Stimulus that retrofits housing can reduce energy bills and inequity too



Nicola Willand, Author provided

Nicola Willand, RMIT University; Bhavna Middha, RMIT University; Emma Baker, University of Adelaide; Ralph Horne, RMIT University, and Trivess Moore, RMIT University

Stay-at-home orders and the economic crisis have increased the burden of energy costs on lower-income Australians. Poor housing quality and unequal access to home energy efficiency are hurting our most vulnerable households. With the next stage of the national recovery program expected to include cash grants for home renovation, now is the time to turn to housing retrofits that support health and well-being as well as boost jobs.

Staying at home during the COVID-19 pandemic increases households’ energy consumption and costs. As one in ten Australians might lose their jobs, the pandemic is adding to the energy hardship of people who were already struggling to pay their bills.




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The other 99%: retrofitting is the key to putting more Australians into eco-homes


Access to energy is essential

Cold housing is a known health risk. Lancet research attributes about 7% of Australian deaths to cold weather. Warm housing reduces the risk of airborne infections, as well as providing comfort for working and studying.

Laundry temperatures of 60-90°C are needed to limit the spread of the coronavirus. But this conflicts with common energy-saving advice of washing clothes in cold water. Self-isolation also means heating more and not being able to close off unused rooms.

Low-income households, renters and older people are more likely to live in energy-inefficient dwellings. In fact, most Australian housing has poor energy efficiency.

When people on low incomes live in such housing, they are doubly disadvantaged by the challenges of needing more energy and not being able to afford it. Households with older people, people with chronic illness and children are particularly susceptible to energy stress and poor health outcomes.




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Stop-gap measures

The temporary stop to disconnections in some states recognises that access to electricity and gas is a basic need and essential for health and well-being. This guaranteed energy, and a commitment by Australian Energy Council retailers not to charge penalty fees for late payment, will give affected households some relief.

Even if power bill payments are deferred, households must still eventually repay their mounting debts.
Shutterstock

However, bill payment will only be postponed until the end of July. Much of the expensive heating period will still be ahead of us. And after that households will face the costs of cooling homes in summer.

Energy debts are going to accumulate as a burden to low-income households into the future. Energy retailers might find it ethically difficult to resume disconnections, but customers will have to repay their debts. This will only be possible if their overall financial position improves and/or the cost of their energy decreases.

Income support via energy concessions can ease bill stress. However, taxpayer money may be better spent on providing sustained relief by improving the energy performance of homes. Acknowledging housing as essential infrastructure would enable economic and social progress.




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A lasting solution to energy poverty

A long-term stimulus package for retrofits would be welcome. The focus should be on comprehensive retrofitting to reduce energy demand, thus helping households to repay debt. Comprehensive or “deep retrofits” combine simple activities such as draught proofing with insulating ceilings, floors and walls, upgrading heating and cooling appliances, and installing solar PV systems.

Many retrofits overlook the opportunity to install underfloor insulation when restumping a house.
CSR Bradford/YouTube screenshot

Initial findings of our HEET (Housing Energy Efficiency Transitions) research show simple retrofit measures are cheap and easy to do, and DIYing is popular. However, some opportunities are missed because householders are not aware of what can and should be done. A common example is failing to install underfloor insulation when restumping the house.




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Riding the current wave of home improvements, innovative retrofit initiatives may guide people in their DIY efforts. However, some training for proper DIY installation and the use of skilled tradespeople for technical installations is needed for safety and quality.

Spread retrofitting benefits more widely

Federal and state subsidy schemes already promote retrofitting. But recent research suggests low-income households and renters have benefited less. The one-in-three households that rent their homes should not be missing out.




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Putting people at the centre of retrofitting programs will provide healthier homes and help tackle unemployment. This means providing retrofit assistance to those who need it most and training people in retrofit skills.

Previously, the boom in new housing construction inhibited retrofitting. This might change following the COVID-19 crisis. A long-term retrofit program would be an opportunity to upskill builders and to retrain newly unemployed Australians, particularly the young people who have been most affected by job losses. An expanded retrofit workforce is needed to reach the large number of inefficient homes.

So-called “Green Deals” have already been proposed in Europe, the US and the UK. Green construction stimulus packages in Australia have successfully supported economic recovery before.
The aim should be to spawn a new industry of energy-efficient builders who will continue to contribute to the upgrade and upkeep of Australian housing. This could help cut greenhouse gas emissions, promote public health and improve our resilience to crises.

A nationwide stimulus package to provide healthier and more energy-efficient homes would help the most vulnerable and boost the economy.The Conversation

Nicola Willand, Lecturer, School of Property, Construction and Project Management, RMIT University; Bhavna Middha, Research Fellow, Centre for Urban Research, RMIT University; Emma Baker, Professor of Housing Research, School of Architecture and Built Environment, University of Adelaide; Ralph Horne, Deputy Pro Vice Chancellor, Research & Innovation; Director of UNGC Cities Programme; Professor, RMIT University, and Trivess Moore, Senior Lecturer, School of Property, Construction and Project Management, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Scott Morrison’s gas transition plan is a dangerous road to nowhere



Flickr

Tim Baxter, University of Melbourne

As Australia continues to battle horrific bushfires, Prime Minister Scott Morrison has announced a renewed focus on gas-fired electricity to reduce emissions and lower energy prices. This is a dangerous and completely unnecessary route.

In a speech to the National Press Club last week, Morrison claimed:

There is no credible energy transition plan, for an economy like Australia in particular, that does not involve the greater use of gas as an important transition fuel.

This statement is completely untrue, even among the “official” transition plans.

The Australian Energy Market Operator’s draft Integrated System Plan, used to plan future infrastructure needs in Australia’s largest grid, contains multiple scenarios for the coming decades. Several of these, including the “central” scenario – representing entirely neutral assumptions about the future – see no substantial increase in gas consumption over the coming decades.

But with Morrison now pursuing bilateral agreements with the states to open up more gas reserves, it is vitally important to interrogate the logic of gas as a transition fuel.

The strong case against gas

Gas is, of course, a fossil fuel and a source of greenhouse gas emissions. Emissions occur during extraction and transport as well as when it is burned to produce energy.

Nonetheless, since the 1990s it has been touted as a “transition fuel” – that is as a resource that might be drawn upon temporarily while the world switches from coal-fired power to renewables.

