December 15, 2015
Australia, Opinions

Renewables: Calling the limits on green power

By Mark Lawson | The Australian Financial Review | 15 Dec 2015 | www.afr.com

The Paris climate conference may have come up with a feel good statement about reducing emissions, but as the problems of the South Australian electricity market in integrating the state’s large supply of wind power show, there is a practical limit to the use of renewables in Australia.

As reported in The Australian Financial Review on Monday the state’s wind generators produced 30 per cent of its energy needs in 2014-15, with wind and solar combined producing 38 per cent. But that high level of supply from intermittent power has played such havoc with the supply that South Australian Treasurer Tom Koutsantonis has called a crisis meeting of energy users and suppliers.

These problems are no surprise to power engineers, although few have been willing to make public statements for fear of the storm of criticism from powerful green and wind lobbies.

As those engineers have been saying for years, although electricity grids have to be balanced for both voltage and frequency 24 hours a day, small amounts of wind, solar and photovoltaic power can be absorbed relatively easily as the grids are operated within certain design tolerances. Tweaking the output of other generators can widen that tolerance.

High levels of alternative energy supply also can be achieved by individual countries in Europe, where the grids are much larger, denser and geographically compact than the widely spread Australian grids. If the many photovoltaic panels in Germany are buried under snow for weeks, as happens every winter, then the power authorities can buy electricity from coal plants across the border in Poland or from nuclear power stations in France. When the wind stops blowing in Denmark, that country can import hydroelectric power across the Baltic from Sweden and Norway.

South Australia is in a different category. The state can always import power from Victoria’s brown coal plants over an interconnector which can supply up to 28 per cent of the state’s needs, but if that interconnector falls out of service and the wind stops blowing, spot prices for the state will spike to almost $2000 a megawatt. When the wind is blowing strongly wind- farm power will flood the market to pull prices down to minus $20 (generators pay retailers to take the power). This is obviously uneconomic for conventional generators, but wind and solar generators can still make some money under the renewable energy target.

This volatility can also gravely complicate the problem of maintaining supply. As a report by Deloitte Access Economics to the Energy Supply Association of Australia, which notes this price volatility, says, this high level of renewables is “already challenging the sustainability of the system”. This volatility and instability, which have also resulted in wholesale prices not much short of double those of Victoria and NSW is set to worsen as more conventional capacity is withdrawn next year. But few investors will be interested in building new plant to supply a market that has such a price lottery.

At the same time, major users interested in building employment-generating projects, such as the redevelopment of the Port Pirie lead and zinc smelter, are being deterred by what promises to be an unreliable supply. Doubts expressed by Nyrstar, the Dutch company developing the Port Pyrie smelter, prompted the emergency meeting.

None of this will be acceptable or even acknowledged by the many, vocal proponents of renewable energy, which can include politicians. South Australian premier Jay Weatherill used the meeting as a venue for announcing that Adelaide would be carbon-neutral by 2050. However, the SA experience shows that renewables have their limits on Australian grids.

If activists have their way and renewables take over the whole market, the result will be brownouts, energy poverty and job losses all in the name of saving the planet.