Home > Economics - General, Environment > The myth of baseload power demand

The myth of baseload power demand

July 22nd, 2009

Today’s Fin has a leader arguing that we should be laying the ground for a move to nuclear power. It’s commendably realistic about the long time lags involved, and argues we should get started on preparations now. My view is that it would be better to wait and see if the US makes progress on its (currently faltering) attempts to revive the industry there. But the thing that really got me going was the repetition of the claim that alternative energy sources are problematic because they can’t meet “baseload power demand”.

I’ve said before that this claim is wrong, but I think it’s time to sharpen my position, and state two claims:

*There is no relevant sense in which baseload power demand is a meaningful concept in our current electricity supply system.

*Any electricity supply system likely to exist in the next 40 years and capable of meeting peak power demand will have no problems meeting baseload demand.

The first point may seem paradoxical, but the reasoning is quite straightforward. Our current electricity system is based primarily on coal-fired power stations which cannot be turned on and off at short notice. So, generating power during times of peak demand (daytime) entails generating power during off-peak times, even if there is no demand for that power at a price that covers average costs. That is, we have a baseload supply, which easily exceeds the demand for off-peak power at average cost, and sometimes even at fuel cost. The result, as we observe, is that off-peak power must be heavily discounted, and even so, demand is barely enough to keep the turbines turning.

To consider any meaningful notion of baseload demand, we could do a bottom-up analysis, and consider how much of electricity demand corresponds to the notion of a continuous, stable 24/7 demand. In the average household, for example, this would include the fridge and those ‘vampire’ appliances that are left on standby all the time. In addition, of course, lots of households have off-peak hot water, but this is only because of the price incentives designed to get rid of the excess baseload supply. The same points apply to offices and a most industrial uses (including some that operate at night to take advantage of cheap power, even though other costs are higher). There are only a few continuous processes like aluminium smelting that really constitute baseload demand in the strict sense. Of course, there are off-peak demands that don’t constitute baseload in the strict sense, like people watching TV at 3am, but there’s no reason to think that such demands are large.

To get a quantitative handle, we can use the following analysis: currently off peak prices are about half of daytime prices, and offpeak demand is about half of daytime demand (illustrative numbers only, will fix). If we didn’t discount offpeak electricity, it seems likely that offpeak demand would be around a quarter of daytime demand.

So, as long as 25 per cent of supply is generated by baseload suppliers like coal, oil, geothermal and nuclear, our main problem will be one of excess baseload supply, as at present. We’re unlikely to reach that point for some decades. But even then, the offpeak demand could be met by reliable sources that are independent of time of day, most obviously gas and hydro. In that case, standard principles of marginal cost pricing would suggest that there should be no off-peak discount. In such a system, the baseload sources would be used optimally, rather than generating excess low-value electricity as at present.

A baseload demand problem would only emerge in a system reliant almost entirely (more than 75 per cent) on solar electricity. And, even if such a problem emerged, it could be dealt with exactly as we deal with our current problem of excess baseload supply, by changing relative prices.

I haven’t dealt with the separate problem of supply variability from solar and wind (hint: the answer has to do with prices, as before). But, in our current circumstances, and as regards marginal increments to the system, the far bigger problem is that of supply invariability. It is a positive disadvantage for nuclear that it generates power 24 hours a day rather than solely during the daytime. Much of that power, and the fuel used to generate it, is effectively wasted.

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  1. Jonathan Baxter
    July 30th, 2009 at 07:21 | #1

    jquiggin :
    The peak load in NSW and even in Victoria occurs on hot summer days

    Not only hot summer days:

    NSW this week set its third electricity consumption record in a month. Experts blamed residents turning up their heaters and reverse cycle air-conditioners to fend off the unusually chilly winter.

    On Monday evening, as Sydney began shivering through its coldest night in 21 years, NSW was using 13,825 megawatts – surpassing even summer’s demand peak, and breaking the two records set on June 20 and 27.

