NSW is on cusp of energy crisis, yet no-one seems to care | RenewEconomy

NSW is on cusp of energy crisis, yet no-one seems to care

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NSW is dependent on imports, its power stations are going to close, there is next to no transmission capacity to build more power and not much policy. Yet no one in the mainstream media gives a rats.

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As we previously remarked, the mainstream media don’t give a rats about NSW electricity, despite the fact that it ought to be the first issue on voters minds at the State election in March.

NSW is dependent on imports, its own power stations are going to close, there is next to no transmission capacity within the State to build more power, and there is not much policy. Yet no one in the mainstream media gives a rats. Renew Economy is the only media site covering NSW electricity

I’d like to congratulate the Smart Energy Council for a first class line up of policy makers for NSW at the conference this week. This was a very useful day.

Don Harwin the Minister responsible in NSW gave a major speech at the Smart Energy Council and took questions. Did any mainstream media people, there to cover Turnbull’s latest irrelevant comments about the NEG, ask a question? Of course they didn’t.

Why was Turnbull irrelevant? Well, dear readers, he has no standing and his party won’t be introducing a NEG no matter what anyone says including say sitting members like Julie Bishop, although the reliability leg may get up. Pretty simple really. So I don’t give a rats what Turnbull says but I have to read about it endlessly.

Adam Searle, opposition spokesperson on energy and climate change also made a speech and took questions. Did any mainstream media ask a question? No, of course, they didn’t. Turnbull had left by then so the ALP’s thoughts on NSW electricity were of benefit only to those actually interested in whether the lights will stay on.

Amy Kean, NSW renewable energy advocate, provided some useful information.

Why electricity should be an important election issue with lots of policy announcements

That issue is, how likely are the lights to go out, or say Tomago smelter go broke due to a potline freeze? And what is your favourite pollie going to do about it? Or if, as is mostly the case, they are doing nothing, what are they saying they will do about it?

Let’s review why the next four years are so important to electricity in NSW.

The state of play, or the play in the State
  • NSW electricity supply in FY18
  • Figure 1 NSW electricity supply and demand. Source: NEM Review

    NSW coal accounts for 57TWh out of 70TWh or 81% of supply. The numbers for both supply and demand exclude about 1.8 TWh of rooftop solar. Imports were almost 8 per cent of supply and mostly from QLD.

    Next, there is the increasingly familiar NSW coal generator closure chart. I note the NSW Government’s version of the chart takes no account of Orign’s twice repeated statement in its Annual Report that the Eraring closure date is 2032. In this respect the NSW Govt. is paying no more attention than AEMO.

  • This is not speculation its what the company is committing to via its Management, as approved by the Board. It is a cause for concern when AEMO and the NSW Govt don’t seem to pay attention to what Origin Energy says.
  • Eraring is the largest generator in the NEM and 20% of NSW supply. Its closing in 14 years. Pay attention. Details matter.
  • It’s also fair to say that if you ask Greg Everett, CEO Sunset Energy he is unlikely to agree that Vales Point will close in 2028.
  • As the coal generators in NSW close, at this stage its likely that NSW will become more heavily dependent on interstate transmission. Put another way, at this point NSW is going to be partially dependent on the supply induced by the RET and by `Victoria and QLD’s 50% renewable energy target.
Figure 2 State share of generation and new investment in NEM. Source: NEM Review, ITK

NSW has 33% of existing generation but 23% of new investment in terms of energy. Liddell has about 8 TWh of output, for a net loss of say 7 TWh after allowing for the Bayswater 100 MW upgrade. So NSW is losing 7 TWh of coal generation but so far only has less than 5 TWh of new investment. So that means more imports.

The same thing is true of rooftop solar. And it’s no good pointing to a lack of transmission as an “excuse” for why NSW’s share of rooftop is so much lower than Qld and South Australia. Even adjusted for detached dwellings as compared to all dwellings NSW is barely doing better than Victoria despite having much more sunlight.

Rooftop solar penetration by State
Figure 3: Rooftop solar penetration by State. Source: APVI, ABS

In absolute terms NSW is second to QLD but, in our view, could be doing quite a bit more.

Transmission is a problem, but it’s the scoreboard not the story that counts

Seemingly prices go up when the interconnectors to Queensland or Victoria get constrained. This chart comes courtesy of Amy Kean’s conference presentation. Note the log scale and note that the chart is showing the difference between say QLD and NSW prices or Victorian and NSW prices. It’s the cost to NSW consumers of insufficient transmission capacity and insufficient local capacity.

Figure 4 Source: NSW Govt as presented at Smartenergy conference

NSW is heavily transmission constrained although we think that is far from the only issue. How constrained is the within (intra) State transmission? The following is a recreation of data provided by Amy Kean on behalf of NSW Govt.

