The future of energy generation and storage

[basilio]

The history of private enterprise funding infrastructure in this country is not brilliant. They usually want government guarantees of no competition before they put their money in. They will wait like sharks untill the government funds it, and then they will try to buy it on a monopoly basis or close to it. Telstra being a prime example, same with the State poles and wires grid.

Totally agree.. No way I would trust a current private enterprise structure to do a cost effective rebuild of our energy systems.

The old SEC model was effective in achieving an overarching energy system. I imagine the Snowy Mountain scheme was a similar beast. Really think we can dust off the plans and consider reviving a Quango as the construction and operation model. The private enterprise is broken.

https://simple.wikipedia.org/wiki/Quango
https://en.wikipedia.org/wiki/Snowy_Mountains_Scheme
http://www.powerhousemuseum.com/hsc/snowy/investigating.htm

 

[Smurf1976]

So far as public versus private is concerned, a bit of a history lesson and noting that we seem to be repeating how it all started.

To cut a long story short, Victoria and SA both started out with privately owned electricity industries with production based on the use of black coal. Tasmania started out mostly privately owned, using a mix of resources (sub-bituminous coal, oil from shale, hydro).

By 1916 Tasmania's power industry was primarily in public ownership and the state's first major energy-intensitve industry had commenced operation. At this point Tasmania was the only state with a transmission system in operation, indeed at that point Tasmania's was among the longest in the world.

In 1917 another major energy-intensive industry started up in Tasmania. Meanwhile Vic and SA were both grappling with ongoing fuel and power shortages.

1919 - Tasmania now has a grid as such running from north to south with two power stations connected and works underway to rapidly expand the system. Meanwhile Tas was aggressively marketing it's electricity supply to industry located elsewhere, primarily Victoria, in an attempt to encourage relocation to the island state.

Victoria sets up the SECV to resolve the state's power situation with a direction that local resources shall be applied to the problem.

A key point here is that private enterprise has failed to resolve the problem of Victoria's unreliable supplies of coal and in turn gas and especially electricity. With Tasmania now actively trying to poach Victorian industry, the Victorian government had little choice other than to resolve the problem.

In 1924 the SECV had their first brown coal mine (Yallourn) up and running along with a briquette works (producing a substitute for black coal) and power station (Yallourn A) using raw coal straight from the mine also running nearby. In 1928 the SECV had added hydro to the system and in due course an assortment of new brown coal power stations, briquette works and hydro schemes followed.

Victoria also set up the Gas & Fuel Corporation for the same underlying reasons, they needed something that wasn't dependent on unreliable supplies of black coal. In 1954 G&FC had a gas works using brown coal up and running, plus the first gas transmission pipeline in Australia, and was supplying about a third of Melbourne's gas from that source.

SA faced a very similar problem, that of privately owned electricity and gas companies being unable or unwilling to shift to alternative fuel sources (SA also having ongoing shortages of black coal). The SA government had tried for a very long time (decades) to convince the Adelaide Electric Supply Co to use the state's local coal but they point blank refused.

In due course, and faced with the reality that both Victoria and Tasmania were now far more attractive to industry with their cheap and increasingly abundant power supplies, SA acquired AESCo by force (actively resisted by AESCo) and set up the Electricity Trust of SA (ETSA) to replicate what Victoria had done with the SECV.

ETSA quickly went about coal production, mixing it with black coal (which at that point was coming from wherever they could get it including imports from overseas) in former AESCo power stations not designed to cope with the local lower quality coal. In 1954 ETSA opened its first purpose built power station using Leigh Creek coal and in 1960 a second, much larger, station was operating. SA had now joined Tas and Vic in having cheap, abundant power with the associated economic benefits.

So historically at least is was certainly the case that private enterprise failed at the task of ensuring a reliable electricity supply and failed even more at the task of changing from established technology to something new. It was simply easier, less risky and not unprofitable to stick with what they'd always done rather than risk a fortune on something that may or may not work (and there were plenty of technical challenges in Vic and Tas).

Other states were slower but in NSW they ultimately had no real choice. Victoria had the massive Hazelwood power station, several times larger than anything in NSW at that time and an order or magnitude cheaper to operate, under construction while Tasmania was building one hydro scheme after another with multiple new schemes under construction at once. And then BHP dropped the bombshell - they'd done the deal and were relocating their entire ferro alloy, a key part of steel production, operations from NSW to Tasmania with power being the reason. All of a sudden NSW was pretty keen on electricity lest other industries also packed up and moved to Vic, Tas or SA.

