Background
The report comes from the Australia Institute (AI) and the the Victorian Energy Policy Centre, who will undoubtedly be dismissed as a bunch of old lefties, or the socialist dictatorship in hiding.
Anyway their Report released Monday 29th March 2021, is in stark contradiction to the attitudes of the major Australian political parties, who seem to be all in favour of tax payer support for fossil fuels.
The Report is being issued ahead of an important meeting scheduled for mid this year in which Australian energy ministers will decide on a new design for the National Electricity Market (NEM), based upon advice from the Energy Security Board (ESB), and which should be implemented in 2025 or thereabouts. The new design is intended to maintain reliability, stability and security. Current politics suggest that the favoured solutions will be new fossil fuel power stations – probably gas, but we cannot predict with certainty. The ESB advice should be published soon, so this report is probably a bit late to have much influence.
The Socio-Technical Problems
Many technological problems turn out to be social problems, in that the technology is designed for particular ends, to intensify power relations, keep challenges to power relations at bay, or to support (or challenge) the established ways of doing things, although these intentions may be undermined by unintended consequences, or by a change in demand (as with the decline of fossil fuel based electricity). The fact that the energy system will be set up, to some degree, by the social intention of some groups of people, makes this claim clear.
Some terminology
However, let us begin with some technical vocabulary, because it is part of the socio-technical imperatives, providing both focus and limitation. For example, the new design for the market could be limited as it apparently does not include emissions reduction as a primary focus.
The ESB’s workstream is focused on inertia and system strength services. Inertia refers to the extent to which the power system resists changes to demand and supply, over microsecond time scales. System strength refers to the extent to which a stable voltage waveform is maintained after disturbances to the system, such as from short circuits.
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper p.2
Security refers to the ability of the power system to stay within safe technical limits…. [and] less synchronous generation does present a system security challenge
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper p.3-4
This research report is entirely about these stability, or security, issues, which were supposed to be the reason for the move to charge people to export solar power to the grid.
Changes in technological use and capacity
In the past coal, gas and hydro were used to produce stability in both frequency (the rate the system oscillates between positive and negative voltage) and voltage. However, that dependency is becoming a problem. Prof Bruce Mountain, Director of Victoria Energy Policy Centre at Victoria University, Founder of BeatyourBill; and Director of Carbon and Energy Markets (Pty Ltd) and part of this research is quoted as saying:
“The business model underpinning coal and gas is collapsing before our eyes…
“Renewables already create the cheapest electricity in the market and the last leg the fossil fuel industry had to stand on was the security services they have historically provided. Now we can see [see below] that even those services are being delivered in a more reliable and affordable way by renewable energy and that trend will only accelerate in the future,”
Batteries and Renewables to Provide Secure Energy Future: New Report
In the summary of the research (Discussion Paper) Dan Cass remarks:
One of the emerging difficulties is that coal generators are starting to lose money and make financial decisions that harm system security. They will reduce maintenance, generate at a lower level and mothball or ‘decommit’ units, which makes them unavailable even when required for system security
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper. P.11
So the system is becoming unstable because fossil fuels are failing financially not directly because of renewables, as is frequently suggested. Fossil fuel generation is starting to lose money primarily because there is less and less demand for electricity during the day, because of rooftop solar, which possibly has something to do with people’s response to climate change. Hence the idea of either letting the system turn off domestic solar, or charge for domestic solar export, which might help bring in extra income and provide a role for fossil fuels.
Renewables may supply stability if the system is configured correctly
As we have seen above, the research claims necessary security and stability services are being increasingly supplied by renewable energy, batteries and demand response, making coal and gas less essential, which probably makes them even less profitable.
Batteries and demand response provided more than a third (38%) of all frequency control markets in Q4 2020, despite comprising just 0.5% of the grid’s generation capacity
Batteries and Renewables to Provide Secure Energy Future: New Report
Now 38% is not that close to 95% or thereabouts…. so we are nowhere near there yet. However, they go onto claim that Energy Australia’s proposed new 350 MW is “likely” to be able to give three times more stability than was given by the discontinuing 1,480 MW Yallourn coal power station. Which suggests that more large batteries would provide even more stability and possibly all the useful stability we might need.