    NSW’s hunger for heat on Monday drove consumption on the national grid to a record 33,027 megawatts, smashing the previous peak of 32,579 megawatts, also set on June 20.


    [SMH, July 18, 2007]

    And even if you were right on this point, none of this justifies the baseload concept. Peaks favor controllable energy such as gas and hydro, not fixed supply technologies like coal, nuclear and geothermal.

    Neither nuclear nor geothermal are “fixed supply” technologies in any meaningful sense. In both cases the fuel costs are a small percentage of the generating costs (the biggest cost being capital to build the plant), so even throwing away all the power generated (or absorbing it in graphite rods) does not significantly impact the cost of the electricity.

    As for the “baseload concept”, I quote from your post:

    A baseload demand problem would only emerge in a system reliant almost entirely (more than 75 per cent) on solar electricity. And, even if such a problem emerged, it could be dealt with exactly as we deal with our current problem of excess baseload supply, by changing relative prices.

    My argument is that this is false because the price variations required would be so great as to be political suicide for whichever government introduced them. So in a solar/wind setup you would have to have a parallel supply capable of producing peak loads (gas, nuclear, coal, hydro, whatever), which would render the solar/wind infrastructure redundant unless it produced electricity at a much cheaper price (which it does not).

  2. Fran Barlow
    July 30th, 2009 at 07:31 | #2

    @Jonathan Baxter

    What renewables do now is produce power at a much lower cost to the health of the biosphere on which all humans, regardless of wealth, ultimately depend. Even if we had a power system such as you imply — with 100% redundant capacity in NG (or in countries where geothermal weren’t viable, nuclear) there would still be a reason for making this the fallback position.

    It’s worth noting too that even allowing that nuclear could, in theory, generate all of the world’s demand for electricity, the costs of building all these plants and the lead times involved would put this a long way into the future. We’d have to be thinking about multiplying the existing number of plants by about 10 at least or perhaps 20. That’s plainly not happening any time soon for reasons that are economic, technical, political and military. I don’t rule out nuclear and believe it can make a useful and perhaps essential contribution in some power markets.

    But renewables simply have to do the heavy lifting in this task. We must make them work.

  3. Jonathan Baxter
    July 30th, 2009 at 08:08 | #3

    Further to the issue of whether nuclear is “fixed supply”: the control rods slow down the fission reaction by absorbing neutrons, not heat, which means they lower output by reducing fuel consumption. That sounds “controllable” to me.

  4. jquiggin
    July 30th, 2009 at 08:24 | #4

    JB, why do you think price variation for a renewable based system would be politically suicidal when people are perfectly happy with multiple tariffs in the existing system?

    Governments certainly don’t seem to think so, as they are rolling out meters capable of delivering time-of-day pricing.

  5. Jonathan Baxter
    July 30th, 2009 at 10:11 | #5

    Under the current system you get cheap electricity during periods of low demand, not punitive rates during periods of high demand.

    If gas provides at most 25% of peak load (as it would under your solar/wind/NG scenario), and peak demand occurs when the renewables are offline (cold, windless nights), then the price variation required will be huge – large enough to kill off at least 75% of demand. Large enough that most people would rather shiver under blankets than turn their heaters on.

    Only the wealthy will be able to afford to heat their homes. Not a politically tenable proposition.

  6. jquiggin
    July 30th, 2009 at 10:25 | #6

    “Under the current system you get cheap electricity during periods of low demand, not punitive rates during periods of high demand.”

    This is a distinction without a difference

    Clearly, electricity prices are going to rise as we move away from coal, so, if you take the current standard rate as normal, a variable price system will go from cheap/normal to normal/punitive in these terms. But the simple fact is that any normal market with time varying demand has prices higher when demand is high (or, if you prefer, lower when demand is low.

    “Only the wealthy will be able to afford to heat their homes.”

