Losing control of affordable reliable power

We're in a brave new energy world. Until recently, intermittency in power supply was demand-driven. Demand peaks meant having pricey spare capacity on hand to meet them, to keep the lights on.

We still have those demand peaks: each day, week, and seasonally. But the supply side has changed. Once we controlled total supply. We had base-load power 24/7. We had 'peaker' power generation that we triggered when extra demand put more pressure on the grid. We had a very reliable, geographically huge, power grid (the NEM).

Not today. Existing base-load and 'peaker' generation is prematurely shutting down. New investment is discouraged. Subsidised growth in solar and wind generation is soaring. 'Pumped hydro' is hyped. Surging renewables are destroying economics of traditional supply.

The NEM is not alone. The Western Australian grid is suffering too.

Grid managers warn power transmission and distribution infrastructure increasingly can't cope, either. Anybody watching PocketNEM knows how frantically they are paddling just to keep the lights on right now. This summer looks ominous. Without expensive upgrade remedies, will the grid become a 'stranded asset'?

Why is this happening? The root cause is we're fast losing control of the supply side of the electricity market. Increasingly, it's the weather and seasons that control power supply, not us. Supply peaks no longer match demand peaks. Both are often out-of-phase.

Renewables can be thought of as 'peaker' generators, but beyond our control. So grid managers now have to contend with different peaks: both on the demand side, and for supply.

Reliability is under threat, as is grid stability, because both are being cut by the two 'blades' of our energy 'policy' scissors. Subsidies go to intermittent and unreliable renewables, and politics bans or cuts investment in alternatives. Increasing renewables supply reduces viable 'dispatchable' power supply.

How can we maintain the current reliability standard (99.998% reliability, or only 10.5 minutes of outages each year)?

There are two broad options. Neither is cheap.

The first is to duplicate any given renewables capacity with 'dispatchable' capacity. Given political constraints in Australia, that's coal (preferably as base-load) or gas (despite East Coast costs).

Reliable generation capacity with renewables therefore is about double demand requirements. How supply is actually delivered depends on the weather, the sun cycle, seasons – and drought.

For near-100% reliability, any given renewables generation capacity can never exceed about 50% of total capacity inclusive of dispatchable back-up. And, on average, the duplicated fossil-fuel 'dispatchable' capacity backing it up supplies much more than half the power actually delivered to users (maybe 75% or more).

We're learning about this right now, with SA and, more recently, Queensland, as exemplars.

Activists will loudly condemn any use of fossil fuels as 'dispatchable' power. They have fomented strong political pressure, on weak politicians, inducing an investment drought therein.

Let's assume these people want reliable power (do they?). If so, they presumably support 'dispatchable' renewables back-up.

That's manufactured batteries. Ignore emissions costs in their production and disposal, and re-charging efficiency losses.

How much battery storage would be needed? What would it cost?

Both rise exponentially as reliability standards and renewables' share both approach 100%. For example, see an MIT Technology Review analysis for California titled The US$2.5 trillion reason why we can't rely on batteries to clean up the grid (James Temple, July 2018).

For PocketNEM fans, have you noticed how average wholesale power prices are zero or negative more frequently, especially in SA and Qld? Sometimes the entire NEM has zero power prices.

Good news, surely? For activists, yes. This hastens the shut-down of existing fossil fuel power and deters new investment therein.

It reflects fast-rising solar and wind generation capacity. Measured against the NEM's capacity actually to use the power generated, it reflects excess supply of solar and wind generation under sunny or windy conditions.

It also hints at, but does not quantify, another excess supply effect. This is euphemistically called 'curtailed supply'. This is power that is actually generated by solar or wind, but not used. It's wasted.

Solar and wind investors should heed these warnings.

Zero or negative prices for power actually used are unsustainable.

So is power actually produced, but not used at all.