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Fossils versus Renewables

The fossils who run the fossil fuel industry attack renewable energy because it terrifies them.

In July and August 2016 there was a concerted attack on South Australia's wind and solar power by the people who run the fossil fuel industry and those who are on their payrolls. These people don't care about the world that will be passed onto their grandchildren, your grandchildren and mine; they care only for their investments and their profits. (Predictably, those who loudly oppose any local wind farm repeated the lies.)

South Australia is leading Australia in the adoption of renewable energy having gone from near zero to over 40% in a dozen years. The experiences of South Australia will be useful for those who are adopting renewables elsewhere.

This page written 2016/08/11
Contact: email daveclarkecb@yahoo.com (David K. Clarke) – ©
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I'll say a bit about why the attack, then I'll say a bit about why the attack is nonsensical, finally I'll give the facts.

Why should the fossil fuel lobby be attacking the renewable energy industries?

 
Sundrop Farm, Port Augusta, South Australia
Sundrop Farm
Innovatively using solar power and sea water to grow tomatoes
  1. They have largely given up trying to convince everyone that climate isn't changing and the change isn't disastrous. The evidence is now irrefutable. Anyone with an IQ above 50 who has not been living in a cave for the last 20 years and is not in total denial should know the facts of the matter. (Why accept climate science?)

    In addition to climate change there's ocean acidification and the millions of people who die each year due to air pollution from the burning of carbon-based fuels. Coal is definitely not "good for humanity".

  2. South Australia has far more new renewable energy than any other Australian state; 37% wind energy and 4% solar. All of this built in the last twelve years. This is terrifying the fossil fuel industry bosses because SA is going further and they can see the rest of Australia going the same way.

  3. With only a very few years to go to 2020 when Australia must have 33 Twh of renewably generated electricity annually there is a resurgence in the building of wind farms, large-scale solar power stations are becoming run-of-the-mill and solar-thermal power stations with storage are being proposed around the country.

  4. The price of solar PV has fallen so low that it is now competing with wind, which is already cheaper than new coal-fired power stations and much cheaper than nuclear.

  5. Following the Paris climate change agreement late last year Carbon Tracker has demonstrated that there are two trillion (that's two million million) dollars worth of fossil fuel deposits which can never be burned. That means that the market value of fossil fuel companies will have to be down-graded by two trillion dollars! The super-wealthy who run the fossil fuel industry know that there's a crunch coming, but the longer they can put off that crunch the more chance they have to sell their investments while minimising their losses.
Of course fossil fuel owners and their lackeys are attacking the renewable energy industry. "Offence is the best means of defence."
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Why are the claims that wind and solar power are the main causes of electricity price volatility in SA nonsensical?

  1. The high wholesale spot power prices that triggered the attack were in a few weeks of July 2016. The last significant wind farm to come online in SA was Snowtown Stage 2 back in the middle of 2014. Since then only a half dozen more turbines have come on-stream (the first few of the Hornsdale Wind Farm). People who don't care about rational argument often confuse association with causality, but in this case the claimed cause came two years before the effect – isn't that a bit much for any reasonable person to swallow?

     
    State with the most high price events by year
    Year>$300>$1000
    2010NSWSA
    2011NSWNSW
    2012QldSA
    2013QldSA
    2014SAQld
    2015QldQld
  2. Dylan McConnell and Mike Sandiford, Melbourne Energy Institute, University of Melbourne; 2016/08/11; wrote a report titled 'Winds of Change: An analysis of recent changes in the South Australian electricity market'. In 55 pages the report went into great detail, but sufficient for this page is the gist of a table on page 20. The table showed the number of high wholesale electricity price events in the four mainland states on the Australian National Electricity Market from 2010 to the time of writing.

    Note that from 2010 to 2015 Queensland had the greatest number of high price events in five cases, SA in four cases, NSW in three cases. SA was by no means outstanding in the number of high price events.

     
    Wind power in South Australia
    Clements Gap
    One of the turbines of Clements Gap Wind Farm

  3. A quote from Richard Denniss of The Australia Institute:
    "The average annual wholesale price of electricity in South Australia has fallen by 40% since 2007-08. Scary isn't it. The same old bedwetters in the media and business community have been spooked by some big spikes in the spot price of electricity in South Australia. Cooler heads have highlighted that the vast majority of industrial and domestic customers are on long run contracts, that renewables sometimes push the electricity spot price below zero, and that there have been no blackouts. But facts are no fun."
    So, wholesale prices, apart from this anomaly of a few weeks, have fallen since 2007-08, in the same period when many or most of SA's wind farms were built.

