David Bidstrup on the summer power rip-off

The other day I submitted an article analysing 2018 YTD costs for wholesale electricity in the 5 states that make up the national electricity market. It did not fly but my interest was aroused again today when an article in the state of darkness daily rag talked about the “big battery” helping to “drive down costs”.

Using the data from the YTD analysis and adding December 2017 I have looked at the summer costs, (December 2017 + January 2018 + February 2018) for QLD, NSW, VIC, TAS and SA to see what the differences are. These are wholesale prices before the transmission people and the retailing parasites add their margins and presumably before the RET subsidies are distributed. Remember also, it is supposed to be a “national market”.

For each state I found the percentage of time that price/MWh was above $150, the actual cost of the electricity consumed in these periods and the percentage of the total summer cost that it represented. The editor cannot reproduce the table or the chart and it may have to await the return of Sinc to see the results most clearly. They can be summarised as follows.

Victoria and South Australia were outstanding in the amount of time when the price was more than $150 per MWh and the amount of the total bill for the summer period that was racked up on those high cost days. The amount of time in the high cost zone ranged from 0.4% for NSW, 0.7% for Qld, 2.1% for Tasmania, 2.4% for Victoria and 4.9% for SA. The highest cost for the period showed a huge range from $280/MWh in NSW through 2,500 in Qld, 4,200 in Tasmania, to 12,900 in Victoria and the gold medal at 14,16676.50 in SA.

Another way to report the difference between the states is to count the % of the total summertime costs that were incurred during those short periods when the price was above 150.MWh.

The folk in NSW have it easy. They had 4.97% of the time with prices above $150/MWh and the total percentage of the “summer bill” was just 1.47.

SA and VIC, the “renewables states” were not so fortunate. For the 2.43% of time in VIC the percentage of the “summer bill” was 32.96. In SA, “the state of darkness and rank stupidity” it was 45.39% of the total “summer bill” for 4.9% of the time.

A chart that cannot be reproduced here shows the gigantic spikes in SA and Victoria on Jan 18 and 19 when consumers were flogged with when prices up $14,000+ per MWh as the system was about to fall over. TAS managed to get free power when SA and VIC were paying through the nose.

As I said, this is supposed to be a “national market”. Clearly it is a very distorted one where consumers are treated differently in different states. When electricity was generated in large thermal power stations the cost did not vary from minute to minute, it was a constant. The only time when there was a price difference was overnight when reduced load encouraged generators to offer discounts to avoid wasting steam. In SA it was called the J Tariff and I expect other states had something similar. Traditional pumped hydro schemes also provided a market for off-peak power.

What we have today is simply madness. No matter how much the gormless pollies and the gullible “planet savers” want renewables to work they will not. As more useless stuff gets added and the reliable stuff gets thrown out the issues outlined above will get worse for us and better for the greedy. It is interesting that the 2 “renewable states” are the ones that get shafted the most.

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15 Responses to David Bidstrup on the summer power rip-off

  1. Singleton Engineer says:

    Absolutely correct.

    Add in the RET subsidies, as was mentioned, and the story becomes worse.

    I recommend reading of the recent work from Jesse Jenkins’ of USA. He presents well written, sane, discussion of the commercial need for a broad view of generation options and technologies, regardless of opinions about climate warming, etc.

    He certainly advocates low CO2 emissions, but even more strenuously points out that the “100% renewables” crowd are completely loony (that’s my word, not his – he is carefully non-aggressive).

    Here’s an example: https://www.cell.com/joule/fulltext/S2542-4351(18)30562-2

  2. David Bidstrup says:

    Thanks Rafe for your efforts to get this posted. If anyone is interested in seeing the charts email me on [email protected] and I will send you a PDF of the post.

  3. bemused says:

    What’s even greater madness is that Dan the Man is going for more solar. He seems to forget that we live in a state where the sun is known not to shine as benevolently as in other states.

  4. NuThink says:

    gold medal at 14,16676.50 in SA.

    How much is that?

  5. Herodotus says:

    It is weird to observe a formerly sensible arrangement being broken down by a mixture of climate alarmism, politicians being ignorant, and media in bed with the scammers of renewables and assorted lefties.

  6. BoyfromTottenham says:

    Successive federal governments have, over the past decade or so, added several layers of ‘regulation’ and market interference to Australia’s wholesale and retail electricity markets, with possibly more in the pipeline. No only have these interventions added to the retail cost of electricity for the majority of consumers, and simultaneously rendered most baseload generation unprofitable and uninvestable, but they have obfuscated the massive LRET subsidies for ‘renewables’ generators, paid for by unwitting retail consumers, which no politician (except perhaps for the ‘red terror’) wants to even mention.
    If anything is going to get a ‘Gilets Jaunes’ movement happening in Australia, it must be the LRET in my books.

  7. Nighthawk the Elder says:

    #2885180, posted on December 13, 2018 at 4:52 pm

    If anything is going to get a ‘Gilets Jaunes’ movement happening in Australia, it must be the LRET in my books.

    Sorry BfT, here in Victoriadanastan it will be more ‘Chemise Rouge’ than ‘Gilet Jaunes’.