Proponents say gas is less emissions-intensive than coal and as such, offers a better fossil fuel alternative as renewables are constructed and energy-efficiency improvements are implemented. (This benefit is overstated: more on this later.)




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But in the 30-odd years since gas was first talked up as a transition fuel, humans have added more carbon dioxide to the atmosphere than they did in all of human history before that point. We are twice as far from stable global temperatures now as we were when the the concept of a transition fuel was born, and emissions are accelerating in the wrong direction.

Last year a consortium of major international organisations including the United Nations Environment Programme released a landmark report which showed planned global production of coal, oil and gas would see the world far exceed the Paris Agreement targets. There is no room for further expansion.

Australia: a vulnerable nation

2019 was the hottest and driest year ever recorded. We reeled from crippling drought and fires worse than our most terrifying nightmares. Then came the suffocating air pollution.

The Bureau of Meteorology explicitly linked this fire season to climate change.

The world has warmed by 1.1℃ since the industrial revolution due to the burning of coal, oil and gas. Current fossil fuel developments are enough to double that temperature increase.

Australia has among the world’s highest greenhouse gas emissions per person, despite also being among the most vulnerable to climate change.

Alongside this, Australia has long been the world’s largest coal exporter and last year took the crown as the largest exporter of liquefied natural gas.

Scott Morrison’s plan for a gas transition is a dangerous route.
AAP

Overstated benefits

It is true that gas, if produced and consumed in Australia without being liquefied, is 30-50% more carbon-efficient than coal at the point it is burned to produce electricity. But this benefit is substantially eroded by the emissions created when gas is vented or flared during the exploration, extraction, transport and distribution processes.




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Gas is mostly composed of methane, the most significant climate-warming agent after carbon dioxide. Methane survives for a shorter period in the atmosphere, but over 20 years has 86 times the planet-warming potential of carbon dioxide.

In 2019, the venting and flaring of methane accounted for 6% of Australia’s emissions – and this is likely a significant underestimate. These so-called “fugitive emissions” massively detract from the purported climate benefits of a gas transition.

Renewable energy is waiting to provide the decarbonisation Australia needs.
Mick Tsikas/AAP

Running out of time

It is worth remembering that to make the gas projects viable, developers expect their projects to last for several decades at least. Gas can only be a “transition fuel” if there is a clear path out the other side to net-zero emissions. Locking in gas projects for decades makes that path impossible.

Where gas does provide a small benefit, this lock-in means it cannot be enough to secure globally-agreed temperature goals.




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A separate United Nations Environment Programme report last year considered how the world might limit global warming to globally agreed temperature goals – 1.5℃ or 2℃ above pre-industrial temperatures. Both of these targets will result in a climate notably less secure than that which drove Australia’s past year of extreme weather.

To meet the 1.5℃ target, emissions from all sources must fall by 7.6% per year between now and 2030, and keep decreasing after that.

Even 2℃ of global warming – a catastrophic temperature increase by any measure – would require annual emissions reduction of 2.7% per year. This is well beyond what can be accomplished with a long, slow detour through gas.

Over and above all this, is the simple point that increasing gas supply will not reduce prices anyway. Since 2016, the spike in energy prices in Australia has occurred because of the increase in gas supply. Nothing Morrison has proposed so far is capable of counteracting the perverse dynamic which brought that about.

It is entirely unnecessary for the federal government to continue down the gas route. The renewable energy sector is waiting in the wings to deliver massive emissions reduction and lower prices.

But in the sunniest and windiest inhabited continent on the planet, investment confidence in the renewables sector is collapsing on Morrison’s watch.The Conversation

Tim Baxter, Fellow – Melbourne Law School; Senior Researcher – Climate Council; Associate – Australian-German Climate and Energy College, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Finally, your electricity bill looks set to fall. Here’s how much you could save


The renewables revolution is starting to pay off: our electricity bills are set to fall.
AAP/Julian Smith

Tim Nelson, Griffith University and Alan Rai, University of Technology Sydney

Household electricity bills in Australia have increased sharply in the past decade. But new official figures show they are projected to fall markedly – in some cases by 20%.

In-house modelling we conducted at the Australian Energy Market Commission (AEMC) shows that a wave of new renewable energy entering the electricity grid is pushing down retail prices. The findings are contained in a report released today.

Retail electricity bills are projected to fall by 7.1% between 2019 and 2022, based on the national average. In southeast Queensland, household bills are expected to fall by 20% in that time – an average annual saving of A$278. Falls in other states are projected to be smaller.

An electricity tower on the Brisbane skyline. Retail electricity prices in Queensland are projected to fall by 20%.
AAP

A quick history

The National Electricity Market (NEM) is one of the largest interconnected electricity systems in the world. It comprises about 40,000km of transmission lines and cables, supplying around 9 million customers in all Australian jurisdictions except Western Australia and the Northern Territory.




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To understand the significance of our projection for electricity prices, a brief history recap is helpful.

Price trends since 1955 can be divided into three distinct periods:

  • 1955 to 1998, before the east coast’s National Electricity Market (NEM) was established. Prices fell due to economies-of-scale achieved by building large coal-fired power stations and transmission lines

  • 1999 to 2009, the first ten years of the NEM, when prices declined due to the introduction of competition between generators, improved price transparency and pricing efficiency

  • 2009 to 2019, when retail electricity prices doubled.

The increase between 2009 and 2019 was due to three factors: a significant and largely unnecessary rise in spending on network infrastructure (“poles and wires”); uncertainty about climate policy; and a large increase in wholesale prices.

The latter was triggered by both rising coal and gas prices and sudden exit of coal-fired power generators, and created a disorderly transition to firmed renewables.



What’s happening now

Electricity prices are determined by five main factors:

  • wholesale costs: the cost of generating electricity from coal, gas, hydro, wind and solar
  • transmission costs: the cost of transmitting electricity across the country
  • distribution costs: building and maintaining the poles and wires in our streets
  • environmental costs: government policies that drive new investment in renewable and low-emission generation
  • retail costs: the cost of billing, customer service and managing the financial risks of operating in the wholesale market.

Our modelling shows that additional electricity supply is now putting significant downward pressure on wholesale prices. Across the country, prices are expected to fall by 7.1% from 2019 to 2022.




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This is due to a very large quantity of new renewable projects coming online, adding much-needed supply. In fact, at the time of our wholesale market modelling earlier this year, investors had committed to around 7,500 megawatts of new gas, wind, solar and hydro projects. For perspective, the largest coal-fired generator in the market today is around 2,000MW.

