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Killing Queensland coal?

By Geoff Carmody - posted Monday, 13 November 2017


The two blades of the RET scissors

RET policies are dressed up only as a cost subsidy for renewable power. They are also a time, and therefore cost, penalty for base-load fossil fuel generation. RETs' emissions-cutting uses policy scissors. Scissors have two blades.

While governments stress the subsidy blade of the scissors, the fossil fuel penalty blade is powerful at cutting fossil fuel energy supply too. Policy ignoring this can lead to overshooting the RET. (Some think that's sneaky, but good.)

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Households and businesses pay the extra costs from the penalty blade, as well as the renewables subsidy blade.

RET overshooting means higher costs, less reliability, and less grid stability than (presumably?) is intended.

Consider this example.

Suppose the all-up long run marginal cost to supply coal-fired base-load electricity is $1,680 per mWh per day, or $70 per mWh on a 24/7 basis. Suppose, in a 2030 Palaszczuk world, renewable energy (including battery storage, etc., as necessary) on average supplies all power 12 hours every day. If, as now in Queensland, the generation is mainly solar power, the cost-minimising optimum 12 hours (including battery or other storage as required) will probably be all the daylight hours. In that case, a 50% renewables target for 24 hours becomes a 100% target during daylight.

(This is like wind in SA. With the wind blowing, SA is wind-powered and has excess power it exports to Victoria.)

Let's be very clear about the nature of RETs. It's critical for an understanding of their implications if achieved.

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AllRETs, the Palaszczuk caretaker government's 50% RET included, have been set regardless of weather (sun, wind or water) and demand peaks. Nights, cloudy days, the 'wet' season, summer and winter solstices, etc, have been ignored. The 2030 target must be achieved regardless of the weather; rain or shine, winter or summer. Costly multiplied generation (especially solar) and multiplied storage effectively have been promised by supporting governments.

For a 50% RET in Queensland, with battery or other storage as required, when the sun is shining (or even when it's cloudy), solar power plus batteries will get preference for all electricity dispatch. Multiplied solar generation plus battery storage costs a lot.

In this case, the daily cost recovery to ensure any coal-fired plant remains viable could be compressed into as little as 12 hours' dispatch from 24 hours' dispatch. What then?

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My apologies. In my previous opinion piece (Are renewables and batteries part of the power generation & storage solution?) on 9 November 2017, I promised a piece on 'poles and wires': the electricity transmission and distribution network. I hope to write that piece next time.



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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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