All that said, public ownership wasn't perfect by any means. It's no secret that unions had a rather strong influence within the SECV, at times crippling power production through their actions (a situation which rather suited Tasmania by the way - not once have the lights gone out in Tas due to a strike and that was always a good marketing point to industry albeit one done discreetly).

Then there were the technical dramas. The SECV put a lot of effort into getting the Morwell mine and briquette works built only to find that the coal was unsuitable in just about any boiler. It seems that nobody thought to test it, simply assuming it to be the same as that found at Yallourn just down the road. For the next half century coal from Yallourn was transported to Morwell, a ridiculously uneconomic operation given the coal is almost 70% water, as raw material for briquette production to work around that problem. Morwell coal was ultimately put to use in Hazelwood power station, being burned at low temperatures (they called it "cold combustion") to get around the fouling problem although that was never perfect and still isn't today.

But despite a few blunders public ownership did achieve the goal of getting a cheap, mostly reliable power supply in Victoria and other states.

Now Vic and SA are both privatised, those states having pursued privatisation earlier and more aggressively than anyone else in Australia. Those two states are now the ones facing the biggest problems with regard to ongoing power supply and that's not a coincidence. It's even funnier when you realise that of the new supply capacity added in Vic since privatisation, the majority is either from Tasmania (which is still publicly owned), or has been brought about by Snowy Hydro (also publicly owned). Hmm...

I'm not ideologically opposed to privately owned electricity though. It could work if set up and regulated properly to achieve the required technical and other (eg emissions) outcomes. Where it fails is if it's left to pure market forces on a commodity basis and there's a simple reason for that - electricity being very different to any other commodity since it can't be stored. Just because the price of the commodity is low right now doesn't mean there won't be a desperate shortage tomorrow and then an oversupply a few hours later. That's massively different to other commodity markets and is why market forces alone won't produce a reliable supply using that model.

Under a different model, one focused engineering rather than financial speculation in a ridiculously volatile market, private ownership ought not be a problem as such. That's a long way from where we are today however with even the remaining publicly owned operators playing the financial game whether they like it or not (they literally have no choice since that's the law).

 

[Smurf1976]

At least half our problems with energy could be fixed if we stopped giving it away.

http://www.examiner.com.au/story/42...australias-offshore-gas-wealth-is-going/?cs=7

 

[SirRumpole]

By 2021 Australia will eclipse the Persian Gulf state of Qatar to become the world's biggest exporter of liquefied natural gas.

In that year, when both countries are forecast to pump and ship roughly 100 billion cubic metres of LNG each, Qatar's government will receive $26.6 billion in royalties from the multinational companies exploiting its offshore gasfields.

According to Treasury estimates, Australia will receive just $800 million for the same volume of gas leaving its shores.

The massive disparity – and prospect, first revealed by Fairfax Media, that Australia will receive no significant take from LNG for "decades" – has sparked calls for a public inquiry into the the petroleum resource rent tax or PRRT.

http://www.examiner.com.au/story/42...australias-offshore-gas-wealth-is-going/?cs=7

Something has to be done about this, we are being ripped off.

 

[noco]

Something has to be done about this, we are being ripped off.

Rumpy, whilst I can see where you are coming from and your deep concern that we are not receiving higher royalties and it perhaps does it does throw a shadow over the government, there maybe some factors which have not been taken into consideration.

Firstly, Qatar commenced exporting liquid natural gas back in 1997 with government resources and then left to multi nationals to operate consequently Qatar were able to attract high royalties


Secondly, different to the set up in Australia, the multi nationals injected some $70 billion of own their own resources to kick the project off.....I am not sure how you will read the link below but it would appear the government is giving some assistance to recover the initial out law before receiving a higher return in later years and I am sure it would have been with the Labor Party blessings.

http://www.smh.com.au/federal-polit...ional-wealth-for-decades-20160412-go4kay.html

 

[noco]

Rumpy, whilst I can see where you are coming from and your deep concern that we are not receiving higher royalties and it perhaps does it does throw a shadow over the government, there maybe some factors which have not been taken into consideration.

