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How wind and solar removed major price spikes in South Australia

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The Murdoch media and the conservative political parties show no signs of relaxing their extraordinary and ill-informed campaign against wind and solar, blaming these technologies for the electricity price spikes in South Australia and across the country, despite the principal cause being the surge of gas prices to record highs.

Conservative politicians over the weekend increased their calls for a review of renewable energy policies and further scrutiny over the construction of new wind farms, while the conservative media – the Murdoch Press and the Australian Financial Review – continued to screech their opposition to wind and solar.

But as we and others, including the South Australian government, have pointed out in recent weeks, the fault lies not with wind and solar, but with the soaring cost of gas, supply constraints from networks, and the unfettered power of the energy oligopoly.

This graph below, from the Australian Energy Regulator, shows the number of high price events – peaks of more than $5,000/MWh – across Australia over the last 15 years. As can be seen, they are currently running at their lowest levels ever, and have fallen rapidly since the build out of large-scale wind and rooftop solar.

 

aer price spikes above 5,000:mwh

 

Large spikes in electricity prices were common-place in the Australian electricity market, occurring nearly once every second day in summer months, when market operators had to turn to expensive gas generation to meet surges in demand. Most of those daytime peaks have disappeared now, because of the appearance of rooftop solar.

South Australia was the worst afflicted, because it relied on just a few powerful generating companies and was particularly reliant on gas. But since its major investment in wind and solar, those peaks have almost disappeared.

In 2015/16, a year in which the state sourced 37.7 per cent of its electricity from wind energy (see graph below) and nearly 7 per cent from rooftop solar, there was only one such peak. In 2008, it experienced 51 such events in the summer months alone.

AER wind share states

Wind output as share of generation. Source: Australian Energy Regulator.

It’s interesting to note that the state with the highest number of high priced peaks in the last five years – Queensland – is the state with the least amount of large-scale renewable generation.

South Australia’s historically volatile electricity prices and price spikes have been one reason why the government has pursued wind and solar.

The ACT government is already reaping the benefits of that, by locking in power prices from wind and solar for 20 years, and removing price volatility.

Australian corporate customers – complaining loudly about surging gas prices – have had the opportunity to do the same, and follow the example of Dow Chemicals, Google, Facebook and Apple. But they have chosen not to do so, instead encouraging a braying pack of media writing nonsense about green energy.

The media pack have duly obliged. We have written a number of stories pointing out the errors in the Murdoch media’s reporting, and the myth-making of the conservatives, including last week’s most-read stories Murdoch and Coalition go in guns blazing against wind and solar, and The anti-wind and anti-solar garbage fit to print in Murdoch media.

And on the weekend they were at it again.

“An energy crisis in South Australia created by an over-reliance on untrustworthy and expensive wind and solar ….. ” screamed the entire Murdoch media in unison in a syndicated story over the weekend. It even published what its chief political reporter described as a “great piece of investigation” into the electricity price rises. Except that it failed to mention, even once, the role of record high gas prices.

The Australian Financial Review followed suit. Although its reporting has been reasonably balanced, its editorial slant is clear.

“The South Australian Labor government’s rush into renewable energy, particularly wind power, has forced coal-fired generation out of the state,” it wrote in a leader article. “But it also has helped generate a surge in South Australian electricity prices that is making the Arrium steelworks even more uncompetitive, as well as hitting the Nystar smelter in Port Pirie and BHP Billiton’s Olympic Dam giant copper and gold mine.”

As the South Australian government and numerous analysts have pointed out, the large energy customers have had more than a year’s notice of potential supply constraints from the upgrade of the interconnector.

But they don’t seem to have adequately hedged. If they had struck the same sort of power purchase agreements as the ACT, these large energy users probably would have been paid to use the electricity.

Conservative politicians are also pushing for constraints on wind and solar.

The head of the Coalition in South Australia wants wind farms to be scrutinised, and halted if need be, and they and the Northern Territory conservative government want gas supplies increased, which means removing restrictions on coal seam gas drilling in the eastern states, or in the case of the NT, building a pipeline so it can export more of its reserves.

But we have already seen something of the Territory government’s attitude to renewables, with its absurd costing of solar and storage in an attempt to justify the decision to build new gas-fired generators in Alice Springs.

The South Australian government, however, seems determined to push through. It has been attacking the power of the incumbent fossil fuel generators, and the state of the National Electricity Market, which is tilted in favour of coal and gas-fired generation.

Its favoured way of doing this is to build a new interconnector, to allow a bigger flow of electricity to and from South Australia, reduce the power of a small group of generators, and remove constraints.

“What we need to do is smash the monopolies … by interconnecting with other jurisdictions so we can get our renewable energy out to other markets,” energy minister Tom Koutsantonis said. What the conservatives are proposing, he said, will simply entrench the power of the monopolies.  

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  • Geoff

    More Happy Clappy GETUP/CRIKEY nonsense…..
    Files you really are a shocker.

    • DDD

      Geoff,
      Could you kindly explain what, FACTUALLY, is incorrect in this article, so I can better understand your position?

      • john

        I do not think he actually understand so posts rubbish

    • Peter F

      Does that statement actually mean anything when gas prices in Australia are 4 times the price of Australian gas in Japan

      • iampeter

        What has that got to do with solar/wind not been able to provide reliable energy?

        • Analitik

          See my answer to George Michaelson’s rhetorical question.
          If it survives the next round of site moderation.

          • which moderation is that Analitik. I am the only moderator here and I haven’t touched any of your posts.

          • Analitik

            My initial answer to DDD’s question for Geoff disappeared. It was the third comment posted at that point.

          • Ah, so blame me. Maybe you just pressed the wrong button. It happens to me some times. Your views horrify me, but I haven’t touched any of your posts.

    • Douglas Hynd

      Discussion of the actual statistics would be welcome

      • Garth Power

        Statistic show that the renewable are forcing some of the plants that can’t adjust not only ROC (Rate Of Change) but the min generation level are shutting off units. There are days that during a single TI (30 min trading interval) that the wind has reduced to close to 50% thus causing spike in price and even diesel generation to kick in as it has the highers ROC. I would post the statistics but there too complicated for this forum.

    • michael

      don’t worry geoff, SA could actually have a total blackout and it would still be blamed on fossil fuels

      it’s not a big enough interconnector is just another way of saying that the installed renewables aren’t able to supply the required power and need ff backup; evil oligopoly ff generators won’t switch on, is just another way of saying that the installed renewables can’t meet the required load

      would be much better if all the renewable blinkered types would be less combative and accept that a transition decade/s is/are required with both operating next to each other instead of forcing gas/coal generation assets out too early through policy positions and price signalling

      • Analitik

        I posted up half a dozen pricing events for South Australia from the past 3 months that were listed in the AEMO reports.

        It seems to have disappeared

      • Wayne

        I would point out that the said power generators are in the hands of private companies and that any choice to switch on or off are at the discretion of said private enterprises.
        South Australian electricity prices starting rising when ETSA was privatised in 1999. Here is a newspaper report from 2012
        http://www.adelaidenow.com.au/news/south-australia/power-prices-to-be-highest-in-the-world/story-e6frea83-1226305741810
        SA Power Networks is 51 percent owned by Cheung Kong Infrastructure Holdings Limited and Power Assets Holdings, which form part of the [billionaire] Cheung Kong Group of companies. The remaining 49 percent is owned by Spark Infrastructure which began trading on the ASX in December 2005″.
        It’s a bit rich when screams are heard about high prices coming from LNP devotees of private enterprise, when those prices are the result of private enterprise making decisions to maximise their profits. Hypercritical comes to mind.