So what’s driving this new investment? The sudden closure of coal-fired power stations such as Hazelwood in Victoria took a lot of electricity from the system, leading to higher wholesale prices. This drove new investment in gas, wind and solar generation, which is projected to cause prices to fall.

Our modelling shows wholesale costs falling by 10-17% by 2022 across the NEM, which should flow on to the retail price paid by households.

An influx of new renewable energy, including solar power, is driving wholesale prices down.
Lucas Coch

How much you could save

The below table shows the projected fall in electricity bills expected in each state and territory in the NEM. They range from a 20% fall in Queensland to 2% in South Australia.



The figures vary between states because of the other factors which determine retail prices. For example, network prices are expected to fall in Queensland but increase in Victoria.

Environmental costs are also expected to fall across the NEM as subsidies such as the Renewable Energy Target wind down.

The wholesale market operates according to real time electricity supply and demand, meaning prices are likely to change across the day. Increased solar generation has long been expected to reduce prices in the middle of the day when solar farms are at maximum production. This is now happening.

In the past few months, this has even led to negative pricing – generators paying customers to stay in the system.

As shown in the chart below for Queensland, price reductions from 2019 to 2022 are most pronounced in the middle of the day, and most limited in the evening when electricity demand peaks but solar output is zero.



So what next?

A lot of work is required to ensure these projections are realised in the longer term. The Australian Energy Market Operator’s Integrated System Plan outlines the need for investment in new transmission infrastructure to ensure new supply can feed into the system. National energy authorities must also keep improving the design of the market beyond 2025.




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Electricity prices are not the only factor affecting the size of your bill; how much electricity you use is obviously also important. Policymakers must continue to enable customers to minimise their energy bills through measures that encourage energy efficiency, as well as lowering peak electricity demand.

Customers should also continue to shop around to get the best deal by visiting government comparison sites such as the Australian Energy Regulator’s Energy Made Easy and in Victoria, Victorian Energy Compare).The Conversation

Tim Nelson, Associate Professor of Economics, Griffith University and Alan Rai, Industry Fellow, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

For hydrogen to be truly ‘clean’ it must be made with renewables, not coal



Hydrogen from renewable energy such as solar can be produced with zero emissions.
Lucas Coch/AAP

Frank Jotzo, Australian National University; Fiona J Beck, Australian National University, and Thomas Longden, Australian National University

Using hydrogen as a clean fuel is an idea whose time may be coming. For Australia, producing hydrogen is alluring: it could create a lucrative new domestic industry and help the world achieve a carbon-free future.

The national hydrogen strategy released last month argues Australia should be at the forefront of the global hydrogen race. Led by Chief Scientist Alan Finkel, the strategy takes a technology-neutral approach, by not favouring any one way of making “clean” hydrogen.

But it matters whether hydrogen is produced from renewable electricity or fossil fuels. While the fossil fuel route is currently cheaper, it could end up emitting substantial amounts of carbon dioxide.

Dr Finkel and Energy Minister Angus Taylor ahead of a meeting about the hydrogen strategy.
RICHARD WAINWRIGHT/AAP

Not all ‘clean’ hydrogen is the same

Hydrogen can be produced using electricity through electrolysis, which splits water into hydrogen and oxygen. When renewable electricity is used, this does not produce any carbon dioxide and is known as green hydrogen.

Hydrogen can also be produced from coal or gas. This process releases carbon dioxide. Most hydrogen produced today is made this way.

Some – but critically, not all – carbon dioxide from this process can be trapped and stored in underground reservoirs – a process known as carbon capture and storage (CCS).




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But CCS is technically complex and expensive. Only two plants producing hydrogen from fossil fuels currently use it: one in Canada, with a carbon dioxide capture rate of 80%, and one in the US with a lower retention rate.

In Australia, the only operating large-scale CCS project is Chevron’s Gorgon gas (not hydrogen) project in Western Australia. After a significant delay, and three years since the project started supplying gas, carbon capture and storage began this year.

High carbon-capture rates are not assured

The hydrogen strategy uses the term “clean hydrogen” for hydrogen produced from renewable electricity, and from coal or gas with carbon capture. And it assumes a “best-case” scenario where 90-95% of carbon dioxide is captured from fossil fuels.

Such rates are technically possible, but have not been achieved to date. Lower capture rates are not examined in the strategy.

At 90-95% capture rates, coal- and gas-based hydrogen is much less carbon-intensive than traditional fossil fuel uses. But a capture rate of 60% means hydrogen from coal has a similar emissions-intensity to burning natural gas directly.

Emissions intensity of fuels with and without CCS. Hydrogen numbers are for production only; emissions intensity is higher for exported hydrogen. Source: authors’ calculations, using data from the International Energy Agency and US Energy Information Administration

The national strategy does not describe a mechanism to ensure best-case capture rates are met. Production of hydrogen might ramp up much faster than the facilities required to capture emissions, allowing large amounts of greenhouse gas to enter the atmosphere – similar to the Gorgon case.

Another risk is that carbon capture will not be able to achieve the best-case rates for technical or cost reasons.

Towards zero-emissions exports

Countries including Japan, South Korea and Germany are exploring the possibility of using hydrogen in a range of ways, including in power generation, transportation, heating and industrial processes.

Some future importers may not care how cleanly our hydrogen is produced, but others might.

To illustrate why carbon-free exports matter, we calculated emissions if Australia produced 12 million tonnes of hydrogen for export per year – equivalent to about 30% of our current liquified natural gas exports and in line with production estimates in the national strategy.




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It would require roughly 37 million tonnes of natural gas or 88 million tonnes of coal. If 90% of carbon dioxide was captured, emissions from gas would total 1.9% of Australia’s current (2018) annual greenhouse gas emissions, or 4.4% using coal.

If only 60% of the carbon dioxide was captured, hydrogen from gas and coal would account for an additional 7.8% and 17.9% of current national emissions respectively – making it much harder for Australia to achieve existing and future emissions targets.

Where to invest

Right now, producing hydrogen from fossil fuels is cheaper than from renewables, even with carbon capture and storage.

Australia also has large and ready reserves of brown coal in Victoria’s Latrobe Valley that will not be used by the declining coal-fired power industry. Captured carbon could be stored under Bass Strait. And the nation’s plentiful gas reserves could be turned into hydrogen, in addition to or partly replacing liquefied natural gas exports. So, it is unsurprising that the national strategy left all options on the table.

