Thread: Future of the Australian Electricity Market

So Paul, we have a problem for the generator companies when the price is either very low or -ve, and they would like to be able to do something with that power rather than sell it at a compelled loss.
OTOH, we consumers (who use the wholesale system) have a problem when prices spike, as I saw yesterday for 90 minutes (18:00 to 19:30 I think it was).

Both of those events are fairly short term, but fairly painful for different parties. What is to stop a generator from having (say) a salt water battery or 10 that they can dump excess power into when prices are lousy for them, and then sell back to the grid when prices are better and demand is higher? They wouldn't necessarily need to run the generator at full whack depending upon how good the price is at the time. Wouldn't that help to smooth out the bumps a bit?

In anticipation of your answer being "they make more in price spikes than they lose in the troughs" I would suggest that it would then be very prudent for a Govt mandate to employ such a sca scheme.

Originally Posted by FenceFurniture

So Paul, we have a problem for the generator companies when the price is either very low or -ve, and they would like to be able to do something with that power rather than sell it at a compelled loss.
OTOH, we consumers (who use the wholesale system) have a problem when prices spike, as I saw yesterday for 90 minutes (18:00 to 19:30 I think it was).

Both of those events are fairly short term, but fairly painful for different parties. What is to stop a generator from having (say) a salt water battery or 10 that they can dump excess power into when prices are lousy for them, and then sell back to the grid when prices are better and demand is higher? They wouldn't necessarily need to run the generator at full whack depending upon how good the price is at the time. Wouldn't that help to smooth out the bumps a bit?

In anticipation of your answer being "they make more in price spikes than they lose in the troughs" I would suggest that it would then be very prudent for a Govt mandate to employ such a sca scheme.

FF

Ideally a generator stops generating when he runs at a loss: Just common sense. BUT: It really isn't that simple in the coal fired stations combined with their contracts. I noticed our Traders at Millmerran commented that yesterday they saw ten price spikes in excess of $10,000/MWh. Admittedly that was in QLD. If the same happened in NSW, I hope you ran around switching everything off! Jeez, you are going to be so fit!

The general strategy in thermal stations is to reduce load as much as possible down to fixed contract levels when prices are low or negative and to go hell for leather when prices are high, during the even peak especially, and the night in general. This is a complete turnaround from the way it used to be.

There is still a reluctance to embrace renewable technologies and much of this comes down to viability.

Regards
Paul

Originally Posted by Bushmiller

There is still a reluctance to embrace renewable technologies and much of this comes down to viability.

Is this denial of the way the world is going, or some hope/belief that there will be a U turn, or have they simply made a decision to "take the money and then walk away"? Or something else entirely? Perhaps a hope that the government will step in and (effectively) buy everything? I have to assume that they have put some thought into the future, even if it's just an escape plan!

Originally Posted by Warb

Is this denial of the way the world is going, or some hope/belief that there will be a U turn, or have they simply made a decision to "take the money and then walk away"? Or something else entirely? Perhaps a hope that the government will step in and (effectively) buy everything? I have to assume that they have put some thought into the future, even if it's just an escape plan!

Warb

My own view, and I have to emphasise that it is purely a personal standpoint, is that all this is a result of commercial decisions. In a way I can understand that as companies have to answer to their shareholders or owners. Even if senior executives want to go off on an environmental tangent, they can't. It is the reason why major utilities should be state or government owned. There was an occasion when some state owned electricity entities did generate as much as possible and against commercial considerations, but that didn't last for long as it was in contravention of the market rules. Also, while I would like to say it was the result of altruistic intentions, I have to say it was political. Nothing comes for nothing in this modern environment.

Regards
Paul

Originally Posted by Bushmiller

....companies have to answer to their shareholders or owners. Even if senior executives want to go off on an environmental tangent, they can't.

This is not strictly true. The Directors of a company can do pretty much whatever they like, if it's "in the best interests of the company". They can be removed by the shareholders, but that requires more than 50% of the shareholders to vote for the removal. The point to consider here is whether doing nothing (which seems, to the outsider, to be what the Directors are doing), is actually in the best interests of the company.

Whilst I have had dealing with a good many company directors of smaller companies who are brain dead, and only in their roles because they had (often inherited) enough money to buy their way in, the directors and senior executives of large companies are normally a bit more on the ball these days - most of the old "family" companies have gone by the wayside, largely because of incompetent family directors who buried their heads in the sand. I would have expected them to have spent some considerable time and effort investigating the path forward and coming up with an optimum approach. If that involved a paradigm shift in operations, that would, from experience, normally be "sold" to the shareholders in glossy brochures and with great fanfare. I find it hard to believe they have no plan whatsoever, given that the world in general is clearly on a crusade to be "carbon neutral", or at the very least to profit from marketing itself in such a manner. That in turn leads me to suspect that they do indeed have a plan, but that the plan is not an adaption of business methods, rather (as I hinted at earlier) a financial "cut and run" escape plan based on public money being used to cover the fairly obvious need for unprofitable coal-fired base load generation during the transition. Interestingly, if that is indeed "the plan", then any attempt by them to improve the situation by installing batteries or any other green/storage capability is (for them) counterproductive as it lessens the need for public money to be spent propping them up. If they do nothing, then someone else will eventually have to step in and pay, either to buy the whole thing and run it at a loss, or give them the money to fix the issues!

Originally Posted by Warb

The Directors of a company can do pretty much whatever they like, if it's "in the best interests of the company". They can be removed by the shareholders, but that requires more than 50% of the shareholders to vote for the removal. The point to consider here is whether doing nothing (which seems, to the outsider, to be what the Directors are doing), is actually in the best interests of the company.