    • johnnewton

      Feoff I’m sure you mean Giles.

  • Peter F

    it would be interesting to work out the economics of two or three 100 MW turkey nest pumped storage systems in SA vs the value of another interconnect

    • Analitik

      The upgraded Heywood interconnector will have a capacity of 680MW. Plus “two or three 100 MW turkey nest pumped storage systems” gives no indication of how long they can sustain their output.

      Check the wind output for the beginning week of July and do the math.

      • Peter F

        I am sorry I was not clear. There is talk of yet another interconnect after the Heywood interconnect is upgraded to 650MW. One of the problems in SA is that CC gas units ramp up slowly compared to OC gas. That means that on most day the operating window for the gas plants favours OC plants so the technically more efficient CC gas plant is not used.
        Pumped hydro that matched the size of the CC gas plant would mean that the CC gas plant could continue to operate for a number of hours to recharge the storage even as wind and solar rise to maximum levels. At peak demand with low wind the CC gas and storage can work together to provide about 6-700MW which is the equivalent of a new interconnect.

        • Analitik

          So you are really proposing replacing/supplementing OCGT with pumped storage so that the CCGT plant at Pelican Point has enough time to come online when the wind drops. The other possibility then is more OCGT – they only need to be able to run for an hour to cover a calm. More OCGT has to be ,more cost effective and quicker to implement than pumped storage on the scale that we are discussing, especially when you add the transmission requirements for large pumped storage systems (they aren’t going to be on the outskirts of Adelaide).

          But surely the additional interconnector being proposed is for additional baseload (to replace Torrens and Pelican Point). Otherwise, South Australia is still dependent on fossil fueled plants that are often idle so price spikes won’t be prevented.

          Just as an example of how long wind can drop out to almost nothing, if you look at the 2 following links and select only South Australia, you will see that there was less than 50 MW output about 20 hours.
          http://energy.anero.id.au/wind-energy/2016/july/7
          http://energy.anero.id.au/wind-energy/2016/july/8

          Baseload is not a myth when you get periods like this

          • Peter F

            Thanks for the link. As I said it would be interesting to check the economics. The problem in SA is not a lack of capacity it is a lack of economical capacity. It currently has approximately 3GW of gas and diesel capacity installed and peak demand is a little over 3GW. The problem is the gas price quadrupled, 60% of the planned interconnect was out of commission and some 1/3rd of the gas plant had been withdrawn from the market. That meant the remaining generators could name their price and they did, selling power for from 3-10 times the cost of generation

            Installation of storage or another interconnect would break the nexus to restricted gas supply.
            A rough approximation of the task
            SA peak demand is about 3GW although that never corresponds with very low wind, so lets say peak demand over that period 20 hours was 2.5GW and average demand was about 1.4 GW or a total of 28GW.hrs
            As only 50MW from wind that means we need about 2.5GW peak and 1.4 average from other sources. Murraylink and Heywood combined will provide 870 MW. Osborn and Pelican point can provide 670 MW so OC gas, solar and storage need to provide the rest.i.e peak supply of 0.9MW.
            In fact the energy supply can all be provided from the existing resources if there is enough storage. The output from the above sources running for 20 hours is 37GW.hrs vs demand of 28GW.hrs.

            Thus there is a trade-off between operating costs and capital costs. OC gas is as you say cheap to build but when gas is $20 per MJ and the efficiency of some of the older gas plants is less than 30% then the operating cost per MW.hr is very high. If the CC Gas plant which has an efficiency above 55% can run for a reasonable period then its operating cost is about 40% less than the OC gas plant. The storage can be used to absorb excess energy from wind or gas and then run with gas at the peak. The ramp rate of pumped hydro is much faster than even OC gas so less hot spinning reserve is required.
            The optimum is some combination of the existing OC gas, storage and/or possibly further expansion of the interconnects. That is why you do a study to find that point.
            As wind and solar output across the whole state can be very accurately forecast 24 to 48 hours ahead, where there is high wind the storage can be used to supplement exports of wind to the Eastern states. Thus SA can get a return on the investment by both reducing imports and increasing exports. On the other hand there will almost never be a circumstance where SA will make money from exporting power from OC gas plants.

            Re transmission costs. There are a number of sites near both Whyalla and in the Southeats which have transmission capability in excess of 250MW and the necessary and have been identified as suitable for pumped hydro by the Melbourne energy institute so there are no significant transmission upgrades required.

            Re time required to run the storage that is part of the study. a bigger pond costs more money but if the OC plant only needs to run for an hour then a similarly sized storage unit can also run for an hour. If you want 20 hours wind backup you size the dams appropriately. It is not a conceptually difficult problem.

            The problem with gas is volatility of prices. In the last few weeks South Australia has paid $100’s of millions for power above the long run cost because of market behaviour. An investment in storage or another interconnect would remove that opportunity for profit gouging. More OC gas plants will not do that unless the whole gas supply chain is torn down and rebuilt in a much more competitive structure. Given the strength of the incumbents that is a very unlikely outcome.

          • Analitik

            I’m sorry but I do not regard the Melbourne Energy Institute as a credible source of information on this subject. Having looked through the qualifications of the staff, I find that none of them have civil or electrical engineering qualifications to properly frame the scope of their SA pumped storage proposal.
            Academics often come up with proposals that look fine until you perform a detailed analysis of the engineering and resources required. Simple scaling as you used for increasing storage is not difficult conceptually, but has large implications for actual deployment.

            It is like saying they can simply scale batteries by adding more cells in parallel and series – if it was simple, there are compelling reasons for it to have been done already.

            As for exporting excess to the Eastern states during high wind periods, you are then passing on the problem that SA faces to them. Victoria is now scaling up its wind farm deployment and the weather systems are highly correlated. If the Latrobe Valley generation capacity is reduced as a result, then Victoria will not want (or may not even be able to) to import the excess. The same is likely to apply to NSW in the near future.

            I cannot see a solution that can be actually be implemented with our current technologies. If wind and solar are to continue to generate power in their current manner and are to displace thermal generators, significant breakthroughs will be needed in storage. By significant, I mean improvements by a hundredfold at the least – 20% etc ain’t gonna cut it.

          • Peter F

            To make wind and solar the dominant supply there needs to be five things.
            a) Firstly we need to get serious about energy efficiency. In Germany where manufacturing is almost 4 times as large as a share of GDP as that in Australia, energy use per unit of GDP is 40% less than here. Energy efficiency in buildings in particular, depresses peak demand even more than total demand

            b) Install some excess capacity. This is not unusual. Australia currently has 58GW peak capacity for 35 GW peak demand so similarly there will need to be excess wind and solar
            c) Despatchable power. This has many forms
            1.Hydro
            2.Biofuels and landfill gas
            3. Geothermal
            3. Wave and tidal power
            4. Gas
            5. Pumped hydro
            5. Batteries
            6. Load shifting, eg running water heaters and chillers when there is power available rather than at fixed times
            d) Demand response. Experience in Texas and Europe show that with correct price signals and a smart grid, demand response of 5-10% of peak demand can be managed quite successfully. It doesn’t really matter if your pool pump operating time is moved a few hours for example or that air conditioners and fridges are cycled off for 10-15 minutes in the hour for 2-3 hours.

