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Requiem for a failed electricity system

By Alan Moran - posted Thursday, 13 October 2016

The trouble with wind

South Australia has on average over 40 per cent of its internally generated electricity derived from wind. This is one of the highest levels in the world for a load with a relatively small interconnection with other sources (the two interconnectors with Victoria have a capacity to supply about 20 per cent of the state's needs).

Wind/solar generation has two features that are of concern.

The first is that it is intrinsically high cost. As a mature technology, it will remain three times the cost of coal powered generation in Australia. It can only compete because it is subsidised by a regulatory charge on the consumer (thereby also not facing the same scrutiny if its support was through the Budget). It receives the subsidy whenever it runs, hence wind has an incentive to generate whenever it can, forcing established fossil fuel plant to be placed offline.


Wind's additional capacity depresses prices in the short term. Because most of the costs of existing fossil fuel plant are sunk, they will continue to operate. But once major repairs are necessary the established coal plant is scrapped.

Gradually the electricity price will rise to reflect the higher cost wind generation that is being substituted for the non-subsidised supplies. But this rise is muted as the higher prices will cause high energy intensive industries to close, reducing demand. Already we have seen the Point Henry aluminium smelter close and the Kurri-Kurri smelter mothballed. The same outlook appears imminent for the Portland smelter.

Secondly, wind/solar is inherently less manageable than fossil, nuclear or hydro-generation. It requires its fluctuating supply to be shadowed by counter fluctuations. This requires additional costs and careful management.

South Australia's electricity system breakdown

The preliminary report of the Australian Energy Market Operator (AEMO) on the south Australian blackout was published October 5. It summarized the position as

Generation initially rode through the (weather induced) faults, but .. 315 MW of wind generation (then) disconnected .. result(ing) in … the Heywood Interconnector overloading,, tripping the interconnector. In this event, this resulted in the remaining customer load and electricity generation in SA being lost (referred to as a Black System)

Actually the AEMO had already spilled the beans. In its Market Notices system amidst some the 30 or so routine operating statements that AEMO posts each day came Notice 516103 on 3 October. This not only said the collapse in wind generation had caused the system to black-out the whole state but went on to redefine nine wind farms as unreliable generators. AEMO basically said that the event is not a one-off contingency but that the cascading effect of a state wide South Australia blackout as a result of losing some pylons was intrinsically likely to re-occur.


This finding did not prevent the promoters of wind and other sources of power from placing themselves in denial. Tony Wood of the Grattan Institute wrote an article in the Australian headed, "Don't blame renewable energy for the state's plunge into darkness". Many other apologists for the renewable industry were scathing about those like Minister Frydenberg who suggested wind had played a part. And even after the publication of AEMO's report, the industry's propaganda journal, RenewEconomy, was claiming it "raises questions answers none".

Who's to blame?

AEMO itself as an entity is not immune from criticism. On many occasions its engineers have said that operating a system with high wind share is technically feasible.

In public has drawn attention to problems of integrating more wind but expressed confidence in doing so and been hopeful that this would be further facilitated by advances in battery storage technology. But, as Brendan Pearson's quote of the Chief Scientist Alan Finkel makes clear, this is overly optimistic. The Chief Scientist estimated that "if we retrieved all of the batteries made for use in mobile phones, laptops, cars and industry in 2014 and used them as back-up for the electricity system, we would have enough energy to power the world for just nine seconds."

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This article was first published on Catallaxy

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About the Author

Alan Moran is the principle of Regulatory Economics.

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