The future of energy generation and storage

As Gomer Pyle would say "Surprise, surprise, surprise"

It seems that the new Liberal Government thinks a low carbon renewable energy future is inevitable and an opportunity rather than a cost... I wonder if he has told Andrew Bolt yet ?

Who would have thunk it ?

Josh Frydenberg: low-emissions future is inevitable and a huge opportunity
Katharine Murphy, Political editor
Treasurer signals new infrastructure for renewable zones, and says Coalition will pursue climate policy it took to the election

Josh Frydenberg says Australia needs to roll out new infrastructure in the coming term of government to support renewable energy zones, and has declared that the “inevitable” transition to low-emissions sources creates an opportunity for the country.

In his first wide-ranging interview since holding his Victorian seat last weekend, where he was subjected to a concerted campaign from the Greens and the climate-focused independent Oliver Yates, Frydenberg told Guardian Australia the Coalition would implement the $3.5bn climate policy it took to the election rather than pursue a reboot.

But echoing the Liberal senator Arthur Sinodinos, who has urged colleagues to use a changing energy market to bolster the Coalition’s environmental credentials and be positive about the increasing share of renewable energy, Frydenberg said emissions reduction and a strong economy were not mutually exclusive propositions.

“I do see the energy transition as an opportunity,” the treasurer said. “I’m really excited by the technology developments – the peer-to-peer lending, microgrids, the improvements in solar panels, battery storage, Snowy 2.0, the Tasmanian renewable energy resource and the potential we will get from a second interconnector.

“One thing we really need to do, which I will be thinking about as the treasurer, is putting in place the infrastructure nationally that the Australian Energy Market Operator has talked about to create the renewable energy zones and to ensure we have the transmission and distribution networks to prepare our country for the long term.

https://www.theguardian.com/austral...s-future-is-inevitable-and-a-huge-opportunity

Bas, just because they don't go round shooting from the hip, doesn't mean they don't understand the problem.
You don't have to loud, proud and in the face, to be intelligent.

no idea what the NEM really does, but will make the point that not all electricity (east coast) is "sold" via the spot market.

my head says any ceo worth their salt that intends to provide a new supply would be crazy to not have supply contracts in place ......... and the greater the capex the greater the revenue certainty needs to be for roi.
when liddell and the rest start shutting i can only assume that a black hole may be left, i can only imagine that governments will be climbing over each to lock in further supply and throw money at producers..... just like sth oz has been doing.

HelloU said:

when liddell and the rest start shutting i can only assume that a black hole may be left, i can only imagine that governments will be climbing over each to lock in further supply and throw money at producers..... just like sth oz has been doing.

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Where the difficulty lies on the purely physical side of it is volatility.

Eg on the 24th and 25th of January this year there was forced load shedding in Victoria.

Well, OK, technically it was voluntary on the 24th but only because industry said they'd do it before AEMO formally gave the orders but that's dealing with semantics really since there was no choice but to turn some load off.

On the 25th it was forced via blackouts to homes and small businesses etc. Those who'd done it the night before were still stabilising their production process so simply couldn't put their hand up gain no matter how much money anyone offered.

So load shedding on the evening of the 24th and around midday on the 25th.

But if you'd taken a look around Victoria's power stations in the early hours of the 25th then you'd have found quite a few completely silent. Shut down and doing nothing as there was simply no need.

That level of volatility on the physical supply side is inherent to electricity but doesn't really happen in any other commodity industry. You don't have for example a wheat shortage at midday then a glut later that same day, every other commodity moves far more slowly than electricity does.

Spot price is likewise. Just because it went from around $100 all the way up to $14,000 at 7pm doesn't mean it won't be down below $50 well before midnight. So again that's extreme volatility compared to other industries.

Then there's the project life cycle and this is where the big problem lies in the immediate term:

2019 - New power station at Barker Inlet (SA) adds 210 MW and mothballing of Torrens Island Power Station (TIPS) A units 1& 2 removes 240 MW so no real change.

2020 - Mothballing of TIPS A unit 3 removes another 120 MW.

2021 - Mothballing of final TIPS A unit removes another 120 MW.

2022 - Permanent closure of Liddell (NSW) removes 1680 MW.

