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When baseload fossil fuel plants are no longer baseload

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It has been fascinating, and somewhat disturbing, to hear so much of the current debate around energy policies, renewable energy, and carbon pricing based around the idea of “base load energy” – as if it is the only option that exists in the world’s modern energy systems.

It is, of course, based on a century-old system model that emerged as Nikola Tesla won his theory of generation supply over Thomas Edison. The reason was the economics of distributed generation.

Centralised generators ruled supreme for more than a century – supported by peaking power plants in recent decades to cope with their quasi-inability to be switched off. But now times are changing, systems are becoming smarter and more flexible, and base load generation no longer reigns supreme in the way it once did. Most analysts suggest it is on an inevitable decline.

origin generation

The generation portfolio of Origin Energy highlights this. This graph above below shows how the company’s biggest base load generator, Eraring Energy which it bought in the past year, operated at a capacity factor of just 35 per cent. Even its only owned and operate wind farm, Cullerin Range, operated at 44 per cent.

There are a couple of interesting points to note. One is that the peaking gas generators were also used less often. Mt Stuart, which actually operates on jet fuel, of all things, was not even switched on during the December half. There are two likely reasons for this, the record warm weather, and because fast-response generators are not needed nearly as much as some say to back up renewable energy sources such as wind and solar. In fact, data from South Australia shows that back-up generators are needed even less than when their sole requirement was to fill the peaks that coal and other base load could not.

Origin’s experience is far from unique. AGL Energy has recently put in a winning bid for Macquarie Generation. Of its two generators, the 2GW Liddell coal fired power station in the Hunter Valley was only in use 36.7 per cent of its capacity over the last fiscal year. Bayswater was in use 57 per cent. And Stanwell, of course, has closed half of its capacity at the 1.4GW Tarong coal generator, and will only reopen it later this year because rising gas prices has forced its Swanbank gas generator out of the market.

macgen dutch capacity

These are interesting and challenging times for the conventionals. No wonder they are struggling so hard to stop renewables in their tracks.

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  • Dennis Clarke

    I think the term is utilisation factor not capacity factor. And Bayswater was commissioned in 1985-1986.

    • Giles

      As the graph shows, and it is taken from Origin Energy, the generators themselves refer to it as capacity factor.

  • Dennis Clarke

    19th February 2014 marked 35 years since the last large coal fired power station was ordered in NSW. 35 years! The official award date for Bayswater and Mt Piper power stations was 19th February 1979.

  • Ronald Brakels

    If anyone’s wondering why Mt Stuart power plant runs off jet fuel it’s
    because jet fuel is just kerosene. Kerosene is used as aviation fuel as it contains more energy per weight than any other oil product and back in 1998 when Mt Stuart started
    operation it would have been hard to transport gas to Townsville so using kerosene would reduce transport costs. Of course, being an oil product kerosene’s price is directly tied to
    the price of oil and may even be relatively more expensive now given the low
    average quality of oil these days. There was a time around 1998 when
    oil was under $20 US a barrel in today’s money, but it really
    didn’t stay down there, did it? It looks to me that oil price increases made Mt Stuart a big mistake a few years after opening. They could change to a cheaper fuel
    such as natural gas (or unnatural gas which seems to be popular now)
    but I guess it’s not worth the expense if they only run the plant for dozens of hours a year. After all, they didn’t even run the plant at all in the final six months of last year.

  • Craig Morris

    Giles, it would be interesting to state the current load factors in relation to historical loads. My cursory research indicates that baseload power plants used to run at much lower levels around 1990 both in the US and Germany, but the trend towards competition has put pressure on plants to be profitable. In other words, low load factors only became a problem when companies were forced onto an energy-only market. They used to simply be able to hand over their books to regulators and calculate power prices that would ensure a profit.

    • ThomasGerke

      In addition, vertical integrated utilities used to opperate all powerplants needed in the power plant mix to meet demand in their region.

      Today baseload power plants are basically concentrated with four big power companies in Germany, while mid- & peak load plants are owned by a more diverse group (municipal & regional utilities and industry).

      Running baseload plants at a high capacity factor is thus also a way of ensuring higher market shares and market dominance for big power companies. Which might be very well be the whole point / intention behind the “liberalized market” in europe, which was organized in close cooperation with big utilities. (In the early 2000s municipal utilities were called dinosaurs facing extinction)

      This situation got even more unbalanced with european & german competition regulators forcing big companies to sell peak load capacities to “competitors” a few years ago.

      However, due to the nuclear phaseout in Germany things might get alot more interessting soon, since Eon & EnBW basically loose all their classic baseload power by 2022.