Energy Supply, Net Zero, and the Instability Created by Renewables

Energy Supply, Net Zero, and the Instability Created by Renewables
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The following is a transcript of Topher’s editorial from Episode 61 of The Aussie Wire News discussing Simon Johansson’s article on energy supply, net zero, and the instability created by renewables, which aired on the 9th of January 2024.

I want to take this opportunity to try something that I’ve wanted to do for a while, and I’ll personally be reading all of your comments and feedback to see if this is something that you’d like me to continue doing in the future.

For a very long time, I’ve wanted to do a regular show or segment where I take an article from the mainstream media and break it down, pointing out unspoken assumptions, misdirections, false dichotomies, and sometimes just outright bad journalism.

I can’t single-handedly fix the appalling quality of so-called journalism in this country, but I can help educate readers and viewers to see through common mistakes and tricks so that, hopefully, in time, the quality of journalism in this country improves thanks to the quality of critical thinking on the part of the consumers.

I’m testing my theory today with an article from the Sydney Morning Herald by Simon Johansson titled ‘Rooftop Solar Drives Out Wind, Coal, and Grid-Scale Solar’. I’m going to ask and answer the question: How can power prices at a wholesale level be negative 25% of the time, and yet at a retail level, we’re paying more than ever before?

Simon, overall, does a pretty good job of detailing the problem and offers decent balance on a few key points, but he drops the ball on the single most important point: What to do about this particular problem? This is a common theme in modern journalism, which is correctly identifying the problem and then immediately prescribing a solution that will only make things worse. It’s no coincidence that that’s a key problem with modern journalism at the same time as with modern politics.

But before we dive in, I need to preface this with one important foundational fact: The electricity grid must be kept in balance at all times. That is, the amount of energy being supplied into the system must be balanced against the amount of energy being consumed in the system. If it gets imbalanced, then brownouts, blackouts, and equipment damage can occur.

So, with that foundational piece of information in mind, let’s dive into Simon Johansson’s article published in The Age on January 7th, 2024.

“Australia’s 3.5 million rooftop solar installations are pumping out so much energy on sunny days that they’re sending wholesale electricity prices into negative territory, forcing large-scale wind and solar farms, as well as coal plants, to reduce generation. Over the past 30 days, rooftops contributed 14.6% to the grid. Bundled together with other renewables such as solar farms, wind, and hydro, they generated 42% of the country’s energy over the same period, according to”

Now, that sounds like a big win – 42% for the entire month from renewables. Well, maybe Net Zero is not such an unachievable pipe dream after all. But those who understand how a grid operates can already see the problem, and it really begins to show itself in the next few paragraphs.

“In South Australia’s electricity market last year, 24% of all 5-minute spot price trading intervals had negative prices”. 

In other words, pretty much a quarter of the time in South Australia, wholesalers were charged money for generating electricity instead of being paid for it. Or, to put it another way, at least at the wholesale level, consumers of energy were the ones being paid and not the producers, and that is a really big problem.

“On the last day of the year in Victoria, electricity spot prices between 6:20 a.m. and 5:35 p.m. were less than -$50 per megawatt-hour. Wind and grid-scale solar scaled back in response.Negative. It’s just one of many typical days, Mountain said, adding in a blog post, Rooftop solar is king, but it is subjugating not just coal but also wind and solar. Big power generators are frequently shutting off supply on clear sunny days as unrestrained output from household solar panels forces wholesale prices down to zero or below.”

How can that be? How can prices be negative? Well, it all comes back to that balance problem for the grid. If it gets unbalanced, then bad things happen. So, if the sun comes out from behind a cloud and heaps of domestic rooftop solar installations start pumping energy into the grid, within a matter of seconds, an imbalance can be created. And if that imbalance gets bad enough, bad things happen. So, what do they do about it? Well, they can’t disconnect the domestic rooftop solar; those systems aren’t designed that way. So, instead, what they do is they drop the price into negative territory. That is to say, they charge energy producers money for producing electricity so that all of those producers who can disconnect do. Coal-fired power plants go down to idle, and industrial-scale wind and solar disconnect because they can, and they hopefully bring everything back into balance.

But the fact that 24% of the time in South Australia, they had negative power prices tells you something. It tells you that they’re struggling to keep balance in the system during the middle of the day when the sun is shining. 

Ok, so we all understand that problem now. But how is that a bad thing? Isn’t this just the free energy from the sun that the renewables revolution always promised? 