Firstly, Qatar commenced exporting liquid natural gas back in 1997 with government resources and then left to multi nationals to operate consequently Qatar were able to attract high royalties


Secondly, different to the set up in Australia, the multi nationals injected some $70 billion of own their own resources to kick the project off.....I am not sure how you will read the link below but it would appear the government is giving some assistance to recover the initial out law before receiving a higher return in later years and I am sure it would have been with the Labor Party blessings.

http://www.smh.com.au/federal-polit...ional-wealth-for-decades-20160412-go4kay.html

Here is another link which takes in the investment made by the Qatar government.

http://persiangulffund.com/qatar-the-biggest-exporter-of-liquid-gas-in-the-world/

So I think we all take a deep breath and compare apples with apples.

The http://www.examiner.com.au/story/421...is-going/?cs=7 does not appear to have researched the full facts...Only the ones which will make the Turnbull Government look bad in the eyes of the public.

 

[SirRumpole]

Here is another link which takes in the investment made by the Qatar government.

http://persiangulffund.com/qatar-the-biggest-exporter-of-liquid-gas-in-the-world/

So I think we all take a deep breath and compare apples with apples.

The http://www.examiner.com.au/story/421...is-going/?cs=7 does not appear to have researched the full facts...Only the ones which will make the Turnbull Government look bad in the eyes of the public.

It's up to us to decide the price that we sell our assets for, and I think most people would agree that it is currently not enough either in the case of case or minerals.
'

 

[noco]

It's up to us to decide the price that we sell our assets for, and I think most people would agree that it is currently not enough either in the case of case or minerals.
'

Did you read the full article of both links...You do not appear to have done so given the quick time of your response.

How much did the Australian Government kick in to help develop such a large project as did the Qatar Government which would appear to be some 50% .

 

[noco]

I believe the Japanese are smarter than us in their thinking of using renewables and are now favouring the use of coal provided emissions from coal can be controlled and if their is a country who could find a way, the Japanese will.

The Japanese maintain renewable are inefficient and unreliable for base load power.



http://www.theaustralian.com.au/bus...c/news-story/4585967a30cd25450168548c37c983f6

 

[Tisme]

I believe the Japanese are smarter than us in their thinking of using renewables and are now favouring the use of coal provided emissions from coal can be controlled and if their is a country who could find a way, the Japanese will.

The Japanese maintain renewable are inefficient and unreliable for base load power.



http://www.theaustralian.com.au/bus...c/news-story/4585967a30cd25450168548c37c983f6

I don't know how you get that impression. The bloke saying it is merely a CEO of the 4th largest power production company .... a worker in a feudal society.


“One thing I am troubled by, and I think it’s something that would be shared by my Australian colleagues, is the policy of increasing the proportion of renewable energy,” Mr Hasegawa said.

“It is definitely a policy that is being implemented in Japan.”


“Coal has been a baseload fuel but we are seeing a phenomenon where renewable energy sources are infringing on that position,” Mr Hasegawa said.

“I am concerned that renewable energy, which is intermittent and unstable, is increasing its share and it may have some impact on the trade of coal.”

 

[orr]

At least half our problems with energy could be fixed if we stopped giving it away.

http://www.examiner.com.au/story/42...australias-offshore-gas-wealth-is-going/?cs=7

There is at least one, at least one Federal Senate seat going begging for a single issue Party pushing the necessity of a Sovereign Wealth Fund for this country that extracts for the National benefit a fair return on the sale of our national assets.
The conspired silence from both major parties on the success of the Norwegian model, which has a per capita worth of in excess of US$160,000 on the back of just the Petroleum assets of that country is in self worthy of a Royal Commission.

Thanks for your earlier post Smurf. The thing that I'd add is the 20 year supply contracts now being locked in the Middle East are for Renewable Energy at a price of (sub)<US$0.03/c per Kilowatt hour. The future is hear, it's just not evenly distributed.
http://analysis.pv-insider.com/mena...prioritize-quality-amid-strong-price-pressure

 

[SirRumpole]

It's up to us to decide the price that we sell our assets for, and I think most people would agree that it is currently not enough either in the case of case or minerals.
'

should be "either in the case of gas or minerals"

 

[noco]

should be "either in the case of gas or minerals"

With regards to minerals, it would nice to say to our trading partners like China and Japan, hey you fellows, the price of our iron ore i $160 per tonne, take it or leave it, but you don't seem to understand, minerals are based on supply and demand and if demand is reduced then so is the price.

I am not sure how the gas pricing works but it is not in the same category as oil which is governed to a certain degree by OPEC.....I will some research for you.

