The great energy debate

[kiwigeo]

It is interesting to note that SA over the last few days is going through yet another substantial power outage.

The cause of the most recent power blackouts here in Adelaide was a severe storm that hit the state on Tuesday night (27/12) and caused widespread damage to power lines, power poles and other infrastructure. It was nothing to do with a lack of baseload power or an over-dependence on renewable energy sources or the Victoria/SA feeder...the blackouts would have occurred regardless of power source. The areas where blackouts were prolonged were mainly in the Adelaide Hills where there are lots of trees and a majority of power supplies are via overhead cables.

No highly centralized power network such as the ones operating in every state and territory could have survived a weather event such as the one above without sustaining significant damage to lines and poles.

[Bushmiller]

My take on the series of events was that freak storms wrecked transmission lines. The remaining wind system was overloaded so it shut down (hence the operating as designed to "protect" the system). However this left the interconnector from Victoria as the only supply, which was unable to cope so it too shut down to protect itself from damage. This resulted in a blackout. Consequently you could consider that there was indeed a design fault.

This is a link to the third preliminary report from AEMO. The final report is due in March.

http://www.aemo.com.au/-/media/Files...ember-2016.pdf

Clearly there are several issues that need to be addressed. The most disturbing factor for me however is the continued dialogue by politicians to cast spin to limit renewable energies. This to my mind is a gross misrepresentation of the facts to suit their agendas and is despicable, if I may quote that cartoon character.

I thought this might be an opportune moment to add further comment following the decision yesterday in SA to shed load instead of firing up a Gas generator. I have no additional knowledge of that strange decision.

One final mention I should make is that the market has changed dramatically since the inception of this thread. Two factors are that the cheap gas has gone and particularly right at this moment we are experiencing an unusually protracted period of hot weather. There are other issues too.

Regards
Paul
(Just a reminder that I work in a thermal power station, albeit good one.)

[kiwigeo]

I thought this might be an opportune moment to add further comment following the decision yesterday in SA to shed load instead of firing up a Gas generator. I have no additional knowledge of that strange decision.

Not as easy as it sounds to fire up the second generator at Pelican Point at short notice....because of the current shortage of domestic gas the operator has first to source enough gas on the spot market (=$$$$$$) and then they have to submit an outrageous price bid to sell the electricity.

[Bohdan]

As I understand they offered the electricity but nobody was willing to pay their price.

So much for the benefits of private enterprise in a service industry.

[Big Shed]

Not as easy as it sounds to fire up the second generator at Pelican Point at short notice....because of the current shortage of domestic gas the operator has first to source enough gas on the spot market (=$$$$$$) and then they have to submit an outrageous price bid to sell the electricity.

This quote from Wikipedia seems to suggest other reasons

https://en.wikipedia.org/wiki/Pelica..._Power_Station

Reduced operation

Since March 2013 the power station has generally operated at half capacity due to over-capacity in the South Australian region of the National Electricity Market. Grid generation capacity was reduced in early 2016 when the Northern Power Station closed. Generation at Pelican Point was increased to full capacity at the request of the South Australian government for at least a week in July 2016, due to much of the state's wind generation being offline due to damaging high winds, and the Heywood interconnector being unavailable due to works associated with a planned increase in its capacity.^[2] It returned to only operating one unit (half capacity) and the owner claimed that the National Electricity Market rules prohibited the second unit from responding to a request for electricity market responses on 8 February 2017.^[3] The result was that the extremely hot weather in Adelaide plus little wind to drive wind turbines led to the market operator requiring "load shedding" for 27 minutes during the evening electricity demand peak.^[4] The owner later clarified that it is not allowed to bid into the market if supply cannot be guaranteed, and it did not have a current gas supply contract for the second unit. It was able to respond promptly one directed to do so on 9 February during continuing high temperature weather

But really the long and the short of it is that we are now reaping the "benefits" of selling off our electricity assets for short term gain, resulting in losing control of them completely.
This is not peculiar to SA, the same thing will be happening in Victoria once Hazelwood is closed down by its' private operator (Engie, also majority owner of Pelican Point).

