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More wind and solar – the answer to all Turnbull’s energy problems

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FJ Holden Business Sedan Brochure Image. (AUSTRALIA)

FJ Holden Business Sedan Brochure Image. (AUSTRALIA)

AGL on Wednesday unveiled what it proposes as a substitute for the ageing, clapped out Liddell coal generator it plans to close in 2022: it suggests mostly a mix of wind and solar, topped with its own big battery, demand management and some gas power to help meet demand peaks.

The response of deputy prime minister Barnaby Joyce? He decided to compare Liddell and Bayswater with old cars and embraced the idea that Liddell was just like an old FJ Holden.

“If you don’t like it Leigh, sell it to me,” Joyce told Leigh Sales, the host of ABC TV’s 7.30 Report. “Because I’ll take it and put stripes down the side and hang some dice off the rear vision mirror and do laps.”

Funny, maybe – particularly if you’re nearly passed out on the floor of a Tamworth pub staring up at the disco ball thinking you’ve discovered the Goddess Venus.

But it’s a tragic indictment of the state of Australia’s energy policy. It finds itself in an appalling state of stupid, driven there by a triumph of incompetence and ideology over economics and engineering, and of folksy nostalgia over modern technology.

One year on from the state-wide blackout in South Australia that sparked the Coalition’s extraordinary jihad against wind and solar, it is clear that the answer to the trumped up energy crisis is exactly what the Coalition doesn’t want it to be: yet more wind and solar.

The message coming from the market operator, from the networks, from the CSIRO, from industry, and from the energy sector itself is that the best way to address the anticipated shortage of electricity, the soaring cost of gas, surging retail prices and cutting emissions is the same: more wind and solar.

What’s the best way to replace Hazelwood? More wind and solar.

How should we address the potential supply shortfalls in Victoria and South Australia this year and next? More wind and solar.

How to make up for the closure of Liddell? More wind and solar.

How to find an alternative to expensive gas? More wind and solar.

How to counter soaring energy costs for big business? More wind and solar.

How to introduce more competition in the market? More wind and solar.

Yes, it will be accompanied by better grid management, smarter software, battery storage, pumped hydro and a lot more focus on demand-side responses and energy efficiency that can deliver smart, flexible and dispatchable resources. Burning more fossil fuels is no longer the answer to everything. It’s not the answer to much at all.

The September blackout, seized upon by conservatives and vested interests as “proof” of the failure of renewables, has told us only that the grid was badly managed and dependent on increasingly fragile and ageing assets.

Some are still openly hoping for a repeat of the blackout itself, and the response to the South Australia event, to the subsequent closure of Hazelwood, to the soaring gas price, to the proposed Tesla big battery, the South Australia solar tower, and the push to keep Liddell open and build new coal generators in Queensland, suggests something more sinister afoot.

South Australia’s energy minister Tom Koutsantonis is in little doubt there is more to this than folksy nostalgia for past technologies. He points to the power of the fossil fuel lobby, and the stranglehold that the Far Right has over Coalition’s energy policy.

“(Prime minister Malcolm) Turnbull needs to stand up to the coal lobby and the right wing of his party and implement a Clean Energy Target, now, for the sake of households and businesses across the country,” Koutsantonis said on the anniversary of the state’s “system black.”

Koutsantonis also wants an apology from the Coalition, but the chances of that are beyond remote. Each day, the politics of energy become more absurd. As the role of wind and solar becomes increasingly clear, the Coalition becomes even more blind to the obvious.

Tristan Edis, writing in the Guardian, explains the absurdity of the push for the new coal-fired generator in north Queensland, proposed by Joyce and former resources minister Matt Canavan, and supported by Turnbull.

Angela Macdonald Smith, writing in the Australian Financial Review, points out that Turnbull’s “deal” with the LNG giants this week changes nothing, apart from a few headlines. There is no increased supply, and certainly no reduction in prices.