“What we are seeing now in South Australia and Victoria and elsewhere is rooftop solar becoming the dominant energy source during the middle of the day and having quite a big effect, driving off production not just from coal but also large-scale wind and solar.”

“Grid-scale wind and solar come back online once demand and prices recover, but coal generators must maintain a minimum operating level and cannot as effectively wind back their exposure to negative prices, bringing forward plans for their early closure as they become less financially viable.”

Now, up until this point, the author, Simon Johansson, has done a pretty good job, in my opinion, of largely just describing the reality of the problem as it exists today. But unfortunately, this article is about to go very, very wrong. The quote continues, 

“Deeply negative prices for long periods of time are not sustainable. Only a huge expansion of storage will change the market’s dynamics.” 

Now, to be fair to Simon, the author of the article, in this particular bit, he is just quoting the director of the Victorian Energy Policy Center, Bruce Mountain. That’s a position and organisation that sounds a lot more impressive than it is, but we’ll get back to that later. 

What Simon, as the author, failed to do in writing this article was to question or offer any sort of perspective on the massive unspoken assumption contained in this quote from Bruce Mountain. I’ll read it again: 

“Only a huge expansion of storage will change the market’s dynamics.” 

That being Bruce Mountain said, and there it is. 

The solution, indeed the only solution, is to double down on the very thing that created the problem in the first place, and that’s according to Bruce from the Victorian Energy Policy Center. Sounds impressive? Who are the Victorian Energy Policy Center? Well, like most such outfits, their name, while technically not a lie, is very much designed to make them sound far more important and official than they actually are. To the casual observer, they might make the mistake of thinking that this is actually a Victorian Government body. But at least they do tell you the truth on their website. They are a part of Victoria University’s Institute for Sustainable Universities and Livable Communities. Or the ISILC. 

So, Bruce is the director of a policy centre inside an institute, which is inside a university that receives enormous amounts of government money and has a vested financial interest in supporting the government’s position on climate change and net zero.

Now, I’m not suggesting, not even for a moment, that Bruce or anyone else at the VU or the ISILC or the VUPC would have changed their position on climate change or on net zero in order to exploit the frankly eye-watering sums of money available. Not at all. I fully expect that they are all true believers and that it’s just by a stroke of good fortune that they believe and research exactly the thing that governments are throwing money at right now. 

Even without all this government money and the position of director at a policy centre inside an institution inside a university that gets vast sums of government money, good old Bruce would still be 100% convinced that doubling down on renewables is the “only” end quote thing to do. Always be wary of the word “only,” by the way. It’s one of the most powerful and potentially deceptive words in the English language. But let’s go back to the article:

“The need to firm up the power grid as ageing coal plants retire and hasten the rollout of renewables prompted Climate Change and Energy Minister Chris Bowen last year to significantly expand the government’s capacity investment scheme and underwrite 32 gigawatts of renewable energy and storage. The taxpayer-backed intervention is needed to meet the country’s objective of renewables supplying 82% of power by 2030.”

Did you see that? Renewables and the instability that they have brought to a previously stable grid are causing such a big problem that we need to spend more money on renewables and the associated transmission lines and batteries to try and fix the instability that wasn’t there before we started building all of the renewables.

So, in a single article, we have renewables causing instability, which creates negative wholesale prices but simultaneously causes higher retail energy prices because of the inefficiencies and the costs that renewables impose elsewhere in the system. The solution is to spend more on the thing that created the problem in the first place and then more again on batteries to try and stabilise the instability that we didn’t used to have before we spent all that money on renewables.

This is what passes for journalism. This could have been a really good article, but Simon didn’t take a step back and look at the bigger picture before he simply swallowed and repeated Bruce’s opinion without questioning it first. As a result, this article ends up reading more like a propaganda puff piece than any sort of serious piece of journalism. This entire article sadly failed on the uncritical use of the word “only.” But most people, most of the time, would completely miss that and come away feeling like they’re well-read, like they’re educated, like they understand these issues because they read the news. When sadly, all that’s happened is that confirmation bias has been provided to prop up existing prejudices under the banner of journalism.

The article continues but sadly never provides any balance on this point. And for me, that makes it a worthy contender for our article of the week award. Now, that’s not week as in week or seven days; it’s weak as in lacking strength. In this case, lacking the strength and rigour and mental capacity required to properly cover the issue of energy prices, and what’s causing them to be sky-high.

You can watch this episode of The Aussie Wire News here.

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