Home > Environment > The Steep Path to a Nuclear Future

The Steep Path to a Nuclear Future

April 26th, 2012

That’s the title of my latest piece for The National Interest. The first three paras are below.

In the wake of the meltdown last year at the Fukushima nuclear plant, the viability of nuclear power has been called into question yet again. The Japanese government has closed down all but one of the country’s nuclear plants (though there are plans to start reopening them), and Germany has abandoned a previous decision to keep existing nuclear plants operating. Concern about nuclear power has also increased in the United States, with most opinion polls now showing a majority opposed to further expansion of the industry.

On the other hand, some commentators have been struck by the fact that the disaster did not cause any direct loss of life and that estimates of the adverse health effects of the radioactive releases are very modest. A striking example is English writer George Monbiot. An opponent of nuclear power before Fukushima, Monbiot has switched to the view that nuclear power should be supported as a response to climate change.

Unfortunately, this debate has taken place without much attention to the economics of electricity production. The critical question is whether nuclear power can be a cost-effective alternative as compared to renewables, investments in energy efficiency or even such long shots as carbon capture and storage. A look at the economic cost of the Fukushima meltdown suggests that the path to a nuclear future is steeply uphill.

I’m too busy to referee another fight over nuclear power today, so I’m delaying opening comments here until tomorrow. The TNI post is open to comments there, so that will give everyone a chance to get started straight away.

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  1. May 4th, 2012 at 10:46 | #1

    Actually, since they currently crank the coal plants up and down depending on the wind and demand, they’re not really baseload at the moment either. But if people want to call them baseload, I don’t mind.

  2. May 4th, 2012 at 10:47 | #2

    So, Fran, do you believe what I wrote about wind power in South Australia? Did you check out the AEMO report?

  3. John Quiggin
    May 4th, 2012 at 11:34 | #3

    “However the big issue is what can substantially replace coal for that 40-60% of peak demand called ‘base load’.”

    This is backwards, as I’ve pointed out many times. The only reason late-night consumption is anywhere near 40 per cent of peak is that it is priced far below peak, so as to do something with the electricity generated by inflexible sources like coal. It’s baseload supply, not baseload demand. Get rid of the off-peak tariffs and you’re well on the way to solving the “baseload” problem.

  4. Fran Barlow
    May 4th, 2012 at 11:44 | #4

    @Ronald Brak

    I am still poring over it. I will write a response when I next get a chance.

  5. Fran Barlow
    May 4th, 2012 at 11:48 | #5

    @Ronald Brak

    Most people in the blogosphere confuse “baseload” with “despatchable” and contrast this with “intermittent”. I wrote a post on this here some time back. Our fossil thermal plants are highly despatchable. Hydro even more so, even though hydro is not technically “baseload” since you’d be nuts using it to meet typical demand.

  6. John Quiggin
    May 4th, 2012 at 12:10 | #6

    @Fran Coal plants generally aren’t considered dispatchable, since they are hard to ramp up and down, at least when compared to gas and hydro. That’s why I describe them as baseload supply and note again that, under current circumstances, the concept of baseload demand is meaningless.

  7. Fran Barlow
    May 4th, 2012 at 12:39 | #7

    @John Quiggin

    They are hard to ramp up and down quickly, which makes them a lot less dispatchable than, say, open cycle gas plants, but on more than about 4 hours’ notice one can ramp them up and down to meet a given level of demand. Given the presence of a multiplicity of coal plants even a slow ramp up can make a rapid difference to available output.

    I don’t agree the concept of baseload is “meaningless” — it just doesn’t mean what most people think it means. What users of power want to know is whether they can predict with confidence that adequate power will be available whether they want it or not at some indeterminate time in the medium term future.

    One can’t know for certain that in two weeks’ time that the output of some combination of solar thermal or wind or wave power plants will meet or exceed demand but one can predict with high confidence that the suite of fossil thermal plants (coal and gas) plus hydro could be configured to meet it. In the case of most renewables, the extent of a relevant ecosystem service is a fundamental constraint. Resort to storage can mitigate some of this — or all of it if one is willing to scale up the storage and the size of the plant (and typically the area over which the system operates). Self-evidently though, this assumes very significant redundancy — much more than is the case in fossil thermal systems.