            If we have a 15 year plan running at about the same operating and investment spend (around$100m/yr) that we are running now, we can build a new energy system that has halved the bill for fossil fuels and where the additional capital and operating costs are about 1/2 to 1/3rd of the savings. i.e in 15 years time energy costs in the economy will be 20-30% less than if we continue on the current path.

  • 10 Tips To Help Murdoch Reporters Write Great Energy Articles:

    http://www.solarquotes.com.au/blog/10-tips-help-murdoch-reporters-write-great-energy-articles/

  • Ursula Theinert

    Its all about the interconnecters to Vic & NSW and their inherent limitations. Its been an issue for a very long time! Its an AEMO planning problem not a renewable energy problem!

    • Brunel

      How about a connection between WA and SA.

  • Don McMillan

    Here are three engineering principles in designing a product or project;
    1 Do not over promise
    2 Make sure the goals of the product are achievable
    3 Beware of too many untested or new features.

    These are all inter-related. I have seen successful engineering products which have failed to reach what was promised be deemed a failure. Critics have a field day when the problem is what was promised rather than the product. Renewables promised to replace fossil fuels. The goal to replace fossil fuels from the start is a very big engineering challenge with very high chance of failure. A low risk approach would be to create a reliable energy source which would require working with the fossil
    industry. – That is take small engineering steps which is a low risk strategy.

    So What is the solution?

    The Windfarm provider forms an alliance or buys out a gas fired generator. Combining the two they can provide to the market a reliable source of electricity. Once you have ironed out all the engineering challenges merging wind and natural gas you can then start thinking about battery storage. Start with a small battery storage facility and once you have overcome the inevitable challenges start to
    increase its capacity and gradually lessen your dependence on the gas fired generator. Small steps = low risk = high chance of success.

    With the SA government asking to recommission a mothballed gas plant implies subsidizing natural gas which ultimately damages the renewable product.

    I hope the renewable industry rethinks their business plan or else the critics may damage the product which will step back development in the energy market for many years.

    • Ian

      Some good ideas, : Obviously gas peaking plants are not economical, their bids must reflect their costs, so a new paradigm is needed. The gas generators have clearly stated their unwillingness and or inability to deliver dispatchable electricity at an economical price, so other options need to be explored. The situation of high peak prices is unacceptable and gives the government a mandate for positive change.

      1. Open the peaking market to other gas generation players.

      2. Increase the interconnector with Victoria

      3. Open the peaking market to distributed generation and storage with time of use and time of feed in tariffs.

      4. Explore other forms of storage such as pumped storage, or solar thermal storage.

      Point 3 should interest to distributed solar advocates, why allow monopolies to dictate prices when there is a huge potential investment in distributed battery storage ?

      • Don McMillan

        Peaking plants are nearly always economic as their usually very few and used rarely. Just there to meet unusual levels of demand. They charge a lot but guarantee’s the market that supply is met. It is open the anyone to compete in. Solar and windfarms cannot compete as they cannot guarantee supply.
        Point 2 is actually bad for the renewables as it confirms to the critics that their product is unreliable and adds cost to the electricity.
        Point 3 You can do storage now but the technology is in its infancy. Peaking is not where to introduce the technology as the challenges [plus costs] are huge thus risk of failure high. My previous proposal using Wind-Gas combination is to compete with base load thus introducing small scale storage is safer regarding both cost and avoids bad publicity.
        Point 4. Pump storage cost is not viable – idea has been around for decades and never taken off. Thermal, the geology of Australia is not conducive to this technology. CSRIO and industry has done a lot of work in this but unfortunately the areas of viability do not match where people live.
        Australia is a gas continent and gas has been very cost effective in replacing coal power stations in the US. The US emissions reduction is impressive as it has been done without Government intervention and subsides.
        My belief is that our goal should focus on reducing emissions as fast as possible rather than replacing fossil fuels.

  • john

    I so remember from a few years ago how in a few days the price of power was so pumped up that generators made more in a day than for a month.
    This the same situation because we do not have a totally interconnected network it is easy to bid higher prices.
    However in this particular case the fact is there is a restriction on an interconnect or the delivery of power to the end user or distributor.
    So in this case one can set a price as high as one likes because there is no alternative.
    This has nothing to do with the use of alternative energy rather a fail in the implantation of a east cost inter-connector.
    However the delivery of this message is never going to happen because the Murdoch Press is I am afraid now a failed deliver of news, but a deliver of idiotically diatribes against any change from the old system of society.
    Am I dismayed from a organisation that was looked upon as the pinnacle of media delivery yes i am.

    • MaxG

      I am afraid to say that the fourth pillar of democracy: a free press, has disappeared a few decades ago.

    • iampeter

      But if solar/wind worked, SA wouldn’t need an interconnect or cheap NG prices.

      What has this fact got to do with the Murdoch media?

    • Garth Power

      There upgrading the link as I type, if you use this month figure there has been 3 separate occurrences of price spikes over $5,000/MWhr this months, 30 TI (Trading intervals (30 min)) Between $2,000$5,000, 16 TI between $1,000 and $2,000 283 TI between $200 and $2,000.

      In total that’s 332 out of 864 TI for the month over $200 MWhr or 20c kWhr. Companies that rely on energy prices are going to shut down and leave with those kind of prices for that extended period of time.

      On the good side you have 167 TI below $60/MWhr when the renewable are working, the only issues is they just aren’t reliable enough unless you have a juicy thermal sitting on the other side of the state boarder with ample of capacity in the interstate links.

      When the link is finished it should support a total of about 800 MW transfer in either direction when including Murraylink. As the conductors at 275kV will be maxed out the next option is more wires and that is costly compared to the upgrades under construction.

      If Hazlewood is shut down without replacing it with something that can handle base load or other assets plants that can balance load don’t expect Vic to keep you propped up when the wind isn’t blowing as winter peaks are much worth than summer as the gas grid is being hammered for heating purposes.

      You need to get Northern Power station back online as its independent fuel to anything else you have over their and its more environmentally friendly than Hazlewood.

      By the end the month you will be back to enjoying the power produced from Vic Coal brown power in time the wind isn’t blowing as your solar doesn’t do much when you get home from work and the sun isn’t shinning.

      There is capacity for about another 260 MW – 300 MW of wind in SA before there will be constraints to offload to other states during low demand and high wind.

      By the way, there are also local constraints. Some recent unplanned outages have caused the North West Power Station Tas to reduce output even though dams are spilling and wind was high. Don’t think for a min that constraints only exists on state boarder. Its very expensive to have complete redundancy and just is not cost feasible. 800 MW link to SA is a massive % considering the size of SA power market.

  • George Michaelson

    Is this just that the facts are open to multiple interpretations? It feels like the News ltd position is internally logically consistent, but from a premise which is at root, a matter of opinion. Because they don’t like wind/wave/PV they go to that starting point in the wheel-of-life of a given days generation, and blame it for the knock-on effects on price for the gas gen requirements of the day. If you come at the wheel from another angle, you can look at the choices the gas gen owners are making, to maximise profit, and get to a different conclusion.

    The interconnector is a large capital investment and News traditionally love to bash any non-road related capex which isn’t directly justified by some profit making enterprise. Since the connector is not of itself a giant cash cow, On principle they’d be opposed. Decent hard working ordinary mums and dads can’t invest through their funds managers in the interconnect to make a giant speculative windfall. Better to put the money into pokies and mines!