    This is ludicrous hyperbole. Most of the growth in demand has come from things that the average household did without 20 years ago (central heating, reverse-cycle airconditioning). The fact that people will now have to think a bit about prices before cranking these systems to the max is not going to be either socially or politically ruinous. We’ve made far bigger adjustments with water.

  7. Jonathan Baxter
    July 30th, 2009 at 10:55 | #7

    “This is a distinction without a difference”

    Punitive is not the opposite of cheap.

    “The fact that people will now have to think a bit about prices before cranking these systems to the max is not going to be either socially or politically ruinous.”

    Do you really think you can get 75% demand reduction at peak times by asking people to “think a bit about prices”? In fact, under your solar/wind/NG scheme you probably need more like 95% demand reduction from households because you need at least 25% (or more) to keep the rest of the essential grid services running. That is far more onerous than water restrictions. And also far more arbitrary, since with nuclear or NG we’d not need any demand reduction.

    If your argument is that we can use 75% less power by undoing 20 or 30 years of living standard increases, then I guess I don’t disagree (although you’ll probably need to wind the clock back further than that). But it has nothing to do with “baseload”. Just old fashion “back to nature” environmentalist dreaming.

  8. Fran Barlow
    July 30th, 2009 at 12:12 | #8

    @Jonathan Baxter
    Jonathan

    You keep raising nuclear power as if it were a viable technology, but as I’ve pointed out, in pracice, it isn’t going to be on the timelines we need it to be.

    Nuclear power is sufficiently unpopular amongst the natural supporters of both major political groupings to make either side proposing it a huge political own goal — nuking their chances of achieving office.

    And even if it were not and even if one side won despite all this and fairly soon — the lead time from election victory to conversion of any substantial proportion of existing baseload to nuclear would be decades — and that assumes several successive election victories where this didn’t torpedo the proponents.

    You keep talking about “75% demand reduction” as if somehow 75% of supply can vanish without warning — but of course this would not happen with a system running 75% renewables. A wind farm with a CF of 35% that at a given day drops to 25% can be compensated by several others running at between 37% and 40%. Wind patterns are predictable on about an 8-hour timeline so falls in output can be compensated by both demand management measures, buying in power from interstate ramping up other capacity and using stored power as per above etc. So too is solar thermal, for obvious reasons.

    And frankly, the ouput of a coal plant is more likely to go to zero unpredictably than rewewables, since this would generally be a result of technical failure. I do note that during the recent fires in Victoria one was taken offline because the roads were too hazardous to bring in coal and the plant itself was threatened.

  9. jquiggin
    July 30th, 2009 at 13:25 | #9

    You have switched from baseload to peak here, more precisely the winter peak, which is declining in relative importance.

    That is, we are not arguing about the need for a reliable 24 hour supply of power, but about the much more limited problem of meeting peak winter heating demands. This is important because it is much easier to store heat than it is to store electricity.

    More generally, your comments display no understanding of the price mechanism, despite the important role it plays even in the current system.

  10. melaleuca
    July 30th, 2009 at 13:54 | #10

    “Most of the growth in demand has come from things that the average household did without 20 years ago (central heating, reverse-cycle airconditioning).”

    I note with disappointment that sweat box homes are still being built in Victoria despite the star rating system for new homes. The standards need to be much higher to reduce heating/cooling costs.

  11. Jonathan Baxter
    July 31st, 2009 at 00:12 | #11

    That is, we are not arguing about the need for a reliable 24 hour supply of power, but about the much more limited problem of meeting peak winter heating demands. This is important because it is much easier to store heat than it is to store electricity.

    Winter heating is just one example. Hot summer nights have the same problem. But even so, I don’t see many winter heat-storage systems that don’t use electricity today. You’re talking huge costs for retrofitting existing dwellings. Why not just build some Gen IV reactors instead?