    I seem to recall that you agreed some years ago (please correct me if I have this wrong) that about 75% of demand could reliably be covered at low cost by renewables. If so this does seem to imply that the concept of dispatchability/availability has some meaning in terms of meeting typical (i.e. baseload) demand.

  8. Hermit
    May 4th, 2012 at 13:31 | #8

    To say ‘baseload’ is irrelevant is like saying we can go without food four days a week. Possibly true but not a happy state of affairs. Some heavy industry like aluminium smelting thrives on round the clock operation. At least off-peak pricing of baseload power has a 24-hour predictable cycle and can be used for loads such as water heating prior to the 7 am rush. With wind and solar there can be extended lulls such as a blocking high pressure system with little wind and low cloud. Dispatchable generation has to be kicked in to cover that lull which means otherwise underutilised plants kept on standby. To help Germany a few months back an oil fired plant in Austria had to be cold started.

    The problem with fossil backup is it may get expensive with or without carbon taxes. For example the Japanese have been paying $15 a gigajoule for Australian LNG whereas our power stations don’t want to pay more than $4 for piped gas. When gas is prohibitive perhaps as early as 2030 some way will have to be found for storing gigawatt-hours of energy with minor losses. The energy storage problem applies equally well to baseload plant as well as intermittent. There may be other workarounds, for example a nuke design that prefers a steady load could do desalination when not producing electricity for the general grid.

  9. Ikonoclast
    May 4th, 2012 at 14:25 | #9

    It’s worth looking at the National Grid electricity demand last 24 hours graph.

    http://www.nationalgrid.com/uk/Electricity/Data/Realtime/Demand/demand24.htm

    At the time I am looking at it, it runs from about 0400 one day to 0400 the next day. The salient features are;

    (1) a large “peak” plateau that runs from 0800 to 2000. This plateau is remarkably flat-ish all things considered.

    (2) A marked and steady drop-off from 2000 to 0000.

    (3) A small low plateau from 0000 to 0400.

    (4) A marked and steady rise from 0400 to 0800.

    (5) The difference between the low plateau and the high plateau is not as marked as it appeara because the base of the vertical scale is set to 22,000 and not zero.

    In fact, the ratio between “baseload” and “peak load” is about a little under 32,000 to a little above 42,000 on average. (I presume these are megawatts?). This is about a ratio of 3 to 4. Furthermore, the peak is not a peak anyway but a long plateau.

    The definition of baseload is as follows. “Baseload (also base load, or baseload demand) is the minimum amount of power that a utility or distribution company must make available to its customers, or the amount of power required to meet minimum demands based on reasonable expectations of customer requirements. Baseload values typically vary from hour to hour in most commercial and industrial areas.”- Wikipedia.

    The last sentence is important, namely; “Baseload values typically vary from hour to hour in most commercial and industrial areas.” Some commentators seem to think, erroneously, that baseload is the minimum base needed over 24 hours. Often commentators warn about the “baseload” capacity needed when they really mean the large overall gross electrical generation capacity needed to run a modern economy.

    The presumption is – whatever the definition of baseload, erroneous or otherwise – that renewable energy cannot supply this electrical “baseload”. This presumption is demonstrably wrong on all counts. A combination of wind, solar, tidal, hydroelectric, geothermal and bio-fuels will be able to provide this power. After questioning this issue myself and investigating it, I found the answer was in the affirmative, I have provided the broad numbers and references on this blog several times. Opponents of this finding almost always ignore the quantified proofs which is an intersting phenomenon in itself.

    Provision of electrical power to modern civilisaztion at current requirements will not be a problem. However, the provision of transport, construction and agricultural fuels and carbon or hydrocarbon based chemical feedstocks will be a problem at least until the private automobile is phased out and maybe even after that. Provision of food, potable water and irrigation water supplies will also be a problem without stabilising and even somewhat reducing world population.

  10. Ikonoclast
    May 4th, 2012 at 14:48 | #10

    In the above post, I did not specifically address the variability of much renewable generation and the effect of this on baseload requirements properly defined. In short, too much is made of this variability problem. A wide, distributed, integrated and mixed renewable generation system will address these problems along with energy “stores”. It is incorrect to suggest that it is beyond current scientifc and engineering ingenuity to devise and provide energy store systems to smooth supply to demand.

