Matt Zema, inaugural head of the Australian Energy Market Operator (AEMO), attended a meeting a year ago of the Regulation Economics Energy Forum at which a number of prominent electricity industry executives were present. Proceedings at the meeting were private, but the need for confidentiality was removed with Matt’s sad death three months later. The following were among his remarks:
“The renewable developments and increased political interference are pushing the system towards a crisis. South Australia is most vulnerable with its potential for wind to supply 60% of demand and then to cut back rapidly. Each new windfarm constrains existing ones and brings demand for more transmission. The system is only manageable with robust interconnectors, but these operate effectively only because there is abundant coal-based generation in Victoria…
… wind, being subsidised and having low marginal costs, depresses the spot price and once a major coal plant has a severe problem it will be closed…
… wind does not provide the system security. But the politicians will not allow the appropriate price changes to permit profitable supply developments from other sources. And the original intent of having the generator or other beneficiary pay for transmission and services over and above energy itself has now been lost so there are no market signals, just a series of patch-ups that obscure the instability and shift the problem to include Victoria. In the end the system must collapse…”
A month later South Australia’s coal-fuelled Northern Power Station was disconnected from the network because it was unable to operate profitably against subsidised intermittent renewable energy that has priority over other supplies.
The patch-ups continue with inter-temporal power shifting (a process that reduces the gross amount available) like the impossibly uncommercial Snowy “Nation Building” pump storage proposal and the Elon Musk battery scheme. The latest saviour, a new solar-battery combination, Lyon Solar in the Riverland, promises 300 Megawatts of capacity, equivalent to 80 megawatts of coal fuelled electricity, and comes at a cost of one billion dollars. It essentially provides electricity worth $50 per megawatt hour for $214 per megawatt hour.
That’s progress! Read more at Quadrant