    I am – and always have been if you read my comments – arguing against your assertion than solar/wind @ 75% of peak + NG @ 25% of peak can be dealt with by changing relative prices. Of course your assertion is trivially true: you can deal with almost any excess demand problem by raising prices. Just like interstellar space-travel is also “doable”: you just need near-lightspeed space drives.

    But in practice, given that most of the NG capacity will be allocated to essential services when wind and solar are not contributing, the “solution” you propose will require the near-equivalent of rolling blackouts. So yes, you can “solve” the problem by simply not providing power, but I doubt many people would regard that as a solution, especially as the only reason for such rationing is an irrational desire to impose solar and wind over other technologies.

  12. Jonathan Baxter
    July 31st, 2009 at 01:13 | #12

    @Fran Barlow

    You keep talking about “75% demand reduction” as if somehow 75% of supply can vanish without warning — but of course this would not happen with a system running 75% renewables.

    I think it would. I hate to break the cardinal rule of blog discussions and provide an actual reference, but if you check out pages 11 and 12 of this South Australian Government wind energy report, you’ll see that at least once a year generation capacity drops to near-zero. And that will most likely be at night when it is less windy.

    BTW, it is worth reading the whole report. Very informative discussion of the effect of wind variability on the entire electricity market. Turns out SA is a world-leader in wind (I did not know that). Specifically, there is no suggestion of introducing draconian rationing to overcome fluctuations. The emphasis is on security of supply and how to make it feasible for “baseload” suppliers to step into the breach.

    Look, this is all about politics. Your kind loves the environmental purity of wind and solar generation. My kind chafes at the inefficiency of two parallel systems capable of servicing peak load. Your kind hates the voodoo Frakenstein nature of nuclear energy, and the association with nuclear weapons. My kind drools at the energy density of natural uranium – 24 TJ/kg (that’s 24,000 GJ/kg) – and its abundance (for comparison, natural gas has an energy density of about 50MJ/kg, or about 500,000 times less than uranium. The power of the strong force over electromagnetism).

    So lets do a deal. I’ll live with the redundant generating capacity if you can live with my Gen IV nuclear reactors.

  13. Michael of Summer Hill
    July 31st, 2009 at 06:53 | #13

    Jonathan Baxter, no-one is going to disagree with your claim that nuclear energy is ‘voodoo’. Thumbs up Baxter.

  14. jquiggin
    July 31st, 2009 at 07:03 | #14

    JB, I stated my views on nuclear in the first para of the post, and they don’t resemble those you describe. I think the economic arguments of nuclear advocates frequently involve “voodoo”, and in that sense I’ll go along with Michael. It’s clear both from past experience and from recent efforts to restart the nuclear industry (mentioned in the post) that nuclear energy is only going to happen if there is a substantial increase in electricity prices. But your comments repeatedly state or imply that this is unthinkable.

  15. Michael of Summer Hill
    July 31st, 2009 at 08:23 | #15

    John, whilst past governments have done Australia a great disservice by not keeping pace with the demand for renewable energy, it is possible with the correct policy framework in place and in conjunction with hydropower to have half of our electricity energy needs supplied by renewables by the year 2040.

  16. Jonathan Baxter
    July 31st, 2009 at 08:59 | #16

    Michael, I’d suggest reading the wind energy report I linked to above. The South Australian government seems to have done an admirable job of keeping pace with demand for renewables, at least when measured against the rest of the world.

    nuclear energy is only going to happen if there is a substantial increase in electricity prices. But your comments repeatedly state or imply that this is unthinkable.

    JQ, most of the extra cost for nuclear is in the onerous and unnecessary approval process. Politics again. But I never said higher prices are unthinkable. Just the kind of prices you’ll need to get the 75%-95% demand reduction required when you only have 25% guaranteed generating capacity, or more specifically the political consequences of imposing what amounts to arbitrary rationing.

    I think we should do a deal: I’ll support renewables if you’ll support nuclear. Each side has their own reasons for not liking the other side’s solution. Each side believes it is correct. So let’s compromise. I bet we’ll end up with both wind/solar and nuclear anyhow. But it will be a lot cheaper and we’ll get there a lot quicker if we can just agree to disagree and get on with it.