    Two important energy effective stores already in use are hydro-electric (pumping water up hill to a resevoir for later hydroelectric generation) and the creation of ice or cooled glycol at night (with excess power) for daytime cooling purposes. This latter can happen at the local site (large building for example) where this daytime cooling/airconditioning is required. Large heat stores for local heating requirements can also be created with excess power. The point of some of these solutions is that all excess energy storage does not have to be of a form that can be easily re-converted to electrical power but can be in the form of heat or a heat differential that is directly useful.

  11. May 5th, 2012 at 13:30 | #11

    Just found some information on the cost of installing point of use solar power in Australia last month. Prices were as low as $2.50 a watt with an average of around $3 to $3.50. That’s before any subsidy and after GST. Not quite as good as Germany yet, but getting there. At these prices for most Australians it is cheaper to use point of use solar than the grid. This will result in a continued rapid expansion of solar capacity and a reduction in coal and gas use.

  12. May 5th, 2012 at 14:14 | #12

    And I’ll mention that at these low installation prices it becomes worthwhile to place some panels facing west or north west to maintain electrical production during the late afternoon. This would be particularly true for someone paying spot prices for electricity.

  13. Hermit
    May 5th, 2012 at 18:48 | #13

    Another view on the role of baseload
    http://grist.org/wind-power/how-wind-power-fits-into-our-energy-diet/

    With wind and solar (thermal or PV) the issue is less to do with capital cost now that other technologies are getting expensive. The issue is how to save enough gigawatt hours of energy for when it is most needed at a reasonable time averaged cost.

  14. Ernestine Gross
  15. May 6th, 2012 at 10:16 | #15

    Hermit, your suggestion of using a nuke to provide peak power is not going to be funded as it is too expensive compared to other options. Currently I can buy an electric car battery pack for about $650 a kilowatt-hour which I could use to store electricity which I could use to store electricity for something like ten cents a kilowatt-hour. This is less than the cost of electricity from new nuclear.

    Note there are cheaper forms of energy storage than car battery packs, this is just a clear simple example. Actually, now that I think about it, since there is a $200 a year connection fee here and and point of use solar is now something like 10 cents a kilowatt-hour cheaper than buying from the grid, a lot of light users of electricity might be better off going off grid. This would be a shame as almost all of them would be producing some surplus electricity that would be going to waste. The charges for simply being connected to the grid might need to be abolished to stop people dropping off grid.

    since all up I get charged about 31 cents a kilowatt-hour and point of use solar in Adelaide is now something like 17 cents a kilowatt-hour, a lot of people might find they are better off going off grid.

  16. May 6th, 2012 at 10:17 | #16

    Oh dear, I go through the trouble of fixing up what I wrote and then as a result I leave a rubbish parapgraph at the bottom of my last comment. Sorry about that.

  17. May 6th, 2012 at 10:24 | #17

    Now that I think about it some more, with the rapidly decreasing cost of solar PV combined with smart meter technology and the slowly decreasing cost of energy storage, it might make sense to pay to remove parts of rural Australia from the grid. Something like 40% of the cost of electricity in Australia is supposed to be a result of battling the tryanny of distance. Perhaps a strategic withdrawal is called for.

  18. Chris Warren
    May 6th, 2012 at 10:41 | #18

    @Ernestine Gross

    No doubt Barry Brook is fuming – or hoping that in a decade or so big business will be able to engineer a reversal.

  19. May 6th, 2012 at 10:52 | #19

    I think Barry is just suffering from sports. You pick a team and you throw all your support behind it, come hell or high water. The other day on the internet I saw someone who had chosen Concentrating Solar Power as their team. According to him (and yeah, I’m willing to bet it was a him) every other power source was rubbish. He wasn’t interested in honest economic comparisons and it was the solution to every problem. While his heart was in the right place, I think his brain was located somewhere inside his pelvic cavity.

  20. Hermit
    May 6th, 2012 at 14:01 | #20

    @Ronald Brak
    You must be blessed if you can get PV via battery for 10c per kwh because a recent estimate by a US academic put it at 30c
    http://physics.ucsd.edu/do-the-math/2011/09/got-storage-how-hard-can-it-be/
    under the heading ‘They’re All Hard’.

    Some people near me are off grid with tracking PV and a battery bank. My understanding is at night they watch LCD screen devices with a wood stove for heat. One of them confided ‘I’m getting too old for this sh*t’ and welcomed the day nuclear power would enable them to grid connect to cheap reliable power. So if the trend is for millions of homes to go off-grid there will be a few early mutineers. I do kinda like the idea of dynamiting all those ugly transmission pylons.

