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The Real Cost of Renewable Energy – A South Australian Experiment

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Adelaide Blackout

The recent politicking on South Australia’s power system says one thing load and clear, that the high penetration of renewable energy in South Australian power generation has been completely unplanned. The rough order of events so far:
1. Government provides subsidies to encourage the installation of as much renewable energy as possible
2. Subsidies make it difficult for thermal generators, both gas and coal fired, to be profitable, leading to the shutdown and decommissioning of South Australia’s base load power, as intended
3. South Australia then relies on the SA-Vic interconnector to fill the local power generation hole when insufficient power is produced by renewable energy generation
4. When there is insufficient power available from Victoria, or there are upsets in the power grid the result is either a state wide power failure or the requirement for load shedding

With each blackout/brownout comes the inevitable finger pointing, and reports from the energy market operator (AEMO). AEMO seem pretty much useless in this whole fiasco. However the "after the fact" AEMO reports do a good job of clearly spelling out the specific technical problems with the SA power gen system as it currently stands, which are:
• Insufficient base load power generating reactive power (read that as coal or gas fired generators) leads to frequency instability in the power grid which is therefore more susceptible to unplanned shutdown events
• When the wind doesn’t blow South Australia can’t always rely on power from Victoria to make up any short fall.

So now it appears that in order for a power generation system to function satisfactorily with a high proportion of power generated from renewable sources the following additional features will need to be provided,

A. Backup power generation:
When renewable energy cannot generate design load, such as during periods of low wind or low sunshine a source of backup power needs to be available. How much backup is needed? Well that depends on:
Availability of power to be imported from other sources: Recent events have proven that Victoria is not a reliable source. Questions do need to asked about relying too much on a single interconnector from a reliability perspective. Sure the SA government want a quick fix by installing a $1B interconnector to the NSW grid, however both the Victorian and NSW governments continue to reaffirm their aggressive moves to renewables. This begs the question, in the not too distant future when both NSW and Victoria also have 30-40% power generation from renewables, which presumably will lead to shutdown and decommissioning of coal and gas fired power generation in those states, will there be sufficient power available for export to South Australia during times of high demand? Surely given the recent heat wave and subsequent peak demand in all 3 states occurring simultaneously, ultimately leading to load shedding, the answer would seem to be, probably not.

Retain some thermal generation in the grid:
Subsidise some coal and/or gas generators to allow them to remain profitable and active power generators in to the grid. Whilst not palpable to extreme left elements such as the Greens and some in Labor, this is a viable option, but will come at a cost to the consumer and would also solve the frequency instability issue to. But subsidising thermal generators would seem counterproductive to the objective of displacing them with the renewable energy subsidies applied in the first place. And would also not be cheap.
And it also begs the question as to how much back up generation is needed in the South Australian electrical system? Renewables generation capability can drop off to near zero in the right climatic conditions, but 100 % backup by thermal generators to cover such events would be cost prohibitive.

B. Frequency stabilisation
Well what do you know? Insufficient reactive power generation in a grid leads to stability issues. Who would have thought? Well the answer is likely that most people would not have been aware of this very technical fact. However governments, or at least their consultants and the power grid operator should have been aware of this and more importantly should have been aware of this BEFORE 40% of power generation was permitted to be of a non-reactive nature.

C. Energy Storage
Hydro storage has been raised by the SA government as means of storing electrical power during times of high energy generation capability in relation to demand, for use when demand exceeded supply. Seems like a good idea. And a quick Google search shows that it is a widely used technique for around the word for reducing peak power prices. Further while the SA government make it seem like their recent brilliant idea, studies have been performed on Hydro storage in south austral as recently as 2014.
Is hydro storage feasible as a backup to renewable generation, well probably not, it is more for peak shaving, i.e. reducing electricity prices at times of peak demand. Typically these systems seem to be sized for proving reasonable quantities of power for a matter of hours, not days.

Planned or Unplanned?
Is there a pattern in all of this mayhem? Yes, every negative event that has occurred over the last 6 months in the South Australian power network has been completely unforeseen by all and sundry, and has resulted in reactionary solutions. In other words the move by South Australia to a high level of intermittent non-reactive power generation in the form of wind and solar has been made without any forethought or planning. I am not sure what counts as negligence in the world of government but in private industry the damage to South Australia's energy supply, and reputation caused by Jay Weatherill's bloody minded obsession with renewable energy would be considered negligent in the extreme.

Renewable Energy at What Total Cost?
We all know renewable energy is expensive relative to coal or gas generation, but the federal government has generously provided subsidies to renewable energy operators from the long suffering consumers pocket, so that they are competitive in the power generation mix. I guess we consumers just had to swallow that.

Now, factor in the additional technical requirements that seem to be necessary for high levels of renewable generation to perform satisfactorily:
-Possible requirement of facilities necessary to stabilise frequency
-Possible requirement to subsidise some thermal generators to remain in the generation mix as a back-up for renewables and also to stabilise frequency
-Possible installation of energy storage, such as Hydro storage or batteries, to improve efficiency of energy generation with renewable generators and to assist in reducing peak power prices in the energy market, primary due to the variability in generation from renewables.

The Real Cost of Renewable Energy
So what is the real total cost for renewal energy with all of the above technical requirements factored in? It appears nobody has bothered to tell the poor consumer what premium they can ultimately expect to pay for generation of power by renewable energy.
The general rule of thumb is that the cost of wind generation is apparently approximately 3 times coal fired generation. But how much is this further increased by the requirement for renewable energy generation to have back up, frequency stabilisation and peaking generation?

Is it possible electricity bills in a couple of year time could be double or triple what we pay today? Please someone tell me this won’t happen.

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