And there won’t be, either. Gas is expensive, and the gas industry suffers the same problems as the electricity sector: a shortage of competition. The best way to address that is not to reinforce the power of the incumbents, but to open the market up to new players and new technologies.

As AEMO’s own studies have shown, one of the best ways of reducing demand for gas is not by closing manufacturing, but by building more renewables. The revived Whyalla steel works, the proposed Nectar Farms complex in Victoria, and the zinc refiner Sun Metals in Queensland tell the same story.

AEMO also came to a similar conclusion about renewables when looking at the shortages facing Victoria and South Australia in coming years, and NSW in the middle distance.

The bulk of the shortfalls could be addressed by new wind and solar, helped hopefully by a meaningful national policy, and smarter management and those dispatchable resources – battery storage, demand response, smart software.

AGL’s message on Wednesday was the same. And the government will be hearing it again from Tesla founder and CEO Elon Musk when he visits the Hornsdale wind farm north of Adelaide and the site of what will be – for a brief time at least – the world’s biggest lithium-ion battery storage plant.

Some day Turnbull is going to have to face up to the fact that his party will never allow him to acknowledge: the answer to nearly all his energy problems is quite simple – it doesn’t lie in either coal or gas, but in renewables, and even more wind and solar farms.  

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  • Grpfast

    AGL’s plan for Liddell is exactly what SA has done after a freak storm torn down our transmission towers with Victoria and exposed the weakness of the power network post LNP privatisations.
    This provided the “friends” of the liberal party to suck as much out of the Australian taxpayer built power generators, put nothing back, and walk away.
    We have a deputy pm who is an ignorant bully and a pm without the power or will to do the right thing.

  • John Saint-Smith

    I note that Joyce’s response to the question of emergency gas supply this summer, ‘Turnbull’s got that sorted’ was based on assurances from the same gas producers who led Labor to believe that there would be no need to reserve gas for Eastern Australia, because there would be ‘plenty of gas for everyone’. At the time, the opposition were silent.
    When it’s the LNP in government, everything is ‘sweet’ after a ‘quick word in their ears’. I note that nothing has been said about price. But when it was Labor getting the same story several years ago, their failure to lock in reserves with legislation was ‘gross incompetence’. When Labor made gas reserves a policy at the last election, the LNP ignored the idea.
    I can’t wait for Liddell to fall over during a heatwave this summer, so that Turnbull and the LNP can make up some story about how it was Black-out Bill’s fault.

  • Robert Westinghouse

    Great article. What is plan as day is that the politicans will not see truth they are only focusing on under the table deals that hurts average people. The answer is simple: more wind and solar….even Gran can see this and in the eyes of the LNP she is old, stupid and only has a few years left to vote. I say to the LNP say sod off…

  • DogzOwn

    Scomo on 730, Abetz on RN, now resort to calling climate change a religion, run by extremists, calling conspiracy theory attacks at every turn. How much lower can they go?

  • You are certainly right Giles in saying the bulk of shortfalls can be made up with wind and solar. But a crucial part of this is ‘get the gas standby generation right’.
    Batteries and larger scale storage – pumped hydro or solar thermal with heat storage – are also needed. I say either or because the returns from storage rapidly diminish with the short term periods being the profitable ‘low hanging fruit ‘ and the longer terms being increasingly less cost effective to fill by storage.

    A crucial thing that comes of of modelling by SEN in WA is that there needs to be a large capacity of fast ramping gas turbines (OCGT’s) installed – up to maximum winter demand minus demand side management. Some of it will only be used for about 20 nights a year but it needs to be there for those times when all storage runs out. The coal lovers say that is cost prohibitive but nothing could be further from the truth. OCGT’s cost about 1/5th as much as a new coal power station and can be located anywhere – only needing either a gas line or large storage tank or both for fuel supply . They can run off gaseous or liquid fuels (including bio-fuels).