    But jokes aside, I suspect that the very nature of an interconnect is a problem for them, because, well, it looks like socialism. The Roxby Downs PV/Battery project, I suspect the finance gurus inside News would back in a flash: avoidance of transmission losses, and reduce exposure to peak power price at a mine? whats not to love.. So the ‘ideology’ component of this is pretty wafer thin: it depends whose interests are being served.

    I’m back in my ‘where is the regulator’ mode on this: Where was the regulator, when the decision by gas gen owners to crank up the volts was being made? They appear to be missing in action. Spot price models are pretty noisy. Wouldn’t it be better to drive them via regulation into more stable pricing modes, and operate steady-state?

    • Analitik

      Where was the regulator when wind turbines were added to the grid and allowed to produce power power whenever conditions allowed and still get paid the same rate without being affected by market pricing?

      And where was the regulator when wind turbines were added to the grid and allowed to NOT produce power power whenever conditions were not conducive?

      Same questions apply for solar.

      The problem is that the renewable generators bypass the “day ahead” market bids placed by the “normal” electricity sources so it doesn’t pay for all the based load generators to run because their output may not be needed or may need to be paid for it’s generation (since viable storage for the quantities we are talking about do not exist in Sth Aust).

      What ends up happening is that enough baseload generators bid in for around the AVERAGE of the wind farms’ output for the times of day and if the wind output is less than this, then peaking plants start coming on-line. Naturally, the peaking plants are not as efficient to run (mainly as consequence of their fast start and ramping ability but also because they are not continuously operated) so their bid price is higher. At the very high end are small peaking plants built for very occasional use so they have a very high bid price to cover the fact that they are (normally) rarely used.

      The A$14,000 MWh rate is the highest bid price allowed by the national authority so the government actually caps the price below what it could be for pure market rates

      You need to read how electricity markets actually work – the system was designed for competitive but profitable operations to meet varying demand without gaming the price (which is still possible if enough generators get together but they get investigated and fined). The renewable generators are distorting the market by their ability to barge in whenever they are producing and get paid fixed rates that bear no relation to market pricing, This leads to massive unplanned and sudden variations in the requirement for normal generation making the overall market much more volatile. To hedge against this, most generators have to increase their bid prices, which is what is part of the issue driving up the retail costs.

      The other is that the guaranteed prices paid to the renewable generators mean that when the market prices are very low which occurs when demand is low relative to supply. It is almost always when the renewable generators are generating lots of power that market prices drop (even into negative) but the wholesalers don’t get the benefit of the low market price since they are forced, by regulation, to buy all renewable generated power when available and it is at these times that there is plenty of it.

      So when the wind blows hard and the sun shines, the market price is low, crippling the economics of normal generators yet the wholesalers have to pay the renewable generators their guaranteed rate. Then when the wind isn’t blowing, normal baseload generation is short and peakers come on line and the wholesalers have to pay the current, high market rate. The retail customers then cop it as the wholesalers pass on the costs in their rates.

      Where was the regulator indeed!

      • George Michaelson

        The _goals_ were defined to include renewables. If the pricing model isn’t working for the old tech, then within constraints it should change but if the endgame of the change is to exclude the renewables its going too far, with respect to that goal.

        If you don’t believe in the goal, the goal is the problem. I believe in the goal. but I also acknowledge its distorting the model. So I’m hunting for the midpoint: What adjustment to the pricing model would permit cleaner gas to come onstream, and cap the peak price?

        You write as if your sole goal is to get low price power. If thats your goal, then burning sulphurous coal in the latrobe valley is good, and you presumably support more interconnects on that basis. If your goalset included renewables, for reasons of carbon abatement, then what would _you_ do, to fix this current situation? That could include do nothing: maybe the high spot-price and News ltds reaction is just noise, and this is the system working?

        I don’t entirely believe that, because what I read above suggested the worst (least efficient, least clean) gas sources come onstream because they have better margins, so the old power regime is banking its worst choice, to maximise profit. Thats not working to the goalset I want.

        • Analitik

          People do not work for nothing – that it my point.
          My goal is energy security that is sustainable from an economic, technical and environmental perspective. All 3 are required – none can be ignored.

          Yes, the pricing model was initially created prior to renewable generation. Then renewables were allowed to shove their output into the grid with no regard for anything than carbon abatement. What a great result that has been.

          So what are your proposals for a pricing system that can address these requirements?

          Don McMillan’s comment is the correct one but wind farms and solar would not be economic, even with all the RECs and PPAs if those generators had to meet contractual outputs via fast ramping gas or diesel generators (imagine if you had to guarantee the output of your solar PV system)

          Have a look here at the pricing event reports if you think the system is working for SA. July 2016 shows there is a problem. November and December 2015 are worse.
          http://www.aemo.com.au/Electricity/Resources/Reports-and-Documents/Pricing-Event-Reports

          • George Michaelson

            Again I suggest that you’re arguing to fail: You’re taking a reductionist point of view that because in the current economic conditions and pricing models its mutually antagonistic, the solution (as I read what you say, but I may be over-reading) is to exclude renewables.

            I am seeking a solution which retains renewables, and retains that part of a bid model which works in our favour to price electricity supply rationally.

            My suspicion is that its a highly regulated, cross subsidized model. It probably requires the state to run some baseload as a fill in, and sell profitable bids to fill peak, without Rupert bagging it as a fudge, to annoy voters and shareholders. Your arguments strongly suggest to me that this current situation is inherently unprofitable for the private sector, which is when its usual to suggest public interest demands drive behaviour, and its moved back to the public utility role (it probably always had) -The days of securing state rent revenue by selling off utility function as a guaranteed income stream may now be gone.

            Equally, and no doubt economically insane, Green movements could put their money where their mouth is: raise funds to buy dirty powergen and alienate it, or chose to buy power forms which are inherently price variant, unreliable, but meet the goal. Its a harsh world: maybe thats part of the mix.

          • Analitik

            Use of renewables in the current manner must result in much higher pricing – there is no way around it whether the system is state or private. Intermittent, sources like wind and solar either require massive (ie hugely expensive) storage support or fast ramping, costly to run, open gascycle turbines, maybe combined with “low carbon” CCGT generation.
            If this is the solution for carbon abatement, then let’s be upfront about it and not try to put on a veil on it.

            My “solution” for real carbon abatement would be nuclear but there is no acceptance for it on this site.

          • George Michaelson

            Good! we almost certainly agree on both these points. The social consequences of massive increases in consumer electricity prices would be truly awful, and regressive since the disposable income potential for low income people depenedant on power is low. So clearly, resolving this requires we socialize/subsidize the cost of power. And I also believe nuclear baseload, as a sustaining reliable energy source (in public hands, but thats my personal view) would improve the situation net.

            Misleading people about the “cost” of electricity is indeed stupid. But in that sense, the nexus between the spot price and the consumer price is weak: the price burden in SA and elsewhere is not rising because of these high spot prices: its rising because of the rent-seeking behaviour in the consumer supply market, sinking capital into the network because they are guaranteed a return on investment. If they were exposed to the risks of that market segment, a lot of that wouldnt happen.

            I do agree that overall, prices would rise in my world view, and that this drives the well off to self-manage, loadshed onto PV and consequently raise the burden on everyone else for transmission overheads: there is no way out of cost shifting from usage, to fixed-component costs. But thats why I pay taxes, and believe in a socialized cost model: instead of charging direct to consumers, we should socialize this in tax.

            Which is precisely how we funded this in the first place.

          • iampeter

            Where should the subsidies come from? And for how long do you think we can operate energy (a primary input into all business) at a loss via subsidies before we start looking like Venezuela?

