Energy Pulse Blog

Two recent reports have made for particularly interesting reading. The first was the New Zealand Energy Strategy to 2050: Powering Our Future - Towards a sustainable low emissions energy system. This report, prepared by the NZ Ministry of Economic Development is a refreshing and challenging look at how New Zealand sees its energy future. The core of the strategy is to achieve:

• Resilient, low carbon transport
• Security of electricity supply
• Low emissions power and heat
• Using energy more efficiently
• Sustainable energy technologies and innovation
• Affordability and wellbeing

It is interesting how often the word resilient comes up. In transport, the NZ government has realised that there are at least 2 major crunches coming; the need to reduce greenhouse gas emissions and the likelihood of international oil price uncertainty and risks of supply disruptions. Among the many actions to be taken are:

The government has made in-principle decisions to set a target of halving domestic transport emissions per capita by 2040, and for New Zealand to be one of the first countries to widely deploy electric vehicles.
Increasing the diversity of transport fuels by introducing biofuels and, in time, electric cars will also make New Zealand more resilient to international oil price uncertainty and risks of supply disruptions.

Provision for travel alternatives such as public transport, walking and cycling should be continually upgraded and improved to ease traffic congestion, provide an alternative to private vehicle travel and reduce greenhouse gas emissions.

For stationary energy, an even bolder position is put forward … How about restricting new fossil fuel power plants?

The world is in a state of transition. The government believes that, during this transition, some areas of the energy sector would benefit from clear guidance to ensure we make the necessary changes to reduce our emissions of greenhouse gases.

As a result, the government has stated a clear preference that all new electricity generation be renewable, except to the extent necessary to maintain security of supply. In support of this principle, and providing time for the full introduction of a price on greenhouse gas emissions, the government’s view is that there should not be a need for any new baseload fossil fuel generation investment for the next ten years.

The government expects all generators, including state-owned enterprises, to take its views into account when considering new generation investments, and the government will advise state-owned enterprises that it expects them to follow this guidance. Currently there are no powers to regulate or restrict new fossil fuel generation.

The government will consider regulatory options to reinforce the government’s objectives for limiting new fossil fuel generation. It is important that any new regulations are a flexible and effective means to restrict new fossil fuel generation except where necessary to ensure security of supply.

This is real leadership in energy.

The second report is Power plays - Energy and Australia’s security by the Australian Strategic Policy Institute. This report is a sobering look at energy security risks in general and asks the question: Are we (ie Australia) vulnerable or just sensitive?

Clearly, oil is at the centre of any discussion about energy security, with the geopolitical instability in the Middle East, Central Asian rivalries, the emergence of Russia as an energy superpower, and ever escalating demand for oil from the West and the new growth from Asia and India. While Australia has considerable energy independence, many of the countries in our region are deeply vulnerable to the impact of an energy shock. Their vulnerability will have profound and unsettling consequences for Australia.

Looking back at the Energy White Paper the Federal government put out in 2004, oil prices were yet to reach $US40 a barrel and electricity from nuclear power in Australia wasn’t even mentioned in the report. This report also concludes that “Australia will not impose significant new economy-wide costs, such as emissions trading, in its greenhouse response at this stage” and “further major action on transport fuel security is not, at this stage, needed in Australia.” The paper was about the “long term framework”. It looks to me that the framework is starting to buckle and maybe we need a new White Paper, except this time one that will actually help Australia readjust to the new energy paradigm instead of ignoring it.

I can’t help but feel Australia is a bit too complacent, slow and unprepared for our energy future. A future that is going to be very different to what we have been used to, and that is going to arrive a lot faster than expected.

Terry McCrann recently wrote When the wind doesn’t blow, power doesn’t flow even in Denmark rubbishing wind power in Australia - “Ignore the hot air: in Australia, wind power is nothing more than an expensive vanity”, writes Terry McCrann October 06, 2007 - commenting on times when there is little or no wind in Denmark, requiring other generation to be used, he then runs down the use of wind power in Australia, eg:

“Nor does it explain how it would “work” in Australia. Yes, you can connect all the state grids; but if you had a huge investment in wind in, say, Victoria, you would still need equivalent coal/nuclear/gas somewhere — as essentially idle surplus capacity. Unless you were prepared to literally turn off the lights, and everything else, when the wind didn’t blow. Yes, Denmark’s wind story has a huge lesson for Australia. That there is no way wind can make a sensible major contribution to mainstream power generation in Australia.”

I expect that with such a small land mass Denmark will occasionally have this problem, but as Denmark is only a bit more than half the size of Tasmania, I doubt this problem would arise in the NEM, which spans 4000 km from Port Douglass to Port Lincoln and now includes Tasmania.

There seems to be a widely held belief in government (and the press) that renewable generation is unreliable or unsuitable for large scale deployment because it may be intermitent. This belief, in my opinion, is the result of a poor understanding of renewable generation technology, electricity networks and electricity markets.

Firstly, all power networks need a reserve margin, usually at least equal to the size of the largest generator, for when it trips or goes offline unexpectedly. The bigger these units, the larger the standby needed (typically 600 MW in NSW). Secondly, demand changes introduce their own variability into the load, which is ordinarily managed through existing arrangements. It is common for demand to change by 100-200 MW over 5 minutes in the NSW market. From a system perspective, a 100 MW increase in demand is no different to a 100 MW reduction in supply through reduced wind, sun or any other cause. McCrann also laments that Denmark has to rely on imported power to meet demand when there is low wind. I guess he isn’t aware that NSW, with almost no installed wind or solar power relies on power imported from Queensland and Victoria to meet it’s minimum reserve levels.

There are many studies that have shown that widely dispersed renewable generation doesn’t need equivalent backup. The Utility Wind Interest Group’s paper - Wind Power Impacts On Electric Power System Operating Costs: Summary And Perspective On Work To Date (pdf) concludes:

“The results to date also lay to rest one of the major concerns often expressed about wind power: that a wind plant would need to be backed up with an equal amount of dispatchable generation. It is now clear that, even at moderate wind penetrations, the need for additional generation to compensate for wind variations is substantially less than one-for-one and is generally small relative to the size of the wind plant.”

It’s been a while coming, but it looks like the power industry is going to follow a similar trajectory to the computing and telecommunications industries. Initially these industries were dominated by centralised (”baseload”?) providers. As needs and technology changed, smaller distributed (and more efficient) systems took over. The same criticisms were made at the time about personal computers and mobile telephony (that they could never displace the incumbent centralised technology). The “baseload myth” is going to take some time to be exposed, but if markets are allowed to operate efficiently, these more efficient technologies will quickly spread.