Coal
fails in the heat. And so it did on 10 February 2017, as the heatwave
that sparked South Australia’s blackout rolled across into NSW and
emergency load-shedding was required in Australia’s biggest state. The
Liddell power station failed to perform and could only operate at below
half-capacity. In fact, throughout 2016-17 the 45-year-old power
station’s average capacity was only 54%. It almost never operates at
peak performance.
To increase grid reliability, the last thing you would want to do is rely upon an underperforming, old power station prone to failure during heatwaves.
But the good news is that Australia does not have to wait until after 2022 to put in place an energy security solution. Consumers can pay less, pollution can be cut and the grid made more reliable without waiting to keep a coal plant open which may or may not have a seller or a buyer.
Demand response technology reduces peak demand to keep the grid stable. Cloud computer software is used to control a potential fleet of millions of domestic and commercial devices, from smelters to residential air conditioners, aggregating them into what the CSIRO calls a “virtual power plant”. From the consumer’s perspective, it is as easy as taking a selfie on a tram.
A recent Australia Institute report into demand management showed this emerging industry will be worth US$36bn by 2025, more than tripling from 39 GW to 144 GW. The International Energy Agency benchmark is that demand response can mitigate about 15% of peak demand. Australia is at less than 1%.
In 2002 Warwick Parer, who previously had been John Howard’s energy minister, recommended to state and federal energy ministers that “negawatts” (negative megawatts) of saved energy should be able to compete in the wholesale energy market with megawatts of generated energy. 15 years later we are still waiting for this simple market reform, which would allow companies and consumers to provide demand response, without any government subsidies.
Rather than letting modest measures such as demand response compete, politicians are too easily captured by grand designs for fixing the national electricity market. If they ever happen, like Snowy Hydro 2.0 or keeping open Liddell, they would come online by some time in the 2020s.
But by next summer, demand response “negawatts” could deliver. In March EnerNOC committed to providing 100MW to South Australia by 1 December 2017, if the market was open to negawatts, as Parer recommended. Greensync, an Australian start-up, said it could deliver 300MW of negawatts across the National Electricity Market.
Minister Frydenberg has promoted the fact that the Australian Renewable Energy Agency is funding a project with the Australian Energy Market Operator, aimed at delivering 160MW of demand response by this summer. The tenders for this ‘DR Round’ trial proposed 1,938MW of capacity could be delivered by December 2018. By way of comparison, Liddell has a capacity of 2,000MW – and even that has been drastically recued due to its age.
If the grid is under stress when the mercury rises this summer, every megawatt counts and this trial could be expanded. Australia is in the midst of a massive and inevitable transition. Ten coal plants have closed in less than a decade and this economic decline is irreversible.
In the short term, to provide stability and lower prices the Australian Energy Market Commission should get on with implementing the five-minute rule. Reforming the market so that wholesale electricity is traded every five minutes would help level the playing field between megawatts and “negawatts”, spur big investment in battery storage and help to stabilise the grid.
In the longer term, energy and climate policy will need to be fully integrated. Already the Australian Energy Council, which represents coal and gas generators, calculates that the political bickering on energy has led to an investment drought that is costing consumers the equivalent of a $50 a tonne carbon price. This policy stalemate is not just pushing up prices; it is pushing the grid to its limits and creating the risk of blackouts.
But there is something we can do about power prices and reliability for this summer and it is not by debating what an ageing coal plant in NSW will or will not be doing in six summers’ time.
To increase grid reliability, the last thing you would want to do is rely upon an underperforming, old power station prone to failure during heatwaves.
But the good news is that Australia does not have to wait until after 2022 to put in place an energy security solution. Consumers can pay less, pollution can be cut and the grid made more reliable without waiting to keep a coal plant open which may or may not have a seller or a buyer.
Demand response technology reduces peak demand to keep the grid stable. Cloud computer software is used to control a potential fleet of millions of domestic and commercial devices, from smelters to residential air conditioners, aggregating them into what the CSIRO calls a “virtual power plant”. From the consumer’s perspective, it is as easy as taking a selfie on a tram.
A recent Australia Institute report into demand management showed this emerging industry will be worth US$36bn by 2025, more than tripling from 39 GW to 144 GW. The International Energy Agency benchmark is that demand response can mitigate about 15% of peak demand. Australia is at less than 1%.
In 2002 Warwick Parer, who previously had been John Howard’s energy minister, recommended to state and federal energy ministers that “negawatts” (negative megawatts) of saved energy should be able to compete in the wholesale energy market with megawatts of generated energy. 15 years later we are still waiting for this simple market reform, which would allow companies and consumers to provide demand response, without any government subsidies.
Rather than letting modest measures such as demand response compete, politicians are too easily captured by grand designs for fixing the national electricity market. If they ever happen, like Snowy Hydro 2.0 or keeping open Liddell, they would come online by some time in the 2020s.
But by next summer, demand response “negawatts” could deliver. In March EnerNOC committed to providing 100MW to South Australia by 1 December 2017, if the market was open to negawatts, as Parer recommended. Greensync, an Australian start-up, said it could deliver 300MW of negawatts across the National Electricity Market.
Minister Frydenberg has promoted the fact that the Australian Renewable Energy Agency is funding a project with the Australian Energy Market Operator, aimed at delivering 160MW of demand response by this summer. The tenders for this ‘DR Round’ trial proposed 1,938MW of capacity could be delivered by December 2018. By way of comparison, Liddell has a capacity of 2,000MW – and even that has been drastically recued due to its age.
If the grid is under stress when the mercury rises this summer, every megawatt counts and this trial could be expanded. Australia is in the midst of a massive and inevitable transition. Ten coal plants have closed in less than a decade and this economic decline is irreversible.
In the short term, to provide stability and lower prices the Australian Energy Market Commission should get on with implementing the five-minute rule. Reforming the market so that wholesale electricity is traded every five minutes would help level the playing field between megawatts and “negawatts”, spur big investment in battery storage and help to stabilise the grid.
In the longer term, energy and climate policy will need to be fully integrated. Already the Australian Energy Council, which represents coal and gas generators, calculates that the political bickering on energy has led to an investment drought that is costing consumers the equivalent of a $50 a tonne carbon price. This policy stalemate is not just pushing up prices; it is pushing the grid to its limits and creating the risk of blackouts.
But there is something we can do about power prices and reliability for this summer and it is not by debating what an ageing coal plant in NSW will or will not be doing in six summers’ time.
- Ben Oquist is executive director of The Australia Institute
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