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NSW Coalition: Time to move on from notion of “baseload”

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Don Harwin, the energy minister of the NSW Coalition government, has made a dramatic departure from the bulk of his state and federal colleagues by declaring that it was time to move on from the notion of “baseload” power as essential to the reliability of the future grid.

In an extraordinary speech to a CEDA energy function in Sydney on Thursday, Harwin looked back on his few months as energy minister, and underlined the huge gap between moderates such as himself looking to embrace new technologies and the conservatives locked into the past.

He particularly focused on the heatwave in February and the events that followed it, including major load-shedding for customers such as the Tomago aluminium smelter.

“There’s no better way to understand how an energy market works and doesn’t work than a heatwave,” Harwin said.

Indeed, were it not for the solid performance of solar, he noted, and other renewables, and the “demand response” from consumers volunteering to reduce the load, the result could have been much worse.

“Clean energy performed as forecast. Thermal generation did not,” Harwin said.

Indeed, some 2GW of coal and gas capacity went missing at the critical moments in NSW when demand hit its peak in early February – around 1GW from the Liddell coal generator and more than 1GW from the two biggest gas generators.

More capacity was lost from other coal plants due to heat stress, and Harwin said there were questions about the ability of fossil fuel generators to perform in the heat, and of the reliability of coal and gas supplies.

This experience, and the arrival of new technologies, and new thinking about energy systems, demanded a rethink.

“Our old paradigm was based upon a notion of a baseload of energy demand being supplied by large thermal generators, and then a peak,” Harwin said. “Over the coming decades, this will change.”

This view is almost completely at odds with conservative members of the Coalition in federal and other state parliaments, many of whom are calling for new coal generators to supply “baseload” and guarantee reliability and low cost.

Numerous reports however have pointed out that large coal generators are neither low cost, nor should baseload be confused with “reliability.”

The Australian Energy Market Operator has embraced these views, and its latest electricity forecasts focus almost entirely on the benefits of distributed generation, small units scattered around the country, like rooftop solar PV, and backed up by battery storage.

And it is looking to key “demand side” responses such as its demand management initiatives currently being introduced in NSW, Victoria and South Australia, and energy efficiency. Together, they can reduce demand by around a third, and more at peak times if properly structured.

Harwin said there was no doubt that the country needed to put in place an “orderly transition”, and echoed AEMO’s call for new market rules and initiatives.

He particularly pointed to the so-called 5-minute rule – aligning settlement of the gross pool market with its 5 minute dispatch, instead of smoothing prices over 30 minutes.

“It (the 30-minute settlement) is a classic example of a rule made to suit existing technologies,” Harwin said. “I have supported change so we can benefit from new technologies such as batteries.”

The 5-minute rule has been fiercely opposed by most large coal and gas generators, although some are seeing the writing on the wall and are now making investments in quicker, fast response machinery with the assumption that the 5-minute rule will be in place.

Harwin said it is clear that renewable energy technologies are getting cheaper, and quicker than almost anyone expected.

“Clean energy has gone from relatively expensive to the cheapest new build technology in a few short years,” he said.  “And we have always underestimated it. Year on year, the International Energy Agency gets it wrong when forecasting the uptake of renewables.  Costs are declining faster, and uptake accelerating.”

He said these price falls would be  critical in delivering affordable energy into the future by reducing the price impact of gas generation. And it would have an impact on coal.

“We could see a situation in the 2030’s where existing coal plants struggle to compete during the day because new solar is cheaper.”

He said this highlights the need to “think ahead on storage”, and seriously consider Snowy 2.0, which he described as a “game-changer” that could potentially support as much as 5GW of new wind and solar.

Indeed, he pointed to the creation of two renewable energy “spines” in NSW, one running west to east from South Australia to the Snowy unlocking Riverina solar and Western Division solar and wind, with a “huge balancing battery” in Snowy.

The other would run from the Hunter to Queensland, tapping wind in the tablelands and solar from the Central West, with the Hunter’s existing infrastructure making it ideal for a balancing battery and bioenergy hub, with greater north-south interconnection.
He also dismissed suggestions that the government should get involved in generation, as has been proposed by former prime minister Tony Abbott and other members of the Far Right and conservative commentators.

Harwin said it was clear that solar costs are much lower than that modelled by Finkel.

“This should give hope that investment will lead to even lower bills into the future,” Harwin said.

He also dismissed suggestions that the government should get involved in generation, as has been proposed by former prime minister Tony Abbott and other members of the Far Right and conservative commentators.
He also pointed to the need to embrace the climate goals of the Paris agreement, something that the Finkel Review sidestepped.

“Investors know that emissions are expected to go down in the future.  The breadth of support for the Paris Agreement has led to a process of risk management around carbon.