Connection enquiries and transmission capacity NSW
Figure 5: Connection enquiries and transmission capacity NSW. Source: adapted from NSW Govt presentation

No-one would take the total of all those enquiries seriously, but the real point is there are three zones in NSW with no transmission capacity. Essential Energy, a NSW Govt owned distributor has no capacity for connecting  utility scale solar.

There are only 1800 MW of intra state transmission capacity available of that 1000 MW is in the South East project have to compete with Snowy as well as other projects.

And you can pretty much guarantee that area is going to be a mess for years while Snowy gets built and because the upgrading of the NSW Vic interconnect and the transmission constraints in North West Victoria are all going to interfere with each other and create a nice big mess.

So this is, in my view, a profoundly hopeless outcome. The fact that transmission was going to be an issue was widely recognized years ago. We’ve been writing about it for two years now and I’m sure others understood it well before that. As well we can point, again, to Texas and ERCOT as an example of how to get it done in good time.

But NSW has not done that. We may yet pull a dead rabbit out of the hat, but the clock is ticking and the risks increasing.

A final chart from Amy Kean, points to the time table problem. For new transmission:

More than six years from contingent transmission to delivered. Just not good enough

A two year RIT-T process (two years! Could there be a better definition of bureaucracy). And there won’t be anyone to do the tests because they’ll all be busy;

Then two years for planning development, environmental approvals, easments, engineering and design. (Of course this part could be run concurrently with the RIT if management actually did some managing)

Then two years for construction then

A period of testing.

So if the ESB did nothing else in its entire existence more than speed this process up it could have its cup of milo in the evening and sleep well.

So what did Don Harwin and Adam Searle say

Don Harwin – “NSW net zero by 2050, policy is to drive low emissions generation. Energy system is in transition, NSW Govt is running a “help people switch” program at every NSW service centre. Trial saved customers $500 per year on average. That’s not bad.

Also 18.5 GW in the planning system

Challenges remain. AEMO forecasts 63% of NSW generation to close by 2040”. (So this is recognition). “Acknowledged that the coal generation would be replaced by new renewables and this requires transmission. Strategy supports 4 projects in short term. Medium term supports 3 REZ that can supply about 1/3 of NSW demand. Market driven, and Govt backs private sector to drive the market.”

“$55 m for dispatchable renewables

$20 m for smart building batteries (schools and hospitals)

$50 m for smart homes and businesses (distributed power plant of 200 Mw)

$30 m community regional electricity program;

$15 solar for low income trial.

Pumped Hydro road map coming shortly.”

In Q&A I asked Mr Harwin if he thought he was doing enough and the answer was essentially that it was a big job and he was focusing on the most important part of it.

That is the transmission planning. In response to other questions he was recently scornful of renewable energy targets such as those of Victoria or Queensland because, in his view, they don’t have the transmission capacity to support their targets.

My view, for what it’s worth, is that what Mr Harwin is doing is necessary but is insufficient and should have been done 3 years ago. Given the delays and that the risk is that NSW power stations close earlier rather than later, more support and more urgency is required.

The size of the programs is ok for a trial but not for playing with the big boys. Kind of talking the talk but then crawling instead of walking the walk. The smart home program might be 10x as large ie $500 m and then it might actually achieve something. The NSW Govt has that kind of money if it wants to use it. And it would probably positively impact voters.

Federal ALP policy as sketched by Mark Butler for an Energy infrastructure fund could be copied by the NSW Govt and speed up the transmission transmission spend, by far the most fundamental building block in the Engiewende here.

Ok, ont o

Adam Searle

“Michael Daly, true believer in clean energy, Adam Searle now energy and climate change shadow Minister. No new policy but principles are:

Cutting electricity bills via re-regulation;

Securing supplies via productivity

Excess profits returned to the public.

Expectation that no new coal generators built in NSW.

NSW ALP supports Federal view of 50% renewable energy by 2030.

Net zero emissions by 2050 (same as Coalition).

Discussion of legislated renewable target using California as an example.

Reverse auction experience being looked at not just for wind and solar but also storage.

Contemplation of publicly owned renewable generator (a la QLD)

My comment: This was in part a very traditional ALP view. Start by bashing gentailers for exploiting the public. Big business is the enemy, private enterprise is the enemy. I can’t support business bashing as a principle of Govt.

That said the rest of the speech such as mandated renewable targets facilitated by reverse auctions are music to my ears, and in my view an entirely appropriate policy that if executed well could well lead to sufficient new supply prior to coal generation closing, and indeed would ensure it does.

I can kind of excuse the formal policy not being released due to the change of leadership but there’s been a lot of time to develop the policy and it isn’t long until the election.

Not enough policy to date

A short summary is that neither party at this stage is doing enough. NSW consumers deserve, indeed require, more policy. Policy that increases supply and increases transmission and facilitates demand management. Bashing big business and restricting their profits won’t help with that and neither will forcing down prices below their natural level.

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