Thread: Future of the Australian Electricity Market

I held off, too, Paul, as I didn't want to lead the debate ... We are basically singing from the same song book.

Agree about batteries. No where near commercially cost effective.

Also was puzzled about reference to long term storage. Pumped hydro only needs to tide you over until the next sunny or windy day. Guess it was just loose journalism.

Costs: $2 or 12 billion - wonder if any credibility in either number? If Snowy 2 is commercially viable at $12 billion capital cost, then it must have been hyper-profitable at $2 b. Why weren't there a queue of commercial developers?

But is commercial viability even relevant now? Roads are not commercially viable! But essential. Would love to see the calculations being done in Treasury about the possible economic costs of the instability in the electricity network, and modelling possible scenarios from the participants:

• coal burning generator may decide that they will only accept a take or pay contract for entire capacity, or decomission their plant - no spot sales,
• solar or wind generator may decide it is more profitable to mine cryptocurrency than to sell into the grid.

My threepence worth...

I watched the program and I now know more about Florence.

As suspected, it confirmed for me that there was insufficient project feasibility and planning before approval to proceed.

The potential risks were known but not given sufficient weight. The incentives to proceed were as much political as economic. I put that down to the ownership and political incentives to have a large flagship renewable project underway.

Snowy Hydro has always been a government venture. First by the Comm Gov, then owned by NSW & Vic, and now fully owned again by the Comm government. It may have been, is, or will be profitable in the future, but it has never been a commercial venture. Like Australia Post, the execs in Snowy Hydro may think they are running a fully commercial venture, but they make decisions with a large government safety net suspended below them. Snowy 2.0 wasn't a fully commercial decision.

Other than the grid expert expressing his views about batteries being a better option, alternative storage solutions to Snowy 2.0 were understandably beyond the scope of the 1hr programme.

Large infrastructure project very rarely come in on budget and on time. So, nothing new there. The optimists usually prevail over the pessimists in the planning stage.

As governments are either the primary or joint partnership investors in most large infrastructure projects the need for an early return, other than political, is not the same as it is in the commercial world. Whether there will ever be a Return on Investment (ROI) for the Australian taxpayers with Snowy 2.0 may not be known in my lifetime, but it would be good if it could at least start to contribute to digging us out of our energy storage hole some time soon, although digging Florence out of her current hole doesn't give one a lot of hope there.

Mr. B, Graeme and Neil, you have all made very pertinent points.

There is indeed a time when necessity outweighs (I can't bring myself to use the word "trumps" ) economic viability and only a government can step in with this in a competitive market.

This is an interesting article from back in 2019 and interestingly some of their forecasts at the time have come to bear and were even conservative predictions of gloom.

Snowy 2.0 will not produce nearly as much electricity as claimed. We must hit the pause button | RenewEconomy

Towards the end of the article, it investigates the claims of what the system would supposedly deliver. It may well be less than half of the 2000MW originally touted. The claim is based on idealistic dam levels that are not possible in practice and ignores the draw from other stations in the original Snowy system. It was once again a gross lie for political purposes.

Regards
Paul

Just on a slightly different tack I was called into work yesterday and an interesting situation had developed because of the local bushfires. The transmission line out of a substation for one of our two units was under threat from the fires and if it came out of service one of our units would have tripped as there would have been nowhere for the power to go. Fortunately, for both us and the system in general, the wind changed or died down and the fire became more controllable. AEMO removed their alert notice and life continued as normal (mild chaos and occasional panic).

One of the fires itself is only about 15 to 20kms out from Millmerran. On Sunday the choppers came in and sucked the water out of the local swimming pool. No small children were lost in this process as everybody was told to go home and the pool was closed to the public. I am told they didn't go home and they watched this fascinating procedure from outside the railings. I would have watched too if I had known what was going on. I did see all the choppers going over not realising where they got the water from.

Farm dams are often used for this purpose, but it has been extremely dry this way of late and dam levels are probably low. The original pool was rebuilt recently and has been open less than a month.

Regards
Paul

Originally Posted by Bushmiller

It was once again a gross lie for political purposes.