“That’s good, and it should be up to the private sector to assess and manage technology risk.  And it’s not ideological. Whatever your view on the science, carbon is risk, that’s how investors see it, and this is an exercise of risk management.”

 

 

   

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  • coreidae

    Goodness. Could he possibly speak to his colleagues in SA who are still spruiking coal fired power?

    • Grace McCaughey

      Yes. Congratulations Don
      Harwin. Most sensible speech from a Liberal Minister this century. And b based on facts. Thank you.

      • Chris Fraser

        And he is part of a sovereign government. So the best part is, with a mere stroke of a pen, legislation can be written to bring it all into being. There’s no concurrence needed with the local Federal-sphere nutcases.

        • Michael Gunter

          STEM-literate greenies like this former wind farmer — who hates nuclear, coal and petromethane — have to grudgingly agree that baseload is real if you want to have electricity 24/7. Sad that neocons are so short sighted they will fight to prevent death spiral of dirty power when credible clean alternatives exist. 🙁

  • Mike Westerman

    Great to hear recognition of the need for “renewable spines” – this truly is a breakthrough as it will do 3 things at least: diversify renewable supplies immensely, bring solar from Qld into the southern states and allow connection of the pumped hydro sites in southern Queensland/Northern NSW which are far more viable than Snowy 2.

    • Chris Fraser

      Good thought. Where could I get a link to a comparison of the different pumped hydro site possibilities ?

      • Mike Westerman

        Preliminary data is being put together thru an ARENA sponsored project, otherwise most is in the heads of the few of us still around who were involved in looking at those projects 😉

      • Michael Gunter

        Andrew Blakers ANU team might have a publicly available map of the #PHES locations used in their modelling. They should anyway…

        http://www.anu.edu.au/news/all-news/hydro-storage-can-secure-100-renewable-electricity

        • Alastair Leith

          Interestingly Blakers talked down Snowy 2.0 in a presentation many months before Malcolm Turnbull announced it in a flurry of polling spin. Said PHES had much better options elsewhere, though I’m not 100% sure he was talking about from scratch or even just adding a pond and pumps at the bottom of Tumult 3.

          • Mike Westerman

            I think quite rightly so Alastair. I was involved in relooking at the Snowy in 1980 or thereabouts, and the environmental and transmission constraints were apparent then, with little changing since. But as Alan points out, off river frees you from many of the constraints of on river, and at lower costs: $1M/MW, $100-150/MWh are achievable on projects that can be built quickly (plant delivery being the longest lead time) with very long, reliable lives.

            SA is a classic: you can wander around and see fantastic dam sites, and wonder why they haven’t been built out as they would have been elsewhere. Then the penny drops: SA has no water for hydro. PHES could add many GL of water to SA’s emergency supplies as well.

          • Alastair Leith

            Thanks for the comment, Mike. Was the review you worked on of Snowy expansion/conversion to PHES ever made public?

          • Mike Westerman

            Not as far as I know…ditto Apsley for ECNSW, which was stopped on environmental grounds (and quite right) but an offstream version of that should be developed – could be 2GW/20GWh+, ditto Mt Byron, site owned by Powerlink 0.5GW/3-5GWh. All IMO better/easier than Snowy, tho’ there are Snowy+ options for upper ponds outside KNP.

            Snag with all of them is securing a bankable revenue stream – too risky for banks under current market rules: hard to bank just arbitrage.

          • Alastair Leith

            WA has a capacity payments mechanism. But that is calculated dispatch history on certain critical days chosen by the regulator. You’d think PHES would be in the mix on high demand events. AFAIK there’s no capacity market on the NEM.

          • Mike Westerman

            I’m not sure what the answer is – clearly 5min bids cannot support an investment decision of 30y for pumped hydro, but capacity auctions can lock in capacity of types and quantities that reflect today’s optimums not tomorrow’s! An overarching energy policy including transport and stationary power, and consistent with GHG policy, is a minimum. And of course acknowledgement in that policy that a transition is already underway!!

  • John Saint-Smith

    These inconvenient facts must be suppressed!

    In conversation with a young engineer from Santos, I heard the same complaint. Gas turbines don’t like hot weather. Every heat engine must have a cooling cycle, and when ambient temperatures are unusually high, the whole system over-heats and shuts down. European turbo-charged cars are often ‘de-tuned’ for Australia’s hot summer conditions. And the world is warming, heatwaves are becoming longer and more intense. Depending on thermal power generation is like throwing more coal on the fire when the boiler is about to blow.

    I expect that the right wing of the NSW Liberal Party will be calling on Mr Harlin for an apology and a retraction.