A diagram showing the myriad potential uses for hydrogen.
National hydrogen strategy



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However establishing hydrogen production facilities with carbon capture would mean huge spending on equipment with very long lifetimes. This is risky, as the capital would be wasted if the market for emissions-intensive hydrogen collapsed, either through public attitudes or a global imperative to move to zero-emissions energy systems.

The world is already far off the pace needed to meet its emissions reduction targets, and must ultimately get to net-zero to prevent the worst climate change impacts.

Australia should invest in research and development to make green hydrogen cheaper. This requires driving reductions in the cost of electrolysis, and further reductions in large-scale renewable energy production. It could lead to big benefits for the climate, and Australia’s future export economy.The Conversation

Frank Jotzo, Director, Centre for Climate and Energy Policy, Australian National University; Fiona J Beck, Senior research fellow, Australian National University, and Thomas Longden, Research Fellow, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia must engage with nuclear research or fall far behind



Nuclear power will likely remain part of the global energy mix.
ioshimuro/Flickr, CC BY-NC

Heiko Timmers, UNSW

Much is made of the “next generation” of nuclear reactors in the debate over nuclear power in Australia. They are touted as safer than older reactors, and suitable for helping Australia move away from fossil fuels.

But much of the evidence given in September to a federal inquiry shows the economics of nuclear in Australia cannot presently compete with booming renewable electricity generation.




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However, international projections predict nuclear power will stick around beyond 2040. It is forecast to reduce the carbon footprint of other nations, in many cases fuelled by our uranium.

To choose wisely on nuclear power options in future, we ought to stay engaged. Renewables in combination with hydro storage might fail to fully decarbonise the electricity sector, or much more electricity may be needed in future for desalination, emission-free manufacturing, or hydrogen fuel to deal with an escalating climate crisis. Nuclear power might be advantageous then.

What reactors will be available in future?

All recent commissions of nuclear power stations, such as the Korean APR-1400 reactors in the United Arab Emirates, or the Chinese Hualong One design, are large Generation III type light water reactors that produce gigawatts of electricity. Discouraged by investment blowouts and considerable delays in England and Finland, Australia is not likely to consider building Generation III reactors.

The company NuScale in particular promotes a new approach to nuclear power, based on smaller modular reactors that might eventually be prefabricated and shipped to site. Although promoted as “next generation”, this technology has been used in maritime applications for many years. It might be a good choice for Australian submarines.




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NuScale has licensed its design in the United States and might be able to demonstrate the first such reactor in 2027 in a research laboratory in Idaho.

These small reactors each produce 60 megawatts of power and require a much smaller initial investment than traditional nuclear power stations. They are also safer, as the entire reactor vessel sits in a large pool of water, so no active cooling is needed once the reactor is switched off.

However the technical, operational and economic feasibility of making and maintaining modular reactors is completely untested.

Looking ahead: Generation IV reactors and thorium

If Australia decided to build a nuclear power station, it would take decades to complete. So we might also choose one of several other new reactor concepts, labelled Generation IV. Some of those designs are expected to become technology-ready after 2030.

Generation IV reactors can be divided into thermal reactors and fast breeders.

Thermal reactors

Thermal reactors are quite similar to conventional Generation III light water reactors.

However, some will use molten salts or helium gas as coolant instead of water, which makes makes hydrogen explosions – as occurred at Fukushima – impossible.

Some of these new reactor designs can operate at higher temperatures and over a larger temperature range without having to sustain the drastic pressures necessary in conventional designs. This improves effectiveness and safety.

Fast breeders

Fast breeder reactors require fuel that contains more fissile uranium, and they can also create plutonium. This plutonium might eventually support a sustainable nuclear fuel cycle. They also use the uranium fuel more efficiently, and generate less radioactive waste.

However, the enriched fuel and capacity to produce plutonium means that fast breeders are more closely linked to nuclear weapons. Fast reactors thus do not fit well with Australia’s international and strategic outlook.

Breeding fuel from thorium

An alternative to using conventional uranium fuel is thorium, which is far less useful for nuclear weapons. Thorium can be converted in a nuclear reactor to a different type of uranium fuel (U-233).

The idea of using this for nuclear power was raised as early as 1950, but development in the US largely ceased in the 1970s. Breeding fuel from thorium could in principle be sustained for thousands of years. Plenty of thorium is already available in mining tailings.

Thorium reactors have not been pursued because the conventional uranium fuel cycle is so well established. The separation of U-233 from the thorium has therefore not been demonstrated in a commercial setting.

India is working on establishing a thorium fuel cycle due to its lack of domestic uranium deposits, and China is developing a thorium research reactor.

Australia’s perspective

To choose wisely on nuclear power and the right technology in future, we can stay engaged by:

  • realising a much-needed national facility to store waste from our nuclear medicine
  • making our uranium exports competitive again
  • driving the navy’s submarines with nuclear power, and
  • possibly reconsidering the business case for a commercial spent fuel repository.

Australia has already joined the international Generation IV nuclear forum, a good first step to foster cooperation on nuclear technology research and stay in touch with reactor developments.




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Australia could deepen such research involvement by, for example, developing engineering expertise on thermal Generation IV reactors here. Such forward-looking engagement with nuclear power might pave a structured way for the commercial use of nuclear power later, if it is indeed needed.The Conversation

Heiko Timmers, Associate Professor of Physics, School of Science, UNSW Canberra, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Snowy 2.0 will not produce nearly as much electricity as claimed. We must hit the pause button



Prime Minister Scott Morrison in front of the Tumut 3 power station at the Snowy Hydro Scheme. New analysis suggests the benefits of Snowy 2.0 have been overstated.
AAP

Bruce Mountain, Victoria University

The federal government’s much-vaunted Snowy Hydro expansion is supposed to smooth out the bumps in electricity supply as Australia transitions to renewables. But not only is the project a bad deal for taxpayers, our analysis suggests it will deliver a fraction of the energy benefits promised.

Fossil-fuel power generators store coal or gas at the point of production. This means electricity can mostly be created on demand when homes and businesses need it. Renewable energy cannot do this. If wind or sun is not abundant, solar panels and wind turbines may not produce enough electricity to meet demand. At other times they might produce more than required.

The Snowy 2.0 project is supposed to provide a solution to this problem – storing renewable energy for when it is needed.

