July 20, 2016
Australia

Business blows up as turbines suck more power than they generate

Business blows up on wind farms | Michael Owen | The Australian | July 20, 2016 | www.theaustralian.com.au

Wind turbines in South Australia were using more power than they generated during the state’s electricity crisis, which has prompted major businesses to threaten shutdowns and smaller firms to consider moving interstate.

The sapping of power by the turbines during calm weather on July 7 at the height of the crisis, which has caused a price surge, shows just how unreliable and intermittent wind power is for a state with a renewable energy mix of more than 40 per cent. Australian Industry Group chief executive Innes Willox yesterday said the rise in prices, already the highest in the country, had disrupted industry and served as a warning for the rest of the nation. “That is a serious blow to energy users across SA and has disrupted supply chains upon which thousands of jobs depend,” he said.

“The real risk is if this volatility becomes the norm across the National Electricity Market.

“In June, electricity cost South Australia $133 per megawatt hour on average – already a high price. But since July 1, electricity prices have spiked above $10,000 per MWh at times.”

Mr Willox echoed warnings of the South Australian government on the weekend, saying “We will see similar episodes again, and not just in SA”, and backing calls for major reform of the NEM.

“Changes in the pattern of energy demand and the ongoing build-up of wind and solar make life increasingly difficult for ‘baseload’ electricity generators across the country,” he said.

The power crisis comes amid growing pressure from independent senator Nick Xenophon to invest hundreds of millions of taxpayer dollars into struggling South Australian businesses to save jobs, and as the Turnbull government attempts to establish a hi-tech submarine manufacturing industry in the state.

An analysis of data from the Australian Energy Market Operator, responsible for the administration and operation of the wholesale NEM, shows the turbines’ down time on July 7 coincided with NEM prices for South Australia reaching almost $14,000 per MWh. NEM prices in other markets have been as low as $40 per MWh with the AI Group estimating this month’s power surge in South Australian electricity prices had cost $155 million.

While all wind farms in South Australia were producing about 5780MW between 6am and 7am, by 1pm the energy generation was in deficit as the turbines consumed more power than they created. By mid-afternoon, energy generation by all wind farms was minus-50MW. The situation forced several major companies, including BHP Billiton and Arrium, to warn the state government of possible shutdowns because of higher energy prices, forcing Treasurer and Energy Minister Tom Koutsantonis to intervene by asking a private operator of a mothballed gas-fired plant in Adelaide for a temporary power spike.

BHP, which employs about 3000 people at its Olympic Dam mine in the state’s far north, said its operations in South Australia were under a cloud.

“The security and reliability of power have been a significant concern for BHP Billiton and the sustainability of Olympic Dam,” the miner’s head of corporate affairs, Simon Corrigan, said.

Opposition energy spokesman Dan van Holst Pellekaan said the snapshot of wind power operations in the state showed the Labor government’s energy policies had created an oversupply of cheap wind energy at times but that forced it to import from interstate when prices shot up.

“This wouldn’t be a problem if we still had a reasonable amount of base load generation but we don’t,” he said.

Mr Koutsantonis yesterday said improved interconnection for a “truly national electricity market” would drive prices down immediately. Federal Energy Minster Josh Frydenberg declined to be interviewed yesterday, but said he would convene a Council of Australian Governments meeting as soon as possible.

Not everyone is unhappy – farmer Peter Ebsary hosts four turbines from the Snowtown wind farm in South Australia’s mid north. The wind farm, owned by TrustPower, is the state’s largest.

“We get a financial return and don’t have to do anything … we just sit back and collect the money as long as the wind blows,” he said.