Australian (ASX) Stock Market Forum

The future of energy generation and storage

Responding to posts from noco and others:

Personally I don't have a strong ideological view on any technology so long as it's safe, within our capabilities, affordable, reliable and actually works.

From a purely technical perspective it is practical to have anything from 0 to 100% renewable in the grid. The arguments for and against renewables are thus economic, scientific (the CO2 issue) and political rather than technical. Either can generate constant power if done properly.

The problem we have is that we're doing "none of the above" meanwhile the existing generation fleet is aging and contrary to the expectations of many the demand for electricity hasn't gone away to any great extent (Qld is at all time record levels and NSW was very close on Friday).

How long a thermal (coal, oil, gas) power station lasts depends on a number of factors from the original design and construction through to operation and maintenance. But the range is 30 to 60 years almost always.

Looking at the present major power stations in the problem states (NSW, Vic, SA) the vast majority is now in that age range so we're certainly going to see more closures over the coming years.

I should also mention that Queensland has the large Gladstone power station which is now 40 years old. Whenever that closes then Qld joins the list of states having power supply problems since it's a very major plant.

So what do we replace all this with?

The real problem is a political one. With so much debate at the federal level over the CO2 issue and associated matters plus so many bits of meddling at the state level, the private sector has simply lost interest in new investment and that has lead us to the present situation.

So the first thing that needs to be accepted is that government is going to have to get involved and take on some risk, that being the risk created by government itself with the constant debate and shifting of policy over the past decade or so.

There's essentially zero interest in building new coal at the moment due to the risk that a carbon tax (or other carbon cost) is introduced.

There is likewise not much interest in a large scale renewables + storage approach due to the risk that a carbon tax is not introduced.

Coal is a viable option technically and so is renewables + storage. But neither will be built on a major scale unless government finds some way to remove the risk of future policy changes.

If that risk cannot be removed then the private sector will at best build things which can be easily sold for relocation overseas if they cease to be viable in Australia. That is, in practice, open cycle gas turbines or diesel engines. Gas wasn't too bad in the past but with the price having tripled isn't a good option today.

What's really needed is for the Australian Government to keep as far away from the power industry as possible. Make their mind up on the CO2 issue and then get out of the way.

In the absence of government getting out of the way there's really only one effective option remaining and that is for government to financially back and take the risk associated with whatever is to be built. Either outright government ownership or taking the risk on behalf of private owners. SA has effectively come to that point now and Vic won't be far behind.
 
What's really needed is for the Australian Government to keep as far away from the power industry as possible. Make their mind up on the CO2 issue and then get out of the way.

Excellent response as usual Smurph, although I see a inconsistency when you state that governments should a. take a financial risk and b. get out of the way. I don't really see how that is possible.

We have seen the PM writing to the Chief Scientist asking "what do you think about the pumped storage idea" ?. Imo the situation needs better handling than the piecemeal affair of politicians trying to design technical systems that are an engineering concern.

Surely just appoint a Board of Engineers to design the system based on the criteria of a. Energy Security, b. best price for consumers and c. low emissions , let the engineers do their job and the politicians then raise the money to build the system in the time honoured way of borrowing money to be repaid over time.

I think Hazlewood has shown us that we can't rely on private enterprise when we need to keep a network in place without generators suddenly disappearing on the whim of overseas shareholders. As you cogently pointed out, government has to take some financial risk for the good of system security.

The tripling of the price of gas is the result of a government policy to force Australian consumers to pay world prices. This policy could of course be changed to reserve a certain amount of gas for running power stations at a reasonable price. "Open market" ideology is a great example of ideology getting in the way of public interest in the same way as Labor is charged with being ideologically welded to renewables.

Time for the politics to stop (he said ROFL).
 
And the South Australians are worse off again due to the poor policies of Wetherill..

If he's to blame then yes Wetherill should take the dagger to the heart. But Rumpole is also correct in that Federal funding for projects was contingent on doing the Federal govt's bidding in return for the favour of getting national cash to the state.

Poor 'ol WA is under the same pressure right now.
 
They generally don't physically withhold, as in an actual refusal to supply, but they certainly can and do adjust pricing upwards when the market is tight. No question there.

Thanks Smurf. So my understanding is that Pelican Point has been running at half capacity for several years now, so why did the AEMO load shed in SA instead of ordering Pelican Point to turn the 2nd unit on?


What's really needed is for the Australian Government to keep as far away from the power industry as possible. Make their mind up on the CO2 issue and then get out of the way.

