The future of energy generation and storage

rederob said:

Yes, as each element split off now has to make their individual profit, rather than a single entity serving the public good.

Interestingly, not long before I left WA over 4 decades ago the State Electricity Commission of Western Australia plus the Fuel and Power Commission were amalgamated into a single "Energy" Commission to better plan for the State's needs. I know it was a long time ago but I believe the change was put in motion by "Honest John" Tonkin. No doubt @sptrawler will know for sure.

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It was either Honest John or Charlie Court, it actually might have been Court because it was formed when the gas was brought down from Karratha and incorporated under the SEC.

I did say people may get a shock with how quickly W.A will stop using coal for generation. McGowan says coal will be done by 2030.
From the article:
Later this year, the first of the 854-megawatt Muja power station’s units near Collie, south of Perth, will close, with the entire plant to be shut by 2029. The nearby 340MW Collie plant will exit the market by the end of 2027, the premier, Mark McGowan, said in a statement on Tuesday.


The state will join South Australia, the Northern Territory, the Australian Capital Territory and Tasmania to be coal-free in its power generation. A report by the Australian Energy Market Operator (Aemo) last year said

As part of the changes, the government also committed to not commission any new natural gas-fired power stations on the south-west grid after 2030. The gas supplies are reserved as part of a 15% carve-out of gas production in the state, a system that some would like to see applied in eastern Australia to ensure supplies and cap price increases.

A caveat to the last post, there is still a private coal power station "Blue Waters" on the Collie coal fields, it comprises two 217MW turbines, I don't know if they have any immediate plans of closing.
The statement by the Government may well lead them to extend the life of the station, it was already written down to zero dollars a few years back, so you never know maybe McGowan has held out an olive branch.

@SirRumpole I read in the AFR this morning that Eraring Power Station was offered to the State Government, like I said the last thing a politician wants, is to responsible for something that could cause a backlash, even if it was in the publics best interest.
I bet the price was a lot less than the State government got for it when they sold it.
It also highlights we were spot on about our synopsis of the issue facing coal fired generation, the problem is no one wants it, but everyone needs it.
Things will get a lot worse before they get better IMO, the remaining coal generators will soon be giving the State Governments ultimatums either buy it, pay us to run it, or we close it.

From the article:
The NSW government considered a pitch to buy the loss-making Eraring Power Station in secret talks with Origin Energy last year. But the deal fell apart amid government concerns that underwriting a plan to keep the coal-fired power station open longer could “crowd out” other investments in energy.

After negotiations failed Origin announced the closure of Eraring in 2025.
Origin first approached the NSW government in mid-2021 with a pitch to hand over control of the NSW Central Coast power station under a deal that would transfer ownership to the government in 2023 financial responsibility from 2025 onwards.

A presentation to government in July 2021 opening talks on a deal was blunt about the challenges Origin faced at the ageing power plant, which the company expects could cost $10 million a month to operate from mid-2025.

“The market shift to renewable energy coupled with commitments to build more dispatchable capacity means Eraring is already loss making and this position will deteriorate over the decade,” an Origin briefing pack to the government stated.
A timeline drafted by the government’s investment banking adviser ICA Partners revealed negotiations opened on November 1, with several options canvassed for Origin to hand over control of the plant from 2025.

Part of the deal included Origin committing to a building an 800MW, two-hour battery next to the plant and potentially expanding a Shoalhaven pumped hydro facility.
By November, the government said it could decide ahead of Origin’s half-year results in February. But by December the deal had fallen over, and Origin walked away citing uncertainty about the retirement date and other issues.

“Origin wants the state to operate the plant post-2025 and sell back to Origin a block of power. State wants an insurance model that allows the plan to operate post-2025 only as required for reliability purposes,” ICA Partners investment banking adviser Michael Siede is recorded to have said in a final briefing note. The government did not want to be seen to be influencing market outcomes, he added.