  4. The high spot prices in the SA Wholesale electricity market have more to do with gas prices than with wind or solar. Richard Denniss again:
    "Spot wholesale prices of gas in the Adelaide market have risen from around $3.50 to $7.50 per gigajoule in the last 18 months as a direct result of government policy to link our formerly landlocked east coast gas pipeline to the seaborne gas market."
    Also see the statement by Minister Josh Frydenberg below.

  5. The biggest interstate electricity interconnector, which allows SA to import or export power to the eastern states was undergoing upgrading and that upgrading was held up by the wet and windy weather. This decreased the flexibility that is normally in the market.

  6. The closing of the Northern (coal-fired) Power Station at Port Augusta and limits on the interconnector reduced competition, making it easier for those who ran the gas-fired power stations to 'play the system', push up wholesale prices, and their profits.

  7. Even Josh Frydenberg, Liberal Federal Minister for Energy and Environment, and no friend of renewable energy, was honest enough to say of the period of volatility:
    "The main reason was the Heywood Interconnector was being upgraded and that supplies electricity from Victoria, coal-fired electricity, into South Australia. The other reason at play here for those – for the wild fluctuations was the increase in demand for electricity because there was a cold snap and that played there. Then spot prices for gas were very high."
    This was broadcast on 2016/07/27.


What is the real situation?

 
Wind turbines sharing a hill with sheep
Snowtown Wind Farm
Snowtown Wind Farm
 
Sunrise at a wind farm
Canunda Wind Farm
Canunda Wind Farm
As Federal Energy Minister Josh Frydenberg said (above), some of the reasons for the spot price volatility were:
  • the upgrading of the Heywood Interconnector;
  • increased demand for electricity because of a cold snap;
  • and very high spot prices for gas.

There was a very important additional factor: uncompetative action in the electricity supply industry. Well before the recent events, in a November 2012 report prepared for the Energy Users Association of Australia, the author Bruce Mountain said:

"The analysis in this document has concluded that concerns over the competitiveness of the wholesale electricity market in South Australia over the period from 2008 to 2011 seem to be well founded."
and
"The analysis in this paper suggests that spot market prices in these periods reflect the exercise of market power rather than scarce supply. The South Australian electricity system appears to have ample capacity even at the times of peak demand."
Bruce Mountain is Director of CME (Carbon+energy markets).

The uncompetative activity of some in the electricity generation and transmission industry increased the spot prices in South Australia.

Some points on increasing the amount of renewable energy in the system

South Australia has a high percentage of renewables and renewables are intermittent. The wind doesn't blow to order and the sun doesn't shine just when it suites us. That's the way of most forms of renewable energy, we don't dig or pump them out of the ground as we need them, we have to use them as they are available.

The world must transition away from fossil fuels to renewables. The transition is essential, it is urgent, but it will not necessarily be easy.

In the short term gas-fired generation can fill in the gaps left by renewables. There's no fundamental problem there, but the South Australian situation shows that some tweaking of the way the generation system operates is needed.

In the long term we must have energy storage. This means more use of batteries, pumped hydro-power, solar-thermal with storage, possibly things like using excess electricity to convert water into hydrogen and oxygen and storing that until it is needed.

None of this is as cheap and easy as burning gas or coal as they are needed; there will be increased costs. We have become addicted to cheap and dirty energy and that addiction is hugely damaging; we have to kick the habit. There will be some pain in the transition, but that is far better than the alternative.






Relevant links

Hugh Saddler, ANU, Honorary Associate Professor, Centre for Climate Economics and Policy; "The Conversation: South australias electricity price woes are more due to gas than wind" 2016/07/25;

Dylan McConnell, Research Fellow, and Professor Mike Sandiford, both of Melbourne Energy Institute, University of Melbourne; "Winds of change: An analysis of recent changes in the South Australian electricity market" 2016/08/11;

Dylan McConnell, Research Fellow, Melbourne Energy Institute, University of Melbourne; "Power of the wind – how renewables are lowering SA electricity bills" 2012/10/08;

The Australia Institute, Richard Denniss; Facts are no fun for anti-wind campaigners 2016/07/26; (pdf version)

Australian Federal Energy Minister Josh Frydenberg: ABC Lateline 2016/07/27;

Report prepared by Bruce Mountain, Director, CME, for the Energy Users Association of Australia. November 2012: pdf document.

The Guardian: "Electricity prices spikes caused by energy companies 'gaming' the system, report finds" 2016/08/11, by Michael Slezak. This piece discusses the report by McConnell and Sandiford mentioned above.



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