    Costing this amount of OCGT capacity into the SWIS along with 85% wind and solar, SEN’s modelling has still found it’s cheaper than a grid powered by new ‘clean’ base load coal and base load gas. Installing this OCGT capacity needs to be done sooner rather than later, along with FIXING THE GAS SUPPLY on the East Coast. These two things will give security of electricity supply right through the transition to clean RE. Storage can slowly be increased to economic amounts and less and less gas will be used but the OCGT’s provide adequate backup regardless of the amount of storage.

    The remaining coal will at some point ‘fall over’ – become uneconomic due to soaring maintenance and having to pay to spill solar and wind to keep generating – under the amount of ramping that will be required but that it is unable to do as more RE comes on line

    • Tom

      Modern aeroderivative turbines can convert liquid fuel to energy just as efficiently as they can convert gas to energy.

      I’ve been reading a bit about methanol lately.

      The conversion of water to hydrogen, and then converting H2 and CO2 to methanol, can be done using electricity with an efficiency of about 40%.

      The tricky bit is you’ve got to find the CO2 first. There are ways to grab it out of the atmosphere (where its concentration is only 0.04%), but I don’t know how energy efficient that is. Easier to capture exhaust from some other fossil fuel burn, but that sort of defeats the purpose (unless it is from a methanol power plant). Or to gasify plantation timber or stubble or something like that.

      Anyway, I calculated that if electricity costs $50/MWh (the approximate LCOE of new wind & solar), then the marginal cost of production of methanol is about $30/GJ. (Not the LCOE – I don’t know how much it costs to set up the infrastructure – just the MCOE). This is not competitive with gas to produce electricity (currently around $10/GJ), but it is about the same as petrol or diesel to fuel a car.

      However, if wind and solar were overbuilt; power was in surplus at times; and a methanol plant was able to ramp up/ wind down production for when power was in surplus hence energy was ultra-cheap, then even at only 40% efficiency, 2.5X the price of bugger-all is still bugger-all.

      The other thing about methanol is it can be used in fuel cells. If industrial scale fuel cells could produce 1000MW of power at 80% conversion efficiency rather than the 40% that aeroderivative turbines achieve, then that doubles methanol’s utility.

      I’m not sure if it will ever take off, but it’s on the “watch list”.

    • Mark Roest

      I don’t see a single number that actually pins a price down — ‘1/5th as much as’ certainly doesn’t — we have to take it from you on faith. I want to see how many MW the study claims is needed, how much it costs per kW, MW or what have you to develop and build that plant, how many years it will take from start of fundraising and environmental studies to commissioned and in full operation, what the operating cost will be per year, and any claimed benefits. Also, how much gas is used for each MWh of electricity produced, when the 20 nights a year are expected, how many hours per night, how much carbon that puts into the air, how much pollution it puts in the air, and how much the health impacts will cost, both in direct health expenditures, and in reduction of calculated economic value compared to a life lived in a clean world.

      Then we can start to compare the oranges to the apples.
      We can compare batteries at a price of $100/kWh, available in volume by 2020. Probably, by that time, around 10,000 cycles at deep discharge, so 1 cent per kWh levelized cost. Since it’s only 20 nights a year that the gas plant runs, we can use the batteries for other purposes on the other 305 nights that are not those nights or the ones adjacent to them, and monetize the value of those uses, whatever they may be.

      We could even include some amount of vehicle-to-grid battery storage and supply, especially if it’s during the time when school is out and we have converted school buses to battery-electric to save on fuel costs. That makes the capital cost for that portion of the storage zero, other than the controls to allow the grid to take the electricity from the buses.

      In short, by the time we finish looking at all the possibilities, on a direct cost comparison, batteries, energy efficiency and energy management will wipe the floor with a new natural gas plant.

