Thread: Future of the Australian Electricity Market

Originally Posted by ian

careful what you wish for WP.

coal fired power stations take around a full day to ramp up to full output or ramp down to zero.
the grid frequency is principally maintained by what is known as spinning reserve -- historically spinning reserve would be around 25% of a station's nominated output.
In more more recent times the spinning reserve has been redefined to be around 10% of rated output.
However, recent breakdowns in the coal power stations have demonstrated the risk of reducing spinning reserve to such a low level.

Ian

The term "spinning reserve" had a more significant relevance in the days before the competitive market was developed around twenty five years ago. The "spinning reserve" was dictated by each individual state and I remember figures of 2000MW being bandied around. This would have been a state wide reserve and not necessarily based on an individual station output.

Today the availability of power is not dictated by AEMO, as the East Coast overall controller, but by price. Consequently any "spinning reserve", to quote that old terminology, is only there by default, because surplus power is dictated by price. This is why generators during that extreme wholesale price excursion a few weeks back could be ordered to generate. It was the default position should the price point become unrealistic. It is the fundamental failing of the competitive market. I should point out that collusion amongst generators is expressly forbidden with very high penalties applicable should there be any proven instances. When the competitive market was first established other markets were observed and the UK market in particular was watched as there had been some scurrilous activity there during their early days.

As price dictates almost everything it is the reason that fossil fired plants should not be made uneconomic before reliable renewables can reasonably take their place. Again it is why, to my mind, storage of electricity should be the primary mantra today.

Just as a ray of hope for retail electricity prices, they should stabilise a little through Spring and we are already seeing much lower wholesale figures. However, while this gives a window of opportunity through the next three months of milder weather, the price issue will return with a vengeance though Summer should the lessons have not been learnt and acted upon.

Regards
Paul

An interesting read AEMO warns of power 'gaps' in Australia's biggest grid within three years as coal exodus gathers pace - ABC News

This is on the ABC tonight.

Quite the saga.

Seems the banks won't touch it, so it doesn't bode well for other similar situations.

Vertical integration with overseas funding looks to be the only way coal plants have a future... Unless they become government owned?

WA'''s biggest private power station moves to take over loss-making, Indian-owned coal mine - ABC News

Originally Posted by GraemeCook

Would an alternative be to revert to coal gas, rather than natural gas, Ian?

not really

From memory, coal gas was produced by heating coal to produce a mixture of hydrocarbon gases -- principally CH4 (methane) and C3H8 (ethylene), H2 and CO (carbon monoxide).
It was the CO that made coal gas the suicide method of choice.
I don't recall if coal gas is more or less calorificly efficient than methane -- aka natural gas.

Using fossil carbon -- in the coal -- to produce coal gas which in turn is used to produce electricity is not particularly efficient.
To say nothing about the greenhouse intensity of coal gas.


TL;DR
no

Originally Posted by Bushmiller

The term "spinning reserve" had a more significant relevance in the days before the competitive market was developed around twenty five years ago. The "spinning reserve" was dictated by each individual state and I remember figures of 2000MW being bandied around. This would have been a state wide reserve and not necessarily based on an individual station output.

Today the availability of power is not dictated by AEMO, as the East Coast overall controller, but by price. Consequently any "spinning reserve", to quote that old terminology, is only there by default, because surplus power is dictated by price. This is why generators during that extreme wholesale price excursion a few weeks back could be ordered to generate. It was the default position should the price point become unrealistic. It is the fundamental failing of the competitive market.

so what you are really saying is that under the current pricing model the current coal fired stations expect to be paid to retain any spinning reserve.

This is not an unreasonable ask -- at least from the perspective of the coal station operator, who is burning coal (the primary variable input cost) to maintain boiler pressure so that the spinning reserve can kick-in if required. The system [of spinning] works across a state-owned electricity generation network, but mostly fails when individual stations have been sold to profit maximising market operators.

The "fix" might end up becoming payments to the privately owned coal dependent electricity generators that cover their variable cost above those required to keep the lights on at night (when solar output is zero) -- talk about money for nothing on sunny days or when the wind is blowing.


And the payments (for essentially nothing) will do just send AUS's CO2 emissions even higher

Originally Posted by ian

so what you are really saying is that under the current pricing model the current coal fired stations expect to be paid to retain any spinning reserve. ...

I think you have both nailed it. But I would go further - the thermal power stations must be paid to maintain a specified spinning reserve. The alternative is to increase price volatility, possibly to a catastrophic level.

Classic economics: price is established by supply and demand. Increase demand and prices rise, decrease supply and prices rise, and vice versa. And with solar and wind power supply is determined by quite variable and uncontrollable natural forces. When it is sunny and/or windy we can expect high levels of electricity availability and on a still night only that which the thermal generators can supply. Ironically, causing high prices when demand is at its lowest! This is a recipe for increasing volatility.

