Origin: How wind and solar will eat market of baseload coal

As the two mainstream political parties finally reached agreement on the renewable energy target to get investment in large scale wind and solar happening again – after a near two year investment freeze – the base load fossil fuel generators, especially coal, are going to feel the pinch.

That much is clear from these graphs from Origin Energy boss Grant King at a recent conference hosted by Macquarie Group. Solar and wind are lowering the case for base load generation, he says, with wholesale prices to stay low, and base load demand being increasingly eroded by the growing emergence of rooftop solar.

These two graphs below illustrate the point. The first on the left assumes 14TWh of additional renewables over the next five years (actually, the deal negotiated by the Coalition today will probably allow for an extra 17TWh). In any case, the result is that it pushes out the supply curve, meaning less opportunities for existing coal and gas generators.

The second graph to the right is even more interesting. It assumes that the amount of rooftop solar will nearly treble to 9.5GW – something that Origin says is possible well within a decade. In that scenario. the net demand from the grid is barely above what is considered to be “minimum generation” for large parts of the day.

In other words, solar will lower demand for baseload energy during the day and increase volatility in afternoon and evening peaks.

origin renewables

This, as the next graph serves to highlight, will “hollow out” the load duration curve, lowering prices for baseload generation and increasing volatility and peak prices, according to King.

origin renewables

These outcomes are not as disadvantageous to Origin Energy as you might think.

While the National Elecrticity Market is said to have 9,000MW of surplus base load coal capacity, Origin Energy is actually “short” generation, meaning that it has to buy off market to meet the demand from its customers.

In a market where wholesale prices are falling, that is potentially an advantage. And it has more “flexible” generation, such as gas-fired generators, that can cope with the variations in wind and solar output.

And, Origin is also pushing it customers to embrace solar. The company that once derided solar households as “free-riders” on the grid, is now extolling solar households as “sun-stealers” in a new marketing campaign.

That tells you just how much the utilities are changing.

 

 

Comments

9 responses to “Origin: How wind and solar will eat market of baseload coal”

  1. Ken Dyer Avatar
    Ken Dyer

    Two things the graphs do not show: the emergence of energy storage, and the marginal cost of solar PV which is zero . Coal cannot compete, and Origin knows this, so they want to lock in as much rooftop solar as they can, because very soon that is how they will make their profits – pay bugger all for rooftop solar and charge it out to those who will not or cannot install it.

    1. DeniseRHuff Avatar
      DeniseRHuff

      ►►►$89 /hour on the internet@me9//

      ,,,

      ➨➨➨https://PriorNetHosts.com/skills/help

    2. nakedChimp Avatar
      nakedChimp

      pretty much.. I wonder when they’ll start to tap into the wind as well.. 5 years from now they probably tell the opposite from 1 year ago.
      Interesting times indeed, just a little bit to insane for my taste..

    3. Mike Dill Avatar
      Mike Dill

      Interestingly, they only forecast a 3x increase in solar over the next ten years, which will probably be in place in five years, based on the current exponential growth rate. The forecast for “increasing volatility and peak prices” is also nearly as bad, as storage will be able to ‘knock – out’ the current and possible future pricing spikes.

      The ‘bid-stack’ graph also has a problem, showing a severe shrinkage near the 150 to 160 TWH price availability, and a severe peak above 210 TWH. I do not see why this might happen, and can foresee storage flattening this stack much more than they anticipate.

  2. Blair Donaldson Avatar
    Blair Donaldson

    I don’t trust origin energy one bit. Unless or until they publicly disown fossil fuels and the politicians who provide support for fossil fuels, they remain suspect. It’s going to take awhile for the stain of Grant King to wash out of their system.

  3. Matt Avatar
    Matt

    In the scenario depicted in the right hand graph, I would assume that the peak wholesale electricity price will then be occuring at the time of maximum demand which is shown as being overnight. Would this then lead to a huge rush to reduce overnight demand by installing lower wattage street lighting and switching off large overnight loads such as office and commercial building air handling systems?

  4. john Avatar
    john

    Perhaps I will post a graph of the base line price of power it is very low often at $20 to $30 a Mw which is 2 to 3 cents Kw.
    The very occasional peak only lasts a very short time so yes the base load generators are just idling along not exactly making much else but covering costs.
    Here is a problem they need a capacity payment I fully expect this to happen with the consumers being monitored for demand power which will be factored into the bill which once again will only accelerate the take up of PV and Battery storage to reduce the maximum demand on the system.

    1. Richie Avatar
      Richie

      I believe $20 per MWh translates to 2c per kWh, not 20

      1. john Avatar
        john

        Absolutely you are spot on I did a type was at same time doing a price of power using battery back up and was not exactly paying attention and yes the base price most of the time to generators is in the 2 to 4C range however every now and again it skyrockets up and they make a profit.

Get up to 3 quotes from pre-vetted solar (and battery) installers.