The government really need a bipartisan agreement here where both the Libs and Labor compromise to give the industry the certainty it requires. The problem is I can't see the Greens ever comprising on this front and the chances are they may hold the balance of power again. During the 2014 Victoria state election they promised pledged that if they held the balance of power they would push the plan to which would see Hazelwood, Anglesea and one of Yallourn's four units phased out in 2015. In 2023 the other three units in Yallourn and Loy Yang B would be retired.
 
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Possibly yes. It shows the folly of letting politicians think they are engineers and letting them decide what's in or not.
Politicians do make the final decisions but it is usually done on advice received from engineers either within the public service or as consultants. You know of engineer "experts" with university qualifications that have never had to exist in the real world I'm sure. I have a nephew, who has recently retired at 57 by the way, after spending his entire working life "advising" a Premier. I doubt he has had any good knowledge to advise with, he is a complete moron.
 
If he's to blame then yes Wetherill should take the dagger to the heart. But Rumpole is also correct in that Federal funding for projects was contingent on doing the Federal govt's bidding in return for the favour of getting national cash to the state.

Poor 'ol WA is under the same pressure right now.

Yes, but you cannot get away from who makes the decisions to up the anti on renewable energy......It is the ideology of the Green/Labor coalition.
It now very obvious, it staring to come back and bite them on the bum.
All the pain and no gain in reducing green house gases.
 
Yes, but you cannot get away from who makes the decisions to up the anti on renewable energy......It is the ideology of the Green/Labor coalition.
It now very obvious, it staring to come back and bite them on the bum.
All the pain and no gain in reducing green house gases.

It's disingenuous to claim that renewable energy is the source of all problems in the power grid.

There is just not enough generating capacity of ANY type.

If people continue to claim that wind power was the cause of SA's total blackout, they are LYING.

The power went out because power lines blew over in the storm. It wouldn't have mattered what generating capacity was available on that occasion.
 
It's disingenuous to claim that renewable energy is the source of all problems in the power grid.

There is just not enough generating capacity of ANY type.

If people continue to claim that wind power was the cause of SA's total blackout, they are LYING.

The power went out because power lines blew over in the storm. It wouldn't have mattered what generating capacity was available on that occasion.

No Rumpy you are wrong.......the power poles blew over after the lights went out....The wind generators could not cope with the excessive wind.
 
No Rumpy you are wrong.......the power poles blew over after the lights went out....The wind generators could not cope with the excessive wind.

Fraid not noco.

I refer you to.

https://www.aemo.com.au/-/media/Fil...-Report-SA-Black-System-28-September-2016.pdf

Executive Summary

The particular event was initiated by the loss of three transmission lines involving a sequence of faults in quick succession tripping generators offline. Such extreme events occur rarely and are classified as‘non-credible’ in the National Electricity Market (NEM). A numb
er of wind turbine generators in the mid-north of SA exhibited a reduction in power or disconnected as the number of faults grew. AEMOwas not aware of the protective feature of these generating units that caused these power reductions,and has taken action to ensure the limitations are known and appropriately managed.

(My bolds)
 
Malcolm Turnbull's hypocrisy, bull headedness and lack of vision when it comes to energy.

Malcolm Turnbull's turnaround on renewable energy, from pro-carbon price to clean coal

http://www.abc.net.au/news/2017-02-10/malcolm-turnbull-renewable-energy-turnaround/8258502

I think I would prefer to say Turnbull has learned his lesson from Vic. and SA....It is his priviege to change his mind after all Barnacle Bill has change his mind om the reduction of business tax......He was with it one day and against it the next day.

I believe there are some 136 coal fired power station being built as we speak.
 
Excellent response as usual Smurph, although I see a inconsistency when you state that governments should a. take a financial risk and b. get out of the way. I don't really see how that is possible.

What I mean is it's one or the other.

Either create the conditions in which private* enterprise will invest OR alternatively government will have to stump up the cash under whatever arrangements (outright ownership or underwriting a private owner).

At present, the problem is that it's too risky to develop coal and it's too risky to develop renewables + storage on a sufficient scale. When you're talking about infrastructure with a minimum 30 years from the start to when it ceases operating, and in most cases double that or more, it's a given that we'll have both Labor and Coalition governments over that time and almost certainly several of each. So long as both major parties have policies that financially kill one option or the other, nobody in their right mind is going to develop either. At least they won't unless they've got a huge appetite for risk which isn't the way most such companies operate.

*I say "private" enterprise but the same applies to things owned by the states. At the moment the only area getting any real investment is hydro and that's because it stacks up financially under either political scenario.