    Meanwhile, instead of Turnbull telling Abbott to shut up or ship out, the man is allowed to spruik his mad coal industry sponsored plan to spend tax-payer’s money to build coal fired power stations. It speaks volumes that they can’t attract investment, either from the fossil fuel industry, or the banks. These people aren’t stupid. Like Adani, they know there’s not much time left to milk some last minute profits from the dying coal market, so they beg fools like Abbott to build them a whole new set of coal and gas fired power stations that Australians will be forced to use when the rest of the world is undercutting our costs with cheaper renewables.

    • omegaman

      Remember also however, that with global warming , global average wind speeds are expected to fall and batteries and solar panels also don’t like extreme heat, so all technologies will have problems with extreme weather.
      But I agree with thrust of the article , as a former ships engineer , I recall when sailing in areas with sea temps of over 33 degrees c , problems started appearing all over the plant.

      • Michael Gunter

        …presumably from your own personal experience then, you can confirm meteo data proving that night time windspeeds are better at sea than on land! So a very good place for new big wind farms to displace fossil fuels quickly is offshore wind farms, no? Port Phillip Bay is plenty big enough body of water to kill nocturnal temperature inversions, but recreational yachties, boaties might complain about flukey winds amongst the turbines, not to mention restrictions on mast heights! 🙂

  • Radbug

    Forget Abbott, the man changes his policy positions as often as he changes his underpants! I suspect an early Federal election, if so, the Coalition will lose & Shorten will be in for two terms, at the end of which, fossil fuels’ political position will be history.

    • Mark Roest

      It also looks like his true focus is to control the economic rent from electricity, and he’d probably partner with coal and / or gas companies, and set regulations in their favor, to capture the revenue potential of electricity from renewable sources. Remember the colonial model of capturing a desired supply, like spices or opium, stoking demand, and raising prices to make a killing / fortune. Everything about Abbott points to this consciousness.

      • Alastair Leith

        Abbott’s chief task is too react to everything in a negative way and burn away at the culture wars. Renewables dissolve part of his power base, they must be stopped. And so they become a symbolic and existential evil to him. No wonder he can’t enjoy the elegance of the purity of the engineering maths and understanding in a wind turbine.

  • Peter F

    All very good stuff in fact the transition will probably be even easier and faster than he forecast.

    From the end of 2016 to the end of 2020 somewhere between 8 and 10 GW of new renewables will be connected to the grid in front of and behind the meter. That will remove 20-23 TWhr of demand for coal and gas or about 15% of their 2016 output.
    There is every reason to expect that by 2025, 1/3rd of the generation from coal plants will be displaced by renewables.

    The presence of storage on the grid allows CC gas to run much more economically and large scale reciprocating gas units are far better for primary and secondary reserve than coal plants and batteries will displace most spinning reserve. Therefore,it is highly likely that gas generation will increase further depressing the economics of coal plants

    More transmission is required but nowhere near as much as many people expect. High capacity spines are probably more expensive and possibly less reliable than overinvesting in generation and storage near the load.

    For example 180 potential sites have been identified for pumped hydro in SA with a total capacity about 10 times what SA needs. None of them need the $2b in transmission upgrades that would be needed for Snowy II

    • Alastair Leith

      Wind and solar will reduce CC gas use too. If they are deployed in an orderly and sizable way, anyhow. While OCGT will probably increase until sufficient day to day & week to week storage is deployed.

  • David Hurburgh

    Yep , base-load is a meaningless concept, when your objective is to shut down all our metal smelters and similar industries.

    Secure, reliable power with no voltage and frequency spikes , and deliverable in GWh levels – if that’s not base-load power, I don’t know what is.

    Once again the #RenewableEnergy zealots are intentionally ( or through ignorance) want to deindustrialise our country.

    • Mark Roest

      You appear to be confused, either by the language of the article, or by the idea that fossil fuels are more reliable than intermittent renewable energy sources backed up by battery storage. They’re not. The RenewableEnergy supporters are that because it works better, it’s already cheaper, it can be owned by individuals instead of large corporations or the State, it saves lives and quality of life from pollution that causes cancer, heart disease, and asthma, and finally, it can save our planet.
      Perhaps you are not confused, just practicing identity politics, as in, you realize that the people who get into distributed renewable energy are not going to be like you any more, if they have been like you, or they are not going to be like you in the first place, and they will wind up with more autonomy and power than you have, and your concept of how society should be ordered will go by the boards. That really is the underlying objection of neo-conservatives to backing nature and the well-being of all people, after all! By the way, true conservatives supported conserving nature and public resources.

