Australian (ASX) Stock Market Forum

The future of energy generation and storage

To highlight that difference in how different groups will see it (not actual quotes from anyone but to illustrate):

Big industrial company wanting to build a factory etc: "We're making a huge investment in machinery etc that has a working life of at least 30 years and we need an assured supply of energy to underpin that".

Engineers assessing options for a new power station: "No point building a power station if there isn't going to be fuel available to run it with. Whatever option we go with, it has a long working lifespan and we need to ensure there's fuel available, economically, for that duration".

Gas company: "We don't make money having 50 years worth of gas sitting in the ground, we make money by selling it ASAP".

Therein lies a huge conflict.

To a big energy user or someone focused on maintaining supply well having an abundance of gas in reserve is exactly what you want. You don't commit to using what's not there since that represents an unnecessary risk.

Hence if we look at the historic power developments in Australia, they were all based on proper measurements of coal reserves, water resources (hydro) and so on. They didn't build Loy Yang without drilling a lot of holes in the ground to determine that there was in fact coal where they thought there was coal. Meanwhile the hydro developments were based on decades worth of river flow data in many cases and where that wasn't available proper estimates, itself a major piece of work, were done to ensure that the overall scheme was in fact based on a resource that really does exist. End result is the coal and hydro schemes worked as intended, they had available the expected resource over the life of the facility which is decades.

That a new mine was developed, at huge expense, for Loy Yang rather than using coal from the already in production Yallourn or Morwell mines was for precisely that reason. Whilst it would've worked initially, the coal available from those existing sources wasn't going to be sufficient for the life of the station and was needed for the remaining life of those already built.

A big problem with all this energy stuff is the different timescales involved when compared to most business.

When you're talking about projects taking 10+ years to build and then being in operation for half a century or more and which are based on decades worth of collected data, this really isn't something where short term thinking works.

As a case in point, it was 1918 when Victoria committed to power generation at Yallourn and it'll be 2028, so 110 years later, when it ends. That sort of thing just doesn't fit at all well within the model of anyone seeking to just dig the coal up for a quick $.

This is intended as comedy but sadly it's also factually correct and remains so today, 5 years after it was made:


While the history of generation gives a sense of why we are where we are, it's a bit like thinking fixed phone lines would be forever and there would be no need to change.
Against this history is simple physics. That is, climate change, and finite natural energy resources due to burning.
Not much thought was needed to work out that transition was inevitable, and an early step Australia took was to put a price on carbon.
That step accelerated a commercial push into renewables, which in turn addressed in part climate concerns.
However, Tony Abbott and his dimwitted followers put an end to that and instead ran an agenda that promoted fossil fuels over renewables. It saw billions committed to carbon capture and storage, including $412M in their last budget. CCS has proven as effective as a solid gold ashtray on a motorbike.

As @Smurf1976 notes, industry knew what was going to happen. There have been hundreds of submissions to AEMO that pointed out problems already in the system, and problems that needed addressing in order to maintain the NEM. ISP road maps identify these, and present scenarios that government can follow in order to achieve their desired outcome. However, there was a missing piece of policy that was necessary to get industry to commit to large scale dispatchable investment, and that was the price on carbon that Abbott removed: AEMO dropped a carbon price scenario from its modelling in 2019. But it got worse ....

Here's what the Coalition hid from us, and through deliberate inaction has cost us countless billions. Let's hope Labor have worked out this rort has to be plugged, and reinvests the gains into transitioning us away from FF as quickly as practical.
 
Against this history is simple physics. That is, climate change, and finite natural energy resources due to burning.
I'm not sure when the climate change issue was first raised at the scientific level but it was a very long time ago now. I've come across references to it dated from the 1890's.

For fossil fuel depletion, that one was raised at least as early as 1865, there's published work from that time on the subject.

So both were known about for an extremely long time indeed I'm pretty sure that Thomas Edison noted the foolishness of relying on fossil fuels and that renewable energy made far more sense. Odds are he wasn't aware of climate change but had presumably realised the physical limits to what's in the ground. :2twocents
 
It isn't all doom and gloom, Australia is still at the forefront of transitioning to renewables, the fact that a new Govt with a stated intention of pushing harder toward renewables is now in office, IMO will be a spur for the coal sector to pursue active incentives to continue in operation. The previous Govt was leaning toward the market sorting out the demise of coal, whereas now I'm guessing there will have to be some proactive market involvement by the Govt, as they actually want a reduction of 43% by 2030.
How that will be achieved, without the Govt either installing new generating capacity and or paying existing generators, will be interesting. :2twocents


The global per capita leaders in deployment of new renewable generation capacity in 2020 were the Netherlands, Australia and Norway (figure 2). They deployed new renewables per capita at 10 times the global rate and 3 times faster than China and the USA.

