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Does Australian renewable energy save the earth – or just cost it?

By Geoff Carmody - posted Tuesday, 22 August 2017


Some Australian states and territories have announced ambitious targets for reliance on renewable energy rather than fossil fuel sources. The current ACT government has announced the Territory will become 100% reliant on renewable energy by 2020.

This requires inter-state shuffling of east coast energy sources. South Australia uses cheap brown coal back-up via the Heywood interconnector from Victoria when the wind doesn't blow. It exports excess wind power to Victoria when it does. The ACT's target assumes renewable energy will be imported from other states.

These are parochial dreams. If intended to deal with a global warming problem, they should be Australia-wide. Even then, we are 1.4% of global emissions and falling. Current inter-state fiddling of east coast supply is a zero-sum game: 'green-wash' window-dressing. The bigger plan, supposedly, is that other states will follow suit.

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OK, let's continue dreaming. Assume the ACT's 100% renewables target applies nationally. No fossil fuels need apply. Assume first that the target is met by 100% reliance on solar panels plus energy storage. Let's concentrate first on base-load power, defined as the constant minimum needed 24/7. (We can modify all this later.)

Some power supply basics

Power supply can be measured in power (kilowatts - kW), multiplied by hours supplied (kWh). Suppose our base-load requirement is 100kW, every hour, 24/7.

There's a difference between rated generation capacity and power dispatched. The first measures maximum generation possible, the second, what is delivered.

There's also a difference between generators that can supply power continuously and those that can only do so intermittently. Fossil-fuel base-load generators are examples of the former. Solar (including solar thermal), wind and hydro (including 'pumped hydro') are examples of the latter (cycles range from daily to much longer).

This difference is critical. Fossil-fuel base-load plant can generate the base-load required all the time if it has a capacity rating equal to that requirement (in our example 100kW). Intermittent renewable base-load plant can only do so if its generation/storage capacity is some multiple of the (100kW x 24) daily requirement.

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A very simplified solar power example

In practice, this stuff is much more complex than what I'm about to describe. But I'm just trying to illustrate the capacity/cost multiple problem in the ACT 'nirvana' world of 100% renewables. Suppose we assume no cloudy days, no fogs, and the same light intensity every day of the year. This is a 'best case' solar power generation scenario. Let's consider an 'equinox' day (where days and nights are each 12 hours). How will solar panels plus storage fare as a base-load power supplier?

The diagram below approximates the solar panel generation pattern. In our example, 'maximum PV power generation' is 100kW.

What does this diagram tell us? Remember, this is in a world where no fossil-fuel back-up power is available.

Let's call the area of the entire 24-hour rectangle our daily base-load requirement (24 hours times 100kW). The area under the orange bell curve is the actual solar panel electricity generated over a day. Obviously, this is much less than the required base-load dispatch (24 hours x 100kW).

Roughly, 12 hours of the day have no sun at all. For daylight hours, 6 hours on average have maximum sun. The remaining 6 hours have nothing on average.

Therefore, we need four times the effective solar panel generating capacity of a continuous fossil-fuel plant. Of its output, on average one-quarter is used as generated. Three-quarters must be stored for use when the sun is not shining (two-thirds of that) or when the sun is not shining strongly enough (the remaining third).

Compared with an old-style fossil-fuel generation capacity benchmark, we need seven times that capacity: four times as solar panel generation, and three times as storage of some sort. (This ignores all sorts of solar panel and storage efficiency losses.)

With 100% reliance on solar panels plus storage, per 100kWh dispatched, would such a power system be one-seventh,or less, of the cost of fossil-fuel base-load capacity? Don't think so right now. Yet this is what is required to make 100% solar plus storage cost-competitive with fossil fuels as a base-load energy source.

But wait: it's worse

This model is based on an equinox daily sun cycle. But using solar for base-load supply would require enough generation/storage capacity to cope with the least favourable sunlight days each year. These will vary by geographic latitude, but in all cases the winter solstice will be the target.

In the ACT at the winter solstice the day lasts about 9 hours and 47 minutes. The night is therefore about 14 hours and 13 minutes.

In this case, on our simplifying assumptions about clouds, fog, and light intensity, maximum solar generation capacity would average a bit under 5 hours, with a bit over 19 hours requiring storage. We need nearly five times the generation capacity of fossil-fuelled plant, plus nearlyfour times the storage capacity equivalent.

With 100% reliance on solar panels plus storage, per 100kWh dispatched, would such a power system be one-ninth,or less, of the cost of fossil-fuel base-load capacity? Don't think so right now. Yet this is what is required to make solar renewables cost-competitive with fossil fuels as a base-load energy source.

The further south we go, the worse this winter solstice dilemma becomes. The further north to the equator, the more the equinox scenario applies.

Of course, if we relax the assumptions about cloudy and foggy days and light intensity, the capacity multiple and cost dilemma for solar gets worse in all cases.