I'm quite certain that the overall view was "optimistic" for political reasons. But the difficulty with that is that these things don't go away and tend to come back to haunt people. Politicians know this, so whilst they may be "optimistic", they don't normally go too overboard if they don't genuinely believe the project will work - they have at least some grasp of the future ramifications of having their name on an utter failure.

For most of my adult life I would have made the above statement, based simply on common sense and logic (yes, I realise neither hold much sway in politics!). However..... after I retired and we moved to the Canberra area, my wife got herself a job in the public service. She's not involved in the energy sector, but her job does involve planning, dealing with contract companies, designing and reviewing policies and the like. And it's frightening. Having been quite a high ranking executive 20 years ago, and then running her own business for 20 years, she's finding it hard going, because "they" are completely detached from reality. Obviously I can't go into details, but decisions are made based on nothing, and statistics are regarded as gospel for decision-making purposes, yet when questioned they are seemingly baseless - nobody knows where the number came from - it's like Barney Stinson - the answer is 83%!!

So now, whilst my statement would remain the same, the reasoning has changed. I now believe that the public service is largely incompetent, and the information it deals with is either incorrect, meaningless, or a distillation of the two designed to provide the person above with what they want to hear. I now feel (a bit) sorry for politicians, because if they ask for information and are supplied with what somebody thinks they want to hear, how can they possibly get things right?

Edit: I also believe (know, from experience) that when outside contractors are used, the contract details are often far below what is realistic because once a company has got the contract it can delay, increase prices etc. to its hearts content. Contract companies almost never get penalised, pressured or suffer any other "punishment" for doing this! Combined with the inability of the public service to come up with accurate real-world information and estimates, it's a massive problem.

I'd also note that it seems to me that public servants don't seem to care much about outcomes or spends. I suspect this is because at the end of the day there is NEVER a downside for them. In the private sector, when the company loses money questions are asked and somebody suffers (whether reputation or financial). In the public sector they just go on to the next project....

Originally Posted by Warb

... And it's frightening. Having been quite a high ranking executive 20 years ago, and then running her own business for 20 years, she's finding it hard going, because "they" are completely detached from reality. ...

Years ago this dicotomy was identified as Canberra and "the real world".

The "real world" starts at Queanbeyan.

Nothing is as terrifying as a second generation Canberran.

(My contribution) ... now we have third generation Canberrans.

Originally Posted by Warb

Edit: I also believe (know, from experience) that when outside contractors are used, the contract details are often far below what is realistic because once a company has got the contract it can delay, increase prices etc. to its hearts content. Contract companies almost never get penalised, pressured or suffer any other "punishment" for doing this! Combined with the inability of the public service to come up with accurate real-world information and estimates, it's a massive problem.

I'd also note that it seems to me that public servants don't seem to care much about outcomes or spends. I suspect this is because at the end of the day there is NEVER a downside for them. In the private sector, when the company loses money questions are asked and somebody suffers (whether reputation or financial). In the public sector they just go on to the next project....

Warb

In our industry we call those subsequent changes in price "variances" and I think frequently that is where contractors make their money. They bid low to gain the contract and charge high when alterations are made to the original specs.

As far as accountability is concerned, it is just not at the same level as within the private sector.

Regards
Paul

I've worked on some power cable projects where a fairly incompetent contractor submitted a low-ball, tender-winning price (largely because they didn't really understand the scope of work and price it accordingly), then proceeded to submit variations like you wouldn't believe to try and make up the difference. Did the customer (power utility) ever sit down at the end of the project and add up the total they ended up paying? No, that would have involved large helpings of egg on face for all concerned.....

I haven't seen 4 Corners yet (been away). It seems to me that Turnbull 2.0 wasn't much cop at his nation-building projects. The NBN and SH 2.0 are both way over budget, late, and probably far less effective than they could have been. For the former (NBN) I don't know if he was put under control by his superiors, but it's hard to see that he was not controlled. He was certainly compromised, particularly as PM.