The project’s cost and time estimates have blown out massively. It would now be surprising if Snowy 2.0, including the transmission upgrades it relies on, comes in at less than A$10 billion or is finished before 2027.

But there is another serious problem. Our analysis has revealed that of the extra pumped hydro capacity promised by the project, less than half can be delivered. There is now overwhelming evidence the project should be put on hold.

The Tumut 3 scheme, with which Snowy 2.0 will share a dam.
Snowy Hydro Ltd

The problems we know about: cost and time blowouts

The list of possible alternatives to Snowy 2.0 is long. Aside from other pumped hydro projects, it includes chemical batteries, encouraging demand to follow supply, gas or diesel generators, and re-orienting renewable generators to capture the wind or sun when it is less plentiful.

But despite this plethora of options, the federal government announced the Snowy 2.0 project without a market assessment, cost-benefit analysis or indeed even a feasibility study.




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When former Prime Minister Malcolm Turnbull announced the expansion project in March 2017 he said it would cost A$2 billion and be commissioned by 2021. This was revised upwards several times and in April this year, a A$5.1 billion contract for partial construction was awarded. This excludes the costs of transmission and other considerable expenses.

The main contractor says the project will take eight years to build – bringing us to 2027 before the full scheme is completed. We will happily wager that more delays and cost increases will be announced.

Then prime minister Malcolm Turnbull during a tour of Tumut 3 power station when announcing the expansion in 2017.
Lucas Cochairs/AAP

Snowy Hydro has not costed the transmission upgrades upon which the project depends. TransGrid, owner of the grid in New South Wales, has identified options including extensions to Sydney with indicative costs up to A$1.9 billion. Massive extensions south to Melbourne will also be required.

Snowy Hydro contends it should not pay for the new transmission lines because the benefits would flow to the entire grid, not just its venture. In other words Snowy Hydro argues, conveniently, that we should count the benefits but ignore the costs when thinking about their project.

The numbers simply do not add up

The Snowy 2.0 project grandly claims it could generate at its full 2,000 megawatt capacity for 175 hours – or about a week. This capacity can also be expressed as 350 gigawatt hours (GWh).

Energy Minister Angus Taylor has talked up the project’s superiority to smaller-capacity alternatives such as batteries.

But the maximum additional pumped hydro capacity Snowy 2.0 can create, in theory, is less than half this. The reasons are technical, but worth taking the time to understand.

The figure below outlines the main physical features that define Snowy 2.0. It includes four dams: Tantangara, Talbingo, Jounama and Blowering. For simplicity, we have numbered these from 1-4 in the following explanation.



The Conversation, CC BY-ND

When Snowy 2.0 generates electricity, water will be released from Dam 1 at the top of the system. It will flow through a long tunnel to the smaller Dam 2. The flow of water drives turbines which generate energy. When the turbines are reversed, the water is pumped back to the top to continue the cycle.

For Snowy 2.0 to produce the 350 GWh of electricity claimed, the top dam must be full and all that water released through the system. But replenishing the top dam after this event would take many months of pumping water from elsewhere in the system, and use up 40% more electricity than was originally generated. So the 350 GWh would never be achieved because it is extremely inefficient and inflexible.

In reality, the pumped hydro capacity of Snowy 2.0 is defined by the amount of water that the smaller Dam 2 can hold. If the scheme was a closed system, with no other water flowing in or out, it could produce around 230 gigawatt hours (GWh) of electricity.

But the system does not exist in isolation. Part of the existing Snowy Hydro scheme, known as Tumut 3, also uses Dam 2. It creates pumped hydro electricity by cycling water between that dam and the even smaller Dam 3 below it.

For Snowy 2.0 to operate at full cyclical capacity, Dam 2 must be empty to receive the water. That would entail emptying Dam 2 into the smaller Dam 3 and from there to Dam 4 at the bottom of the system. This water could not be used again to generate electricity. This “lost” water would have generated 60 GWh worth of electricity in the Tumut 3 scheme.

Khancoban Dam, part of the soon-to-be expanded Snowy Hydro scheme.
Snowy Hydro Ltd

This means that as a cyclical pumped hydro system, Snowy 2.0 does not add 230 GWh of capacity. When you subtract the 60 GWh from the 230 GWh, Snowy 2.0 adds just 170 GWh of recyclable pumped hydro. This is less than half the claimed storage capacity.

And this is the maximum cyclical capacity in theory only. Snowy 2.0 would never produce continuously for the time needed to generate and then pump 230 GWh because it would never be economically viable to run it this way.

In practice if Snowy 2.0’s lower dam is operated in future as it is now – almost always close to full – the cycling capacity of Snowy 2.0 may be as low as 40 GWh – around one tenth of the promised number.

What does all this mean?

These facts put Snowy 2.0 in a completely different light. There are many competing alternatives that can provide storage far more flexibly for a fraction of Snowy 2.0’s price tag. These alternatives would also have far fewer environmental impacts or development risks, in most cases none of the transmission costs and could be built much more quickly.

It is always difficult to press the pause button on a major project once it has begun. But the evidence for doing this is overwhelming. In pursuit of the public interest, the federal government should put the project on hold and ask a reputable investment bank to publicly advise, perhaps through the Productivity Commission, what Snowy 2.0 would be worth if built.

A credible independent valuation would establish with some confidence how deeply Snowy Hydro will have its hands in the public’s pockets. A panel of independent experts should then be asked to publicly advise whether taxpayer money is needed to meet the demands of a renewables-dominated power system, and if so, the best way it should be spent.The Conversation

Bruce Mountain, Director, Victoria Energy Policy Centre, Victoria University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

View from The Hill: Malcolm Turnbull delivers the unpalatable truth to Scott Morrison on climate and energy


Michelle Grattan, University of Canberra

Sometimes birthdays are best let pass quietly. The Liberals are finding the 75th anniversary of their founding another occasion for the blood sport they thought they’d put behind them.

Tony Abbott and Malcolm Turnbull are out of parliament – for which Scott Morrison is much thankful – but their passions are unabated. Each has let fly in interviews with The Australian’s Troy Bramston to mark the anniversary.

Abbott repeated that it was Turnbull’s undermining which did him in (only the partial truth) and indicated he wouldn’t mind returning to parliament but didn’t think the Liberal party would ask him (absolutely true).

Turnbull’s was the more pertinent and, from where the government stands, pointed interview because it fed very directly into central issues of the moment, climate change and energy policy.

