Technically it would be harder to have a hot potato issue without electricity. Amongst other things, electricity makes it far easier to create the hot potato in the first place, as well as light, heating and cooling, traffic control, transport and giving you the ability to read this article.
However, if you listen to the Coalition who, in their best Hanrahan, are crying ‘we’ll all be rooned’ if any more of the coal fired power stations around Australia are allowed to close. The justification is that we need power that we can switch on and off like a lightbulb (pun intended). The problem with the justification is that there are other and better ways of getting power on demand.
Turnbull and his Coalition colleagues are not even sure what they want. At the Australian Forest Products Association Industry dinner in Canberra on 12 September 2017, Turnbull’s remarks included:
So we’ve taken action. Recently we commissioned the energy market operator AEMO, to analyse the future of dispatchable power in our energy market, in the immediate, short term, medium term and longer term.
Their finding, that you’ll have all read about in the news, is that the closure of Liddell power station in New South Wales in 2022 will create a large gap in reliable baseload power, in the national electricity market, the east coast essentially and South Australia.
I’ve made it clear that we will not allow this gap in baseload power to occur.
So naturally we are exploring all options to fill this gap. We cannot have another event like the closure of Hazelwood, which whatever you may think of the Hazelwood power station, its closure at such short notice, taking so much dispatchable power out of the energy market, caused a dramatic rise in wholesale energy prices.
In New South Wales alone, it was over $50 a megawatt hour, nearly double the wholesale price of electricity. So you know ideology and good intentions are not enough; you have to be very hard-headed about this.
Apart from the illogical leaps of faith, the fundamental problem with Turnbull’s speech is that the use of the terms ‘dispatchable’ and ‘baseload’ in connection with power production are not interchangeable.
Dispatchable power can be quickly turned on and then off when the demand for electricity surges or at those times when the wind’s not blowing. It’s best provided by hydro-electricity, or gas.
Baseload power (usually provided by coal) isn’t particularly dispatchable. It’s always on, whatever the need. It’s one of the reasons off-peak power is cheap overnight. Baseload generators needed to get rid of the stuff. As the energy market operator put it in the letter to minister Josh Frydenberg that Turnbull claimed to be acting on, baseload power is in general “not well suited to respond to rapidly varying energy system needs”.
The Coalition government seem to have been caught out by the closure of the Hazelwood power station in Victoria which, apart from its age requiring its owners to fund major upgrades, was one of the most polluting power stations in the world. Possibly as a sop to their own right wing climate science denialists (and to potentially pick up a seat or two in the Hunter Valley based on a local jobs ‘Fear Uncertainty Deception’ campaign), Turnbull’s government appears to have decided to draw the line in the sand over AGL’s announcement that the 46-year-old Liddell power station in the Hunter Valley would be decommissioned in 2022.
The engineer familiar with Liddell said the plant routinely had at least one of its four units out of operation, and that half of the rated 2000-megawatt capacity was suddenly unavailable on February 10 – the first day of a record NSW heatwave – due to leaks in boiler tubes. That poor performance was despite its turbines being replaced about a decade ago.
On three occasions, the plant’s equipment had oil supply failures that led to turbines grinding to a halt in about 10 minutes, compared with 40 minutes under normal conditions; “basically wrecking” the machinery.
AGL, which valued Liddell at zero dollars when it bought it in 2014, said in a statement: “Liddell has four units that, due to age and reliability issues, are rated at 420MW”.
“Safe generation levels at Liddell are driven by a number of factors including market demand, plant outages and maintenance but more critically at present access to coal supply.”
Dylan McConnell, a researcher at Melbourne University’s Climate & Energy College, said Liddell operated at just 39.6 per cent capacity in August.
That level was about half the capacity utilised of Victoria’s aging Hazelwood power plant in the final year before its closure in March.
Stephen Saladine, the managing director of Macquarie Generation at the time AGL bought both the Bayswater and Liddell plants, said the then state-owned corporation had planned for Liddell’s closure “in the early 20s”.
And even if the two generators were available during the heatwave last February, clearly they can’t be ‘switched on’ immediately. Ironically, AGL bought the power stations from a Liberal Party controlled NSW State government.
Meanwhile in Western Australia, which isn’t connected to the ‘National’ Grid, the Barnett Liberal Party government decided in 2009 to complete a major refurbishment of the coal fired Muja AB power station which was:
… 43 years old and mothballed. Reviving it was meant to cost $150m, paid for by private investors who would reap the benefits for years to come. But costs and timeframes blew out. An old corroded boiler exploded. The joint venture financing the project collapsed; a wall followed suit. The bill ultimately pushed beyond $300m, much of it to be stumped up by taxpayers – and once completed, the plant was beset with operational problems. It ran only 20% of the time.
By April 2016, the government acknowledged it was subsidising more generation capacity than it needed and predicted demand for coal power would fall over the coming decade. In May this year the new Labor administration confirmed Muja AB would shut early next year.
Apparent dual citizen and current Deputy Prime Minister Barnaby Joyce was recently on the ABC’s 7.30 talking about the Clean Energy Target – and putting another line in the sand that coal had to be included to get the approval of his political party.
LEIGH SALES: Is there any form of a Clean Energy Target that the National Party would accept?
BARNABY JOYCE: Look, I think we have to be part of the negotiations most certainly Leigh and obviously the higher the level, the more it brings in coal-fired power.