      • Mark
        Details of SEN’s analysis can be found in my recent article in Renew Economy – http://reneweconomy.com.au/wa-grid-reach-85-renewables-cheaper-clean-coal-46180/. Reference sources and WACC used are included. Reference for capex was BREE, 2014 Australian Energy Technology Assessment; we used their 2025 capex figures in $/MWh: Coal 2949, OCGT 750; i.e. coal capex is 3.9 time higher. Applying WACC’s from the Finkel review – 14.9% for coal and 8% for gas the annualized capital cost for supercritical pulverized coal is 5.2 times higher than OCGT.

        Cost of OCGT depends on how much it is used; with a cf of 0.1 it’s $220- 230 per MWh with a gas cost of $11 per GJ; the fuel being about 60% of the LCOE for OCGT’s.

        I wanted to believe than storage could do the whole job but but alas when I modeled it I found they can’t, even at the implausibly low price of $100/ MWh you are assuming. The amount of storage required for several days generation is stupendous. We costed doing this with pumped hydro (cheaper than batteries will ever be), and it would push the weighted average wholesale electricity cost up to about $500 per MWh.

        • Mark Roest

          Re last paragraph, I don’t know why you chose $100/MWh and state that it’s impractical. Assuming you mean a levelized cost of $100/MWh, a levelized cost of one cent per kWh ($100 capital cost divided by 10,000 cycles) is only $10/MWh, so it does not push the weighted average wholesale electricity cost up to $500/MWh. You call even $100/MWh implausible, but I made a clear distinction of timing, and both Tesla and LG Chem will be well below that level by 2020, since they will probably have well over 2000 cycle life, and their capital cost will be under $100/kWh. Next-generation battery physics is by definition uncertain to those not involved with it today, but we have high confidence for a number of proprietary reasons to expect the numbers I’m proposing to be realizable by that date, including the 10,000 cycles.
          Also, you do not appear to be accounting for my statement that, “Since it’s only 20 nights a year that the gas plant runs, we can use the batteries for other purposes on the other 305 nights that are not those
          nights or the ones adjacent to them, and monetize the value of those uses, whatever they may be.” That definitely requires some modification of your model, if it is not already included; the whole battery industry and many in other sectors are calling for full monetized recognition of all the values that can be provided by battery storage.
          Finally, you do not appear to be accounting for my statement that, “We could even include some amount of vehicle-to-grid battery storage and supply, especially if it’s during the time when school is out and we have converted school buses to battery-electric to save on fuel costs. That makes the capital cost for that portion of the storage zero, other than the controls to allow the grid to take the electricity from the buses.” It is actually a conservative statement, because there are many plausible circumstances in which a significant portion of the charge in school bus batteries, and all of the remaining safe depth of discharge in the stationary batteries that support them (assuming a solar system is in use), can be drawn on even when school is in session, assuming an intelligent and effective energy management system is in use, with separate thresholds for each bus route.

          • Mark,
            You would have to see the Powerbalance spreadsheet to understand how the costing works. If I put in a capital cost of $100/ kWh ($100,000 per MWh), this is about 1/8th of the current cost, which I think is implausible. Anyway I did it and increased the battery capacity up from the 6000 MWh (several coastal container shiploads) of batteries that I had in the 85% RE scenario. I put it up to 1 million MWh and this still didn’t cover the backup required during 2015 on the SWIS; 2500 MW of OCGT were still required albeit at very low capacity factor of 1%.
            This 1 million MW of batteries pushed the weighted average LCOE of electricity from the grid up to $457 per MWh. Having all those batteries sitting there hardly being used is not cost effective even at your $100 / kWh capex price.

    • Tim Forcey

      Yes most “100% Renewable Energy” scenarios and the like for Australia, since AEMO’s in 2013, have turned to gas (could be biogas not fossil gas) as the energy source needed to supply a bad week or two in winter when sun and wind output is low.