Snowy Hydro and Hydro Tas (both publicly owned) have both invested in maintaining and improving their existing infrastructure, in both cases getting a bit more capacity and efficiency out of it as well as ensuring it remains reliable for decades to come. Meanwhile AGL has their nice new 150 MW hydro station in Vic and Genex has their 250 MW pumped storage project in Qld with both of those being privately owned.

Trouble is, undeveloped hydro potential in Australia that can be done at a cost that works financially under all policy scenarios isn't that much, it's not even close to being what we need. Hence there's other such projects which haven't gone anywhere and that applies to both government owned (Hydro Tas) and privately owned (Origin Energy) who were looking at them. Won't happen unless there's some policy certainty - we're talking about stuff that lasts a century or more here after all, and the odds are high that we'll have a change of government numerous times during that period.

Likewise state owned companies sure aren't lining up to build coal. They've gone cold on the idea of most new non-hydro renewables development too. Exact same reasons as the private companies have lost interest - just too much risk with policy at the federal level.

So it's the risk that is killing investment. The Australian Government is the source that risk and needs to either remove itself from the equation or go down the track of actual or quasi nationalisation. Do neither and we'll literally be left in the dark.

Surely just appoint a Board of Engineers to design the system based on the criteria of a. Energy Security, b. best price for consumers and c. low emissions , let the engineers do their job and the politicians then raise the money to build the system in the time honoured way of borrowing money to be repaid over time.

That's exactly what I'd do although with a bit of thought private sector involvement isn't impossible if done well enough. Eg give them the opportunity to own and operate something but don't give them the choice of what to build and certainly don't let them run it down and close it. That's adding complexity and risk to taxpayers which I don't see as necessary but it wouldn't be impossible if it's the only way to get around political ideologies.

I think Hazlewood has shown us that we can't rely on private enterprise when we need to keep a network in place without generators suddenly disappearing on the whim of overseas shareholders.

Yep and the biggest problem is that nobody really knows what's going on.

AEMO put out a routine planning report in August 2016 which shows that Hazelwood will still be running at full capacity for at least the next decade based on information from the owners. Then at the beginning of November, less than 3 months later, it's announced that the plant will be completely shut by the end of March 2017 and, in practice, capacity has been cut by about 14% straight away (because it's stuffed.....).

That's not a sensible way to be running things when you consider that it takes years to build a major power station even if you've already got the environmental approvals, design and finance already in place and ready to go (which in practice generally won't be the case so it takes even longer).

A real concern there is the "who's next?" aspect that has plenty in the industry thinking. There's a few rumours but in the absence of formal announcements nobody's going to invest in replacements and that's a rather large.

Looking at what AEMO knows and publicly reports:

Snowy Hydro and Hydro Tas both have some major plant outages planned for various times over the next decade. Strangely nobody else does.

There's some capacity being closed in NSW and Qld:

Smithfield (NSW, gas, 171 MW) closing in mid-2017

Liddell (NSW, coal, 2000 MW) closing in 2022

Mackay (Qld, oil, 34 MW) closing in 2021

Daandine (Qld, gas, 33 MW) closing in 2022

That's it so far as existing facilities closing or having reduced output is concerned. Everything in Vic and SA will still be going strong in 2026 apparently, and will do so without any major maintenance outages along the way (minor outages yes but not major ones). Hmm....
 
Thanks for that Smurph, I think you are quite correct that the real problem is conflicting political ideologies over State ownership of generation and distribution assets, and the fossil fuel/renewable mix plus the usual blame game between State and Federal governments.

My own ideology is that electricity supplies are an essential service which is the responsibility of governments to provide. So I see it necessary for governments to ensure (own) baseload supply, but also encourage private investors to supplement this with wind farms, solar thermal, solar PV etc and for the government to supply a storage system (likely pumped storage hydro) that they pay private investors to top up and then sell the power later.

The financial processes of this is above my pay grade, but it should be kept as simple as possible. The mix of public and private ownership should help satisfy both the ideologies of total government ownership and the "sell it all off" philosophies. Reality suggests that private investors are not going to build large scale infrastructure like hydro dams so if government doesn't do it then it won't get done.

I saw a government Minister (Chiobo) trying to blame the SA government again for its "ideological" approach to renewables , but not mentioning the Liberals ideology of privatisation and devotion to coal. With dickheads like that running the show it's not surprise to me that we are not getting anywhere.
 
There will be a financial incentive after Turnbull and Morrison raid the Clean Energy Fund.
There will be a financial incentive after Turnbull and Morrison raid the Clean Energy Fund.
So you are saying the Government is going to, in some way, fund coal fired power stations?

Or were you just getting a cheap shot in?

It amazes me, that smurph has given you a fast track power system training module, and you can't help but make politically motivated comment.

Why not think through the issue?
 
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