Over the long term the NEM might not need inertia as conventionally defined at all.
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper p.2
‘Might’ is a hypothetical, suggesting we need more work here. Anyway, the research claims that there is:
no technical obstacle to… replacing the system security which has been provided by coal and gas generators. Innovative new inverter-based sources are already proving themselves cheaper and better than legacy technologies.
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper. Executive summary
Solar, wind and batteries use inverters to convert DC to AC and control power output to the networks and this ‘inverter-based’ class of technologies will <likely> provide most inertia and system strength in the future
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper p.4
These inverters could have advantages if set up properly.
Inverter-based systems can resist system frequency change, like a synchronous generator. Software determines the shape of the frequency response. Inverter based systems can also provide fast frequency or active power response, which does not mimic a synchronous generator and may be as fast as 70 milliseconds [which is a lot faster than the present system]….
The settings on grid-following inverters can be tuned so that instead of creating cascading system strength and inertia problems they can support system strength.
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper p.6 Rearranged for clarity.
Batteries also can be ‘grid forming’ – “setting frequency not simply following it” and batteries “have inertia in proportion to energy stored”.
Interestingly, the AI adds that “new or stronger interconnections in a network increase inertia” (Cass p.6). This seems to be a suggestion in favour of more “poles and wires” and making a more distributed grid.
They also estimate that:
the cost of system security represents around 2% of the cost of wholesale energy
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper. Executive summary
Which is surprisingly little in my eyes, and suggests a relatively easy transition.
Regulation
However, transition will probably not occur at the moment, as the existing regulatory structure inhibits that transition. Regulation is part of the social background to technology, and usually results from a competition between various social groups. It is not surprising that regulation tends to enforce the ‘markets’ favoured by established and dominant players, to the extent those players have been able to get away with it.
Rules:
governing the provision of inertia and system strength are not fit for purpose for the Post-2025 market. They are a brake on the clean energy transition and undermine state-based Renewable Energy Zones.
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper. Executive summary
A rather unclear example they give suggests that regulations prevent solar farms from using their inverters to provide system strength – but I’m not entirely sure if that is what they mean (cf Cass: p.5).
For them, the:
critical test is whether [the regulation] encourages investors to fund the innovative energy and system security capacity Australia needs as coal exits the stage.
Cass Volt-face: Changing energy security in the National Electricity Market, Discussion Paper
We may also need to think about whether contemporary capitalism can provide the transition which might have been provided by other forms of capitalism, or other forms of investment, but that is a different problem and we cannot expect such considerations in this kind of report.
The preferred solution of the general public?
Finally, only 26% of people surveyed preferred the idea of paying coal powered energy stations for this stability service. I’m not yet sure if they asked about gas.
It does not matter what people prefer, if they are wrong. Many people seem to think that Donald Trump was working for ordinary Americans, and that Republicans can be said to be the party of the working class. This does not mean those statements and preferences are remotely accurate or plausible.
But it does mean that people would like to progress if possible, just as the Trump results suggest that Americans recognise the need for a party that represents working class interests.
If more, and better regulated, renewables is the preferred solution of the public then the indication provided by the mainstream political parties is that the public will have to agitate for this solution, and not entirely leave it to committees which may still live in a fossil fuel universe in which emissions do not matter.
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Endnote from a day or two later…
The Clean Energy Council has said that more than 3 gigawatts of new small-scale solar capacity has now pushed the total renewable mix to almost 28 per cent of total supply. The number of individual installations reached 378,451. The average size of installations was 8kW. Renewable generation reached 27.7% of the total production over the whole year for the first time ever.