The documents reveal government fears over taking on risks it could not control and that committing the power station to operate for longer could discourage or “crowd out” investment in other energy sources. The notes also reveal a government preference to keep the plant open using extensions to address shortfalls in supply rather than committing to a specified time frame.

A note prepared by the Department of Planning, Industry and Environment on December 8 reasoned that the power station was “not expected to be needed for price or reliability beyond June 2025” and that extending its operation beyond 2025 could expose consumers to unnecessary costs while “outcrowding” other investments.

Government advisers also reasoned that Origin was a “socially responsible” organisation and would not shut the plant down in 2025 if the market needed the supply. Two months after the talks failed, Origin announced it would close Eraring in August 2025.

sptrawler said:

@SirRumpole I read in the AFR this morning that Eraring Power Station, like I said the last thing a politician wants, is to responsible for something that could cause a backlash, even if it was in the publics best interest.
I bet the price was a lot less than the State government got for it when they sold it.
It also highlights we were spot on about our synopsis of the issue facing coal fired generation, the problem is no one wants it, but everyone needs it.

NSW government knocked back Origin offer to sell Eraring power plant

Advisors believed the company was “socially responsible” and would not shut the plant down in 2025 if the market needed the supply. They were wrong.

www.afr.com

From the article:
The NSW government considered a pitch to buy the loss-making Eraring Power Station in secret talks with Origin Energy last year. But the deal fell apart amid government concerns that underwriting a plan to keep the coal-fired power station open longer could “crowd out” other investments in energy.

After negotiations failed Origin announced the closure of Eraring in 2025.
Origin first approached the NSW government in mid-2021 with a pitch to hand over control of the NSW Central Coast power station under a deal that would transfer ownership to the government in 2023 financial responsibility from 2025 onwards.

A presentation to government in July 2021 opening talks on a deal was blunt about the challenges Origin faced at the ageing power plant, which the company expects could cost $10 million a month to operate from mid-2025.

“The market shift to renewable energy coupled with commitments to build more dispatchable capacity means Eraring is already loss making and this position will deteriorate over the decade,” an Origin briefing pack to the government stated.

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Interesting.

In the current circumstances government owned generators would be important in stopping price gouging.

Eraring could be a good deal in the short term, long term it will be a dead asset of course but at least there would be some price competition in the market before that.

SirRumpole said:

Interesting.

In the current circumstances government owned generators would be important in stopping price gouging.

Eraring could be a good deal in the short term, long term it will be a dead asset of course but at least there would be some price competition in the market before that.

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Like I said, the Pollies don't want to be responsible for the pain that the transition will cause and is the reason the last Government was allowing the operators to sort it out, now we have a Govt that has actively attacked the coal operators and made a lot of promises about shutting them down.
Well now IMO we are going to find out if the narrative fits the reality, at least in W.A the gas isn't being demonised, so we should be getting a row of GT's at Kwinana Power Station soon.
I certainly hope Kurri Kurri gets underway soon, otherwise it will turn very ugly IMO.

I loved the last line in the passage above.
"Government advisers also reasoned that Origin was a “socially responsible” organisation and would not shut the plant down in 2025 if the market needed the supply. Two months after the talks failed, Origin announced it would close Eraring in August 2025."

The company is a socially responsible organisation, what a hoot, isn't that the Govt function. lol
So the company is meant to run at a loss, to supply an essential service, that the Government sold to them. I can't see how that will work, my guess as I've already stated, the coal companies will just flick the bird and walk.

Not sure how cluey this reporter is, she's just stating the obvious really but it seems that the media is finally catching up with reality.

Nothing like a crisis to focus attention...

AEMO suspends national energy market.

Implications ?

There is a view under capitalism that market forces lead to greater efficiency.

The NEM is proof that this is not the case.

Fortunately for Labor the public won't care how much it costs to fix now as it just has to be fixed.

rederob said:

There is a view under capitalism that market forces lead to greater efficiency.

The NEM is proof that this is not the case.

Fortunately for Labor the public won't care how much it costs to fix now as it just has to be fixed.

