Hi everyone, here are reports from The Australian & The Advertiser on SA’s energy crisis
MAR 27, 2017 — Please read and share with everyone you know.
How we sabotaged our energy market
18 March 2017
Had reason prevailed, there would have been no electricity crisis
There is an inexplicable lack of clarity around the energy crisis even as politicians, business leaders and journalists discuss details of complex policies and proposals designed to correct it. And, worryingly, a shambles created by government intervention is prompting yet more intervention by way of so-called remedies.
The debate is confined by unspoken mutual agreement so that the main causes and most obvious solutions are not even discussed. This is the constrained world of political correctness taking hold in a crucial area of practical and vital economic policy.
It should be about cold hard facts: energy demand and supply; resource availability and exploitation; electricity generation and consumption; power prices and security. We should have dispassionate and frank discussions but instead facts are often ignored or denied.
Since South Australia’s unprecedented statewide blackout in September last year, Labor Premier Jay Weatherill has steadfastly claimed there was nothing wrong with his state’s energy policies or system. Defiantly unapologetic, he spoke about “two tornadoes ripping through” the state in what was “not simply a storm” but an “unprecedented weather event” and he castigated anyone pointing out his renewables-reliant grid was at fault. “This was a weather event,” he protested, “this was not a renewable energy event.”
Yet this week Weatherill unveiled a $550 million plan to boost state-based gas generation, increase gas supplies, reduce reliance on interstate interconnection and provide large-scale battery storage to try to prevent future blackouts and load shedding. He is spending more than half a billion dollars on a problem he said didn’t exist.
Weatherill’s plan is vastly more expensive — by a factor of at least 20 — than the proposal he rejected little more than a year ago: to keep the Northern coal-fired power station in operation. Had he done that the blackouts would not have occurred and the next couple of years would not look so risky as he tries to build more generation and faces more pressure on interstate supplies with the imminent closure of Hazelwood in Victoria.
The Premier has stuffed this so badly that he plans to bring 200MW of back-up diesel generators into SA next summer. What a shambles.
When the power catastrophe hit on September 28, anyone familiar with SA’s energy system and policies knew immediately it was a consequence, at least indirectly, of Weatherill’s renewable energy push. This was because the decisive event was the tripping of the main interconnector to Victoria.
The government’s push for a 50 per cent renewable share undercut the commercial viability of coal and gas generation — as intended — forcing much of the state gas generation into mothballs and triggering the closure of the coal-fired generators. So for the periods when wind or solar weren’t working, Weatherill’s Labor had made the state hopelessly reliant on that interconnector.
Subsequent technical reports revealed the culpability to be even worse. Rather than being triggered by collapsing towers, the initial problems occurred when wind farms fell off the grid and the sudden drop in voltage tripped the interconnector. Then, with no baseload or synchronous power available to re-energise the grid, the state was stuck.
The wind push had created the vulnerability in the grid; wind unreliability triggered the blackouts before lines were even brought down; and wind energy was useless when it came to trying to restart the system. Weatherill had introduced Don Quixote to the Ancient Mariner — windmills, windmills everywhere but not a volt to link.
Now a range of federal and state interventions are floated to fix SA’s problems and prevent them spreading east to the other National Electricity Market states. Apart from publicly funded gas generators and battery installations there are incentives for exploration, proposed changes to the NEM rules and Canberra’s demands that gas producers allocate more of their resources for peak demand domestic generation.
Serious consideration is given to taxpayer support for a ‘‘clean’’ coal generation plant somewhere on the eastern seaboard and now Malcolm Turnbull has announced a $2 billion medium-term upgrade of the Snowy Mountains scheme to included pumped hydro storage, boosting output by more than 2000MW.
This is a dog’s breakfast of interventions that can only make it even more difficult for private energy investors, except in subsidised renewables. Yet most of the public debate focuses on the individual merits of the various interventions — band-aids on band-aids. Only a handful of politicians and commentators raise the elephant in the room — the renewable energy target.
The renewable energy that now makes up more than 40 per cent of SA’s electricity production, not to mention wind and solar projects in other states, has emerged under the RET. This federal scheme mandates and subsidises renewable energy to a target of 33,000GWh by 2020.
And it is only about half complete — a further $10bn of large-scale renewable energy investment will occur in the next three years.
These costs will be met by energy consumers regardless of whether electricity demand increases (ie, regardless of whether the investment is needed).