“The Liberal Party has just proved itself incapable of dealing with the reduction of greenhouse gas emissions in any sort of systematic way,” Turnbull said.

“The consequence … is without question that we are paying higher prices for electricity and having higher emissions.”




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He knows what he’s talking about. These issues were critical (though not the only factor) in Turnbull losing the leadership twice – first in opposition and then in government. And that was despite doing deals and trade offs to try to satisfy the right in his party.

He still frets about the battles which cost him so much for so little gain. He told the Australian, amid boasts about what his government had done, that his biggest regret as PM was not settling a new energy policy.

What Scott Morrison really thinks on the climate challenge, or what he would do if he were just driven by policy concerns without regard to party considerations or electoral judgements are in that category of known unknowns.

In few areas can Morrison’s beliefs be divined free of political context.

But we do know two things.

Firstly, we don’t have a satisfactory energy policy: emissions are rising; power prices are too high; investment is being discouraged. An analysis released by the Grattan Institute this week was damning about how federal government policies were discouraging investment including by “bashing big companies” (the so-called “big stick” legislation, allowing for divestment when an energy company is recalcitrant, is still before parliament).

Secondly, climate change is again resonating strongly in the community.




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Critics dismiss the attention young activist Greta Thunberg has received internationally, and this week’s “Extinction Rebellion” demonstrations, and many in the government would point to the election result to note that climate change did not carry the day with the “quiet Australians”.

The Morrison win, however, doesn’t mean the issue lacks cut through, or won’t have potency in the future. And although the Liberals like to talk about the miracle victory, it should be remembered the win was by a sliver, not by 30 seats. What made it so notable was that it defied expectations.

Turnbull said in his interview the Liberal party had been influenced by a group that was denialist and reactionary on climate change.

It still is, but this group is not giving trouble at the moment because Morrison, unlike his predecessor, is not provoking them.

The problem for Morrison is that keeping his party calm doesn’t solve the policy problem. Unless that is more effectively tackled, it could come back to bite him, regardless of the positive tale he tries to spin, such as in his United Nations speech.

Turnbull also said in his interview that, among much else, in government he had been “very focused on innovation” which, as we remember, was his catch cry in his early days as PM.

And, if we take information from the Harvard Kennedy School’s Center for International Development, reported in Tuesday’s Australian Financial Review, Australia needs innovation to be a much higher priority.

Australia fell from 57th to 93rd between 1995 and 2017 on the index of economic complexity, which measures the diversity and sophistication of countries’ exports. Our wealth comes from the minerals and energy that form the bulk of our exports but “Australia⁩ is ⁨less complex than expected⁩ for its income level. As a result, its economy is projected to grow ⁨slowly.⁩ The Growth Lab’s ⁨2027⁩ Growth Projections foresee growth in ⁨Australia⁩ of ⁨2.2%⁩ annually over the coming decade, ranking in the ⁨bottom half⁩ of countries globally,” the data says.

“Economic growth is driven by diversification into new products that are incrementally more complex. … ⁨⁨Australia⁩ has diversified into too few products to contribute to substantial income growth.⁩”




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Turnbull’s talk of innovation, agility, and the like was seen by many in his ranks, particularly in hindsight, as too high falutin’. It certainly went down badly in regional areas, which is why in 2016 the Nationals sharply differentiated themselves in the election campaign.

The Harvard work suggests Turnbull’s innovation ambition was on the right track. But the political evidence showed he was a bad salesman for this (and a lot else).

Morrison is a good marketing man. But the test of his prime ministership will be whether he can use his marketing skills to sell policies that the country needs, rather just what he thinks will go over easily with his constituency.

The most effective leaders (and that excludes both Abbott and Turnbull) can both identify what the nation requires and persuade enough of the voters to embrace it, even when it’s difficult. They operate not on the principle of the lowest common electoral denominator, or simplistic descriptions of their supporters – rather they pursue the highest achievable goals.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Governments took the hard road on clean energy – and consumers are feeling the bumps



Prime Minister Scott Morrison (right) and Energy Minister Angus Taylor at Snowy Hydro Scheme. The Grattan Institute says the government should better encourage investment rather than build electricity infrastructure.
LUKAS COCH/AAP

Guy Dundas, Grattan Institute

More than two years on from the sudden closure of Victoria’s Hazelwood coal power station, quite a mess remains. It is clear the federal government’s market interventions have not worked. Electricity prices are higher and supply is tight. Consumers are not happy.

In the face of this, federal and state governments have felt pressured to act – especially after several severe blackouts attracted fever-pitch media coverage and prompted a national debate about electricity reliability. But their approach has been ad hoc and has made things worse in the long run.

Australia is in the midst of a great energy transition. The nation’s entire coal fleet will close over the next few decades, and the government must urgently improve its policy response or electricity consumers will continue to suffer. We propose a solution that ensures coal plants close in an orderly way.

A high-voltage electricity transmission tower in Brisbane. A new report says governments are hindering the clean energy transition.
AAP/Darren England

We can’t afford a repeat of the Hazelwood mess

The aftermath of the sudden Hazelwood closure is a good case study in failed government intervention.

Hazelwood closed in March 2017 after supplying Victoria with cheap brown coal-fired electricity for more than half a century. The plant’s owner, French energy company Engie, gave only five months’ notice of the shutdown. This left no time to build replacement electricity generation, so prices rose and supplies became less reliable.

In the years since Hazelwood’s closure, the federal government failed to clear up more than a decade of uncertainty around national climate and energy policy – including last year when it dumped the National Energy Guarantee. This has left investors wondering when a framework to cut emissions in the electricity sector will be imposed.

Instead of creating investor certainty, the federal government has adopted a “picking winners” approach. It plans to build new generation assets such as the Snowy 2.0 pumped hydro project, and subsidise others through a program of underwriting investments. Alongside this, the government’s proposed “big stick” laws would give it vast powers including those to break up big energy companies. Our research has confirmed this has a chilling effect on investment.

The sudden closure of large coal power stations is challenging enough without being made worse by ill-conceived policy responses. Hazelwood will be the first of many closures. Australia’s entire coal fleet is expected to retire over coming decades as it ages and gets displaced by low-cost solar and wind energy.



The Grattan Institute, CC BY-ND

Flogging the life out of coal plants is not the answer

The crucial lesson from Hazelwood is that Australia needs adequate notice of impending coal plant closures. This allows timely replacement investment to occur, minimising the price and reliability impacts on consumers.