      • Michael Gunter

        see my reply to David H. he is right about baseload being real, or at least an “abstract” idea we must regard as real if we regard photons coming from light globes 24/7 as both real and desirable. It’s nuke waste and CO2 pollution that we must avoid, and repair the damage already done to the biosphere

        • Alastair Leith

          do you even no how baseload is defined? it has SFA to do with lightbulbs (presuming you mean system reliability) at any time of the day or night. It’s the amount of energy used in a day from zero to minimum demand on the daily demand curve. There are a heck of a lot of lightbulbs running above the base-load cutoff point at daily minimum demand.

      • Alastair Leith

        What is a “true” conservative anyway, what’s truth about a fundamental lack of compassion for others and a disregard for other points of view?

    • Mike Westerman

      Energy intensive industry, because of the dominance of energy costs, are notorious for moving to where the power is cheapest. They moved to Australia when Australian taxpayers were willing to offer them subsidized tariffs. When China became the dominant miner and processor of minerals, it initially didn’t care that its cheaply built, highly polluting low cal coal plants where exacting an enormous environmental and social cost – now it does because those costs are swamping the profits. So energy intensive industry is on the move again. Sarawak has built 3,400MW of hydro and is building 2,500MW more. Indonesia 7,000MW. Chile, Canada, Indonesia, Sarawak, PNG will all dominate this space with sub-$50 energy in GWh quantities. As wind and solar have become cheaper than that, they will augment their hydro with these technologies – Tas is the only region in Australia that will compete in this space, as no-one will ever invest in lignite plants again. For most of industry and commerce, where energy typically is a minor cost, and reliability is key, Australia is the Lucky Country, with enormous wind, solar and pumped hydro resources, at costs that are cheaper than the marginal cost of gas, and soon will be below the long run costs of coal.

      No zealotry, just sound economics and good engineering.

      • Michael Gunter

        amen to that 🙂

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      • Alastair Leith

        Good points, Mike.

      • daw

        Now that wind and solar are so cheap it is past time to cut all subsidies. They should stand alone and on their merits.

        • Mike Westerman

          Ah wouldn’t that be great Daw, a world without subsidies: not more accelerated depreciation for miners, no more government funded oil and gas exploration, no more freebies to pollute! If users paid, what would be the rate for polluting the airshed: I’ll tell you what – we’ll direct the flue gas from a powerstation to your bedroom window and ask what you’d pay for it to go some place else. I’m pretty sure you’d pay more than if I put a solar panel outside your bedroom!

    • juxx0r

      I agree, you don’t know what is.

    • John Saint-Smith

      Could you please tell me what evidence you have for this assertion?

      • Michael Gunter

        “your lights didn’t go out last night”, a cold time across the southern half of NEM with little wind and zero sun. The grid is emphatically NOT a battery. Possibly you are trapped in a fatally flawed mindset that thinks “zero net” is a credible way to clean up the power grid and keep the lights on. The vested interests are the ones with the most to gain commercially from this pervasive misapprehension, so they will do nothing to clear it up. Whistleblowers such as Guy Pierce should expose anyone in the #GreenhouseMafia or neocon think tanks who may have been actively sowing the seeds of confusion, actively promoting the “zero net” idea to defend their dwindling(?) market power.

        • John Saint-Smith

          ‘Green Mafia’ – you lost my respect about there. Pointless trolling when your arguments no longer make any sense.

    • Michael Gunter

      nothing wrong with clean industrial production for the public good, rather than meaningless destructive soul-destroying planet-destroying consumption. #needs vs. #wants problem. And yes too many loud-voiced renewables zealots are insufficiently STEM-literate to understand why “net zero emissions” and “offsets” will NEVER get us to a zero carbon electric grid. I strongly agree with you that baseload is a real physical concept. We may agree to differ on whether solar+wind+BIG_bulk_TWh_of_storage can cost-effectively be implemented through iron-fisted public control of this privatised disaggregated bunch of greedy tax-evading mavericks in a dysfunctional marketplace. #HerdingCats #ForceMajeure or #renationalise

    • Alastair Leith

      No, baseload is the energy in the daily dispatch between zero demand and minimum demand. That part of the energy use spectrum is no more and no less important than the energy use from daily minimum to daily maximum demand. Because in case you missed it, all these users share the same grid. Perhaps you don’t understand the definition of base-load, it’s the load coal generators was comfortable with, and they gave away energy at night for almost nothing to artificially increase the amount. Wind and solar, as the AEMO have been pointing out in presentations for years and years also provides baseload power, at less cost and less damage to the environment.

  • Alastair Leith

    “Clean energy performed as forecast. Thermal generation did not,” Harwin said.”

    Note to Turnbull, Joyce, Caravan et al

  • Robert Comerford

    So do I assume he was not invited to The Rabbit’s talk fest in Sydney last week?
    Seems like there is actually someone who thinks in the NSW govt.

  • MaxG

    Don Harwin — let’s see how long he lasts 🙂