Because renewable electricity is intermittent, this investment does not negate the need for other forms of power — baseload — which are required when the renewables go missing. The trouble is, all this has made baseload investment unbankable.
Canberra’s bipartisan RET has been successful in underwriting renewable projects and helping to close down a series of major coal-fired power stations, but it acts as a disincentive for investment in baseload generation. Hence SA’s dilemma — coal and gas have shut down because their continued operation is financially unviable and there is no incentive to invest in baseload upgrades or new plant to meet the demand that might or might not occur, depending on the vagaries of the wind.
Even the debate about gas availability isn’t entirely frank. If gas generators were confident about the electricity market they would have locked away long-term contracts and secured their supplies. The RET has killed that certainty — it is no use committing to gas contracts when your electricity price is undercut as soon as the wind blows, leaving them as the bidders of last resort for our gas resources.
The Pelican Point gas plant in Adelaide, for instance, could soon reboot its second generator but only if adequate electricity contracts can be signed enabling it to enter into gas contracts. It hopes large customers might now be willing to pay a premium for security.
The Prime Minister has become fond of saying he wants a “technology-agnostic” approach to energy fixes. But the RET is the antithesis of this — it is a massively disruptive market intervention in favour of renewable technologies.
If the RET were scrapped tomorrow, energy companies would model demand projections and costs and invest in the plant and contracts required to meet demand. That process now is completely contaminated, especially with Labor promising to double the RET after 2020 and the Coalition refusing to say what it will do beyond that date.
Without the RET, SA’s coal-fired power stations would still be operating and Pelican Point would be running at full capacity. There might even have been more investment in new plant or upgrades to other gas-fired plants. Hundreds of people would still be in work, a statewide blackout would not have occurred, Adelaide Oval would not be looking to buy a back-up generator, power would be cheaper and a $550 million state energy rescue package would not be required.
Similar chaos awaits Victoria as it pursues a 40 per cent renewable target and Queensland as it chases 50 per cent. All NEM states are already suffering price and insecurity consequences that will escalate dramatically if Labor’s 50 per cent national target is adopted.
The RET is the problem but both major parties have declared it sacrosanct. The only possible justification for having a RET is to reduce emissions and save the planet. Yet this is obviously not happening because our emissions reductions are internationally insignificant and global emissions continue to rise. This is economic self-harm for no environmental gain — the madness of gesture politics writ large.
Anyway, there are a million other ways to reduce emissions, if we need to.
Energy Crisis Puts The Wind Up Jay Weatherill
21 March 2017
South Australian Premier Jay Weatherill has lashed out over the state’s energy crisis, claiming Labor’s relentless pursuit of renewables had no impact on the power grid and independent advice to government in 2009 warning of destabilisation from increased wind power had been proven wrong.
Mr Weatherill, seeking re-election in a year, maintained South Australia’s more than 40 per cent mix of wind and solar generation had not played any role in blackouts since the state’s last coal-fired baseload power station closed in May. “There hasn’t been a blackout as a consequence of the increase in renewable energy,” he said.
“Renewables are a given; they are the future. What is at error here is the absence of a national price on carbon.”
When challenged by journalists from both the ABC and The Australian yesterday about the veracity of his claims, given the role of wind farms in last year’s statewide blackout, the Premier said, “I’ve just said it”, before lashing out at The Australian.
“I know that’s inconvenient for The Australian and I know that they’re wanting to continue their jihad against renewable energy but all of the evidence is to the contrary,” the Premier said.
However, the Australian Energy Market Operator yesterday revealed it had recommended new wind farms in South Australia have tougher technical standards because of the state’s unstable energy mix, which leaves the grid prone to collapse.
AEMO’s recommendation to an inquiry by the Essential Services Commission of SA into the licence conditions for wind farms states: “The high proportion of non-synchronous intermittent generation in South Australia justifies having additional or tighter technical standards than those that currently apply”.
AEMO found a failure of wind farms to ride through voltage disturbances contributed to a statewide blackout in South Australia in September.
Federal Energy Minister Josh Frydenberg yesterday said the South Australian government had ignored warnings eight years ago that increasing the uptake of intermittent sources of power beyond 20 per cent would have negative consequences.
He said poor planning and a lack of back-up systems to deal with increased wind and solar generation created South Australia’s power problems. Labor has been in office in South Australia since 2002.