Warb

I probably should have not been so general with my comment, but I would suggest that any decision made by the senior executives has to be commercially viable. The ubiquitous bottom line. The problem for the moment is that entry into the renewable sector is a minefield. If it were not for the subsidies for both rooftop and commercial farms, solar would not be anywhere near the stage it is at now as an example of this. The Australian market in particular is dogged by a very conservative approach at best and a sceptical tending towards scathing attitude at worst.

On your second point I did distinguish between shareholders and owners, but I would agree not well enough. Shareholders require majorities while owners have only themselves. However, I am approaching the boundary of discrete information here and it is not my perogative to share that information.

Regards
Paul

Originally Posted by Bushmiller

....but I would suggest that any decision made by the senior executives has to be commercially viable. The ubiquitous bottom line.

Absolutely, but the "bottom line" is ongoing - a short term loss is often a required and acceptable penalty to ensure future profitability. At present I'm struggling to see any effort being put into ensuring that ongoing profit, and given the increasing calls for the shutdown of coal fired generators, I find that interesting....... and possibly a signal that the plan is indeed "cut and run", or an assumption of future public funding. I strongly suspect the latter.

Here is a question for everybody. How many industries are there with a price range for a particular good as extreme as that for electricity? The price for 1MW can range from -$1000 to $16600.

Effectively, the price is the first level in the frequency control and the effect of supply and demand.

Regards
Paul

Originally Posted by Bushmiller

How many industries are there with a price range for a particular good as extreme as that for electricity? The price for 1MW can range from -$1000 to $16600.

Economists have some jargon for that, Paul.

It is what happens when an inelastic supply curve meets an inelastic demand curve.

Pity is did not apply to breweries!

Another article on the future of hydrogen as propulsion for vehicles:

Will hydrogen overtake batteries in the race for zero-emission cars? (msn.com)

It acknowledges problems, particularly around refueling, but there I think back to the early days of the ICE. I think I read that fuel was obtained from the local pharmacy until fuel stations abounded. It also concludes that H2 will not be for every application even if it is adopted, but seems more likely for heavier goods vehicles and coincidentally that seems an application which tests the limits of batteries.

Regards
Paul

“Future of Victoria electricity market”
Wow I thought this thread would have been like a lightbulb on steroids yesterday an today, well apart from the members in Victoria with out power.

Cheers Matt.

I am far less sanguine than you, Paul, on the future of hydrogen other than in very small niche markets. The reason is contained in the first paragraph of your articles.
"When (hydrogen) reacts with oxygen it produces only water and releases abundant energy. "
The laws of conservation of energy say that to create that you need an equal amount of energy; in practice you need more energy because nothing is 100% efficient. Energy costs money, abundant costs lots. Then there are problems of storage, safety, transport, etc.

The costs seem insurmountable.

Originally Posted by Bushmiller

I think back to the early days of the ICE. I think I read that fuel was obtained from the local pharmacy until fuel stations abounded.l

I think that was true for a short period. Then petrol was supplied in square 4 gallon tins, packed in 4-tin pine crates, sold by general stores. Then in the twenties hand pumped petrol bowsers were installed on the kerbside outside those general stores. Some of them were still existant in the fifties and disappeared in the sixties.

More recently, in the fifties and sixties, you could only buy olive oil at pharmacies, in quite small bottles. No mention as to whether it was extra virgin!

Originally Posted by GraemeCook

"When (hydrogen) reacts with oxygen it produces only water and releases abundant energy. "
The laws of conservation of energy say that to create that you need an equal amount of energy; in practice you need more energy because nothing is 100% efficient. Energy costs money, abundant costs lots. Then there are problems of storage, safety, transport, etc.

The costs seem insurmountable.

For commercial transport, you require abundant energy to drag a 55tonne B-double hundreds of kilometres across the country, and you can't sit around waiting for it to recharge. You also need to consider the weight of the power source, as each tonne of battery, hydrogen+tank (or diesel for that matter) takes a tonne off your load capacity. In the case of a battery, it also removes the option to increase your load capacity by only half-fuelling for a short trip. I don't know how the weights of these renewable power sources compare, but a friend tells me that a B-Double drinks about 80l/100km - at 0.83k/L that's about 66kg of fuel per 100km travelled - and has a range of around 2000km.

Tesla is quite shifty about how much its Semi weighs, but they say it has a range of 500miles (800km). Without knowing how much it weighs (tare weight, including batteries), it's not really possible to compare with a diesel truck because the load capacity is "GVM - tare", so we don't know what load could be carried, but Melbourne to Sydney (880km-ish) in a single hit looks very doubtful*.

*Because truck drivers are regulated in respect of working hours and rest hours, "unnecessary" refuelling stops are unpopular (at least with the owners/drivers that I know!).


Trains have similar requirements for massive amounts of stored energy, I'd assume.

Originally Posted by Warb

Trains have similar requirements for massive amounts of stored energy, I'd assume.

Warb

Trains, as BobL pointed out, are a good candidate for overhead direct electrical power, so apart from "shunting" there may not be much takeup on the railways for hydrogen.

Something that occurs to me surrounds all the hype, both positive and negative, over electric private vehicles. It seems to me that large vehicles and other forms of bulk transport (ships and aeroplanes?) are far more problematical.

The hype around an electric vehicle not making a pleasant sound, the lack of charging stations, the time taken to charge etc. are all either ludicrous or surmountable and are largely thrown into the debate because of prejudice, self interest or, mostly, reluctance to change.

Regards
Paul