  17. Michael of Summer Hill
    July 31st, 2009 at 09:36 | #17

    Jonathan Baxter, the only problem is that the SA Government is a member of the National GreenPower Steering Group which accredits GreenPower. And whilst there are only 9 wind farms generating some 740MW, they are on target to meet their 20% renewable energy needs by 2014.

  18. Fran Barlow
    July 31st, 2009 at 09:42 | #18

    @Jonathan Baxter

    Your response #12 …

    Firstly, as I’ve noted earlier, I have no problem in principle with nuclear power, though I’d prefer thorium as the main fuel to uranium. I think it likely that in some power markets — Japan for example, and perhaps China, India and Russia — it may well be the least of all and certainly preferable to coal. So I can “live with it”. My objection would be that in practice most people would rather not and in societies that are democratic in some sense, one can’t ignore that, even if one disagrees with the calculus those who object have made. If running nuclear entails setting up a police state regime to secure it from attack, then that is not something one should regard as trivial. And if the speed at which coal plant needs to be retired in favour of nuclear to get an advantage would entail unacceptably high compensation for sunk cost losses to coal plant operators to make the kind of impact we need to make then this too goes to feasibility of nuclear as a solution. In this country, the advocates of nuclear are in effect, opponents of early action, even where their desire to help mitigation programs is sincere.

    The build times on wind and solar are far shorter and so it stands to reason that these solutions have an inbuilt advantage. Wind and solar are comparatively low tech and can be reconciled with regional employment and development programs. That too is an advantage. One has to look at all the public goods as well as all the public costs.

    In your discussion of wind variability you overlook the questions of greater diversity in the location of wind — which ternds to smooth out these very occasional falls, and the possibility of resort to storage technologies, which I’ve also mentioned. Alos there are questions about where one should site wind. In the UK, a CF of 23% is considered standard, but since 2006 nearly all of the US wind farms are running above 30% and some (in Hawaii) as high as the mid 40s. My own view is that 35% is a good benchmark for wind feasibility. I’d favour a lot more offshore, even allowing for greater installed cost, perhaps combined with submarine turbines. Placement at elevated locations — buildings for example — would be low cost, high CF and have good proximity to areas of demand, places where maintenance could take place cheaply etc.

  19. Michael of Summer Hill
    July 31st, 2009 at 09:51 | #19

    No Fran, at the rate the SA Government is going with renewable energy production there will be no need for nuclear energy.

  20. jquiggin
    July 31st, 2009 at 10:00 | #20

    JB, I’m neither for nor against nuclear. As you say, the big problems are regulatory, and it is highly unlikely that they will disappear or that Australia will solve them from scratch. So, as I said in the post, we should wait and see how the US effort goes. If they can get new plants up and running, we will have a model we can evaluate and, if the price is right, follow.

  21. Fran Barlow
    July 31st, 2009 at 10:09 | #21

    @Michael of Summer Hill

    The question is moot because no government will, within the next 20 years, attempt to introduce nuclear power to any jurisdiction in Australia. No party will campaign for it either, and if one does it will be beaten and if it did so in violation of commitments after having won, the local agitation and filibustering through planning would defer it another 20 years. No funds could be found for such a controversial project either and of course, given that it would be running up against coal directly, there would be serious compensation issues to deal with. In order to create space for nuclear, you’d have to shut down coal plants and unless these are near the end of their useful commercial life, the compensation costs are going to be prohibitive. So there’s another timeline right there.

    Of course, if there is no prospect of nuclear then new installed capacity in coal or something else that can do that job is going to start replacing the old capacity, and if that replacement is more coal then the timeline gets even longer.

    That’s one reason why we need ASAP to get a serious price on emissions in place so as to prejudice the business model for new high-emissions capacity.