Jay Weatherill, SA Premier, is now talking about the possibility of "nationalising" electricity generation again!

[kiwigeo]

This quote from Wikipedia seems to suggest other reasons

https://en.wikipedia.org/wiki/Pelica..._Power_Station

"The owner later clarified that it is not allowed to bid into the market if supply cannot be guaranteed, and it did not have a current gas supply contract for the second unit. It was able to respond promptly one directed to do so on 9 February during continuing high temperature weather." Translation - the second generator was fired up after the national authority granted the plant operators exemption from the supply guarantee rule.

A guaranteed gas supply is still an issue......most of the gas from Moomba and Bass Strait is currently being piped to Gladstone to feed the LNG plant there because they cant get enough gas from local CSG fields.

[Lappa]

I don't have an intimate knowledge of the energy suppliers and political cabin Australia so I can only go on reports I read and heard. If these are correct, then the thing that annoys me re this gas shortage is the amount that goes OS. Reports have overseas households in Asia paying less for their Australian gas than Australian households pay. I believe we are the only country selling fuels overseas that allows this price variation to occur.

[ian]

seems to me, the major issue in SA is a false assumption around the "National energy market".

Leaving aside the issue of transmission losses, which are, I believe, substantial, there are just not the wires required to allow electricity generated in NSW's Hunter Valley to be consumed in Adelaide. Nor the wires to allow most of SA's potential demand to be supplied from Victoria.

so when the sun goes down and the wind's not blowing and everyone is running an air conditioner, there's not enough generating capacity to go around -- unless the gas fired generator at Pelican Point runs both its units. But to run both units requires the operator to enter into a take or pay contract for the necessary gas, the cost of which can't be recovered if the wind is blowing, which it does much of the time.

[ian]

"The owner later clarified that it is not allowed to bid into the market if supply cannot be guaranteed, and it did not have a current gas supply contract for the second unit. It was able to respond promptly one directed to do so on 9 February during continuing high temperature weather." Translation - the second generator was fired up after the national authority granted the plant operators exemption from the supply guarantee rule.

my translation would be "the second generator was fired up after the operator received an assurance that the cost of entering into a take or pay contract for the required gas to run the second unit would be covered. "

[kiwigeo]

my translation would be "the second generator was fired up after the operator received an assurance that the cost of entering into a take or pay contract for the required gas to run the second unit would be covered. "

Either way the root cause is still the same......a government that lets the nations gas reserves be shipped overseas as LNG at the expense of domestic users.

[Bushmiller]

Quite an interesting day in the generation business, but before I get into that I should congratulate you blokes on doing the research on the SA situation from the other day.

There was quite a deal of mis-information touted initially by politicians and subsequently beaten up by a more than eager media circus. As Kiwigeo and Big Shed have pointed out, the gas turbine station at the centre of the controversy was indeed Pelican Point. After running at half load for a year the owners decided to shut down one unit (mothball), which resulted in a couple of points. Firstly it was not in the availability mix and secondly it was not allowed, as a consequence, to bid into the market. The third issue is that a piece of equipment shut down for a year may or may not start if it was required in a hurry.

As Kiwigeo alluded to, it was not a simple business to crank it up despite the impression from the media that all they had to do was give the order and press the button. The order was given today, but I don't think the unit came into service today. I suspect it was desperately needed in SA, but it didn't run.

So that brings me to the interesting aspect of the day: Today was one of the most volatile in terms of demand and market price that I have seen. Any power generator capable of generating made money today. In recent weeks it has been QLD that was at the top of the money trail, but today NSW took the cake. I calculated that one station with four units had the potential to make $50 million in one and a half hours. This is a round figure and not actual because of a number of factors including contracts.

This occured when the market price hit $14,000/MWhr and remained at or near that level for one and a half hours. Compare this to the 25c/KWhr you pay at the retail level. The wholesale price in KWhrs was $1.40 (more than five times the retail price). The wholesale price has gone up in recent months, but it would still not exceed 10c/KWhr normally.

