An unsustainable future

Policy for reducing carbon dioxide emissions now appears to be double-barrelled with a target for renewable sources for electricity generation with government subsidies and a carbon tax in the form of an emissions trading scheme. Neither approach appears to be realistic, possible or even plausible.

The Federal Government has a target of 20 per cent renewable electricity by 2020. This requires about 6,000MW of additional deliverable power for a projected total energy demand of 260,000GWh in 2020.

It is difficult to imagine any carbon free technology readily deployable and able to provide this except for nuclear power and wind. Since the government will not consider nuclear power, wind power is the technology of choice.

Let us examine whether this is a possible solution.

The NEMMCO (National Electricity Market Management Company) Statement of Opportunity for 2007 projects requirements out to the year 2017-18. Taking these projections as a base and adding the extra years to 2020 gives a need for 11,000MW of new generation. The NEMMCO view is that the technology of choice will be gas turbine generators. Gas turbines have about one third of the carbon dioxide emissions of coal fired generators. This will be added to an existing 45,000MW of established coal, oil, gas and hydro power generation.

Gas turbines can meet base load demand and are most effective in following fast changing demand so how would wind power fit into these projections?

Wind power is intermittent. It is known to be intermittent across South Australia and Victoria where the performance has been measured. Wind power cannot be relied on to supply peak demand power but it has a potential for replacing base load power with some contribution for peak demand times.

The intermittency of wind means that to supply an average of 6,000MW of power requires installing 20,000MW of wind power taking the average output of wind farms to be 30 per cent of installed capacity.

For 2MW for a wind turbine, this is a building program of 10,000 wind turbine towers, that is two towers each day for 12 years. This would have to parallel the installation of 9,000MW of gas turbine generators. This is after allowing a 10 per cent reliability contribution for the 20.000MW of wind power. This program doubles the cost of supplying the extra energy from gas turbines alone. It is an increased expenditure of $34,000 million over 12 years! The present wind farm development has added a few hundred MW each year so the target does not look achievable either physically or financially.

How well would the electricity network cope with this change in energy source? First the electricity grid systems would need substantial enhancement to cope with highly variable and dispersed sources of energy. At a cost of $2 million per kilometre it could mean a further cost in the billions for new transmission lines.

Then there is the consideration of whether the system could cope with variations of energy from 0MW to 20,000MW as the wind varies. The answer is almost certainly “no” without heavy costs in keeping thermal generators in reserve or in standby mode. There is then the issue of whether the thermal generators are able to ramp up their output to compensate for falling wind energy. It can possibly be done with extraordinary co-ordinated management of coal, gas and hydro generators.

The best match for wind power is hydroelectricity with about 9,000MW of installed power but only some 3,500MW in the Snowy with the rest dispersed throughout the states. However, hydro is used in meeting peak energy demands so the management of limited water resources would present a challenge.

In summary, the proposal for renewable power is unachievable. It is unachievable in terms of installation, present transmission network capacity and present market operation.

In addition it is an economic folly where the use of natural gas would substantially reduce carbon dioxide emissions, provide energy when needed and save some $40 billion in expenditure.

So why not follow the example of the United Kingdom and convert some thermal power stations from coal to natural gas? This would be a short term fix. Long term this would be a misuse of a vital industrial feedstock.

None of this addresses the second of the Federal Governments schemes for reducing carbon emissions.

So we now have both a projected reduction in demand from thermal power stations as the available wind energy sources increase but also a carbon emissions tax. This can be described in one word as a shambles with wind power subsidies to continue at a state and federal government level. These schemes will presumably be merged at some time.

There have been a number of detailed analyses of the generators supplying power in the National Electricity Market i.e. South Australia, Tasmania, Victoria, New South Wales and Queensland (NEM). These show that Victoria has the cheapest marginal cost electricity and the best planned system of generators. A comparison with NSW is quite shocking. The load on the Latrobe Valley generators is 88 per cent of their installed capacity of 6,000MW while NSW has a load of 65 per cent for its three largest generators with total capacity of 7,300MW. If NSW generators operated at the Victorian level it would be the equivalent of a new 1,900MW generator! This would be a major reduction in the need to construct more power stations.

The imposition of a tax, if it were set at $25 per tonne of emitted CO2, would make the Victorian generators marginal cost base the same as that of the NSW generators. This is a reflection of the use of brown coal in Victoria. However, in each of these states there would be a tax of some $1.7 billion.

This tax would remove any cheap power advantage Victoria currently enjoys while making power more expensive for consumers and threatening the viability of coal burning power stations. It provides no incentive for the future development of a well managed and economically responsible power supply system.

These policies will be subject to the claims of special interest groups and “politically correct” technology.

It is no wonder that large tax concessions have been proposed for the coal burning power stations. As Mrs Thatcher has said: “TINA” (there is no alternative)!

Wind farm reliability: power curve for South Australian wind farms from July 1, 2006 to June 30, 2007. The capacity factor or average output is 33 per cent of total capacity of 307MW. The 90 per cent reliability figure is 7 per cent.

Wind intermittency: South Australian wind farm performance during a January 2009 heatwave. This is the sum of the output of six wind farms with a total capacity of 388MW. Total South Australian wind farm capacity is 740MW. There is little contribution from wind power during peak demand times, 7 per cent of installed capacity.

Generator marginal costs for the national market: marginal costs are largely fuel costs. Note the low cost Victorian generators and the spread of costs for South Australia.

Carbon tax and generator marginal costs for the national market: marginal cost advantages have largely disappeared. Note the spread of costs for South Australia.