ASX200 was routine in comparison. AGL shares dropped 2.71% and Origin Energy fell 4.42%. :2twocents
 
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Smurf1976 said:
In keeping with recent discussion regarding the content on ASF I'll point out that there's an awful lot of relevance in the above if you're a shareholder of either AGL or Origin or any other energy industry participant. It doesn't really fit into any individual stock thread but it's not every day that government announces price controls on anything. Today's 1.05% drop in the ASX200 was routine in comparison. AGL shares dropped 2.71% and Origin Energy fell 4.42%. :2twocents
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So in reality, it is going down the same path as telecommunications, Telstra was forced to on sell services at a regulated price determined by the ACCC.
Therefore if there is a fixed cap on the wholesale price of electricity, as with the telco sector, who is going to install new plant with no guaranteed profit only projected growth?
Sounds to me like when push comes to shove, the taxpayer will be installing plant, on projected growth forward estimates.
Another NBN in the making. IMO
A great opportunity, for bassilio's Government superannuation slush fund, to throw money at. lol
Not that there are many other options than capping prices, ATM it is so open to manipulation as to be useless.
Just wait until Labor throw the carbon target curve ball in, that will cause massive disruption, which should bring it to a head real quickly. IMO
 
Sorry Smurf but householders are (only a drip yet) realizing they can go their own way right off the grid. Its happening with phones, Kogan for instance $21 a month, unlimited calls and texts with 16 gigs. The grid is a joke.

Power companies and the guvmint are going to soon sink in their own ignorance.
 
explod said:
Sorry Smurf but householders are (only a drip yet) realizing they can go their own way right off the grid. Its happening with phones, Kogan for instance $21 a month, unlimited calls and texts with 16 gigs. The grid is a joke.
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How much in reality, do you think that has cost the Australian taxpayer?
A taxpayer owned telco system, that we have all but renewed, with taxpayer money.
So overseas Companies and shareholders take the profit, rather than it going back into consolidated revenue.
It is amazing how people look at the small picture, rather than the big one. IMO
 
explod said:
Sorry Smurf but householders are (only a drip yet) realizing they can go their own way right off the grid.
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It's not impossible to do it but under most circumstances grid power is cheap compared to off grid. Even the off grid enthusiasts will mostly acknowledge that upfront.

Obviously it depends on location but Vic, Tas, ACT, southern NSW or most of SA it's problematic during winter since energy use goes up due to heating at the same time rooftop solar production goes down. That's where it gets hard and $$$.

But certainly there are some situations where going off grid makes sense yes. FWIW there's at least one substantial electricity generating company which has rather a lot of off-grid solar systems in its own operations. Reason = it's cheaper than maintaining the grid to supply small volumes of power to remote places and that's still true even if you really are the electricity company.
 
The herald sun feeds my chip heater for a nice warm shower in a five minute burn. The extreme costs are returning us back to the old ways.

Power companies took a bloke to Court in little River six years back for going off the grid. He's never had to start his diesel backup. A friend is on the grid to get $8,000 per year back but his own power use is all his own extra generation.

The word is getting around.
 
explod said:
The herald sun feeds my chip heater for a nice warm shower in a five minute burn. The extreme costs are returning us back to the old ways.
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They were a great bit of gear, the chip heater at the end of the bath, the Meters wood stove in the kitchen and the wood heater in the lounge.
Shame they were banned, because of the pollution they produced, now they are embraced as a sensible way ahead.
Life goes round in a circle, you probably find all the greenies using them, ironic really.
I wish I could install them again, I would in a minute, just efficiency personified.
 
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Its happenning:- below just a part of the following article.

https://www.theguardian.com/austral...energy-is-cheap-surging-and-headed-for-a-fall


"Meanwhile, rooftop solar panels are being installed at an astonishing rate. In May, the head of the Australian Energy Market Operator, Audrey Zibelman, said six panels were going up across the continent every minute, adding the capacity of a large coal power station each year. The consumer watchdog recently recommended incentive schemes for small-scale systems be wound back. Some in the energy industry have suggested there will soon be more solar power coming into the grid than Australia can use but a new study by consultants Green Energy Markets, which examined the amount of solar power expected every 30 minutes out to 2021, rejects this idea. The energy minister, Angus Taylor, says the federal incentive scheme will stay.

The investment avalanche is driving an unprecedented transformation of the electricity grid. At the time of writing, clean energy had met 21.8% of national electricity market demand over the past week, suggesting the country is on the cusp of meeting the 2020 renewable energy target of about 23% ahead of schedule. The Clean Energy Council’s chief executive, Kane Thornton, says the momentum is massive; Green Energy Markets suggest it could mean renewable generation hits 33.3% by 2020. Analyst and advocate Simon Holmes à Court says it is likely as much clean energy capacity will be built over the next two years as over the previous 40.

In July, the market operator found a business-as-usual path, without policies ramping up, was likely to lead to about 46% clean energy by 2030. It underlined the hollowness of the government’s now-dumped pledge to introduce a national energy guarantee to reduce greenhouse gas emissions from electricity by 26% below 2005 levels over that timeframe, and implied Labor’s 50% renewable energy target would take little effort. (Both targets are less than the change in coal use the Intergovernmental Panel on Climate Change suggests is necessary for Australia to play its part in limiting global warming.)"
 
explod said:
Analyst and advocate Simon Holmes à Court says it is likely as much clean energy capacity will be built over the next two years as over the previous 40.
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Private enterprise can build the renewable generation like solar panels and wind farms but governments have to build the storage, hydro and batteries, because no private enterprise entity will take on the risk of public liability cost if anything goes wrong.
 
Meanwhile, in parliament.....

morrison-scott-with-coal.gif
 
SirRumpole said:
Private enterprise can build the renewable generation like solar panels and wind farms but governments have to build the storage, hydro and batteries, because no private enterprise entity will take on the risk of public liability cost if anything goes wrong.
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There are some who are willing to give it a shot.

Genex, Origin Energy and Tilt Renewables being the notable ones with pumped hydro.

Plus AGL (ASX: AGL) did build a conventional hydro scheme (Bogong power station) a few years ago which they sensibly kept rather quiet about. It's in Victoria and an additional stage to a scheme built by the SECV decades ago but it's a new power station as such. That they've said not much about it was a smart move in my view.

Origin Energy (ASX: ORG) have got some government $ for their feasibility study but what they're looking at isn't new, they've been considering it for quite a while now and there's basically two options which are mutually exclusive. Expand an existing power station and get 160 MW or build something that in layman's terms is akin to a highway bypassing a town, albeit with tunnels, water and a power station not asphalt and traffic, to get 237 MW. The big one is the option they're keenest on. This is an extension of the existing Shoalhaven scheme.

Tilt Renewables (ASX: TLT) has their 300 MW project on the edge of suburban Adelaide.

Genex (ASX: GNX) have their 250 MW pumped storage project in Queensland.

So there's some private interest but the big problem is with operation rather than construction. The last thing we need is multiple owners competing to empty the lakes and put the lights out. Co-operation is what's required and that's not how the market works at present (well, some companies do co-operate within reason but they can't go too far or the ACCC will ping them for collusion - that being problematic in a renewable energy system where you need everyone on the same team in order for it to work reliably and efficiently).
 

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