Then there's things like a recent incident. I won't go into details, to my knowledge there's no official public release of the information, but suffice to say there's been an incident at a power station and several hundred MW won't be running for quite some time. Best estimates at this stage are ~ 4 months to return to service but that's subject to change. It's pure good luck that it didn't happen a few months earlier and that there will probably be sufficient supply available from other sources to cope without it until it's back in service.

Now the point there is that any "good" option from a longer term perspective has the problem that it would be extremely difficult to get it built in time and for some of them it's just not going to happen.

Of the things which could be built in that time, they have the problem of being higher cost than the other options in an environment where that cost can't realistically be passed through to consumers. They can be done physically but cost is the problem.

Extending the life of Liddell seems too difficult politically. It's probably the most well known power station in the country for all the wrong reasons so don't go there. It is also by far the least reliable power station in the NEM by the way - the outage rate is extremely high compared to anything else.

So what happens?

The new NSW - SA line should be built by 2022 indeed I'll speculate that nothing will stop that. That helps to the extent that SA and NSW don't usually experience high demand at the exact same time.

A few open cycle gas turbines, diesel engines and medium size batteries will likely appear somewhere.

Politically far easier than extending the operation of Liddell would be to keep TIPS A running a bit longer. It's far smaller but still enough to be of use (480 MW versus 1680 MW) and has the advantage that whilst very much outdated (in operation since 1967) it does work fairly reliably (it's orders of magnitude less trouble than Liddell) and the big one is that it's not the subject of any political debates. Keep that going along with more transmission and a few batteries or diesels etc and we'd likely scrape by. If there's no gas to run it then fear not - Torrens Island also has the ability to fire oil which isn't cheap but it's a workaround if needed.

Note that the last two paragraphs are speculation on my part and aren't something actually proposed by anyone, at least not at present.

As for Liddell, well if it makes it through to 2022 then it's going to be like the marathon runner who collapses to the ground with one hand across the finish line......

The mistake in all of this in my view is that the wrong plants were closed. Wallerawang (NSW, 1000 MW), Northern (SA, 546 MW) and Redbank (NSW, 150 MW) were between them the same size as Liddell and in vastly better condition. Returning Redbank to service wouldn't be impossible but that's only 150 MW and the other two are too far gone - literally blown up with explosives in the case of Northern.

Anglesea (Vic, 160 MW) was small and getting old but also another one that's gone (and been blown up) but which worked far more reliably than Liddell.

Cheap solar panels and batteries are inefficient and dangerous...

https://www.abc.net.au/news/2019-05...heap-solar-derailing-market-insiders/11139856

SirRumpole said:

Cheap solar panels and batteries are inefficient and dangerous...

https://www.abc.net.au/news/2019-05...heap-solar-derailing-market-insiders/11139856

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This is another problem with the renewable issue, who is going to ensure the installations are maintained and replaced as they fail?
I know the people who live over the road from me, have had their inverter fail I checked it out burnt cct board, they said unless insurance cover it they wont replace it.
The situation as it is, means it is up to the homeowners discretion, but the electricity supply assumptions are being based on that generation remaining ad infinitum.
The person in your example, is going to replace an $8,000 system, on the hope the next one last longer? Because there is no way it will have paid for itself.

I see the first drops of what's going to be an outright flood are starting to receive some attention:

https://www.macrobusiness.com.au/2019/05/defence-orders-marshmellows-gas-disaster-locks/

https://www.macrobusiness.com.au/2019/05/nsw-import-bricks-gas-gangsters-steal-economy/

There's a reason why no other country has gone down this track and suffice to say there's plenty more news like this coming, some of it already baked in the proverbial cake.

One thing's for sure, the cost of all this makes some of the issues which dominated the recent federal election campaign seem child's pocket money in comparison.

Smurf1976 said:

I see the first drops of what's going to be an outright flood are starting to receive some attention:

https://www.macrobusiness.com.au/2019/05/defence-orders-marshmellows-gas-disaster-locks/

https://www.macrobusiness.com.au/2019/05/nsw-import-bricks-gas-gangsters-steal-economy/

There's a reason why no other country has gone down this track and suffice to say there's plenty more news like this coming, some of it already baked in the proverbial cake.