More Background
The Energy Security Board delivered some public recommendations in January 2021, saying:
The intent of this paper is to set out the direction of work within the Post-2025 work program, rather than elicit stakeholder views at this time. In March 2021, the ESB will consult on potential market designs which are being developed in accordance with the direction in this paper. Various accompanying papers published with this paper are, however, open to consultation
ESB Post-2025 Market Design Directions Paper p.10
The paper has been summarised as having the following aims:
1. Manage exit of coal stations while providing reliability
2. Work out how to provide system services when everything is done by power electronics
3. Work out how to redesign the system so that distributors, communities and household seamlessly integrate with industrial size generators and consumers.
4. Coordinate REZ introduction process and associated transmission
5. Try and herd the States back into the NEM framework
As the Energy Security Board (ESB) released its latest Health of the National Electricity Market report.
Chair of the Energy Security Board, Dr Kerry Schott, said “years of insufficient action” and “band-aid solutions” have characterised Australia’s response to growth of renewable energy generation….
“The technology and renewables-driven transformation of our energy market is no longer an if or when proposition. It is here and now,”…
“The current set of systems, tools, market arrangements and regulatory frameworks is no longer entirely fit for purpose.
“This pace of change means there are now just months to finalise the redesign of the electricity marketplace so consumers can reap the benefits of this change.”
Clarke Blistering assessment gives Australia ‘just months’ to fix nation’s energy security. ABC News 5th January 2021
Professor Ken Baldwin of the ANU’s Energy Change Institute said an integrated energy and emissions reduction policy was needed.
“If there was a consistent policy going forward which had targets milestoned at every decade for the amount of emissions reduction we need to achieve in the electricity sector, that would help,”
Clarke Blistering assessment gives Australia ‘just months’ to fix nation’s energy security. ABC News 5th January 2021
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Another Endnote from April
The Energy Security Board has apparently delivered its recommendations to the Minister Angus Taylor, and is apparently supposed to be distributed to to state and territory energy ministers before being released publicly for feedback.
One of the apparent problems, is that the Energy ministers meet as part of a ‘national cabinet’, subcommittee which means participants are bound by, strict cabinet confidentiality rules and that external viewers, interested parties, experts etc are excluded from the meetings. Some say that Angus Taylor is the only formal member of this subcommittee, and thus effectively controls the agenda and results. It could mean that blatant giving of taxpayer funds to ‘mates’ could proceed without challenge.
Despite the restrictions, it appears that ministers have complained that Taylor will not allow emissions reductions to be discussed. He is the minister for emissions reduction. ACT climate change minister Shane Rattenbury said “If the federal government doesn’t want to talk about it, Angus just doesn’t let it on the agenda.”
RenewEconomy has made several attempts to request information about the proceedings of the federal cabinet energy subcommittee, only to be denied on the basis that all such material is cabinet-in-confidence.
Mazengarb Transparency lost as Taylor seizes control of now “secret” energy minister forums. RenewEconomy 1 DEcember 2020
It is apparently the case that “ministers meet ‘as required’ and that no details of the next meeting are available.” It is also not an unreasonable assumption that the Federal Government will try to design the market so it requires lock-in of coal and gas, and the inhibition of renewables.
Angus Taylor recently wrote:
The record level of renewable investment is in mostly non-dispatchable intermittent energy that works only when the sun shines and the wind blows…. this means there is an urgent need for more investment in dispatchable capacity, and a need to avoid premature and unanticipated closure of thermal generators, which are mainly coal and gas….
The Kurri Kurri gas generator, to be built by Snowy Hydro, will help fill the gap in the market when Liddell closes, if the private sector doesn’t step up. We are working closely with private sector proponents, but with only two years to go, we can’t risk under-supply and the higher electricity prices that would result.
We are strengthening incentives for the private sector to invest in dispatchable generation, whether it is pumped hydro, gas, batteries or just continuing to maintain existing coal and gas generators….
the Energy Security Board is currently working on initiatives that will strengthen dispatchable investment incentives further.
Gas will inevitably provide part of the answer. Opposition to investment in gas generation makes no sense, as generators are now typically [not universally] built to be hydrogen-ready [not much deal if there is no hydrogen] and offer an immediate pathway for decarbonisation <only if gas can be produced without massive leakage>.
Taylor, We need a balance of technologies. Australian Financial Review, 29 March 2021