Australia has the most installed solar PV capacity per capita, ahead of Germany, the Netherlands, Japan and Belgium.

Since the Australian solar resource in the populated southeast is 30-50% better than in those countries, Australia is by far the leading country in terms of per capita solar generation and also solar deployment speed.

In respect of deployment of wind capacity, Australia is in 4th and 13th places for deployment speed (Watts per person per year) and total deployment (Watts per person) respectively. Eleven European countries and Uruguay rank ahead of Australia for the latter.


2-4-1024x624.jpg
Figure 2: New renewables in 2020


A recent paper shows that electricity production in Australia needs to double to decarbonise these sectors. This would eliminate 69% of emissions without significant impact on electricity prices.

To accomplish this task by 2040, the deployment rate of PV and wind would need to double from 7 GW in 2020 to 14 GW per year, which is not so hard considering that the deployment rate in 2015 was only 1 GW per year.

The balance of emissions comprises fugitive emissions (10%) (which vanishes as fossil fuel use vanishes); waste (3%); chemical production, aviation & shipping (8%); and the land sector (10%).

Grid balancing​

Balancing high levels of variable PV and wind is usually straightforward through storage and strong interconnection between regions (to smooth out local weather).

Rapid deployment of PV and wind in Australia and Vietnam is notable because neither country has significant grid connection to neighbours to help balance the grid.

According to estimates from the Clean Energy Regulator, 7 Gigawatts of new solar and wind energy capacity was added in 2020.

As a consequence, renewable electricity reached 30% in the National Electricity Market and 70% in South Australia over last summer and is tracking towards 45% and 100% respectively in 2024.

Pumped hydro energy storage comprises 95% of global storage power and 99% of global storage energy. It provides lowest cost storage for periods of more than a few hours.

The global pumped hydro storage atlas lists 616,000 sites(4,000 in Australia) with 23 million Gigawatt-hours (GWh) of combined storage, which is two orders of magnitude more than required to support a global 100% renewable electricity system.

In Australia, two pumped hydro systems are under construction (Snowy 2.0 and Kidston) with combined storage power and energy of 2.3 GW and 350 GWh respectively.

Batteries (utility, home and in electric vehicles) complement pumped hydro by providing short term storage. About 2 GW (2 GWh) of utility batteries are under development in Australia.

The renewable energy industry in Australia is now worth $11 Billion per year (including both rooftop and utility solar and wind systems) and is employing 27,000 people.

Continuing reductions in the price of solar and wind may cause a wave of early coal generator retirements during the 2020s, further accelerating the change towards a renewable grid.

Professor Andrew Blakers is head of the Research School of Electrical, Energy and Materials Engineering
at Australian National University
 
It isn't all doom and gloom, Australia is still at the forefront of transitioning to renewables, the fact that a new Govt with a stated intention of pushing harder toward renewables is now in office, IMO will be a spur for the coal sector to pursue active incentives to continue in operation. The previous Govt was leaning toward the market sorting out the demise of coal, whereas now I'm guessing there will have to be some proactive market involvement by the Govt, as they actually want a reduction of 43% by 2030.
How that will be achieved, without the Govt either installing new generating capacity and or paying existing generators, will be interesting. :2twocents
Not meaning to diminish anything in your post but there are several important points to add.
First, we did well per capita in 2020 because Australian's have the biggest houses in the world (on average)
1655071223471.png


and we can afford to invest more in private rooftop solar:
1655070928089.png
Next, 2020 was an outlier and 2021 did not look so good for us:
1655070486389.png

The above link notes, "Oceania is no longer the fastest growing region (+5.2%), although its share of global capacity is small and almost all of this expansion occurred in Australia."

The problems we have are well covered in this thread. We are behind in storage, interconnectors for grid scale distribution of renewables (HVDC) - Marinus Link being an example, and DER. And this does not cover where we should have been if Finkel's National Hydrogen Strategy was properly funded rather than getting backburner status.

There's a lot for Labor to do, and if they can avoid the influence of lobbyists and the big donations they hold out it's possible they might get some things right for a change.
 