            How about as a novel idea we get the government out of energy? This way the best product or combination thereof will win at the best possible reliability and price.

          • George Michaelson

            aaargh god save me from economists. if you dislike government enough to wish it out of power, presumably you wish it out of all enterprises. I think we’re oceans apart.

          • iampeter

            It’s not really a question of economics as much as it is ethics. No one has the right to a single cent of any one else money against their will, which is the premise on which the entire interventionist tax-spend, mixed economy we live in is based on. Those subsidies you so casually call for are paid for by money that does not belong to you. This is immoral and therefore can never work in practice, always leading to societal collapse if not rolled back. Again we are literally seeing it before our eyes in Venezuela right now.

            My view is that a proper functioning governments only role is to prevent the initiation of force. This means maintain the army, the courts and the police. The moment it gets involved in anything outside of this we get problems.

            We have always seen these problems in energy generation in Australia as the government has always been heavily involved.

            Historically we have been able to produce more than this kind of interventionism has been able to destroy and have continued to prosper despite the mixed economy but I wouldn’t count on our luck holding out forever.

            Ultimately it comes down to what you are trying to do here: is it free and prosperous life for humans on this earth? Or is it something else? If it’s the first – then you should support me in calling for a properly restricted government, including getting out of the energy sector.

          • George Michaelson

            right. so you reject all taxes basically, except the ones you agree with. you are a troll.

          • iampeter

            To be clear I reject all taxes, period. Government should fund itself like any other non-profit organization.

            I know it’s a pretty radical suggestion though but not trolling big guy.

          • Wayne

            The fed. government does not need to fund itself. It does not need taxes to spend. Taxes are there only to alter our spending habits through policy, such as the tax on cigarettes.
            Why would the Federal Bank need taxes to spend when it has the ability to create the currency we need to spend and pay taxes with. It makes no sense.
            http://bilbo.economicoutlook.net/blog/?p=9281
            https://newmatilda.com/2016/06/29/who-does-a-surplus-serve/

          • Peter F

            As usual you let ideology get in the way of the facts. Real energy costs have risen since the governments sold the power systems and governments have lost the considerable dividends they were making which far exceed the interest saving they made by paying off debt with the sale proceeds of the assets.

            With regard to nuclear you also need storage. The three biggest users of nuclear France,Sweden and formerly Japan all have hydro/pumped hydro equivalent to 30-60% of the capacity of their nuclear plants and France and Sweden still import power at peak times and export power off peak. In SA if it was an isolated grid the storage would have to allow for 3 months of refueling of one of the 2 generators or peak capacity of 3.5GW i.e the storage system would be 10 times the size of a wind and solar backup system.

            Also there is no nuclear energy system in the world where the government has not provided massive subsidies to build the plants, restricted competition, assumed the insurance risk etc.etc. If you want government out of energy there will be no nuclear

          • Garth Power

            If your going to install Nuclear base load, why would you install any renewable?

          • George Michaelson

            because I like mixed technology solutions.

          • Garth Power

            I meant more from a technological sense, if you build modern day commercially available Nuclear and you have wind that can say deliver a fluxing load, I would prefer to shut the wind off to keep the Nuclear running at a more constant level.

            I prefer my Nukes to not melt down, but hey you cant wish for everything.

          • George Michaelson

            Even in France there is a technology mix. You don’t have a single source. it ?75? percent? So presumably, a replacement nuke in this dystopia where I am king for the day, is supplying somewhere north of 20% and less than 100% of total demand, and runs as it needs to, below melting point. You need to blow out the tubes from time to time. Even places with three of the buggers run two and clean one. So like any large complex machine, it needs downtime. Don’t you want to have some thermal store, hot salt, windy power in there?

          • Garth Power

            SA is not France my friend and has strong interconnectors with many other countries and can strike base load deals. SA has barely enough load to keep 2 reactors ticking over then alone trying to balance with wind and other intermittent renewals.

            SA already has too many wind farm to have a nuclear power plant unless you want to put monies into R&D for a MSR as they have some really unique capacities.

            There not commercially available as it stands but there is a little work going into developing them (again).

          • Peter F

            because nuclear cannot economically follow demand

          • Concerned
          • Peter F

            You missed the word economically. The lowest cost new nuclear reactors in the world are running at around US$120 per MW.hr, that is at about 90% Capacity factor. For a whole lot of reasons it is extremely unlikely that the price from similar plants in SA could be brought below US$180/MW.hr These plants are 1.1-1.3GW. Smaller plants are available but more expensive per MW.hr. If there is a nuclear system in SA with a peak capacity of 3.5GW +1 power plant for reserve it will be capable of generating around 4.5-5GW peak. At 90% capacity factor, that is a total annual generation of 35-39TW.hrs. SA total annual demand is 12-13TW.hr so the plants will be operating at around 33% capacity factor. Given that about 85% of the cost of nuclear power is the fixed cost that means that a fully nuclear system in SA would have average (not peak) price of around US$500 per MW.hr. That is why no-one in the world is planning a 100% nuclear grid. Nuclear works best when it supplies minimum or baseload demand as it does in the US where it supplies 19% of demand. The problem for nuclear in SA is that minimum demand is less than the output of one modern nuclear reactor and you can’t have a single reactor system because they go offline every 18-36 months for 4-12 weeks (the more your want load following the shorter the refueling cycle) and you have to have replacement power.

          • Concerned

            I would check the the Korean and Chinese program first.South Australia is non starter /non entity. And https://decarbonisesa.files.wordpress.com/2015/07/zco-2015.pdf

          • Peter F

            I don’t disagree with nuclear in Japan, Korea etc. and I think it is actually a pity that plants in Germany and the US are closing ahead of schedule and that Japan is so slow in re-opening theirs. However the comments I made are in response to this article which is about SA. Generalising further, the economics of nuclear in SA as you say is a complete non starter. Furthermore it is also very difficult to justify anywhere in Australia until and if SMR’s can be shown to be economical

  • iampeter

    Reading through this you are basically saying that without access to cheaper fossil fuels the solar/wind generators in SA cannot produce reliable and cheap power. Yet the conclusions drawn by the article is that this is not an issue with solar/wind. And then you are calling for cheaper fossil fuels back into SA. Doesn’t this suggest then that you acknowledge that solar/wind isn’t cutting it and fossil fuels are needed?

    It’s almost like you want to have your cake and eat it too or am I just missing something really obvious?

    • Peter F

      There is not enough wind and solar and there never has been. Then some gas plants were withdrawn from the market, the coal plants were closed 12 months early before the upgraded interconnector could be built and then the gas price quadrupled while international prices fell. How is any of that the fault of wind and solar.
      If South Australia spent the $500m (the expected cost of a new interconnector) on a 35% subsidy for domestic and commercial battery storage, installed over the next 3-4 years (the time it would take a new interconnector up and running) and increased the FIT for solar to the true value (i.e. 10-12c per kW.hr) they would add the about 1GW to peak solar capacity and install about 2GW (4GW hrs) of storage. It would mean that it would become a net exporter of electricity across the existing interconnect but could take advantage of cheap wind, solar and hydro from the Eastern states when needed

      • iampeter

        Hi Peter

        All of this is the fault of the wind/solar industry as they along with their advocates have been working hard lobbying the government to cripple the fossil fuel industry. This was one of the strategies along with subsidies that has made it possible for any solar/wind companies to exists as their products would not compete from technical point of view (i.e. they cannot produce energy cheaper or more reliably than fossil fuels).