  21. Fran Barlow
    May 6th, 2012 at 14:20 | #21

    @Ronald Brak

    NB: Haven’t gorgotten about that wind document — will get back to you on this

    You pick a team and you throw all your support behind it, come hell or high water. The other day on the internet I saw someone who had chosen Concentrating Solar Power as their team. According to him (and yeah, I’m willing to bet it was a him) every other power source was rubbish.

    Sounds like BZE ;-)

    I don’t agree it’s “like sports” though. Sure there may be some tribalism in there somewhere, but there’s no obvious reason for people to pick one ‘team’ over the other. I see it as rather a second order effect of something far more common in human usage: the tendency when faced with an apparently intractable and serious problem to invest one’s hopes in a panacea or silver bullet. Complexity and delay is painful and silver bullets offer the promise of rapid gratification. Most of us are predisposed to hope they exist and to be a little too credulous when a candidate appears, especially if the silver bullet fits nicely with the rest of our cultural paradigm.

    That’s true not merely of technology but in public policy, culture and large areas of our interpersonal lives. There’s a widespread belief that everyone, somewhere, someplace has a ‘soulmate’. This seems utterly improbable, and even if it were true, spending one’s life in search of that person would be about as sensible as putting your life on hold until you win lotto. Worried about the challenge of radical Islam? Nuke Mecca! Worried about asylum seekers? Turn back the boats/Nauru! Worried about crime? Build more prisons; have longer gaol sentences; the death penalty! Worried about s*xual predators? Megan’s Law! Drugs? Ban them! Threats from {fill in currently dangerous country} — Spend billions on defence! It’s not only RW fruitcakes who think this way of course.

    And so it goes. Once all problems can be reduced to something amenable to a simple answer, all rival solutions become “diversions” from the real solution which, inexplicably, other people are ignoring. Every now and again, one hears the duality that lies behind this objection — the sense from the objector that the cause is hopeless and the associated desire to buttress the walls and cling tightly to their own righteousness, seeking out any evidence they can to make them feel safe. They want a solution and they want it now, and if they can’t have one, they just want a safe place to abide in so that they can regard the question as settled.

    I used to suffer from quite a bit of this. I suspect we all do, though most of us retain the if it looks to good to be true, it probably is objection. Occasionally, there are simple, ubiquitous and effective solutions to problems, but usually, solutions are partial and problematic and generate new challenges.

    I used to be very keen on pumped hydro — seeing it as the key to unlocking the potential of renewables, especially wind and wave. These days, I’m not so sure. Yet I think I chose that, rather than nuclear at the time, not out of any real analysis attaching to nuclear power but rather because it fit my own paradigm — which was that nuclear power was bound up with nuclear weapons, the military, and purveyors of industrial waste.

    CSP ticks a lot of boxes for many. Prima facie, it seems able to answer the intermittency objection. I used to be quite keen on it for this very reason, though now I’m more doubtful, at least if one constrains for cost. (Spending $37bn per year for ten years is a bit like arguing for an NBN every year for ten years, or an ADF budget every 8 months in addition to the one we have.)

    Nevertheless, it’s easier to have in public ownership than rooftop PV and easier to scale up and probably would have a longer service life and be easier to upgrade. Many of those allied with BZE are on the relatively far left and so you can see why this appeals. They are also concerned as any lobby group is that a multiplicity of messages means fragmentation and the persistence of BAU — hence the strident tone.

  22. Ernestine Gross
    May 6th, 2012 at 16:18 | #22

    “The Steep Path to a Nuclear Future”.

    Sub-topic: The number of words used to weasel an image of pro-nuclear to ‘steep path’ may grow exponentially.

  23. May 6th, 2012 at 16:31 | #23

    Whatever the cause, Fran, there certainly seems to be a lot of strident tones around and it can result in silly things like me being viewed as some sort of an enemy because I don’t agree that Concentrating Solar Power cures cancer or destroys body odour.