Not meaning to diminish anything in your post but there are several important points to add.
First, we did well per capita in 2020 because Australian's have the biggest houses in the world (on average)
View attachment 142822

and we can afford to invest more in private rooftop solar:
View attachment 142821 Next, 2020 was an outlier and 2021 did not look so good for us:
View attachment 142820
The above link notes, "Oceania is no longer the fastest growing region (+5.2%), although its share of global capacity is small and almost all of this expansion occurred in Australia."

The problems we have are well covered in this thread. We are behind in storage, interconnectors for grid scale distribution of renewables (HVDC) - Marinus Link being an example, and DER. And this does not cover where we should have been if Finkel's National Hydrogen Strategy was properly funded rather than getting backburner status.

There's a lot for Labor to do, and if they can avoid the influence of lobbyists and the big donations they hold out it's possible they might get some things right for a change.
Very true I've mentioned on several occasions, Australia is one of the largest per capita consumers, early in the thread I mentioned to Bas if we could halve our usage a lot of the coal generators wouldn't be required.
But being a country of entitled people, the last thing we will do is reduce our personal consumption, we just want our indulgence to be cleaned up. :roflmao:
 
Very true I've mentioned on several occasions, Australia is one of the largest per capita consumers, early in the thread I mentioned to Bas if we could halve our usage a lot of the coal generators wouldn't be required.
But being a country of entitled people, the last thing we will do is reduce our personal consumption, we just want our indulgence to be cleaned up. :roflmao:
This is what really gives me the irrits... Climate action NOW! So long as it's someone else living in a cave, huddled around a single candle ;)
 
Very true I've mentioned on several occasions, Australia is one of the largest per capita consumers, early in the thread I mentioned to Bas if we could halve our usage a lot of the coal generators wouldn't be required.
But being a country of entitled people, the last thing we will do is reduce our personal consumption, we just want our indulgence to be cleaned up. :roflmao:

Really ? One of the largest per capita consumers ? Be interesting to see how much energy use in industry and commerce is included in that figure. Otherwise perhaps we are asking industry to go to renewable energy ? As many are now doing as much for commercial reasons.

But putting that aside there is a strong case for energy efficiency across all areas of society and industry. If we needed less energy then the cost of building new solar/wind plants would be proportionally reduced. Of course we won't actually reduce new energy sources because one of the giant new sunrise industries being proposed is mass renewable energy generation which is then exported by cable or turned into hydrogen or ammonia for subsequent export/local use.

We are also seeing a determined push towards "electrifying everything" to move people and industry off natural gas and oil. I'm afraid Wayne will have to shiver in his single candle lit cave ...alone.. ( Well of course he won't because canny Wayne is busily becoming frugally self sufficient on solar power )
Can we please stop running this tired stupid trope ? It's just climate denial BS that poisons the discussion. There are plenty of more constructive and concerning issues to debate than this sort of rubbish.
 
huddled around a single candle
That one's a tad closer than many might realise.

In short:

Extremely high prices in Queensland, which have averaged over $800 / MWh over the past week, have now triggered the $300 administered price cap for electricity.

At $300 / MWh the open cycle gas and diesel fired generators can't even cover fuel costs so have withdrawn capacity. This occurred today.

That very nearly put the lights out tonight, a situation that has been temporarily averted through directions but ultimately the problem persists as such.

The $300 price cap has now also been triggered in NSW, extending the problem to that state.

Ultimately this isn't an engineering failure but a financial one. It's a problem needing to be fixed not by those with spanners or in control rooms but by those who came up with what were termed "reforms" back in the 1990's which ultimately created this mess.

More information here:


:2twocents
 
@SirRumpole you will like this article, it explains why a tax on volume is critical, it explains how it is easy to wash profits.

From the article:
In his 2010 review of the tax system, former Treasury Secretary Ken Henry said the PRRT "fails to collect an appropriate and constant share of resource rents" because it overcompensated investors on deductions.
When it comes to paying taxes, the big resource houses almost always cite the amount they shell out in royalties.

But royalties aren't tax.

They're a cost of doing business. Just as musicians earn a royalty from allowing others to sell their recordings at a profit, Australians — or rather the states that make up the Commonwealth — own the resources. The miners have to buy them from us.
During the past decade, Australia has, on occasion, overtaken Qatar as the world's biggest exporter of liquefied natural gas.

However, where Qatar has managed to reap a financial windfall from royalty payments on its exports, we've barely managed to eke out spare change.

Five years ago, Treasury estimated we'd receive around $800 million in royalties for 100 billion cubic metres of LNG.