There you go...that was too easy for this ole codger.

https://en.wikipedia.org/wiki/Natural_gas_prices

 

[SirRumpole]

With regards to minerals, it would nice to say to our trading partners like China and Japan, hey you fellows, the price of our iron ore i $160 per tonne, take it or leave it, but you don't seem to understand, minerals are based on supply and demand and if demand is reduced then so is the price.

I am not sure how the gas pricing works but it is not in the same category as oil which is governed to a certain degree by OPEC.....I will some research for you.

There you go...that was too easy for this ole codger.

https://en.wikipedia.org/wiki/Natural_gas_prices

It would be easy enough to put a tax of x% on the price of gas, coal, gold, bauxite or iron ore, whatever x was deemed to be a reasonable return to the owners of the commodity. In fact this could be used to replace a profits tax and the companies wouldn't need to hire expensive accountants to reduce their tax.

 

[noco]

It would be easy enough to put a tax of x% on the price of gas, coal, gold, bauxite or iron ore, whatever x was deemed to be a reasonable return to the owners of the commodity. In fact this could be used to replace a profits tax and the companies wouldn't need to hire expensive accountants to reduce their tax.

At something like less than $50 per tonne for iron iron I doubt if the market would stand RRT of any percentage at this stage........The iron ore miners are struggling to make ends meet at these low prices which I must emphasis again to you is based on supply and demand.

And please do not over look the royalties the miners have to pay irrespective of the price received.

Labor tried unsuccessfully to apply an RRT which cost more to administer than the return which Wayne Swan told us and that money was supposed to fund the NDIS and Gonsky......So it left NDIS and Gonski under funded.

 

[SirRumpole]

At something like less than $50 per tonne for iron iron I doubt if the market would stand RRT of any percentage at this stage........The iron ore miners are struggling to make ends meet at these low prices which I must emphasis again to you is based on supply and demand.

And please do not over look the royalties the miners have to pay irrespective of the price received.

Labor tried unsuccessfully to apply an RRT which cost more to administer than the return which Wayne Swan told us and that money was supposed to fund the NDIS and Gonsky......So it left NDIS and Gonski under funded.

Prices go down and prices go up. A percentage tax is relative to the current price whatever that is.

 

[noco]

Prices go down and prices go up. A percentage tax is relative to the current price whatever that is.

But didn't you just state that we are the ones who should set the price of our minerals?

You are now saying prices go up and down...Now why is that?...Hope you now understand a little better.

Here are some facts to enlighten you on tax and royalties paid to WA by the miners.

http://www.abc.net.au/news/2016-10-...ed-why-are-rio-tinto-and-bhp-targeted/7908544

 

[SirRumpole]

But didn't you just state that we are the ones who should set the price of our minerals?

Alright, the market sets the price but we should decide what proportion of that price we get and what proportion the mining companies get. If company A finds the price too high they can move out and let someone else dig them up, or the government could reduce the tax depending on circumstances.

I'm aware of State royalties, there is no reason there can't be a Federal one as well.

 

[noco]

Alright, the market sets the price but we should decide what proportion of that price we get and what proportion the mining companies get. If company A finds the price too high they can move out and let someone else dig them up, or the government could reduce the tax depending on circumstances.

I'm aware of State royalties, there is no reason there can't be a Federal one as well.

Rumpy, you just don't get it do you.......You appear to have very little knowledge on how the mining industry operates.

You say if company "A" finds the price too high they can move out or do mean if the price is too low....If the price of minerals was high, I cannot see a miner moving out.

Miners do have legal rites to a site and can either sit on it until the price rises or they can sell the lease....They are very unlikely to just move out and let some other miner in without some monetary transaction.

Andrew Forest is sitting a massive nickel deposit at Posiden and has placed it in moth balls until the price of nickel rises to make it a viable project......He has dewatered the incline into Posiden to a depth of some 700 feet and is ready to go as soon as prices improve which I believe maybe early 2017......The nickel that has already been extracted from Posiden is only the tip of the ice berg.

Royalties are a state government right only and the Federal government cannot impose a royalty as well...The states can raise the percentage of royalties when ever the like ...That is if they dare.

 

[SirRumpole]

Royalties are a state government right only and the Federal government cannot impose a royalty as well...The states can raise the percentage of royalties when ever the like ...That is if they dare.

The Federal government can impose other taxes, like a resource rent tax. It works the same way as a royalty , it's just not called a royalty.

The miners and gas exporters are evading company tax anyway they can by transfer pricing or whatever so we have the right to recover that lost revenue by other means if necessary.