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Oh yes, people who make a profit from something will always be cheaper than those who do it at cost.

SirRumpole said:

AEMO suspends national energy market.

Implications ?

Energy regulator's drastic step amid ongoing crisis

The national energy operator has suspended Australia's east coast wholesale market, saying it is impossible to keep operating in the current emergency.

thenewdaily.com.au

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You never know, the States may have to buy back the stations, they are the only ones in a position to run them, my guess they will have to pay the coal generators a standby allowance to be available. The turbine/boilers can't be just left going cold, the colder they are the longer they take to bring on line.
So they have to be kept at a temperature, suitable for the expected return to service time, that means firing the boiler to keep pressure even when it is off, oh dear at last the reality of the situation is hitting home.
Of note, Origin didn't offer to sell Eraring power station to the Feds, they were offering it to the State, same as happened with North power station in S.A, now Bowen realises the problem Taylor had.
It is going to be interesting to see who pays what, to whom.

SirRumpole said:

Oh yes, people who make a profit from something will always be cheaper than those who do it at cost.

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Don't forget the narrative of yesteryear, the Govt workers are slack, inefficient and lazy, it always amazed me because I've worked in both private and Govt and found Govt to be much harder workers.
But try telling that to the media.?

This is where Australia should have been heading years ago.
Copyright prevents me from snipping from the article, but when you see BP put $12B into renewables you know it's serious.

sptrawler said:

Don't forget the narrative of yesteryear, the Govt workers are slack, inefficient and lazy, it always amazed me because I've worked in both private and Govt and found Govt to be much harder workers.
But try telling that to the media.?

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No, try telling it to the LNP.

rederob said:

This is where Australia should have been heading years ago.
Copyright prevents me from snipping from the article, but when you see BP put $12B into renewables you know it's serious.

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I dont think the project was stiched together last week, but I could be wrong.

SirRumpole said:

No, try telling it to the LNP.

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That's true I did always find the LNP were more into privatisation.
But were easier to get a payrise out of.

SirRumpole said:

Not sure how cluey this reporter is, she's just stating the obvious really but it seems that the media is finally catching up with reality.

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The only bit I disagree with is the references to "the last decade" which implies it's all the doing of the previous government.

Suffice to say the fundamental flaws in the market date back to the 1990's.

sptrawler said:

Don't forget the narrative of yesteryear, the Govt workers are slack, inefficient and lazy, it always amazed me because I've worked in both private and Govt and found Govt to be much harder workers.

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The thing politicians and other critics failed to grasp is that there tends to be a huge team spirit aspect to public utilities and so on.

There are some inefficiencies but overall they do work far better than most seem to realise. Things get done that the private sector draws the line at and walks away from. To the extent there's a bit less efficiency at times, it's offset when the crunch comes and you find the entire team still there in the middle of the night and so on.

Australian Energy Market Operator suspends spot market for wholesale electricity to ensure reliability and avoid blackouts

Looks like the wholesale market is going haywire with huge demand as winter kicks coupled with not enough supply. This kerfuffle is a huge wake up call. Government has been asleep at the wheel hoping private enterprise will fix the problem but surprise, surprise, it hasn't. Energy security is something the government needs to sort out as it's a national security issue.

This is what thinking one election cycle at a time gets you.

greggles said:

Australian Energy Market Operator suspends spot market for wholesale electricity to ensure reliability and avoid blackouts

Looks like the wholesale market is going haywire with huge demand as winter kicks coupled with not enough supply. This kerfuffle is a huge wake up call. Government has been asleep at the wheel hoping private enterprise will fix the problem but surprise, surprise, it hasn't. Energy security is something the government needs to sort out as it's a national security issue.

This is what thinking one election cycle at a time gets you.

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This is what selling off your power stations and then expecting the private sector to run it at a loss, because they have a social obligation that overides their business obligation gets you. Lol
Oh and also letting the gas companies sell all your gas, while not asking they keep some for you. Lol