    Pumped hydro does have some problems here, what with Australia basically being god’s ironing board and normally dry as a bone. (Which is a bit of an odd expression as I can assure you that currently my bones are quite moist.) But there is still some room for some fresh water hydro and pumped storage in Australia, and I guess sea water pumped storage is an option as well. There are also other options – usually small scale – such as towed storage where railway cars are dragged up and rolled down tracks on long steep slopes or where something similar is done with a disused mineshaft. And this trick can make use of depths that are underwater. For example, a weight could be lowered into a flooded mineshaft or the ocean. But I don’t know anything about the economics of towed storage, just the concept.

    I think that thermal concentrating solar power could be quite useful, once we get rid of that annoying, more expensive than PV, solar part and use electrical resistance to heat the molten salts instead of sunshine. While thermal storage is only about half as efficient as pumped storage, if the capital costs are low enough that isn’t a problem. If low demand and bright sunshine and/or strong wind have a habit of dropping electricity prices down towards zero, then the lower efficiency doesn’t really matter.

  24. May 6th, 2012 at 17:55 | #24

    Hermit, we’re all blessed when it comes to electric car battery prices. They dropped to $658 a kilowatt-hour this quarter. I did assume that their rate of degregation would be constant.

    Oh, and you should explain to your friends that nuclear power won’t help them as it is actually quite expensive compared to current wholesale prices in Australia. That’s why we don’t have any here. And they might want to consider moving to Hong Kong. Electricity is pretty cheap there because tight packing makes for low distribution costs and there are no woodstoves to be seen.

  25. Fran Barlow
    May 6th, 2012 at 18:20 | #25

    @Ronald Brak

    If low demand and bright sunshine and/or strong wind have a habit of dropping electricity prices down towards zero, then the lower efficiency doesn’t really matter.

    Unless of course the total output remains inadequate. At high efficiency you need less ecosystem input to meet demand than at low efficiency, so you might be tempted to respond with more capacity and more storage — pushing up costs.

  26. John Quiggin
    May 6th, 2012 at 18:25 | #26

    Let’s take 30c /kWh as the cost of battery storage, and say 15c /kWh for the solar PV used to generate it during the day. If you store 1/2 the electricity you generate, that comes in at an average cost of 30c/kWh, dearer than the typical grid price, but in the same ballpark, and almost certainly far cheaper than the combination of nuclear generation + grid costs.

  27. May 6th, 2012 at 19:33 | #27

    Here in Adelaide, all up I paid 31 cents a kilowatt-hour on my latest bill.

  28. May 6th, 2012 at 19:37 | #28

    And I see Solarbuzz has a price of 28 cents per kilowatt-hour for PV plus battery storage.

  29. May 6th, 2012 at 22:17 | #29

    Fran, total output doesn’t affect if energy storage is built. All that matters is there being a big enough difference between what the storers pay for energy and what they can sell it for. If it is enough to be profitable, then it will be done. If renewable energy pushes down electricity prices at some times while the carbon price pushes it up at other times, it might make energy storage a money maker, although improvements in technology might also be required. And of course energy storage relies on being cheaper than burning natural gas and then removing the CO2 released through photosyntheis. (Remind me to ask Craig Venter how long the cellulose excreting algae are going to take.)

    The type of energy storage use will probably be the cheapest. Ideally any negative environmental externalities of energy storage would be accounted for and priced appropriately, although if there is a situation where thermal storage system is just making use of PV on people’s roofs that would be there to meet peak demand anyway, I don’t see much in the way of negative externalities there.

  30. Fran Barlow
    May 6th, 2012 at 22:51 | #30

    @Ronald Brak

    I suppose the other unknown here is the volume of surplus output available to be stored. If the efficiency of some renewable source is low, then the surplus above demand might be modest. If the round trip efficiency of storage is low, then the amount available for load balancing will be further reduced.

    If you want to guarantee supply, then you need to be sure that it will almost never be the case that the combination of renewables + stored energy will be unable to avoid brownouts. To guarantee that you are going to need more renewable capacity than if either harvest or storage was more efficient.

    At the margins, it’s probably going to be cheaper just to have more open cycle gas. You obviously can’t just have too many plants lying about unused so those that are redundant had better be cheap and ready to go. In practice, you probably have to have them in continuous operation if they are in private hands or pay them not to operate.

    Bear in mind also that the price for stored power may well be largely the off-peak rate — narrowing the margins for storage.

  31. Chris O’Neill
    May 6th, 2012 at 23:15 | #31

    @John Quiggin

    the electricity generated by inflexible sources like coal.

    Wind is just as inflexible as coal, the difference is available wind power varies, while available coal power is fixed.