One thing's for sure, the cost of all this makes some of the issues which dominated the recent federal election campaign seem child's pocket money in comparison.

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What people here have been saying for a long time.

The politician's skulls must be made of lead if they haven't seen a disaster coming over gas supplies.

It's crazy really. On any way of thinking moving quickly to a renewable energy economy makes absolute sense.

I was really delighted to her Arthur Sinodinis attempt to eocourage the Liberal party into recognising that such a policy platform was inevitable and just had to be done to not look like complete twits. And of course it would completely disarm the Labour Party and Greens.

And then he flits off to battle Trump and Angus Christian decides the previous BS Liberal policy was what they should do because "they had a mandate" . What about the Senate ? What about the centrist Libs ?
What about the entire business sector wanting to move to a clean and cheaper energy future ?

Just madness all over again..

Another one bites the dust......

https://www.theage.com.au/business/...jobs-alarm-on-gas-crisis-20190528-p51s2s.html

Get used to this sort of news

The smartest move at this point would be to just bite the bullet on the costs and fix the mess since the longer it's left the bigger it gets. Taxpayers are going to foot the bill one way or another, the only question really is about the detail of how, so may as well just accept the inevitable and get on with it before the whole thing gets any bigger.

SirRumpole said:

Cheap solar panels and batteries are inefficient and dangerous...

https://www.abc.net.au/news/2019-05...heap-solar-derailing-market-insiders/11139856

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Funnily enough the solar installer interviewed has made roofs leak after his installation. Minor stuff but tried to pin it on someone else.

AFC has tested and proven the use of Ammonia as the hydrogen source for its fuel cells. The hydrogen that is produced by cracking ammonia is not as pure as other sources but, critically, this lack of purity doesn't affect their fuel cells. Their SP has jumped in the past few days. See AFC energy on UK stock market

Ammonia is cheap and easily transportable.

AFC Energy Successfully Concludes Ammonia to Power (“A2P”) Fuel Cell Generator Trials and Confirms Plan for Scalable Commercial System
AFC Energy (AIM: AFC), the leading alkaline fuel cell power company, announces the successful results of an 18 month Ammonia to Power (“A2P”) trial and confirms plans to conclude work on the business case and engineering of an integrated, scalable ammonia fuelled clean power generator.

The system, which expects to utilise existing ammonia cracking technology alongside AFC Energy’s proprietary fuel cell system, would enable the use of AFC Energy’s fuel cells in off-grid locations where electricity would be generated through the consumption of ammonia; a low-cost commodity chemical that is readily available in industrialised and developing countries.

Highlights

• Proof of concept for the use of AFC Energy’s fuel cell system with cracked ammonia fuel to provide clean electrical power in remote, off-grid applications where premium power prices are available
  
  • Negligible difference in fuel-cell performance witnessed between direct hydrogen gas sourced from industrial gas companies, and that sourced from cracked ammonia
  • Ability to utilise “off the shelf” ammonia crackers readily available in today’s market without the need for further research and development costs that would otherwise likely delay go to market strategies
  • Completion of full third-party safety review demonstrates safe operation of the integrated system
  • Clear ability to scale up power production with increases in the size of the cracker capacity and fuel cell to deliver multi-MW solutions for powering remote or off-grid communities
  • Work has commenced on the design and business case for an integrated power system that is fully consistent with AFC Energy’s approach to the identification of third party hydrogen solutions within its off-grid power generation unit
  • Uses commodity ammonia as fuel that is readily available as one of the world’s most produced inorganic chemicals for its use as a fertiliser.

https://fuelcellsworks.com/news/afc...confirms-plan-for-scalable-commercial-system/

I see that AGL have now publicly announced the incident at Loy Yang to which I have previously referred to in non-specific terms.

They're putting the cost in the $60 to $100 million range with an expected return to operations in December this year. That's AGL's publicly stated estimate.

In layman's terms for what happened - there was an electrical short circuit whilst at full output last month and it's a mess. Think in terms of cooking and melting sort of mess.

Affected plant is Unit 2 at Loy Yang A power station in Victoria. This is a 530 MW conventional steam driven plant using coal to fire the boiler.