Logically, the thermal producers should provide a minimal load to minimise this volatility. But it is not in their best interests to do so without compulsion. If they simply reduce supply of a product with notoriously inelastic demand then prices will rise substantially. And there are very few producers. A simple wink and a nod or two "To save all that terrible pollution - you close Plant X and we will close Plant Y". Now ramp up the publicity about how we are saving the planet; a few workers might suffer, but its the big picture."

It sounds dramatic, but it is exactly what happened in California 20 years ago.

its not quite "you must be paid for spinning reserve"

I'm pretty sure AEMO state "you have to have a system in place for frequency deviation control and response" (it's actually called FCAS and stations can opt in or out of this but there is a payment from AEMO that goes along with it for opting in) which leaves it up to the station on how they wish to handle it, most thermal stations will have a small back up of steam pressure they can use to quick generate some load, but it really does leave it up to the business to decide how it wants to do it, you could have a 40MW battery sitting out the back and use that as your response tool and not burn as much coal maintaining your spinning reserve. sometimes for testing and other things you have to call AEMO and tell them you're turning FCAS off as you need the steady load and don't want them driving you up or down in mega watts.

Here is another brilliant idea that gets us one step closer...

Out of thin air: new solar-powered invention creates hydrogen fuel from the atmosphere | Hydrogen power | The Guardian

Here is something to add to the thought-mix: California Avoids Blackouts, But Some Cities Didn’t Get the Message - BLOOMBERG


and here is something to turn thy pubes grey! Bloomberg - Energy Trading Stressed by Margin Calls of $1.5 Trillion

This is something which in some ways is now starting to happen in parts of remote Australia, but could happen in the near future more often.

A small village in Germany which is now off grid, powering their needs via a wind farm, which started very small, solar PV and bio-gas to provide heating for the village.

This German village managed to go off grid and become energy self-sufficient | DW News - YouTube

Mick.

I have posted similar thoughts earlier in this thread for isolated towns and communities, it eliminates a lot of marginal parts of the grid and should be cost effective and more reliable and I am confident this is what will happen.

Originally Posted by Chris Parks

I have posted similar thoughts earlier in this thread for isolated towns and communities, it eliminates a lot of marginal parts of the grid and should be cost effective and more reliable and I am confident this is what will happen.

Hi Chris
You may wish to view the video again.

The village might be self sufficient energy wise, but the village itself is still very much connected to the grid.
The wind turbines produce many more (perhaps 5000) times the electricity the village consumes, exporting the excess energy generated to the German grid means that there is still a high capacity grid connection to the village.

What I took away was by allowing the village's residents to become "shareholders" in the wind farm, opposition to the turbines went away.

Yes the Germans do things slightly differently to Australians, but this is to be expected as their villages are much closer together and their population density makes ours look sparse.

That village had their wind turbine system kick started by a couple (farmers) who paid for the first 4 turbines, then other villagers came on board and raised money to purchase another turbine. I believe it is somewhere around 50 wind turbines at the moment.

My brother in-law lives in a small village in Germany and they are doing a similar thing. We visited in 2013, we stayed with them for some time. I noted the proximity of a couple of wind turbines to the village and remarked that it wouldn't be possible to do this so close in Australia. His reply was along the lines of; "well once villagers started to own the turbines, noise issues and other issues went out the window."

At times we were walking to the local sports field, where above the changing rooms is a restaurant; delicious food. I noted that the local farmer had constructed a new shed on his land since our last visit and that it seemed that the roof design was made with solar panels being in the right direction and vertical alignment for their latitude. The answer was interesting. The locals after taking up ownership of a few wind turbines, turned to solar PV cells on rooftops. As the village is effectively a grouping of tightly squeezed in 100 to 180 year old houses, rooftop space is certainly PV cell unfriendly. The solution: approach the local farmer and offer to build a new shed with his money and their money. The collective will then furnish the rooftop with PV cells and everyone in the village should be able to benefit if they contribute.

This they did, the rooftop has slightly over 300, 200W solar panels on it's main roof, with another 180, 200W panels on the secondary roof. Let me tell you, that is a serious bit of generating power when the sun is shining. Almost non-existent power bills for many in the village. By the way, that shed is pretty massive, but I'm sure you've figured that out.

If you look at the rooftop behind the local mayor in the video, you will see the kind of solar PV cells and how they do it in Germany, no space and if there is so much as a square centimetre of space, it will be covered with a panel.

Mick.

Ian, yes I noted it was still connected but I think that will go away in the future. The only reason the isolated towns are connect to the grid is because central generation was the only way practical way to supply power. Now with battery technology making local storage & generation possible there will be no reason to run kilometres of copper wire which in a lot of cases is unreliable and upkeep intensive. Local grids have been around for a while now though specifically for those reasons and there are a few in WA.