Guest essay by Eric Worrall

h/t JoNova – An Australian Government AEMO commissioned report has suggested that while government incentives make renewables preferable to coal, the new renewable capacity isn’t helping grid stability.

One of their recommendations; more government incentives, to encourage renewable businesses to add battery backup to their solar and wind farms.

National Electricity Market lacks ‘holistic thinking’ and risks ‘failing to keep the lights on’

By business reporter Stephen Letts
Updated Fri at 9:01am

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However, the report has identified the new battleground as “anytime/anywhere energy”, or wind and solar, versus “keeping the lights on services”, or traditional synchronised generation from the big fossil fuel utilities.

The declining cost of wind and solar farms has made them the default choices for additional capacity, however the new generation is seldom integrated with “keeping the lights on services”.

“We have structured market incentives in such a way that it promotes this increasing divergence. A rapidly increasing number of commercial businesses have ‘followed the money’ to what was disproportionate value due to scheme design,” the report said.

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“There is a glimmer of hope there with people putting in batteries, but it still just a ‘toe-in-the-water’ exercise,” Global-Roam’s Paul McArdle said.

“It make sense wind and solar farms should invest in some form of battery storage, but there is still a fair bit of commercial risk without greater incentives [to build them],” he said.

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Changes in ‘bid patterns’ for power are seeing an increasing volatility and a concentration of either extremely low (below $0/MWh) or high (above $300/MWh) prices.

Occasionally “cheap” power may sound good for consumers, but they are bids from price-takers who find it either cheaper to keep plants going, or are happy enough to take whatever price is going — but average prices across the curve keep creeping up.

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Read more: https://www.abc.net.au/news/2019-05-31/nem-20-year-report-card-points-to-big-challenges-ahead/11164014

A paywalled copy of the report is available here.

Many Australians hailed the recent electoral victory of the Conservative Morrison government as a victory over the wild green socialism of their political opponents, but I see the Morrison win as a very qualified victory for affordable energy.

Despite years of Conservative dominance of Australian federal politics, a deluge of cash is still flowing into the pockets of green energy rent seekers.

Green energy optimists tout an expensive Morrison government scheme to massively increase hydro capacity as the solution to renewable intermittency. But hydroelectricity in a dry country like Australia is not entirely reliable; the catchment where the grand new hydro scheme will be based suffered a severe drought in recent years, which placed substantial pressure on water users.

Squeezed between these expensive new hydro schemes and calls for new renewable energy incentives are Aussie businesses and voters, who are becoming increasingly impatient with watching “average prices across the curve keep creeping up”.