Leigh, we are easy to understand in this one, we want to make sure we keep coal base load fired power stations going. Because the reality is that that is how you get the base load power onto the system to keep power prices down to make sure that we keep manufacturing workers in a job and to keep coal workers, to keep power workers in a job.
We’ve seen what happened in South Australia under the Labor party, it was a fiasco. They are doing it now in Victoria.
We don’t want it to happen to our nation, power’s overwhelmingly driven by the states but we’ve got a role in this and we’ve got to try and do our bit to try to keep these people in a job and keep the people in the weatherboard and iron with a power bill they can afford.
LEIGH SALES: Just to ask a first principles question, does the National Party accept that over time coal will be replaced by renewable sources of energy?
BARNABY JOYCE: We accept over time that you have to keep it renewable sectioned in to meet your international commitments. We understand that.
LEIGH SALES: But I mean just broader than that though sorry. I just mean you know generally, like over time, you know whether it is 50 or 100 years does the National Party believe at some stage coal will be replaced by renewable energy?
BARNABY JOYCE: I accept over time that technology goes ahead and if you can use coal more efficiently then you will use coal more efficiently and that Leigh won’t be remarkable you know, because you know cars are more efficient.
You think of what you go around on a tank of fuel today and what you went around on a tank of fuel 50 years ago, it is vastly different.
If we can do this in a vastly more economic way, then we should let technology be the presiding judge as to what form of power is driven, not religion.
And that’s the thing where we stand against the National Party. When someone says, “We’re going to have a 50 per cent renewable target”.
And say, “Well that’s great China plate, exactly how does it work?” And we find out from South Australia that it doesn’t work very well and we know what happens if it doesn’t work. Your lights go out, your lifts get stuck, operations stop in hospitals and people at that moment will completely change their views in the power debate and that mightn’t be a good idea even for the renewable energy sector. I have said that to the renewable energy sector. If the lights go out in Sydney and the lights go out in Melbourne, this is going to be a bad day for all of us.
John Hewson is a former federal Liberal Party leader who, amongst other things, occasionally writes articles in the media. In a recent article published by The Guardian, he observes:
… neither the government, nor the opposition, has yet produced a believable and deliverable energy policy. That is, a policy to specify the path forward to a low-carbon society, demonstrating a genuine capacity to lower power prices and to guarantee supply.
The bottom line is an outcome you might reasonably have expected that they would have wanted to avoid. While consumers are totally confused about what our pollies are doing, they get their regular power bills, which they can’t understand, and the power companies certainly don’t help them in this respect, so they remain absolutely convinced that they are being “ripped off”, which of course they are!
One of the most disturbing aspects of all this is that the government seems to have lost its sense of what it stands for – or at least what the electorate had come to accept that it stood for.
For example, as a Liberal government supposedly believing in small government, little regulation, market processes and private enterprise, they now feel at home “shirtfronting” the board and management of a significant power company, AGL, pressuring them to reverse a board decision to close the Liddell power plant in 2022.
This has come on the heels of them pressuring gas companies to “reserve” a proportion of their output for the domestic market, rather than for the exports that they had been encouraged to pursue in the past.
Of course, self-appointed Prime Minister in waiting Abbott has an opinion:
Abbott declared the government should end all subsidies for renewable energy, and that would mean there was no need to subsidise coal.
Despite leading the successful political campaign to scrap the former Labor government’s market mechanism, the carbon price, Abbott declared on Thursday afternoon: “I don’t want to see subsidies, I want to see a market”.
“I say let’s not subsidise anymore renewables, and if we don’t subsidise anymore renewables, we won’t need to subsidise coal, because coal in a normal market is the cheapest way of providing reliable power.”
“It is vastly cheaper than wind and solar and considerably cheaper than gas.
While Abbott’s opinion is wrong according to Ross Garnaut at least he is ‘suggesting’ a return to a free market and Liberal Party tradition.
There are a few of things here to ponder further.
First, the ‘market’ so beloved of Abbott and (up until recently) Turnbull is clearly telling the government that a new coal fired power station is as likely as most of us winning big on Lotto last night, in short, it just ain’t gunna happen.
Second, the war between the conservative and progressive factions of the Liberal Party, as represented by Abbott and Turnbull, is just as destructive and dangerous to the rest of us as the ALP power wars of the past 10 years.
Third, if I was the owner of coal fired power generator in Australia, I would be either selling now or advising the government at the last possible minute of my plans to close it down, rather than manage an orderly transition with the Energy Regulator and Unions. No one would willingly replicate the problems that AGL is currently having by being the proxy in an ideological war within the Liberal Party.
Fourth, yes there will be readjustment in people’s lives as their jobs in coal mines and coal fired power stations do slowly evaporate over the next 40 years as the coal powered generators close down. A similar thing happened when horses were swapped for internal combustion engines in a generation early in the 20th century as well as when steam engines were converted to diesels in the mid-20th century. While the job losses will inevitably make the headlines, the ‘unemployment rate’ in Australia usually bounces around within a couple of percent from one year to the next. As the Brisbane Times recently reported:
The number of Queenslanders who found a job last month would more than fill a packed out show at the Brisbane Entertainment Centre.
The latest Australian Bureau of Statistics seasonally adjusted figures show 16,700 Queenslanders found work in August.
The arena at Boondall seats 13,500.
The adjustment is happening already.
This article was originally published on The Political Sword
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