  22. Michael of Summer Hill
    July 31st, 2009 at 10:14 | #22

    Fran, don’t tell anyone but the former PM & other neo-conservative illywackers within the Coalition are pushing for nuclear power and are at odds with Turnbull.

  23. Fran Barlow
    July 31st, 2009 at 10:49 | #23

    @Michael of Summer Hill

    That’s as maybe. Dennis Jensen probably won’t be re-endorsed. But even if some ginger group formed within the coalition around this issue, the party as a whole knows full well that nobody will switch their votes to the coalition on the basis of a desire for nuclear power, and quite a few will abandon it, especially in the major cities where there are winnable seats.

    Nuclear power is moreover, a tabloid issue. If raised it could simply suck all the metaphorical air out of the room, denying the party raising it a chance to fight on other grounds more helpful to it. So even those in the party who thought raising it might not be all that bad per se, would oppose raising it on tactical grounds.

  24. Michael of Summer Hill
    July 31st, 2009 at 10:58 | #24

    Fran, my nose tells me that the Dollar Sweets man who made his mark in the 1980s is also the one pushing for nuclear power and destabilising the Coalition.

  25. Michael of Summer Hill
    July 31st, 2009 at 12:54 | #25

    John, Andrew Macintosh has come out out swinging today arguing that pegging global warming to two degrees is but a ‘pipe dream’ which makes me wonder why he spent so much time modelling 45 different climate change scenarios. Something sounds fishy.

  26. Michael of Summer Hill
    July 31st, 2009 at 16:52 | #26

    John, McIntosh’s is aware no-one knows what ‘new technologies’ will bring but have to agree that by delaying aggressive abatement until after 2020 will make 450 ppm CO2-e virtually impossible and for this reason developed countries need to implement a more aggressive target of say 30% below 1990 levels. But it is not a pipedream.

  27. Alice
    July 31st, 2009 at 19:17 | #27

    I cant live with nuclear…I think its a fatal mistake. You cant contain the stuff ups (and our generation cant guarantee the next gen or the one after that stuff ups can be contained) and these do damage..serious damage.
    Dont need it, dont want it – Id rather get used to less power.

  28. Donald Oats
    July 31st, 2009 at 19:36 | #28

    If we have to have nuclear, build the first station in Canberra near parliament. At least then if any accidents should happen, the (mushroom^1) cloud will have a silver lining.

    fn1: Yeah, yeah, I know – nuclear reactors don’t explode.

  29. Alice
    July 31st, 2009 at 20:02 | #29

    Yeah yeah Don…me too..nothing ever goes wrong with nuclear in the short term when its cheap and some can see a way to make a dollar out of it..in the medium term or long term…ooops we had a little accident and four generations die from cancer or their kids are deformed.

  30. Jonathan Baxter
    August 1st, 2009 at 00:12 | #30

    jquiggin :
    JB, I’m neither for nor against nuclear. As you say, the big problems are regulatory, and it is highly unlikely that they will disappear or that Australia will solve them from scratch. So, as I said in the post, we should wait and see how the US effort goes. If they can get new plants up and running, we will have a model we can evaluate and, if the price is right, follow.

    Australia’s situation is unique. There’s no need to follow the US on nuclear. Apart from the common language, Australia and the US have very little to learn from one another over nuclear.

    Australia has never had nuclear energy. Australia is a small-population country with vast unpopulated land areas suitable for nuclear waste storage/disposal. Australia has huge nuclear fuel reserves. Australians are far more committed to doing something about CO2 emissions than are Americans. Australia’s history of big mining, construction and agriculture companies providing most of the employment means that the left is more pragmatic when it comes to big-ticket infrastructure development than are their counterparts in the US. Getting any kind of major legislative change at the Federal level in the US is far more difficult than in Australia.

    Waiting for the US just puts an unnecessary hurdle in the way. If South Australia can lead the world on wind, it can lead the world on nuclear too.

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