New South Wales’ Liddell power station is due to close next and its owner AGL has given plenty of notice. In 2015 it announced a 2022 closure, and this year firmed up its plans for full closure by 2023. One unit of four will close in 2022.




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Federal Energy Minister Angus Taylor is so concerned at Liddell’s closure he set up a taskforce to examine how to manage it, including extending its life or replacing the lost generation like-for-like.

But his concerns are misplaced. The Australian Energy Market Operator’s 2019 reliability projection for New South Wales is that the outlook is improving more rapidly than it was in 2018. About 2.3 gigawatts of solar and wind energy has been committed in NSW since the start of 2017 – and more is planned.

The best way to maintain reliability is through investment – not by trying to keep an ageing power station running on hot summer days.

The now-closed Hazelwood coal-fired power station in the Latrobe Valley, Victoria.
Global Warming Images/Cover Images

Laws on coal plant closures must grow teeth

Liddell’s closure is very likely to prove manageable. But this cannot be taken for granted in all future cases.

A new rule introduced late last year requires generators to give at least three years’ notice of closure. It’s a step in the right direction, but the rule lacks teeth. The penalties for non-compliance are small, and the mechanism could be gamed by generators nominating a closure date and then continuously delaying closure. We need better insurance to avoid future disruptive closures.

Past Australian experience gives some lessons on what not to do. In 2011 the Gillard Labor government proposed paying coal generators to close, on the grounds that otherwise they might continue operating indefinitely. Four of the five short-listed generators have since closed – without being paid a cent of government money. We are now dealing with the opposite problem, but the lesson holds – taxpayers will be taken for a ride if government money is used to delay or otherwise “manage” coal closures.

International experience is not likely to translate well to Australia. Germany’s coal closure commission built on deep cooperation between business, unions and governments that is not present here. The UK and Canada legislated coal phase-outs, but they did so at a time when coal provided only 10% of their power, compared to more than 60% in Australia today.

Prime Minister Julia Gillard during a visit to the Acciona windfarm near Gunning, NSW, in 2011. Labor’s incentives for coal stations to close were also misguided.
AAP/Alan Porritt

Make coal plants guarantee orderly closure

The Grattan Institute’s latest report, Power play: how governments can better direct Australia’s electricity market, proposes a new approach. Coal generators should be required to put money – indicatively several hundreds of millions of dollars each – into a fund, managed by an independent third party, to be held as security. Generators would be allowed to nominate their own closure window, but would get these funds back only if they closed within this window – providing a strong financial incentive for predictable and orderly closure.

Circumstances change and generators cannot reasonably fix closure decades in advance. To balance flexibility and certainty, younger generators would be allowed to nominate relatively long windows, but they would need to tighten these windows as they age.




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Limited exemptions would be available if early closure did not harm the reliability of the market, or conversely if continued operation of the coal plant in question was absolutely necessary to maintain reliability.

This policy would come with costs. Collectively generators would need to place several billions of dollars into the fund. As generators have a higher cost of capital than would be earned on the held funds, this would cost them, collectively, several hundreds of millions of dollars a year. But the measure would provide low-cost insurance against the destabilising effect of poorly managed coal closures on the A$18 billion National Electricity Market.

The policy would give a clear signal for investment in new, clean power supply before – not after – coal closures, and better manage Australia’s energy transition.The Conversation

Guy Dundas, Energy Fellow, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Nuclear power should be allowed in Australia – but only with a carbon price



The Opal nuclear research reactor at Lucas Heights in Sydney. It does not produce nuclear energy but is used to produce medical radioisotopes and for other purposes.
Tracey Nearmy/AAP

John Quiggin, The University of Queensland

Looking at the state of policy on energy and climate change in Australia, it’s tempting to give in to despair. At the national level, following the abandonment of the National Energy Guarantee last year, we have no coherent energy policy and no serious policy to address climate change.

In this context, the announcement of two separate inquiries into the feasibility of nuclear power (by the New South Wales and federal parliaments) could reasonably give rise to cynicism. The only possible case for considering nuclear power, in my view, is that it might provide a way to decarbonise our electricity supply industry.

Yet many of the keenest boosters of nuclear power have consistently opposed any serious measure to address climate change, and quite a few have rejected mainstream science altogether.

Activists dressed as nuclear waste barrels protesting at the Lucas Heights nuclear reactor in 2001. Nuclear technology in Australia has long raised concern among environmentalists.
Laura Frriezer/AAP



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Yet in a situation which all responsible people view as a climate emergency, we can’t afford the luxury of despair. For this reason, rather than dismissing these inquiries as political stunts, I made a submission to the federal inquiry setting out the conditions required to allow for any possibility of nuclear power in Australia.

The submission was picked up by the national media, which largely focused on my proposal to lift the state ban on nuclear power and implement a carbon price.

The reception from commentators on the right, who want the ban lifted, and from renewables advocates, who want a price on carbon, suggests a middle ground on nuclear power may be achievable.

The three big problems with nuclear power

Three fundamental problems arise immediately when considering the prospect of nuclear power in Australia. First, the technology is expensive: more expensive than new fossil-fuelled power stations, and far too expensive to compete with existing fossil fuel generators under current market conditions.

Second, given the time lags involved, any substantial contribution from nuclear power in Australia won’t be available until well beyond 2030.

Third, given the strong public opposition to nuclear power, particularly from the environmental movement, any attempt to promote nuclear power at the expense of renewables would never get broad support. In these circumstances, any investor in nuclear power would face the prospect of losing their money the moment the balance of political power shifted.

A technician uses a hot cell which shields radioactive material at the Opal nuclear research reactor at Lucas Heights in Sydney.
Tracey Nearmy/AAP

On the first point, we have some evidence from the contract agreed by the UK government in for the construction of the Hinkley C nuclear power plant. This was the first new nuclear construction project to be approved in an OECD country for a number of years.

The agreement to construct Hinkley was based on a guaranteed “strike price” of £92.50/ megawatt hours (MWh), in 2012 prices, to be adjusted in line with the consumer price index during the construction period and over the subsequent 35-year tariff period. At current exchange rates, this price corresponds to approximately A$165.




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Prices in Australia’s National Electricity Market have generally averaged around A$90/MWh. This implies that, if new nuclear power is to compete with existing fossil fuel generators, a carbon price must impose a cost of A$75/MWh on fossil fuel generation.