    It’s baseload supply, not baseload demand. Get rid of the off-peak tariffs and you’re well on the way to solving the “baseload” problem.

    The concept of off-peak is related to demand, not supply.

  32. Sam
    May 6th, 2012 at 23:24 | #32

    Fran Barlow :
    @Ronald Brak
    At the margins, it’s probably going to be cheaper just to have more open cycle gas. You obviously can’t just have too many plants lying about unused so those that are redundant had better be cheap and ready to go. In practice, you probably have to have them in continuous operation if they are in private hands or pay them not to operate.
    Bear in mind also that the price for stored power may well be largely the off-peak rate — narrowing the margins for storage.

    In the case of both gas and storage, if we price appropriately, they’ll either be financially viable or they won’t be needed. Unless you actually run one of these outfits, you shouldn’t really care which of these is true. We shouldn’t need any “pay them not to operate” nonsense – just pay them $100 per kwh for a few hours a year. Better still, expose the consumer to these real price fluctuations and watch the peak demand problem disappear.

  33. Sam
    May 6th, 2012 at 23:34 | #33

    @Hermit
    I think you care too much about batteries. Most people are connected to the grid in Australia. Grid tie-in solar systems are about half the cost as off-grid ones and you get the best of both worlds. All the reliability of the grid, and a fairly cheap, mostly renewable electricity system.

    What’s more, these people greatly contribute to grid stability by supplying clean energy right when it’s most needed, at peak times.

  34. Ernestine Gross
    May 6th, 2012 at 23:55 | #34

    @Chris O’Neill

    I understand the expression ‘inflexible sources’ to refer to a production technology that is not representable by a smooth supply schedule everywhere such that cost minimisation corresponds to a fixed minumum output at all times.

    I understand ‘off-peak tariffs’ to refer to a time dependent price at which the minimum output can be sold.

    Suppose an ‘inflexible source’ (eg coal) is replaced by a ‘flexible source’ (eg gas) then the price for the time period now categorised as ‘off-peak’ may be different from the ‘off-peak tariff’ from an ‘inflexible source’.

    So the relevant conceptual framework involves technology, preferences, prices, and the profit motive.

  35. Ernestine Gross
    May 7th, 2012 at 00:23 | #35

    Fran suggests people want to live in the expectation that electricity supply is available whenever they want it even if they don’t consume it at all times. This suggestion is credible from the perspective of each and every individual. However, decisions based on the aggretation of these expectations could result in a socially wasteful supply of electricity. As the data provided by Ikonoclast as well as Prof Q’s reference to off-peak tariffs’ indicate, ‘the market’ aggregates the actual consumption behaviour of electricity for given production technologies.

  36. Hermit
    May 7th, 2012 at 08:39 | #36

    @Sam
    Nobody has asked the electricity retailers whether grid tied PV suits their business model. They are compelled to do it by the RET. Drop the RET and subsidies (now called STCs) and see what happens. Retailers might tell PV owners ‘use it or lose it’. They do get some clawback with the daily connection fee of about $1 in most States I believe. In effect several kwh per day get donated back to the retailer as a sort of tithe.

    I disagree that PV is a good load follower. Air conditioning demand is usually high as the sun sets but temperatures linger on. I also disagree that widespread PV stabilises the grid. In Germany retailers want the right to curtail the amount of surplus PV they accept
    http://www.smartpowergeneration.com/spg/files/library/A_case_of_sunstroke_in_Germany.pdf
    See the discussion of ‘the solution’.

    I also wonder whether the 50 Hz frequency standard is threatened by too many inverters getting out of sync. Not a problem when rich people get battlers to pay a third of their costs while producing a miniscule 1% of overall grid energy. Somehow the fact no coal stations ever get closed down gets overlooked in all the self congratulation.

  37. May 7th, 2012 at 08:44 | #37

    Fran, at the moment we guarantee supply by paying people to meet it. We might change this system in the future, but I think we’ll probably stick with it for a while. In South Australia this system meets demand over 99.9% of the time, using a maximum wholesale price of $10 a kilowatt-hour. Or is it $1 a kilowatt-hour? Damn, I’ve dropped a zero in my head and I can feel it rolling around in there. Anyway, as Sam pointed out, if we were willing to pay more, then barring barring accidents and disasters we could meet demand 100% of the time. Our current system results in open cycle gas turbines only being used to meet peak demand as it’s not profitable unless the price of electricity is high, and no one is paid not to generate. (Open cycle gas turbines can be used rarely and still be profitable because their capital costs are so low, starting at something like $300 a kilowatt.)