  8. DaveR says:

    If Daniel Andrews was really running Victoria for the sake of Victorians, and not for the left collective, he would use existing state powers to shut down the two Vic-SA interconnects on days when Victorian demand was above a certain threshold. That would keep more power out of the hopelessly undersupplied SA raising prices sharply there, and leave more power in the eastern grid, lowering power prices there.

    SA should fully experience the real effects of what its past leaders have done, not the rest of Australia.

    Maybe the concept of a national grid is coming to an end?

  9. Bazinga says:

    Got anything for WA? Mark McGowan is doing a pretty good job in this space (not swallowing the Kool Ade).

  10. TFX says:

    I want to defend the original design of the National Electricity Market (NEM) not the current model with so many ad hoc add-ins that have destroyed the effectiveness of the original model.

    By connecting the previously basically insular state based systems, supply risks were reduced with consequent savings in generator capital costs and the different state-based networks would become more reliable. The model was originally based upon the US PJM (Pennsylvania, New Jersey, Maryland) multijurisdictional model. Ours was better and they came out here to look at how we were doing things. In the creation of the NEM, interconnectors between the different states were built. There are of course costs that have to be recouped for the additional capital costs and a decade ago rule of thumb was transmission interconnector costs were about $1,000,000 per kilometre. This was still cheaper than having to add additional generation capacity at the margin. Prices received in the NEM varied on a five-minute basis and an average of thirty minutes for contract settlement. All generators had to bid in at their price and be dispatched in rising price order. If they failed to provide there were penalties but the market worked in that they also had hedges such as with Snowy Hydro or gas peakers.

    Unfortunately the model now has intermittent generators who cannot guarantee supply but are dispatched when available ahead of firm bids from despatchable generators as there levelised cost of electricity is lower than from traditional despatchable generators such as coal, gas and Hydro.

    A simple change to the market rules in that all generators must be despatchable or have appropriate backups and hedges or face the appropriate financial penalties for bidding at an auction and not being able to carry through is all that is required to improve reliability.

    Unfortunately the wind and solar people will fight to the death over such a change.

    To see the market in operation in real time with the capacity of the interconnectors and the different prices inspect the real-time AEMO data dashboard.


  11. Karabar says:

    TFX is quite correct.
    If all generators were to be treated by the NEM equally, (all have to bid in and suffere penalties if they do not deliver) the problem of ruinables would go away.

  12. None says:

    I remember the time Ma’rm Ferguson got up in parliament and warned even Labor that they had the potential to f****** up the energy market with their stupid carbon tax bills but of course by that time it was way too late because the things were just about signed and Ferguson had been a while for months and months on the issue. Abbott was not successful in totally undoing that damage thanks to that fat slob Palmer and the cross benchers. Moreover each state has to take responsibility for their own fuckwittery including useless desal plants which now means our water bills are even higher because we can’t let the f****** environmentally unfriendly salt producing plants just rust so we’re down to drinking sewage mixed with seawater. And god help us when we have no electricity and therefore no water as well. I don’t think the fuckwits realise that yes we need electricity to even pump water through our pipelines beer from desal or otherwise. The current South Australian liberal government is just as fuckwitted as the Rann and whatever the other poon’s name was government. That’s right Wetherill who was never called to account even for his disgusting neglect of the child welfare portfolio when he was the child welfare minister resulting in even child welfare public Servants driving child abusers to their suppliers to pick up drugs and never mind the kids in their care who inevitably ended up dead. Weatherall deserved jail. Rann too should have been jailed after he signed a very dodgy contract to turn the entire Yorke Peninsula into a wind farm before running off to Italy with the latest woman he was bonking. God what foul people we have in our parliaments.

  13. Adelagado says:

    I have what I hope is a simple question for David or one of you other gurus.

    How much does a typical wind turbine cost and, at constant speed, how many houses could it power?

  14. Graeme No. 3 says:


    That’s not a simple question.
    The cost is usually put at (just less than) $A1,400 per MW. Thus a 2.5 MW turbine would cost about $3.5 million. That includes some cost of site construction.
    The problem is that the output is so variable that constant speed output is meaningless. In Australia the average output is about 30% of the nominal capacity, but that can be zero to a higher figure. They can even reach near full capacity if the wind is strong, but not too strong when they shut down, but that occurs less than 1% of the time.
    The How Many Houses is a nonsense figure used by Developers to make them look good. The only sure answer is zero houses when there is little wind. As a rough (very rough) guide a 2.5MW turbine will average 0.75 MW ouput over a year, which (reduced to 750kW) might supply the average consumption of 1,000 homes. But households tend to use power in peak periods and not much in the small hours of the morning when wind turbines are most active. Really they are useless but expensive.

  15. Kneel says:

    “If all generators were to be treated by the NEM equally, (all have to bid in and suffere penalties if they do not deliver) the problem of ruinables would go away.”

    Easy fix, IMO – just require all generators to also supply the ancillary services such as frequency support as part of the supply. If you can’t supply this directly, then you must pay someone else to do it. This would at least give the reliable generators some sort of income when they are “bumped” not because of price, but simply because the ruinables are “available”.

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