        This strategy is succeeding which has left the state of SA 100% reliant on alternatives. This is what you all wanted. Many publications wrote articles celebrating this great achievement.

        Now reality has caught up resulting in dropping supply of energy, skyrocketing prices and panicking politicians throwing other peoples money at gas power plants their own regulations have rendered unprofitable to re-open their doors for a little bit.

        This article, purporting to support wind/solar, acknowledges they have failed and denounces high fossil fuel prices as the real cause of spiking power. It’s completely contradictory and doesn’t make any sense at all. That’s what I was trying to clarify with my initial post: what is the author trying to say? Is solar/wind good and workable? If it is how does he explain the issues in SA where after so much money has been provided it’s obviously not working? NG too expensive? What has that got to do with solar/wind prices been too high? etc, etc.

        None of it makes any sense, but if I’ve missed something I’d love to know it.

        • Peter F

          As I said in another post SA currently has 3GW of gas capacity installed plus 200MW on Murray link. It did not run out of power capacity. The problem is that some of the gas plants have been mothballed and at the same time gas price in SA was 4 times the price it was a year ago and more than double the net price our gas was selling for in Japan. This is market manipulation by the FF players in SA.
          SA has five ways of ensuring such price spikes are minimised.
          a) encourage more energy efficiency. it uses 40% more energy per unit of GDP than other more industrialised economies. less demand means fewer supply constraints which minimises opportunities for price gouging
          b) encourage storage in such things as power to heat for domestic and process heating. Thermal or ice storage is usually about half to a quarter of the cost of batteries
          c) install limited battery or pumped hydro storage (i.e. about 10-20% of peak demand for 20 hours average load which will not only capture excess wind and solar but allow the remaining gas plants to run more efficiently and therefore lower their costs
          d) tweak the incentives to wind and solar so that west facing solar and low wind turbines are installed so that output is more closely matched to demand
          e) increase wind and solar by another 10-15% so that it becomes a net exporter of very low marginal cost wind and solar to the Eastern states

    • chadke

      You’re fine. They’re missing their scruples.

  • DogzOwn

    Pic here is from http://media.bze.org.au/ZCA2020_Stationary_Energy_Report_v1.pdf a whole year of data to validate renewable energy viable, insignificant gaps filled with biofuel sources. Of course, cheaper, cheaper import dirty power from VIC for now. Interconnector is more about export business clean power from SA to VIC.

  • Neville Bott

    Now the Guardian has a story on this, Reneweconomy is getting some links published in the comments 🙂

    https://www.theguardian.com/business/2016/jul/19/australia-surging-electricity-prices-spark-calls-for-national-inquiry-into-renewable-energy#comment-79343575

    • they took that link down pretty quickly!

      • Neville Bott

        Hi Giles,

        The link in my comment is still there search for “Perhaps he Guardian could learn something from here” in the comments (Just noticed that I left the “t” off “the”)

        The Guardian to their credit generally seem to accept links to other publications even their competitors such as Fairfax and news corpse in their comments sections.

        In this case I don’t think if it makes any difference but I thought it couldn’t hurt to at least try and lead some people to a better researched article.

  • Roland

    The market needs reform. The reform must facilitate innovation and a smooth transition to sustainable renewable energy. Gas prices are demonstrably the factor that is making the marginal cost of supplying peaking power uneconomic. The other arguments are false or misconstrued.

    Gas prices are clearly excessive when OUR GAS is delivered to foreign markets at a much lower cost than it is supplied in the domestic market despite the additional costs of conditioning, liquefaction and shipping. Back when the LNG boom started taking off we were told domestic gas prices would be pushed up as we were paying low gas prices that were below prices on international markets yet now we are facing gas prices that spike well above those markets. That is not right. Clearly there is anti-competitive profiteering going on as a result of misuse of market power.

    Those who stand in the way of a transition to sustainable renewable energy are engaging in economic treason and intergenerational theft. The sooner we transition the lower the cost and the greater the benefits.

    Fuel-free renewable energy is the innovation we need. It is good for the economy, good for the environment and sustainable.

    • iampeter

      I would argue that the fossil fuel industry which has lifted so much of mankind out of absolute poverty, created enormous wealth and led to the amazing standing of living we now enjoy is the definition of sustainable. It produces more than it consumes.

      On the flip side the alternative energy industry has consumed enormous amounts of subsidies in return for windmills and solar panels that will never be able to repay themselves. It is impoverishing countries that are heavily investing in it, leading to shortages in energy, skyrocketing prices and will sooner or later lead to the turning out of electric lights and a return to candles and open fires. Nothing about this is low-cost or ever will be. This is what I would define as UN-sustainable. Anyone who cares about the environment should be appalled at the shocking waste.

      Also no one is standing in the way of transition to anything. We are been forced at gun point to subsidize technology which doesn’t work (which is why it needs subsidy), that despite the complete crippling of its competition and a bottomless supply of other peoples money still can’t provide reliable energy at a cost that is even remotely competitive to fossil fuel companies.
      And to add insult to injury this situation still gets blamed on fossil fuel companies.

      NG prices are not the problem and can provide peaking power without bankrupting its customers when used with reliable fossil fuel. It is a struggle when you have to depend on things beyond anyone’s control such as the sun shinning or the wind blowing.

      Wind/solar are not fuel free, they are made out of materials that are as scarce as anything else. The cost of building, implementing and maintaining far exceeds any money these things can make selling energy making this technology the opposite of innovative.

      • subsidies for various energy sources over last 100 years (per year) renewables are a fraction of handouts to fossil fuels.

        • iampeter

          Hi Giles, other commenters have made this point as well but not only is it false it is physically impossible.

          In order for a government to subsidize it must first tax someones profits. This means that profitable businesses exist first which implies energy companies exist to power them. This all had to happen before any taxes could be raised to subsidize anyone.

          The order is:
          1. Profitable industry and energy companies set up shop and start making money
          2. Government taxes a percentage of the profits
          3. Government subsidizes alternative energy companies
          4. Alternative energy companies consume the subsidy and go back for more

          You cannot put the cart before the horse. Government cannot subsidies without taxing someone first.

          Any “subsidy” fossil fuel companies receive is their own money coming back to them after it has been through the trough. Or panic money thrown at them as is happening with pelican point right now to re-open at a loss just to get the spot price spike down.

          • Oh dear. Well, on that definition, renewable energy companies have never been subsidised because they haven’t made a profit to tax. The data comes from the US government, just so you know. And the IEA and the IMF have similar data. But they’re just a bunch of leftie ratbags aren’t they. what would they know about economics.

          • iampeter

            Not quite but close. What happens is that because no renewable energy companies can make profits they have to be subsidized. Subsidies come from profitable businesses such as fossil fuel companies.

            In short profitable fossil fuel businesses (and any other profitable business really) are taxed and some of these taxes are used to subsidize alternative energy companies.

            The argument I am making is more about ethics than economics. Forcing a profitable enterprise to subsidize an un-profitable one especially when it competes in the same market is completely immoral. As a result this will never work out in practice and we are seeing this in SA.

            If what you support is a sustainable energy future than you should support for profit (therefore sustainable) fossil fuel companies and oppose subsidized (therefore un-sustainable) alternative energy companies. This is the moral thing to do and as such will work in practice. As evidenced by the last 100 years where fossil fuels and the men who have harnessed them have aloud mankind to prosper like never before.

          • You’re arguing in favour of fossil fuels and ignoring their environmental and climate impacts, and you are giving us a lecture on business ethics!?!?! Oh, please.

