Watching California’s horrific wildfires spread into many other states in the US, it was tough not to be reminded of Australia’s Black Summer. Watching the ensuing misinformation campaign, and the political stoush playing out right now, one important thing immediately came to mind. As I previously wrote at RenewEconomy, Australia’s government responded to the climate-intensified Black Summer bushfire crisis by moving backwards.
That backwards slide has continued throughout this year, primarily through Energy and Emissions Reduction Minister Angus Taylor’s “Gas fired recovery” efforts. The crux of this project is a massive expansion of Australia’s fossil gas extraction, transport and burning within Australia, sure to result in an extremely significant increase in Australia’s domestic and exported emission footprint, both of which have grown primarily due to gas over the past years.
Let’s be blunt.
In any other universe, recovering from one public health crisis by worsening another would spark immediate backlash. An “asbestos led recovery” would be career-ending; as would a “tobacco led recovery” or a “AK-47 led recovery”. But fossil fuels have locked their harm so deeply into our lives that we have become desensitised to this incredible, radical significance of proposing to hurt humans as a pathway to helping them. What is happening here is simultaneously deadly and ludicrous.
The latest escalation in Taylor’s fossil-fuelled efforts is a web of interlinked announcements, revealed today in NSW. Most of it is aligned closely with the demands of the government’s gas-led recovery taskforce, led by a range of fossil fuel players including gas mining executives, gas customers and pipeline builders. The sheer weirdness of this push is wide-ranging, but it’s neatly summarised within a single element of this package of announcements: the government’s very problematic relationship with the nation’s electricity grids.
The secret modelling that makes no sense
The shut downs of coal-fired power stations are flashpoints for tensions in Australia’s grid planning. The big coal-fired power station that’s next in line for retirement after Victoria’s Hazelwood in 2017, is NSW’s Liddell, owned by AGL.
The first instinct of the government was to simply hold back the tide and try to force back the retirement of Liddell, as I wrote about here. That proposal was analysed by the University of Technology Sydney’s Institute of Sustainable Futures back in 2017, who found that the cheapest way to meet the reliability standard was also the lowest-emission way: replace the shut down coal with a mixture of renewables, demand response and storage capacity. AGL’s option, which included a gas-fired element, was more expensive. The government’s desires, to extend the life of the plant, was the most expensive.
If that analysis wasn’t enough, Australia’s grid operator, AEMO, made a point of explicitly stating that AGL’s plans were more than enough to fill the gap left by Liddell’s closure on the grid.
The most recent release from Angus Taylor and Scott Morrison switches from ambitious efforts to put coal on life support to a surprisingly petulant and very much unprecedented tactic of threatening to build old, harmful technologies if the private sector refuses to build new ones.
It’s worth pausing to reflect on how genuinely silly this situation is. Imagine the communications minister demanding that telecommunications companies build 5G masts, and if they don’t, the government will start building landlines and telegraph poles.
The threat is roughly this: if the private sector doesn’t build a functional replacement for Liddell, the government will burst into the room and plonk a one gigawatt gas-fired power station as punishment for the laziness of corporate Australia. The stern, school-teacher tone links back to the narratives of ‘reliable’ and ‘affordable’ power, both buzzwords that lost any meaning many years ago.
“The Government is setting a target for the electricity sector to deliver 1,000 megawatts of new dispatchable energy to replace the Liddell power station before it closes down in 2023. To protect families and businesses against the risk of price rises, the Government will step up and back a new gas power plant in the Hunter Valley if the sector doesn’t replace Liddell’s capacity”, wrote the government, in a press release. Significantly, this call is based on an extremely suspect piece of unreleased modelling, mentioned also in the release:
“The Liddell Taskforce found closing the plant without adequate dispatchable replacement capacity risks prices rising by around 30 per cent over two years, or $20 per megawatt hour to $80 in 2024 and up to $105 per MWH by 2030”
I’ve searched relatively rigorously, and it seems like the taskforce’s modelling hasn’t been released anywhere. The only mention of the taskforce on the website is an empty page with a few paragraphs warning of catastrophe if Liddell shuts down. In February, a draft report was “leaked”, reportedly suggesting a high price tag for keeping the plant open. Intuitively, the magnitude of those prices increases seems weirdly high, considering the fact that replacement with renewables ought to drive down power prices. What is meant by “dispatchable”? Do they mean gas, batteries, hydro, demand response? It’s a mystery.