Losers = AGL plus anyone buying from the spot market who isn't hedged are short term losers. Longer term, consumer prices reflect the underlying market so expect your bills to go up a bit in due course.

Winners = Rival generating companies who are exposed to the spot market and/or which have the ability to boost production plus the suppliers of fuels used by them.

Partly related but elsewhere, Unit 4 at Torrens Island B (SA, owned by AGL) ran at sustained high output burning fuel oil throughout Wednesday and Thursday this week due to a scarcity of natural gas in south-eastern Australia caused by high demand and a gas production outage in Victoria. So if you're in Adelaide and saw smoke coming out of Torrens Island PS then that's what was going on.

The generating unit in question at Torrens Island is a 200 MW conventional steam driven unit using gas / fuel oil to fire the boiler. Typical operation is load following and system security (so a highly variable output) using gas as the fuel and not the constant high output using oil as took place this week. In simple layman's terms you could say it was switched to doing "grunt work" just sitting there churning out bulk power during the gas supply squeeze.

AGL's media release and some media coverage regarding the incident at Loy Yang:

https://www.agl.com.au/about-agl/me...20-impact-of-extended-unit-outage-at-loy-yang

https://www.theage.com.au/business/...NiBn_PPo2hBMUScTb8nzBVN5XjvCek5gz77ev0E_SfpTY

Smurf1976 said:

I see that AGL have now publicly announced the incident at Loy Yang to which I have previously referred to in non-specific terms.

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Just curious about your post being in a thread on renewables.
I thought I was more lost than usual .

Smurf1976 said:

I see that AGL have now publicly announced the incident at Loy Yang to which I have previously referred to in non-specific terms.

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Great concern from AGL regarding it's own financial loss , little concern for the load it's put on other generators and no admission that maybe it was lack of essential maintenance that caused the problem in the first place.

Smurf I saw a headline, that another big unit in the Latrobe Valley, has gone AWOL.

Electric cars and renewables could boost outback jobs.

https://www.abc.net.au/news/2019-06...ergy-driving-new-outback-mining-boom/11196732

SirRumpole said:

Electric cars and renewables could boost outback jobs.

https://www.abc.net.au/news/2019-06...ergy-driving-new-outback-mining-boom/11196732

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Exactly what we have been saying, there is no practical reason why a battery industry can't be developed here.
The old chestnut that you can't fill the ships to capacity, doesn't cut it with batteries, we should demand they do it here or charge them a tax for every ton of lithium that goes out.

This article about facebook's entry into the solar market, puts a bit of perspective to the enormity of the challenge facing us.

https://www.fastcompany.com/9035669...reds-of-millions-in-a-gigantic-new-solar-farm

If we take the article as being fairly accurate, we can determine the size and cost of a solar installation, to replace Liddell Power Station.
Liddell is 2000MW, so we require 4,000MW of renewables to replace it, for the sake of simplicity forget storage.

Facebook is building a 380MW solar installation, which will cost $600m AUD and cover an area of 4,600 acres.
So for the sake of rounding call it a 400MW solar farm, so just multiply the figures by 10, that is $6billion and covering an area of 46,000 acres or 186 sq/klm.
That is going to take some building, if you can find the land suitable, and do it in a couple of years.

sptrawler said:

Smurf I saw a headline, that another big unit in the Latrobe Valley, has gone AWOL.

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That's the AGL one at Loy Yang and the "incident" to which I've referred a few times.

Since it's a listed company I've been careful to only state what the company has said about it publicly - it had an internal short circuit and there's damage to the stator and rotor.

In layman's terms that's a serious incident and hard to fix - bit like saying someone had a heart attack or that your car's lying upside down at the bottom of the hill. It's a big problem not a minor one.

Official word from the company is it'll be fixed in December this year but that's an estimate subject to revision.

From an investment perspective AGL is a loser out of it but it's more complex when it comes to who wins. Origin Energy is the obvious potential winner so far as listed companies are concerned but where it gets complex is with the hedging arrangements in the market and the participation of other companies which aren't listed. What benefit may arise to Origin is thus far from certain (and noting that around a third of Origin's generation is under contract from others anyway and not actually owned by them).