Assuming emission rates of 1.3 tonnes/MWh for brown coal, 1 tonne/MWh for black and 0.5 tonnes for gas, the implied carbon price ranges from A$50/tonne (to displace brown coal) to $150/tonne (to displace gas). On the basis that nuclear power is most plausible as a competitor for baseload generation from brown coal, I considered a price of A$50/tonne.

A blueprint for reform

The central recommendations of my submission were as follows:

Nuclear power, while costly, could dramatically reduce Australia’s electricity sector emissions.
AAP

Recommendation 1: A carbon price of A$25/tonne should be introduced immediately, and increased at a real rate of 5% a year, reaching A$50/tonne by 2035.

Recommendation 2: The government should immediately adopt the recommendations of its own Climate Change Authority for a 40% to 60% reduction in emissions by 2030, relative to 2000 levels, and match other leading OECD countries in committing to complete decarbonisation of the economy by 2050.

Recommendation 3: The parliament should pass a motion:

  • affirming its confidence in mainstream climate science and its acceptance of the key conclusions of the United Nations’ Intergovernmental Panel on Climate Change;
  • legislating a commitment to emissions reductions;
  • removing the existing ban on nuclear power.

Let’s all meet in the middle

Rather to my surprise, this proposal received a favourable reception from a number of centre-right commentators.

Reaction from renewables proponents, on social media at least, was cautious. But it did not indicate the reflexive hostility that might be expected, given the polarised nature of the debate.

There are immediate political implications of my proposal at both the state and federal level. It will be more difficult for the Coalition-dominated committees running the two inquiries to bring down a report favourable to nuclear power without addressing the necessary conditions – including a carbon price. If the government’s hostility to carbon pricing is such that a serious proposal for nuclear power cannot be considered, it will at least be clear that this option can be abandoned for good.

Former Nationals leader and now backbencher Barnaby Joyce is a strong advocate for nuclear power.
Lukas Coch/AAP

In the admittedly unlikely event that the Coalition government shows itself open to new thinking, the focus turns to Labor and the Greens.

Given the urgency of addressing climate change – a task that is best addressed through a carbon price – it makes no sense to reject action now on the basis that it opens up the possibility of nuclear power sometime in the 2030s. And, if renewables and storage perform as well as most environmentalists expect, nuclear power will be unable to compete even then.

Political hardheads will doubtless say that this is all impossible, and they may be right. But in a world where Donald Trump can win a US presidential election, and major investment banks support UK Labour leader Jeremy Corbyn over Prime Minister Boris Johnson, “impossible” is a big claim

In the absence of any prospect of progress on either energy or climate, the grand bargain I’ve proposed is at least worth a try.The Conversation

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia’s energy woes will not be solved by reinforcing a monopoly



Australia’s energy market has a logjam,
Sean Davis/Flickr, CC BY-NC-SA

Bruce Mountain, Victoria University

The possibility of blackouts affecting half of Victoria has attracted plenty of attention to a document once read only by industry insiders and policy wonks: the Electricity Statement of Opportunities.

The Statement, updated every year by the Australian Energy Market Operator (AEMO), forecasts 10-year supply and demand in the main grids that serve the Australia’s south and eastern states.

But the chance of huge blackouts is just part of the Statement – and in fact it reveals a growing tension between the market operator and the bodies that oversee electricity regulations.




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Blackouts unlikely

So, what does the latest Statement say? The good news is AEMO calculates the expected level of “unserved energy” – that is, demand that cannot be met by supply – is likely to be fairly low, which makes blackouts unlikely.

The bad news is AEMO thinks a standard based on “expected unserved energy” is a poor way to forecast keeping the lights on.

Instead, AEMO points to the unlikely events that nonetheless could have a significant impact on consumers and says we should frame reliability obligations around those.




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In its analysis of these, AEMO finds it is possible (albeit unlikely) about half of Victoria’s households could lose supply in a single event in the coming year.

So, on the one hand AEMO expects the system will basically meet the current obligations for unserved energy, but it also says there is nonetheless the possibility half of Victoria’s homes could suffer outages because of shortfalls on the main power system.

Importantly, as AEMO’s obligation is to hit the expected unserved energy standard, not beat it, it is not authorised to take actions to mitigate these outside possibilities.

Market vs regulators

To really understand the issues here, we need to look back to last year. In 2018, AEMO sought to change Australia’s energy regulations so AEMO could buy as much reserve capacity as it decided was needed to reliably manage unlikely but possible severe failures.

It also asked for the authority to buy reserves for longer periods so that it could source reserves more cheaply.

The Australian Energy Market Commission (AEMC) that sets the rules rejected this application on the basis that the standards were already high enough – maybe even too high – and AEMO was unduly risk-averse (the political risk associated with power failures made it so). By implication, left to its own devices AEMO would look after itself, at customers’ expense.

Whatever the stated rationale, underlying AEMC’s rejection of AEMO’s application is the philosophy of the sanctity of the market: wherever possible, the market is to be protected from intervention.

From the regulator’s perspective, were it to have acceded to AEMO’s request to expand the volume of reserves AEMO bought outside the market, it would be buying reserves it did not need and allowing the price signals in the market to be further undermined.

But I would argue the regulator’s decision is better characterised as protecting the National Electricity Market’s monopoly for the exchange of wholesale electricity.

It may be acceptable to force transactions through a market if there is confidence in that market. But the evidence of market failure is abundant: wholesale prices in Victoria at record highs, rampant exercise of market power, reliability concerns that often make the front page, and in certain cases shortfalls in dispatchable capacity, storage and price-responsive demand.




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In its Statement, AEMO signalled it will work with Victoria’s state government to explore ways they can work together to meet Victoria’s reliability needs, in spite of the AEMC’s decision.

This is a very significant development and I envisage it will presage similar bilateral arrangements between AEMO and other states.




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Should we be worried about this? Not in the least. Electricity markets do not spontaneously arise; they are administrative constructions. For too long the National Electricity Market has had a monopoly on the exchange of wholesale electricity and the AEMC has had a monopoly on its oversight. Monopolies and markets ossify when they get stuck in their originating orthodoxy and ideology.

AEMO is beginning to clear a log jam. There is a spirit of innovation and discovery in the air. This is something to welcome and it is not a moment too soon.The Conversation

Bruce Mountain, Director, Victoria Energy Policy Centre, Victoria University

This article is republished from The Conversation under a Creative Commons license. Read the original article.