Most significantly, this secret modelling doesn’t seem aligned with the grid operator’s latest forecasts of grid reliability.
Renewbles help reliability and decaying thermal power stations hinder it
Of course, nobody is proposing closing the plant without ensuring there sufficient capacity in place to meet demand. But as energy analyst Simon Homles a Court pointed out on Twitter, AEMO’s latest grid planning report, the 2020 ESOO, found that even the new strangely excessive and controversial ‘Interim Reliability Standard‘ will be met without any additional investment until 2024:
“New South Wales’ reliability outlook after the Liddell Power Station retires has improved since the 2019 ESOO, as a result of the committed augmentation of the Queensland to New South Wales Interconnector (QNI) in 2022-23 and the development of local new renewable generation (900 MW)”
Even without new investment, the core reliability standard is not exceeded for another decade, according to AEMO. The main reason the outlook improved? Significantly more renewable energy. New South Wales in particular has a significant pipeline of new renewable energy coming online prior to 2021:
The confusion that Taylor and Morrison base their remarks on harks back to an age-old gripe. These wind farms and solar farms can’t provide baseload, right? Don’t you need something that respond to commands and turns up and down when needed? Well, not really – large volume of variable renewables help meet demand most of the time, alongside existing capacity and new interconnection. And AEMO notes that “The recent announcement by New South Wales government to provide capital projects funding to 170 MW of dispatchable capacity under its Emerging Energy Program will help reduce expected USE in this time period”.
The main reason ‘unserved energy’ (blackouts) are expected to increase, over the coming decade? “From 2023-24 onwards, the forecast level of [unserved energy] increases due to the impact of increasing forced outage rates associated with plant aging and approaching retirement”. In the short term, it is vast new quantities of renewable energy that help reduce blackouts. In the longer term, it is ailing thermal power stations that become the real threats to the grid, and scrambling last minute to build replacements is an awful, ridiculous pathway to choose. But the government is choosing it.
To add insult to injury, one of the biggest additions of capacity in NSW – among the many helping to replace Liddell and protect reliability – is the Collector Wind farm, a project that Angus Taylor has helped oppose for more many years. “Projects like this seem set to continue unabated until a national review – which the new federal government has committed to in 2014 – can reveal the true economics behind the industry,” said Taylor in 2013. “The RET review will look into the massive subsidies for wind farms, which are forcing up electricity prices and propping up an economically unviable industry.”
Of course, Taylor’s personal failure to stop both that project and the wind industry as a whole was later reframed as the fruits of his efforts to help the industry, as he now regularly brags about how well renewables are doing. It’s perfectly circular, isn’t it? Continued failure provides the future feedstock for announcements.
The government’s own failures to provide investment certainty and stable climate policy play a key role in stifling the ability for the private sector to build new capacity. Even this announcement – introducing an ‘investment by threat’ approach to grid planning – creates another weird, new and ludicrous stumbling block, when clear-headed planning that accepts and admits the transition underway could be present instead.
We know an influx of renewables in addition to short-term interconnector upgrades helps significantly in the short term, but things are going to bite as coal and gas power stations begin to shut down far quicker than we anticipate. That’s going to require clear-headed planning, rather than a government that thinks it can scold, threaten and fail its way into managing the most significant transition Australia has ever faced.
NSW does not need a new gas-fired power station – not on the grounds of cost, or reliability. On climate grounds, it is an act of deadly insanity to build something that we know is harmful to human life. But the gas-fired recovery is set to continue, locking in fossil fuel infrastructure for decades to come. It is an outrage, and knowing the weird and weak justifications for these policies, it is tragic, too.