Can one day make or break an energy source?

Can just one day make or break an energy source? According to several media reports, including from both The Australian and the Australian Financial Review; 15 January 2014 was the day renewable energy failed Australia.

However, analysis of the National Electricity Market may suggest that its woes are in fact indicative of a volatile electricity market that would exist without renewable energy.

Last week saw one of the most intense heatwaves to hit the Southern states of Australia over the last few years. Notably, this heatwave was experienced, with almost equal intensity, simultaneously in Victoria and South Australia.

As one would expect, in the midst of a heatwave, people seek out a means of relief from the heat. The ubiquitous solution used in Australia is the loyal air conditioner.

In a case of unfortunate timing, as the nation sweltered last Wednesday, the heatwave in South Australia and Victoria coincided with a period of low wind in the those states. Wind turbines met just 11 per cent of the South Australia’s power demand on that day, while it will often deliver around triple that on better days.

In Victoria, wind dipped to just 1.4 per cent of demand, while regularly providing more than 5 per cent on a good day.

Was this unusual? Not at all. Wind is a variable supply of energy. Even the most ardent supporter of renewable energy doesn’t deny this. The National Electricity Market can accommodate such fluctuations through good planning and considered design.

Putting the fact that brown coal behemoth Loy Yang had a quarter of it’s capacity go offline in the midst of the heatwave peak aside (because, of course, the supply of base load generation from coal is apparently infallible), one must ask what impact did the reduced availability of wind really have?

With what some members of the press asserted, one would expect that fossil fuels would sweep in as the electricity sector’s White Knight, with its “stable and reliable” supply to keep our air conditioners blowing and beer fridges cold.

However, a stable market is far from what was observed. With fossil fuel generators left on their own to satisfy our energy demands on Wednesday, the average daily price in South Australia surged to $555, a vast increase compared to the 2013 daily average of just $69.06.

Intraday volatility in electricity prices was also significantly worse.  Those who observed the market closely would have observed, during the hottest part of the day, prices in South Australia and Victoria bouncing between the NEM price ceiling ($13,100/MWh) and floor (-$1000/MWh) with regularity.

In the following two days, the 16th and 17th, the wind returned. With the heat remaining as high as it had in the days prior, price spikes continued to occur. However, with wind farms providing additional supply, these spikes were less extreme and occurred far less frequently.

The average NEM price on those days following also fell from its windless peak. NEM prices in both South Australia and Victoria fell by a factor of four between the 15th and 17th; Price volatility fell by a comparable factor, yet temperatures were just as high.

So, what can we take away from the performance of the NEM last week?

When we become completely reliant on fossil fuel generators, we experience higher wholesale electricity prices.

When we become completely reliant on fossil fuel generators, we experience significantly higher levels of volatility in the electricity market.

Wind, despite its variable nature, seemingly has a calming effect on the market. It’s supply keeps the market in check, prices low and predictable

To add to this effective defence of renewable energy in our electricity mix, it is possible to point out that the spike in Victorian demand was also partially met by imported hydro generation from Tasmania, with the Basslink interconnector between the two states running at capacity during the heatwave.

Likewise, it is obvious to point out in times of heatwaves; the potential for solar PV and solar thermal technologies to directly meet increased electricity demand is high. Wind, solar and hydro generators are all a perfect complement to each other, and we are already reliant on them to keep wholesale electricity prices low and stable.

More investment and support in their deployment is likely to provide further benefits to consumers, and electricity market participants alike.

It is important to remember the National Electricity Market is a complex beast. With network constraints and interconnector capacities adding another level of complexity to the task of balancing demand with supply, it’s too simplistic to point to what occurred in one state on one given day, and then make an assessment about the performance of a particular technology.

Especially when it’s possible to build such a compelling counter-argument using the same data.

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South Australia:

adelaide grab

 

 

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Victoria:

 victoria

Michael Mazengarb has worked as an analyst for the Australian Government and non-for-profit organisations on climate and energy policy. He currently is completing a Master of Climate Change at the Australian National University.

Michael Mazengarb is a Sydney-based reporter with RenewEconomy, writing on climate change, clean energy, electric vehicles and politics. Before joining RenewEconomy, Michael worked in climate and energy policy for more than a decade.

Comments

9 responses to “Can one day make or break an energy source?”

  1. barrie harrop Avatar
    barrie harrop

    Yes there has been some media hysterics,but the fact is baseload can only be reliable syncing intermittent renewables like wind/solar ,which its not in case Aust and is coming anytime soon via “distributed energy” systems watch this space .

    1. wideEyedPupil Avatar
      wideEyedPupil

      yet another kryptic comment, Barrie

  2. Name Avatar
    Name

    So a coal fired unit at Loy Yang A3 at 500MW trips out – but ‘Renewables can’t take the heat’ as one paper headline said. Seems odd logic to me.
    Renewables did not drop out they kept going.
    Apparently solar PV was estimated to be providing around the same amount as the failed unit at Loy Yang A3 – 445MW without any transmission losses. And wind was doing a bit more.
    So ‘Fossils can’t take the heat’ appears to be a more realistic headline, but that would not sell papers!! Journalism why do we believe it.
    Dave Rossiter

  3. Mr X Avatar
    Mr X

    Michael is correct that we shouldn’t judge the reliability of one technology based on one day’s performance. If one looks at wholesale prices of electricity on the NEM over the long term, one will notice that renewables have put downward pressure on the electricity price. The average wholesale price of electricity is lower than it otherwise would be thanks largely to renewables. There have also been much fewer peaking events ($300+/mwh) on the NEM since renewables have become a significant generator of electricity. This is ironic considering that certain newspaper outlets have blamed wind for the recent NEM price spike. In other words renewables have improved both the affordability and reliability of the electricity on the NEM, contrary to the claims made by certain media groups. These media groups’ views of this one event in isolation are both myopic and misleading.

  4. lisalinowes Avatar
    lisalinowes

    Your conclusion that fossil generation, left on its own, drives up electricity prices is simplistic, wishful thinking and demonstrates a limited grasp of how energy markets work.

    1. Jonathan Prendergast Avatar
      Jonathan Prendergast

      Such price hikes have existed for a while, certainly before greater renewables penetration of recent years. I remember a friend sending me a screen grab of $70,000 per MWh as he worked for a coal generator. Renewables have 0 marginal cost so reduce the chance for this to happen.

  5. Alen Avatar
    Alen

    It is so sad that newspapers today have to rely on such blatant lies to sell their papers. This scenario was a perfect demonstration of how renewables contribute to lower electricity prices, but somehow they were twisted to be the bad guys. Honesty has really gone downhill lately.

  6. disqus_w8QFm9OyEl Avatar
    disqus_w8QFm9OyEl

    maybe worth adding that most wind turbine generators installed in Australia are designed for operating at rated output for max temperature of up to 40Deg. Past that point, most of them would de-rate or shutdown. Wind Turbine Manufacturers are working to bring this number up to 45Deg. Some of them may already provide 45Deg as an option. Please note this is not particular to wind turbines but standard in electrical equipment.

  7. Jonathan Prendergast Avatar
    Jonathan Prendergast

    Thanks for posting Michael, particularly so quickly why it is an important topic of debate. I have had to share and include in replies with a few curios friends and a few denialists.

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