This is the penalty that is paid under a so-called competitive market: Fourteen times the normal price. Ok, today was exceptional. It will be interesting to see how the weekend develops as temperatures are expected to be considerably higher than today in QLD.

Regards
Paul

[swk]

It would be interesting to observe the desgners of the system giving evidence before a Royal Commission in effect saying "The system worked within its' design parameters - it's just that we got the parameters wrong.

I'll reply to this a bit late, I was overseas around Christmas. My comments here might lead on to another post about the current SA situation and will be relevant if I do.

Big shed. "The system worked within its' design parameters - it's just that we got the parameters wrong" is exactly the situation.

I assume you have been out of the workforce for a few years. There is one thing that has changed over the last decade + which gives me some cause for concern. Many decisions now are made by a group of people working together to come up with a consensus. Which on the face of it seems a good idea, and maybe is in most cases. Lots of people with diverse backgrounds must cover more experience than one individual. However, there are two problems with this. Increasing the number of people partaking in the decision means that the responsibility for the decision is also dispersed. And then the second problem is, do you know if all the people involved actually _do_ know enough about their area of expertise.

In real life, a couple of years ago, one of my colleagues, keen to be a mover and shaker, inserted himself into a number of these decision making processes (with the blessing of my then boss). Due to another similar project I was working on, I found out that the colleague in question had been on a review panel and completely missed a problem and gave the OK to a very dangerous situation. But it wasn't some esoteric problem, it was a simple high voltage clearance issue, clearly laid out in Australian standards. When I had "words" with the colleague, his excuse was "no one else picked it up either" which annoyed me no end, as his role in the group was as the "design expert". Needless to say, he didn't take part in any more of those design decisions.

So to get back to the design of the transmission system and last years SA event. Who are actually the "designers"?
The wind farms are designed by a group of people who are given a set of parameters to meet by the Network operator. Those parameters were put together by the network operator (most likely from an independent group with expertise that the network operator hired). The wind farms themselves are in the clear, they did what they were told. Now AEMO will stand up in court and say "we hired people who had the best credentials, we had processes in place, not our fault". And if the independent group fronts any inquiry, they can take a couple of paths, either "AEMO weren't clear enough in what they wanted" or " wow, this is a totally unprecedented event, no one could have foreseen the need for those particular parameters" (and as there are ultimately very few actual experts and they all work for the independent advisor, no one can/will disagree).

And this has come about, in part, due to the privatisation of the electrical industry. The old state organisations were "inefficient" because they carried people who spent their whole lives thinking about these sorts of out of the box problems. At privatisation all this type of non direct work was dumped with the thinking, "not our core business", if we need it "we will hire the expertise". But if no one is paid to think about the more esoteric stuff, then there will be no one who understands it and the outcomes of rare events become "unpredictable" and expensive.


SWK

[david.elliott]

And this has come about, in part, due to the privatisation of the electrical industry. The old state organisations were "inefficient" because they carried people who spent their whole lives thinking about these sorts of out of the box problems. At privatisation all this type of non direct work was dumped with the thinking, "not our core business", if we need it "we will hire the expertise". But if no one is paid to think about the more esoteric stuff, then there will be no one who understands it and the outcomes of rare events become "unpredictable" and expensive.

SPOT ON...

Once upon a time these core departments were focussed on supplying the service, water, power, telecoms, and so did all they could to support that. Most times they could return a modest amount to govt. Now they are money making enterprises the focus has moved from safety, reliability etc. to eeking out the last few cents... Look at poles and wired here in WA...

[AlexS]

SWK & DE, exactly the same thing is happening in the water industry.

[Mobyturns]

SWK & DE, exactly the same thing is happening in the water industry.

and the Telco industry as it has in the banking industry. Banks lend more capital than they actually have at times, the power generation industry supposedly is dimensioned to accommodate typical load demands. Supposedly! "The system worked within its' design parameters - it's just that we got the parameters wrong."

The Telco and water assets are in the same boat - not every body can get the capacity that they are paying for at the same point in time!!!! Bean counters are dimensioning assets to give the illusion that a certain capacity exists for consumers when in fact it doesn't.

Privatisation is not the golden egg.