      Pumped hydro and molten-salt energy storage are more for day-to-day coverage. Aren’t meant to (economically) cover for a bad week or two…

      Except for Turnbull’s Snowy 2.0 pumped hydro… which is meant to provide “weeks” of energy storage. But that might be too expensive to ever be built. See: http://www.smh.com.au/federal-politics/political-news/snowy-hydro-20-could-hasten-death-of-fossil-fuelgenerated-electricity-20170317-gv0vh7.html

    • Carl Raymond S

      Please elaborate on what ‘fixing the gas supply’ entails. Seems to me that if gas is there primarily for peace of mind, we will use bugger all of it. The more numerous and diverse the RE portfolio, the more impossible it becomes for the weather to scale them all down simultaneously. It’s like looking for a weather map with no isobars – none at all. Just doesn’t happen.

      • Carl Raymond S

        Here’s a link to a map of live wind conditions across Australia. If anybody ever clicks on it and sees nought but blue – I’ll eat coal.

        https://earth.nullschool.net/#current/wind/surface/level/orthographic=-224.41,-28.01,1457

      • Miles Harding

        I think this is eaxctly it.
        It’s not quite peace of mind, but if the gas supply (or could be distillate or bio-fuel) is only needed a few days a year, then its cost doesn’t make much of an impact. It is still needed to prevent an epic and costly over-build of RE to bridge these few periods. There is an optimal point in the mix of facilities that we should aim for.

        The system we need is at odds with the economic orthodoxy that has brought us globalisation, ‘just in time’ manufacturing and distribution. This orthodoxy optimises the systems for cost with little or no concern for resillience.

        We will have branches of infrastructre that sit idle most of the year, like a fire engine waiting for its time to shine.

  • Tim Forcey

    A really great alternative to gas-use in your home & other buildings is… wait for it… a heat pump.

    OK OK it is indeed another way to harvest the Sun’s energy, another form of “solar energy” indeed.

    See: http://www.theage.com.au/victoria/heat-pump-tech-could-save-victorian-homes-up-to-658-a-year-on-gas-report-20150825-gj7gzt.html

    • Ian

      I couldnt agree more.
      On our city olympic pool, the auditors found the cost of pool heating by heat pump is about half the cost of the gas boilers. Of course the bpilers are the last resort pool heating!
      And yes heat pumps harvest renewable energy, which appears to be little understood…

      • Miles Harding

        At least ambient energy, but can be powered by renewable energy.
        Try that with a gas boiler.

        • Ian

          Ambient is indirect solar heat= renewable.

    • Mike Westerman

      Heat pumps are expensive tho compared to resistance heaters and solar is so cheap now I doubt the improved COP justifies the expense.

      • Tim Forcey

        The link I provided above to the article in THE AGE is talking about SPACE-HEATING with reverse-cycle air conditioners (heat pumps). The thing is, people often have reverse-cycle air cons (heat pumps) in their homes that they have never used for space-heating… thinking gas is cheaper.

        • Mike Westerman

          I guess until recently it was! Now your oversized resistance heater HWS is probably the cheapest battery you can buy for winter space heating, if you don’t have a reverse cycle AC.

  • Chris Drongers

    NAIF said – spare a thought for poor Malcolm tonight. The first NAIF project is supposedly to be announced tomorrow. The bet is that it will be the railway for the Adani mine.

    If it is, the environmental lobby, including most of us, and the specialists who have written gov commissioned report after report about climate change and investment risks and priorities will roast him.

    If it is a green project such as the Copper String in Qld, a totally renewable power system for the SWIS in WA, or a pumped hydro storage project (only one ready for funding is Kidston in QLD, along with 2GW of utility solar to use it) then Abbott and his throwbacks will roast him.

    Only way out is multiple projects across all options. But Malcolm probably cannot direct the NAIF to his bidding so…….
    Malcolm will just have to get used to history remembering him for ignoring science, engineering, economics and the majority of voters and waste gov funds, my funds, on saving buggy whip makers from cars.

    He cannot even point to a public climate change education policy as his first actions in power were to continue to dismantle climate policy bodies.

    Poor Malcolm

    • Mike Dill

      Please tell me what NAIF stands for. I am just an ignorant yank.