Clear warnings were given to the Department of Premier and Cabinet in 2009 that the power grid could cope with only 20 per cent of wind generation before it became unstable. A report by McLennan Magasanik Associates said: “A level of 20 per cent wind capacity is proposed as a level that can be achieved without compromising grid stability.”
The 2009 report also suggested South Australia invest in “energy storage to maximise potential for its renewable energy resources”, while noting “renewable energy generation has typically a higher cost of generation that conventional forms of generation”.
A separate 2009 report from the National institute of Economic and Industry Research said: “Limitations on wind power output to ensure South Australian grid stability is estimated to be associated with about a 20 per cent limit on wind capacity.”
Labor Warned Wind Farms Would Destabilise Energy Grid in 2009
20 March 2017
THE State Government was warned eight years ago that generating more than 20 per cent of South Australia’s electricity using wind farms would destabilise the grid, documents reveal.
Senator Nick Xenophon said it proved the state’s power crisis — which prompted Premier Jay Weatherill to announce a $550 million taxpayer-funded energy plan — was “completely avoidable”.
Two reports prepared for the Department of Premier and Cabinet in 2009 when the Labor Government was setting a new state-based renewable energy target state that grid stability would be compromised if wind generation surpassed 20 per cent.
During the second half of 2016, wind made up 30 per cent of the electricity generated in SA.
“Here’s the proof that this energy crisis was completely avoidable,” Senator Xenophon said.
“The alarm bells were ringing eight years ago but the Labor Government was deaf to the concerns.
“The Government was either asleep at the wheel or reckless in pursuing a jump in renewables without ensuring grid security.”
Senator Xenophon said the reports “spell out” that South Australia could not increase the percentage of wind above 20 per cent without destabilising the grid.
The McLennan Magasanik Associates report states: “A level of 20 per cent wind capacity is proposed as a level that can be achieved without compromising grid stability.”
Another report, by the National Institute of Economic and Industry Research, advised: “Limitations on wind power output to ensure South Australian grid stability is estimated to be associated with about a 20 per cent limit on wind capacity.”
SA Government launches $500k energy plan TV ad campaign
Asked on Monday if his Government should have taken more consideration of the reports, Premier Jay Weatherill said: “We have been thinking about it and we’ve been implementing changes as we go”.
“The future is renewable energy. What is at error here is the absence of a national price on carbon,” he said.
“Those who are opposed to renewable energy are losing the argument and they’re becoming increasingly shrill.”
Energy Minister Tom Koutsantonis said the state should be “proud of our leadership in renewable energy” and insisted that it was not to blame for any blackout.
“The National Electricity Market is an ageing grid, and it has to be managed and updated as new forms of technology are integrated into the system,” he said.
He said Senator Xenophon’s criticism was disappointing given he had supported the Government’s energy plan.
Both the reports note that if baseload generation and connection with other states was increased, more wind power could be put into the grid.
However, since then both the Playford B and Northern coal-fired power stations closed while the upgrade of the Heywood interconnector only began construction in August 2015 and was still in progress.
Mr Weatherill refused to confirm on Monday if Alinta Energy had offered to sell the Northern Power Station to the Government before it closed last May.
He said there was a confidentiality agreement which prevented him releasing details of any offer from Alinta.
Asked if he would lift the confidentiality agreement if Alinta agreed to waive the restriction, Mr Weatherill said he would “take advice about that”.
“There may be other issues that need to be taken into account,” he said.
“Alinta haven’t put that proposition to us.
“There’s never been an offer that’s been made by Alinta that would have met our needs, either temporary or permanent.”
One of the 2009 reports stated wind plant and grid management technology improvements could also allow more to be fed into the grid.
The reports found between a 30 to 40 per cent state-based renewable energy target by 2020 would be achievable but predicted greater use of biomass and the establishment of geothermal technology.
In 2009 the Rann Government increased the state’s renewable energy target to 33 per cent by 2020 which was achieved in 2013-14 and then 2014 a new target of 50 per cent by 2025 was set.
In 2015-16 about 43 per cent of the state’s power generation came from renewable sources.
Meanwhile, two more federal ministers have expressed support for the energy package’s aim of unlocking more gas supply by paying royalties to landholders.
Deputy Prime Minister Barnaby Joyce has already backed the move, as has Energy Minister Josh Frydenberg.
On Sunday, Health Minister Greg Hunt — the former environment minister — and Resources Minister Matt Canavan said unlocking resources was important.