    All else being equal, a higher efficiency is better. But where costs are not equal, people may find it actually saves money to go with the less efficient option. For example, if system A is twice as efficient as system B, but costs 27 billion times as much, people will probably go with system B. This sort of thing happens in all areas of life. I could have bought Slazenger balls the other day, but instead I bought generic ‘Recreation’ brand balls because I was simply better off having more money but low quality balls. Anyway, with a commodity like electricity, if people build energy storage capacity, it will almost certainly be the most profitable type they can legally build. And if they make a mistake and it turns out they they would have made more money with a more efficient system, then they have to suffer that loss and learn from their mistake. Or if they are a big company, they might get a helping hand from average Australians.

    Currently South Australia has enough wind capacity to entirely meet the state’s demand if there is a period of both high wind and low demand. At the moment we have the capacity to export any surplus to Victoria, which is a huge electricity sink from our point of view, so wholesale electricity prices don’t drop to zero, but there have been places where low demand and high winds have dropped prices down to zero. If enough wind and solar capacity is built, electricity prices could often drop to zero in Australia.

  38. Ben
    May 7th, 2012 at 12:38 | #38

    @John Quiggin

    .. but cheaper than the peak tariffs in some parts of Australia now.

  39. John Quiggin
    May 7th, 2012 at 13:03 | #39

    @Hermit “Somehow the fact no coal stations ever get closed down gets overlooked in all the self congratulation.”

    http://www.adelaidenow.com.au/coal-power-will-only-switch-on-for-summer/story-e6frea6u-1226332097185

  40. Hermit
    May 7th, 2012 at 13:16 | #40

    @Ronald Brak
    I sometimes wonder if the casual reader casually accepts all of this without trying to think it through. Spot prices for grid electricity can be zero or negative (ie pay to take away but still get any subsidy) but the cost is always positive. Every lump of tricky hardware has depreciation, finance and staffing costs whether or not it burns fuel. If generators opt to sell cheap or give it away it suggests the subsidy is too generous, which Pr Q will recognise as a form of dissipation of rent.

    From what I can gather the AEMO price ceiling is or was $12.50 per kwh and the price floor -$1.00. SA’s high wind penetration is an artefact of the RET , the REC/LGC subsidy which was 3.9c per kwh when I last looked and the fact that wind capacity is fully backed by gas. Therein lies a tiny problem; both SA’s current gas sources are running out fast unless fracking greatly improves reserves. Unless SA can find a way to store energy (giant batteries?) or sell it across the border all those wind mills won’t be much use. Ditto PV when the sun goes down. As an energy model SA is Germany-lite.

  41. John Quiggin
    May 7th, 2012 at 13:35 | #41

    “As an energy model SA is Germany-lite”

    And your point is? Last time i looked, Germany still had the lights turned on, and hadn’t gone broke, despite subsidies that everyone agrees were too generous. They are winding back the subsidies now, but they are still planning on installing 3GW of solar per year, as well as lots of wind.

  42. Sam
    May 7th, 2012 at 13:52 | #42

    @Hermit
    The European experience you cite isn’t relevant to Oz though. In Germany and England, PV doesn’t stabilise the grid. In these places panels are actually a headache. It’s cloudy, and cold, and people don’t demand much energy when the sun is shining. This is totally different to the Australian case.

    I don’t say PV in Australia is a perfect load follower; there is some time in the early evening when price is high, but no PV is produced. However, the reverse is true; when PV is operating, the price is almost always high. This means that in Australia, the grid should just about always be happy to accept PV. This still leaves the problem of early evening demand. This can be met two ways. First, only starting up alternative generators during these times (and making it worth their while to lie unused most of the time by paying a premium then). Secondly, demand management. Expose the consumer to the real price, and the problem will largely fix itself.

    As an example, imagine a smart airconditioner, that knows the current retail electricity price. It can run full bore in the summer until 4:30 and then switch off, leaving the house nice and cool in the evening without night-time energy use.