          • iampeter

            But fossil fuels have greatly improved our standard of living. Something that improves our standard of living cannot be destroying our environment. In reality (and you know this just by going outside) our environment has never been better as a result of fossil fuels.

            On the flip side alternative energy companies are impoverishing us and reducing our standard of living. Something that reduces our standard of living may also damage our environment.

            I know this is a pretty radical thing to post here but you’ve got to admit I have a point.

          • No. It’s laughable.

          • Roland

            Absolute radical nonsense. While there have been benefits from fossil fuels, these historic benefits do not justify continuing their use when we know the devastating impacts of climate change. Up until now much of the impacts have been “not in my backyard” in urbanised developed countries but that is changing rapidly.

            Huge numbers of people have died globally due to deaths in the coal mining industry from diseases such as black lung and mine collapses. Many more have died or suffered reduced life quality and expectancy due to airborne particulate pollution. All human activity has an impact but the cumulative impact from fossil fuels is exponentially higher than from renewable technologies such as solar and wind.

          • iampeter

            Hi Roland, what you’re doing there with your statement is similar to what religious people do when they believe something existed before existence or that virgin birth and resurrection is possible – believing nonsense. What you need to do is apply reason to the situation. Let me show you what I mean.

            We know that fossil fuels have lifted mankind out of poverty and created the most prosperous society in history. This fact disproves any kind of negative climate change as you cannot have both prosperity and “devastating impacts of climate change” at the same time. It’s one or the other. If you examine this honestly you know that it’s prosperity that is happening NOT climate impacts.

            You say it’s not happening in “our back yards”, but where would it be happening? In non-industrialized and therefore from your perspective non-polluting countries? In terms of it changing rapidly, we only have disasters that are caused almost exclusively by government intervention. From water shortages and deadly wild fires to energy shortages – these are all the results of government – specifically environmentalist based – policy making. It’s not a joke, many have been killed and many have had their lively-hoods destroyed. The men responsible should be held to account. But NONE of these issues have been caused by fossil fuel companies.

            And finally you mention huge numbers dying from mining coal – that’s true. What is also true is that far more will die if we force fossil fuel companies out of business and are once again left in poverty and at the mercy of random acts of a brutal and uncaring natural world.

            Life is about cost-benefit analysis and pursuing that which improves the standard of living for man as opposed to reduces it.
            So which side are you on, the side of reason and prosperous life on this earth – or the other side?

          • Wayne

            You say “This fact disproves any kind of negative climate change as you cannot have both prosperity and “devastating impacts of climate change” at the same time. It’s one or the other”.
            How does one prove the other. There is no logic in that.
            No one is denying that the Industrial Revolution did not lift many out of desperate times but to argue that the Industrial Revolution did not also create massive problems, is naive. Ask the children under 10 working in dangerous factories or mines, if they thought they were better off. You have got the earliest case of “trickle down” ‘prosperity’ myth right there. Yes, some made vast amounts of money and it was good for many but not all and the smog in London was a killer as it was more recently in the Chinese industrial revolution in Beijing and elsewhere. They too are counting the cost and changing direction.
            Currently, there is great prosperity in the USA but there is also huge environmental problems. Acid rain. Air pollution. Devastating weather extremes, poisoned water, and in the most prosperous and money loving Florida coast and Miami, there is a massive problem with sea level rises, causing sea water flooding in those mansions and likely to get into the fresh water aquifer that supplies their fresh water.
            So prosperity most certainly does come with devastating impacts of warming, even to the most wealthy.
            http://www.newyorker.com/magazine/2015/12/21/the-siege-of-miami

          • iampeter

            Hi Wayne

            I’m saying you can only have prosperity OR “devastating impacts of climate change”. You can’t have both, it’s a contradiction.

            You agree that industrial civilization has lifted people out of desperate times but you then go on to say that it has also caused massive problems. Again it’s a contradiction. Use your reason and decide which one it is: did industrial civilization lift us out of desperate times OR cause massive problems? It can’t be both.

            Thing of it this way: everything in life is about cost benefit but using your brain you can make a clear determination if something is net benefit or net cost. Looking at the world around you and leveraging your knowledge of history do you think industrial civilization has been a net benefit or a net cost?

            Once you answer this question honestly you will see that it has been a net benefit, which invalidates all environmentalists positions which require you to somehow maintain at the same time that it has been a great cost and then proceed only with addressing the cost with no regards to the benefits. This can only lead to destruction.

          • chadke

            Absolutely devastating.

            The most comprehensive modelling of remote sensing data so far shows the area on Earth covered by plants in this time has increased by 18 million square kilometres — about 2.5 times the size of the Australian continent — largely due to the fertilising effect of carbon dioxide (CO2).

            Global crop yields have also registered spectacular growth as global temperatures have warmed. Global grain harvests have nearly tripled since 1961. As is the case in the U.S., nearly every important global crop has attained record productivity during the past five years, including the Big Three corn, rice, and wheat crops.

            Indeed, while the media claim global warming is threatening our morning coffee, farmers are preparing to harvest a record global coffee crop. While the media claim global warming is jeopardizing our beer bellies by harming barley production, U.S. farmers in 2009 netted their highest ever barley yield per acre. Claims that global warming is harming African corn production are the most ridiculous of all.

            During the past decade, African nations have registered record harvests in a variety of crops, including corn and rice. Moreover, the modestly warming climate is stimulating more frequent and abundant rainfall which, together with more atmospheric carbon dioxide, is greening the African continent

          • Wayne

            All arguments about the for and against fossil fuels and for and against renewables, have to take into account the massive danger to our world and life on it, that CO2 particularly, represents.
            One argument used here is that CO2 is a necessary gas to all life but especially “green” life. That is demonstrably false. If u fill a room with CO2 and try to live in there, you will obviously die. Like with anything, too much, is not necessarily a good thing. There has been some greening, however, plants will not survive with a continual high supply of CO2. Further, there is a critical link between CO2 concentrations and the addition of energy to the system, or the greenhouse effect. Hence, the name.
            In seeing the small positive of CO2 you completely ignore the problems of huge increases in energy from the Sun from the addition of CO2. The drying of some areas, wetter in others. The increased wildfires, the crops damaged by bees being lost, by one in 100 year floods or fires becoming more frequent. The damage to oceans and the Arctic, Greenland, Antarctic ice melting, that may cause catastrophic changes to ocean currents that will affect weather, winds and rainfalls.
            You completely ignore the catastrophic fires in California and the massive drought making dust-bowls of farms and some areas previously arable, now desert.
            Climate Change and Global Warming is a catastrophe and unless something is done soon, this is only the beginning of our problems.
            To put a balance on it, the previous ice age was the result of a drop of only 4C. Renewables are our only chance and we cant afford delays.

          • chadke

            Idiocy. “If u fill a room with CO2 and try to live in there, you will obviously die.” That’s your argument against CO2 being a necessary gas to all life, which it is.

            Increased crop yields is not a small positive. The greening of our planet due to CO2 soil sequestration is not a small positive.

            You completely lie about catastrophic fires in California being a recent event that had never occurred previously.

            You lie about the drought in California being the fault of anthropogenic global warming. California has a history of drought, including several over the last two thousand years that lasted well over a century. In fact ( a word you’re obviously haven’t acquainted yourself with ), California experienced a 240 year drought beginning from 950 AD. Fossil fuel industries did not contribute to that.