      • Robert Comerford

        Hi Mike, Northern Australia Infrastructure Facility

  • Evan Vernon Giles

    Yep you can trust the Liberals to fuck up anything they touch and like every thing the LNP does is reactive

    This reminds me of the time when little Johny was telling everyone to expect fuel prices during the last Iraq war to reach up to $5.00 per litre and at that stage it was heading to over $2.00 per litre

    When asked to state what he would do to aleviate the problem his response was typical LNP ” Sweet FA” nothing was his answer it was only under public pressure that he froze the excise

    Skip forward and we have another retarded Liberal PM who needs a hand stuck up his date to function properly

    • Ren Stimpy

      Now that you mention it, I’ve never seen Tony Abbott drink a glass of water while Malcolm Turnbull is speaking.

    • mick

      hasnt worked yet needs a bigger hand

  • brucelee

    I really like Joyce’s analogy

    Except he needs to clarify to Australia that he is paying top dollar for the bomb with a milo tin on the exhaust, when he could be buying a Tesla for that money.

  • suthnsun

    I have this persistent niggling background thought that in the end, when LNP is really, really, totally discredited on this issue, they are going to come out with the argument that they were really only ever acting on ‘high level’ advice that they needed to keep burning more coal to preserve the aerosols in the atmosphere in order to keep the planet cool.

  • Miles Harding

    Spot on.
    It would appear that the LNP’s canutian tide is coming in.

    Any organisation with any sense is now embracing renewables, not for the environmental benefit, but because of the cost advantage.

    From a network point of view, only Tasmania has sufficient battery, in the form of hydro, to bridge seasonal variations. For the rest of the network, some stored fuel generation is needed to avoid a gross over-build of renewables and battery storage to satisfy those 20 days a year and a number of nights. The stored fuel could be in the form of pumped hydro or fuel for turbines – local factors will determine which is the most effective.

    Gas turbines fit this bill well, particularly as they are easy to locate near load centres, responsive and can burn a range of fuels including gas, distillate and bio-fuels, allowing a transition path to 100% renewable when the time comes. An appropriate over-build of renewables and storage can ensure that the number of run events for the turbines and their fuel consumption are optimised.

    The fact that this process is a step-wise transition seems to be almost completely overlooked and deliberately mis-represented by the LNP.
    Renewable technologies are implemented in small (10-100MW?) increments, so mistakes are small and there is plenty of opportunity for programme correction as the transition continues. It simply needs coordination and planning to prevent lop-sided evolution.

    • Mike Westerman

      I think the various 100% models have followed this path, given that OCGTs are about as cheap as you can get in capital costs. But I think a fair bit of overbuild for solar is inevitable.

  • Raymond.
    In WA we have the logical situation of gas reservation for domestic purposes. That needs to happen at a national level; Federal governments have been negligent in the past (or in bed with the energy corporations) in not doing this. We have modelled the SWIS during the transition, gas use may increase slightly as coal closes to about 55% of generation then falls steadily to about 15% of generation at 85% penetration of renewables. This scenario will cost little or no more than existing generation and if RE prices continue to fall, would cost less.

  • Hi Tim,
    Thanks for your wise contributions in particular that bit of information about the The Gas Supply Guarantee mechanism, which puts my mind at rest a bit. Govts. better now take the next steps – ensure they have deals in place for sufficient gas capacity on the pipelines during peak demand and some cap on gas prices that prevents gas corporations from gouging in times of peak demand or short supply.

    I think the debate needs to shift a bit – get the OCGT’s in place and we will have a secure, affordable clean electricity supply that can if necessary go out to 100% renewables using those same gas turbines. That should put to rest all the hooha about energy security and cost. You with your in-depth knowledge of this situation and academic network may be a key person in getting the this sanity into the debate?

  • It more wind and solar, much more all over the place and dramatically less coal. Thank you Giles Parkinson. You are one of the finest writers in Australia. I hope you are able to maintain your role in Australia’s great fossil fuel phase out. We can change the world.