What about non-base-load power?

The daily power demand cycle adds peak period demands to base-load demand. These include early morning demand and evening peak demand, plus different summer and winter demands (cooling and heating demand, respectively). In all cases, more generation/storage capacity will be needed to deal with demand peaks.

If we use renewables to meet these peaks, the generation/storage capacity multiples relative to fossil-fuel peaking plant will depend on how much these peaks coincide with solar power generation. We also need to determine these capacity multiples to cover the weakest solar power generation period (the winter solstice).

In winter, the intra-day demand peaks will tend to occur when the sun is not shining or is only shining very weakly.

So daily non-base-load solar power generation will increase the generation/storage capacity multiples needed, relative to fossil-fuel capacity (eg, gas peakers).

What about wind, hydro and thermal solar power?

Wind, hydro and thermal solar (the new rage for SA?) renewables are also intermittent, but with different (usually longer) cycles than the daily solar cycle.

In general, the longer the non-power generation period in their cycles (no wind, no stored water, no sun/molten salt) the larger the generation/storage components required for reliable renewable energy. This generation/storage capacity multiple can be very large where generation power is not available for extended periods. With an interconnected grid, spatial variations in renewable generation can reduce required capacity multiples, but usually with increased transmission losses.

What about the other new (Commonwealth) rage, 'pumped hydro' ('Snowy 2.0')?

This idea already operates, as anybody watching, say, the Guthega Pondage over a summer day will know. It might make economic sense (given the capital investment) if arbitrage is possible between cheap base-load power in the small hours of the morning to pump water uphill, to be released (say) during peak power demand in the afternoon/evening of the following day or later on.

It works now because of the fossil-fuelled base-load/peaking supply system in Australia's east coast grid. Electricity prices are high during peak demand and low during the small hours of the night/morning. We can choose when to dispatch high cost peaking supplies and when to use off-peak to recharge the upper dams.

But what happens in our ACT 'nirvana' world of 100% reliance on intermittent renewables?

I assume dispatching power as it's generated is cheaper than dispatching power that has gone through the full renewable energy generation/storage/draw-down/dispatch process. That means 'pumped hydro' systems would be pumping water uphill when the sun is shining strongly or the wind is blowing strongly (so other renewables are available at lowest cost to power the pumps). Such systems would then be competing to use other renewable energy sources when they are in their own generation/storage phases, conflicting with their generation/storage objectives, in our hypothetical 100% renewables world.

Does 100% reliance on intermittent renewables reduce our ability to choose how we match peak supply with peak demand? Do the sun cycle and the weather determine this instead? Does 'pumped hydro's' cost arbitrage rationale shift it from being a peaking power supply complement (as now) towards a more base-load power demand competitor? If so, does that further magnify the generation/storage multiple inherent in 100% reliance on intermittent renewables?

The nuclear option?

Using renewables to deliver base-load power (and even peaking power) will be expensive because of generation/storage requirements to deal with intermittency. Yet Australia is well-endowed with the resources needed for a nuclear power generation industry. It's ideal for base-load energy supply for a start (as in France).

We have no compunction about exporting some of our resources for this purpose to countries that have not signed the nuclear Non-Proliferation Treaty. What ideological, cultural or other cringe prevents us using our resources for our own peaceful, reliable, low-emissions base-load nuclear power generation? To be sure, this will take time, because so far we've chosen not to have a nuclear power industry. If policy is reversed, we might need to import 'nuclear batteries' for a while. (So be it. SA is importing diesel generators to cover summer blackout risks.)

Resolving the power 'trilemma'

The Government says we face an energy policy 'trilemma'. Policy needs to deliver (i) low emissions, (ii) reliable energy, (iii) low-cost energy.

That's three (conflicting) objectives. Do we really only have one instrument – renewable energy – to deliver them? Is that choice immutable? (SA is using brown coal plus diesel as back-up power.) Renewables advocates should consider the arithmetic implicit in the physics: renewables as our only power supply are very expensive.

Nuclear power might get us close to two objectives (low emissions plus reliable energy). Cost probably will still be an issue (but less than for renewables?). Coal could deliver one objective (reliable energy) or maybe two (lower cost, via stop-gap refurbishment of existing plant?). Low emissions plus cheap energy seems too hard now.

If you sweep nuclear energy or coal off the policy table in favour of renewables, achieving these three conflicting objectives with one instrument is numerical nonsense. A blend of energy sources seems the only way to get a compromise outcome in terms of the three objectives, at least pending some new technological breakthrough. As now, putting all one's eggs in the renewables basket scores renewables = 1, plus achievement of any of the three energy policy objectives = 0. Or worse.

We should control what we can control locally (reliability and cost), and persuade others jointly to control what we jointly affect globally (emissions).

We should not foist any Australian emissions reduction targets solely on electricity, a crucial industrial and household input.

Such targets are globally ineffective, at best, anyway.

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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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