For the latter, I think his heart was in the right place, but it seems to have been highly politically motivated to try and nostalgically reinvigorate the nation-building exercise of the 1950s. However, those times were completely different and all the planets lined up beautifully. The war was over, we needed skilled people and increased population (to eat all that wheat and wear all that wool), and we needed electrical power to crush said wheat and mill the wool.

And yet Turnbull was probably the smartest PM we've had since Rudd The not-so-fat Controller right up to Albo. That should be pause for thought regarding the Aukus project, and how that could go awry.



I had dinner on Monday with someone who works for Defence in a planning role of some kind. A fairly aware person, but she is hell-bent on nuclear power being the right fit for Australia. "What about the waste problem?" I asked her. "It's a big country." was her solution. I didn't bring up what First Nations people might think of that, confident in the knowledge that it would be dismissed. She glossed over the shortest start-up time-frame of 10 years, and the staggering cost. Apparently Voldemort's Koolaid is pretty sweet nectar, and she's chugging it down.

This, by the way, was just one or two streets away from Morrison, in Lilli Pilli, and the conversation was on the balcony while we drank in the expansive water views.

I thought Malcolm came across on the 4 Corners prog as very sheepish and defensive - if in doubt, deflect, deflect, deflect.

Felt sorry for the current project manager guy from Snowy Hydro who has basically inherited most of the mess from his predecessors, but at least was prepared to face the cameras and respond as best he could.

I was recently made aware that there are two pumped hydro storage facilities under consideration in QLD. I'm not quite sure why I was unaware of these projects so shame on me for that.

Firstly at Borumba in the Sunshine Coast hinterland:

Borumba Pumped Hydro Project | Queensland Hydro (qldhydro.com.au)

and secondly at Pioneer Burdekin 75 Km west of Mackay.

Pioneer-Burdekin Pumped Hydro Project | Queensland Hydro (qldhydro.com.au)

The second project is at a very early stage.

Regards
Paul

I thought this one was laughable. To my mind it is only a group of politicians who are pushing for nuclear power and it seems that in itself is just a diversion to take the heat off the fossil fuel industry while at the same time supposedly offering an alternative to solar and wind: It is a delaying tactic.

Poll shows public support for ‘green energy fantasy’ declines as push for nuclear rises (msn.com)

Recently there has been huge opposition, by the local public in Newcastle, to the proposal for offshore wind farms. If there is objection to wind turbines 20Km out to sea, I am wondering how receptive they will be to a nuke in their backyard.

Wake up!

Regards
Paul

Originally Posted by Bushmiller

I thought this one was laughable.
Poll shows public support for ‘green energy fantasy’ declines as push for nuclear rises (msn.com)

Can't get it to play, but now that I see who the "reporter" (distorter?) is...I think I'll take your word for it.

Originally Posted by Bushmiller

Recently there has been huge opposition, by the local public in Newcastle, to the proposal for offshore wind farms. If there is objection to wind turbines 20Km out to sea, I am wondering how receptive they will be to a nuke in their backyard.

Assuming for a moment that the survey is genuine and random, not the result of asking people with shares in "Reactors R Us"..

It's par for the course that people support things "in principle", but don't want to be directly impacted. The more directly people are (or suspect they might be) impacted by things, the less likely they are to support them. Wind farms have great support amongst people who stand zero chance of having one built in their backyard, far less support from those who will have to watch them go around every day. Except, of course, from those who own rural land and will gain income from the leases but don't actually see them, I know this from experience. At my previous property I saw the range of reactions to a proposed windfarm, from massively positive from people who would have turbines on their land but not where they were in view of the homestead (or where the landowners lived somewhere else), through to pulling out of a farm purchase by a supposed climate believer who had previously extolled the virtues of all things green/renewable... but not in their backyard! The guy who found out there was a 280m high turbine planned 500m from his house, right in the view from his living room window but just over the fence on his neighbours' land (so zero compensation for him) was apoplectic.

So why would someone in the Eastern suburbs of Syndey not support nuclear? They assume the plant will be built out in the sticks, the same way wind and solar farms aren't built in Bondi.