            You completely ignore the greening of the planet which has made some areas that were previously desert now arable.

            Only hysterical fanatics use the terms catastrophe.

          • chadke

            Only alarmists despise fossil fuels. I’m thankful for the improvements in technology, medicine, transportation, mortality and science cheap (pay attention now), reliable energy they have provided..

            No one’s ignoring their climate impacts. Once again I’m thankful for the continuing greening of the planet and the year on year record, global, grain crop yields which have been following that trend for decades.

          • Wayne

            That is not true. And calling people ‘alarmist’ does nothing to support your case.
            Plants don’t always respond to increased CO2 in the way you think. Apart from issues such as nitrogen availability, increased growth does not mean increased crop yields. Soy plants respond to increased CO2 by reduced production of hormones that act as natural insect repellents, and are prone to devastating attacks.
            Add to that the financial impact of wholesale changes to arability of land as rainfall patterns change significantly. It’s not cheap for to shift where you farm on a large scale. There has been a lot on this recently with wine grapes and having to change vines and/or move due to climate and warming.

          • chadke

            Simple question. Whilst CO2 has been rising, have global crop yields increased or decreased? I prefer data over unsubstantiated hysteria.

          • Wayne

            No. Your economics is flawed. You based that on the myth that a federal government requires tax to spend. That is incorrect and is based on the flawed model of a household or company having to “balance the books”, being the same as a government that has a central bank and a fiat currency.
            The Federal Reserve [bank] is the creator of our Aussie dollar. It can create the dollar essentially out of “thin air’ using simple computer key strokes to credit any account they chose. They can buy anything in that currency and are essentially able to do so without limits, in an economy as strong as ours. We are nothing like Zimbabwe or Greece or Argentina with the risk of hyperinflation problems. From reading your comments, I expect a reply about this and so refer you to Prof. Bill Mitchell’s blog where this is discussed in detail should you wish to explore this.
            http://bilbo.economicoutlook.net/blog/?p=33389
            Your argument about subsidies is false as tax is not required, as you claim. That is a very different argument however, as to whether we should be subsidising mining or fossil fuels etc.

        • iampeter

          Well just looking at that graph I can understand where you’re coming from. But understanding that in the real world production has to happen before consumption I understand that taxable NOT subsidized energy companies had to come first.

          This graph also likely conflates both subsidy and tax credits which makes it look like nuclear, oil and gas receive a lot more “subsidy” but they are really receiving their own money back.

          Renewables have only ever received subsidy from other profitable businesses as they cannot make any money, can’t pay for themselves and can’t subsidize anyone else like fossil fuel companies can. They’ve received less according to this graph because they’ve not been around as long but everything they have received has been a real subsidy – none of it is their own money coming back to them.

          So in summary this graph counts credits like subsidies for fossil companies and has a half a century more of credits to add together giving it that very misleading huge bar.

          • The graph is per year, not total. try again. And please explain why oil, gas and nuclear still need subsidies when they have been around for between 50 and 100 years. I can guarantee you that wind and solar won’t be needing subsidies in 10 years time.

          • iampeter

            That 4.86 for oil & gas is made up of tax-credits, rebates, etc. that are all been counted as “subsidy” but they are not and over a longer period of time. It’s misleading.

            The $0.37 for renewables is ALL subsidy as these companies never made any money to tax in the first place.

            So oil & gas have never been “subsidized” they just get some of their own money back after tax. This can’t be counted as a subsidy.

            Alternatives can only be subsidized. Think about it: if all else is equal the sun shinning and wind blowing are still beyond human control. This variability alone will never make solar/wind more economic than fossil fuels.

            Then when you factor in the constructions and maintenance costs of solar panels and windmills it becomes even less competitive.

            As for alternatives not needing subsidies in 10 years – but why do you think anyone invests in them? The above reasons that I’ve stated are as real as the sun coming up in the east. Everybody knows they can’t make money selling electricity with wind/solar at competitive prices. The only reason anyone gets involved in them is specifically to collect those subsidies.

            Here is an article quoting none other than Warren Buffet:
            http://www.usnews.com/opinion/blogs/nancy-pfotenhauer/2014/05/12/even-warren-buffet-admits-wind-energy-is-a-bad-investment

            Key quote: “For example, on wind energy, we get a tax credit if we build a lot of
            wind farms. That’s the only reason to build them. They don’t make sense
            without the tax credit.”

            In other words you’re assuming that wind/solar are business that are needing a helping hand with subsidies before they can stand on their own two feet. What I’m saying is they can never stand on their own two feet, everyone knows it, and is only involved specifically for the subsidy handout.

          • chadke

            That’s a delusional statement. Intermittent renewable sources like solar and wind have far lower capacity factors, as their output varies with the availability of the sun and wind on both a daily and seasonal basis. Solar has rarely surpasses 25% theoretical capacity.That’s not going to change in 10 years time.

        • chadke

          I noticed you decided not to show subsidies per kilowatt of power produced. Is that because wind and solar are several orders of magnitude more expensive?

      • Wayne

        Fossil fuels have lifted man out of one lesser lifestyle no doubt. We are one of the richest countries that has ever been and we enjoy an amazing lifestyle.
        Your point about poorer countries not able to share that lifestyle is not all together about whether they have access to coal. There is a huge push in India, for example, to connect citizens to small grids using renewables, as they do not require expensive infrastructure like poles and wires and also because of the health benefits of not using coal and fossil fuels like kerosene inside homes.
        You might like this to read more.
        http://thinkprogress.org/climate/2014/11/04/3588512/bnef-renewables-developing-countries/
        As for your claim that renewables never pay for themselves is not right. Or why would their be huge investment in renewable projects if an economic loss inevitable. Makes no sense. Included in the benefits would be less CO2 and of course the health benefits of no poisonous left overs and air pollution as well as huge insurance payouts and rising sea levels avoided perhaps.
        Renewable pay for the cost of manufacture and also the cost in CO2 generated in a very short time. In a matter of less than a year or two and of course, require no more fuels once made. The return on investment is something like 20 times.
        http://www.culturechange.org/wind.htm

        • iampeter

          Lack of access to cheap and reliable energy like fossil fuels in 3rd world countries is ABSOLUTELY the reason for their poverty. This is the basic input in an industrial civilization without which no prosperity is possible. Them engaging in renewable is what they are forced into through various efforts of environmentalist NGO’s. This is destroying these peoples lives and is a grave crime.

          If renewables could pay for themselves then they would not need the regulatory state to stay in business. People “invest” in renewables to make a quick buck off the cash that is pumped into them unearned by the state. This is immoral. The claims of ROI for alternative energy are beyond fantasy and almost always fail to take the true costs into account only looking at revenue. If any of these claims were even remotely true most fossil fuel businesses would have long since converted as they would be making a killing.

          Meantime the fossil fuel businesses are closing up shop due to the regulatory environment, as can be seen in SA. At the same time they are been accused of both been responsible for the energy shortage (which in a way they are since without fossil fuel you can’t produce affordable energy reliably) and of receiving subsidies on these pages. All without a hint of any irony.

          In the end you have to ask yourself what exactly the end game here is. If it’s human prosperity on this earth then you need agree that we need the government to disentangle itself from the private sector. This will ensure that the best product (i.e. the one that can produce the most energy, most reliably and therefore at the best price) will win in the marketplace.

          If the end game is NOT human prosperity than I invite you to ask yourself what on this earth could be more important and what the real game really is.

  • Tom Conley

    Gas reservation should be a no-brainer …