  43. Ernestine Gross
    May 7th, 2012 at 14:21 | #43

    @Sam

    There is no doubt Australia – a continent – is more suitable for photovoltaic electricity generation than Germany and England – to geographically ‘small’ countries north of he Alps – combined. But, detail matters. The southern part of Germany is more ‘sunny’ then the north and most of the UK. It is in the south and south-west of Germany where PV panels are anything but a headache. There are programs in place where solar energy is not only harvested from PV panels on the roof but also from the walls of high buildings. Incidentally, it is on very cold days when the skies are often cloudless. The northern and north-eastern parts of Germany are more suitable for wind. Some parts of the south and the north and much of the east are more suitable for biomass (space and agriculture), etc etc. In other words, details matter in conjunction with the portfolio idea of renewable energy.

  44. Ernestine Gross
    May 7th, 2012 at 14:24 | #44

    “to geographically ‘small’ countries north of he Alps” – almost incomprehensible. Should read “two geographically ‘small’ countries north of the Alps”.

  45. Sam
    May 7th, 2012 at 14:57 | #45

    @Ernestine Gross
    OK. But the take home message is that the aussie grid should be much happier to accept rooftop PV than the German one. If the grid were allowed to pay the real price for residential solar here things would look even better than they currently do.

  46. May 7th, 2012 at 15:03 | #46

    Hermit, the ceiling is getting self conscious about how I keep rolling my eyes towards it. “It’s not you, it’s the internet,” I keep telling it. So in the interest of my domestic harmony I’ve created a short list of points for you to print out and blu-tac to your monitor and check through before you post. Hopefully this will save you lots of time and result in a huge improvement in your productivity.

    1. Wind turbines don’t use gas to generate electricity. They still work even if there is no gas.

    2. Wind power has reduced the amount of gas and coal used in South Australia.

    3. South Australia currently buys gas from Queensland and to a lesser extent from South Austalia. It gets the gas through long pipes. It doesn’t rely on its own gas supplies.

    4. Saying that the subsidy on wind is too high while calling for enough nuclear capacity to be built to meet peak demand means I lack self awareness on the issue of subsidies.

  47. May 7th, 2012 at 15:04 | #47

    South Australia, New South Wales, when you think about it, there’s not much difference between the two.

  48. rog
    May 7th, 2012 at 17:41 | #48

    This thing about baseload power (emphasis on “thing”) puts me in mind about traveling. Whenever we set off there is the ritual prepack and reprepack, an exercise of narrowing the range of stuff down to maximum allowable limits. Inevitably in the “I cant do without” items there is the hairdrier, which is never used as wherever we go there are wall mounted hairdriers.

    As an asset baseload power might well turn out to be as useful as a never used hairdrier.

  49. Hermit
    May 8th, 2012 at 07:08 | #49

    Denmark has the world’s highest electricity prices , Germany 2nd, SA 3rd
    http://www.adelaidenow.com.au/news/south-australia/power-prices-to-be-highest-in-the-world/story-e6frea83-1226305741810
    German GDP contracted in 4Q 2011 and doesn’t appear to have been announced for 1Q 2012. Their emissions were static as higher coal burning was offset by lower use of domestic gas (much from Russia) due to a mild winter. As of last year $110 bn had been paid in feed-in tariffs.

    SA gets gas from the Cooper and Otway Basins both of which had low reserves to production ratios until the fracking craze hit town. Unless fracking increases reserves the talk is of only a decade of reliable gas supply left, see for example here. SA has 1.1 GW of nameplate wind power backed by 3.7 GW of reliable gas fired generation. Only 5% or so of the wind capacity can be relied upon. The idea is that during wind lulls gas fired generation covers the dip in output to meet demand, for example in heat waves when the wind hardly blows. Nor do solar panels help much when it is 40C at 7pm. Without relatively cheap gas SA is screwed. It could happen in just a few years time.

  50. John Quiggin
    May 8th, 2012 at 09:23 | #50

    @Hermit To repeat myself, so what? Suppose that a shift to renewables leads to a doubling of electricity prices. The impact on standards of living will be minimal – comparable to a few quarters of negative economic growth. Your examples prove the point – even with an economic crisis (unrelated to energy policy) Germany and Denmark are still rich and will remain so.

    Granted, we would all be better off, to the tune of a few per cent of income, if we could burn coal without worrying about CO2, or if nuclear energy was an affordable alternative. But since these things aren’t true, we will have to pay a bit more for energy. End of story.

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