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'Reliable' renewables roulette

By Geoff Carmody - posted Thursday, 26 July 2018


Set a reliability standard closer to 0.002% outages. With an outages maximum of 0.25% of the time – 125 times less reliable than the current standard – the generation plus storage capacity multiplier is up to 797times base-load. See chart below. This chart shows average generation plus storage capacity multipliers within the zero to 5% renewables availability share range not shown (for scale reasons) in the chart above.

The politics of 'keeping the lights on' implies retaining the 0.002% standard. With 100% 'new' renewables, a generation and storage capacity multiplier of almost 100,000 times base-load capacity would be needed.

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The foregoing is based on a RET of 100%. The inter-state energy-dependent ACT government might go on posturing this is its target. Producers of renewable energy beyond its border should get any 'green' credit.

Nationally, politicians are promising less than 100% RETs: 45% (Federal Labor), 26% or so (Federal Coalition). Is the arithmetic any better if we go below 100% 'new' renewables? See table below.

Even if we accept an increase of 7,500 times, to a maximum of 15% outages, as a new reliability standard, capacity multipliers are sizeable. And a 15% unreliable power grid would be unacceptable.

Such extreme reliability requirements very rarely would be needed. Is that the point? Our 0.002% reliability standard covers very unlikely power outages with base-load power, too. Outages will become much more likely with 25%, 30%, 45% or 100% renewables than now. What's the cost of insuring against them?

I don't think we can maintain the current 0.002% NEM reliability standard, or anything approaching that, if we insist on using 'new' renewables as base-load and back-up power supply. It's prohibitively expensive. The arithmetic of renewables' uncertain intermittency will collide with existing reliability standards and concerns about rising power prices. Insisting, 20 or so years in future, on up to 100% replacement of existing base-load and back-up power sources with 'new' renewables, makes this inevitable. Additional 'poles and wires' will cost extra. Ditto the chilling of investment in new base-load capacity now and in the years ahead.

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I think the 'official family' is well aware of this asymptotic arithmetic. Capacity multipliers approaching 37 times, 800 times, or 100,000 times base-load capacity, or even less than half these numbers, are impractical and unaffordable. Why else do we now see a new list of energy market buzz-words intended to obscure the blow to the voter as we descend more and more into 'new' renewables power dependence?

These days we hear a lot about 'demand response'. This is a euphemism for rationing supply because we haven't enough. There's talk of 'behind the meter' adjustments in a 'distributed generation' system. This is code for taking house-holds' own-generated power (for which they paid a lot in capital costs) because the grid is short of it. There's been talk of asking (forcing?) large energy users to own-provide for their power needs to secure grid reliability. That's code for off-loading grid investment responsibilities to big users. The punter will still pay when the costs of doing so are passed on to local consumers. But it'll be less obvious. The reliability burden may be off-loaded to retailers and others who may be required to contract for 'firm' power supply. They might get the blame, and we'll pay the costs, if things go wrong. Watch out, too, for substantial new investment in inter-state interconnectors and more 'poles and wires' generally. These reflect attempts to spread the outage risks of renewables intermittency across the NEM as another response to the capacity problems noted above. Remember 'poles and wires'? Not so long ago these were loudly blamed for power costs because of 'gold plating'. Now we're likely to pay more for them.

The big response to this awful arithmetic? Probably, change the reliability goal posts. Accept less reliable power. Naturally, this will be effected in the most opaque manner possible.

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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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