Qatar, in contrast, was forecast to pull in $26.6 billion for exactly the same amount. That's primarily because it levies a 35 per cent royalty on its gas.
 
W
That one's a tad closer than many might realise.

In short:

Extremely high prices in Queensland, which have averaged over $800 / MWh over the past week, have now triggered the $300 administered price cap for electricity.

At $300 / MWh the open cycle gas and diesel fired generators can't even cover fuel costs so have withdrawn capacity. This occurred today.

That very nearly put the lights out tonight, a situation that has been temporarily averted through directions but ultimately the problem persists as such.

The $300 price cap has now also been triggered in NSW, extending the problem to that state.

Ultimately this isn't an engineering failure but a financial one. It's a problem needing to be fixed not by those with spanners or in control rooms but by those who came up with what were termed "reforms" back in the 1990's which ultimately created this mess.

More information here:


:2twocents
What has caused the surge in prices that triggered the cap?
 
@SirRumpole you will like this article, it explains why a tax on volume is critical, it explains how it is easy to wash profits.

It makes it h and to understand why Jim Chalmers said they were not proposing a super profits tax like the UK , unless they have something else in mind.
 
How so??

the standard answer to every problem is the Ukraine war lately, doesn't even matter what question is.
Haven't you kept up with the events ?

Russia produces most of Europes gas, Europe has boycotted Russian gas so they are looking elsewhere, therefore there is a gas shortage and the price goes up.

Meanwhile, our generator companies haven't maintained some of their stations and unit have gone out of service, plus flooding in coal mines had led to a coal shortage.
 
It makes it h and to understand why Jim Chalmers said they were not proposing a super profits tax like the UK , unless they have something else in mind.
The article explains the problem with a super profits tax, the companies don't make a super profit, also as the article says the Arabs put a 35% royalty on the gas ours is from memory 2.5 or 5%.
Brendon Grylls a National Party minister a few years ago, tried to get groundswell support for an increase in royalties, well the media put paid to that when the mining companies poured millions into scare advertising.
He was a good politician, he actually pushed for a better deal for the regions, where all the money is made, but they always miss out on the cream from Governments.
https://thewest.com.au/politics/sta...-fall-of-a-political-king-maker-ng-b88414737z
From the article:
Five days of balance-of-power negotiations in 2008 changed the fortunes of WA’s regions.

They also etched the name of Brendon Grylls — king maker — on to the political landscape.

Those talks allowed Mr Grylls to implement the $8 billion Royalties for Regions program, which redirects millions of dollars in royalties into a special fund quarantined for projects in country WA
.


Unfortunately he wanted to get more money for our resources. 2017

From the article:
Brendon Grylls is going to the state election with a mining tax proposal he says will recoup the government an extra $2.3bn a year – and the industry is escalating its campaign to oust him.

Five months ago, pictures of macaws started popping up on the screensavers of employees at BHP Billiton’s iron ore operations in Port Hedland, 1,500km north of Perth.
The colourful image came with a warning.

“Increasing WA iron ore royalties by $5 would make them seven times higher than our biggest competitor Brazil,” it read. “What’s at risk if WA mining is made uncompetitive?”
The target of the message was the local MP, Brendon Grylls. As leader of the Western Australian National party, Grylls had suggested increasing a minor charge attached to some of the state’s oldest and most established iron ore mines from $0.25 a tonne to $5 a tonne, in line with inflation.

Then he was done: 2017
From the article:
Brendon Grylls, the leader of the Western Australian National party, who spearheaded a campaign to increase charges paid by Australia’s two biggest mining companies, has lost his seat to Labor.
Grylls faced a sustained attack from the mining lobby, which conducted a $5m advertising campaign against his proposal to increase the special lease rental fee paid by BHP Billiton and Rio Tinto on their two biggest iron ore deposits from $0.25 a tonne to $5 a tonne.

The rate had been set when the state agreements were struck in the 1960s and Grylls, as leader of the National party, argued it should be increased to bring in an extra $3bn in revenue a year to shore up the ailing state finances
.
 
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Haven't you kept up with the events ?

Russia produces most of Europes gas, Europe has boycotted Russian gas so they are looking elsewhere, therefore there is a gas shortage and the price goes up.

Meanwhile, our generator companies haven't maintained some of their stations and unit have gone out of service, plus flooding in coal mines had led to a coal shortage.
So you are saying Australia imports gas from Russia??
 
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