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Energy Trauma

I don’t watch much television. It presents me with an unenviable choice. Do I watch commercial television and be assailed with endless, brain-numbing, intellectually demeaning advertisements? Or should I watch ad-free ABC to be lectured by left-wing advocates, Greens’ politicians and committed virtue signallers? Faced with such a choice I watch a little news and a little sport and then retire to read something sensible.

But I do recall in the back of my mind an advertisement from yesteryear about batteries. I think, and no doubt you will correct me if I am wrong, it portrayed battery powered toy rabbits. There were two sets of rabbits – those powered by conventional batteries and those powered by, (if my memory serves me right,) “energiser batteries”. In the face of our current energy crisis I believe we need more than “energiser batteries”

Let me try to explain my concerns and put this issue into a historical context.

Australia, as I have observed in previous essays, is facing an energy crisis which some commentators are hoping will be solved by a combination of intermittent green energy and emerging battery technology. But I suspect that in the short term we have done ourselves more harm than good in eschewing more traditional generation technologies.

Let me commence by putting my credentials on the line.

Twenty years ago, I was the CEO of an electricity generating company. It was very successful. Its success was built on the profitability of our major asset, a coal-fired power station that had been recognised internationally for its innovative work practices and technical excellence. Despite that we made a commitment to develop renewable energy projects, because we understood renewable energy was the way of the future.

Yet saying that, we didn’t disparage our coal-fired asset because it was an environmental leader and its revenue stream was necessary to develop our renewable energy business.

Renewable projects were attractive to us, not only because of their reduced carbon dioxide emissions but because they were often located in economically impoverished areas and provided commensurate economic benefits to disadvantaged communities.

In those days it was difficult to make the economics of such projects work. Many of the technologies were relatively new and as such were much more expensive than traditional technologies.

I was co-opted to be part of a working group to advise then industry minister, Nick Minchin, on ways to promote renewable technologies.

But outside that, our business came to the conclusion that the best way to advance the renewable energy cause was to have the Government mandate a modest renewable energy target. Consequently, we decided to lobby the Federal Government to that end. In 2001 through our efforts and the support of others the Government established a Mandated Renewable Energy Target (MRET) of 9,500MWhrs to be achieved by 2010.

This modest target was designed to support new technologies to reach maturity and gain reasonable economies of scale without unduly distorting the electricity market. But in recent years the Commonwealth has substantially raised that target and many state Governments have established their own ultra-ambitious renewable energy targets. With the rapid expansion of renewable energy projects around the world it is now hard to justify such targets as promoting the new technologies and ensuring economies of scale. They have now largely become an impost on coal and gas fired technologies.

The justification for these interventions that have distorted the electricity market and led to huge increases in electricity charges has of course been that it has reduced carbon dioxide emissions and consequently helped reduce global warming. Australia’s emissions are a miniscule proportion of global emissions and our efforts are unlikely to have any significant impact. Since 2000, reportedly, China’s carbon dioxide emissions have more than tripled making Australia’s efforts insignificant on the global scale. But they are not insignificant on a national scale because these efforts have resulted in huge increases in the cost of electricity causing many energy intensive businesses to close and threatening the viability of many others.

When I joined the electricity industry as a young engineer in the 1960’s, Australia had one of the lowest energy costs in the world. As a result we were able to attract energy intensive industries to locate here. Those who wanted to process aluminium, steel, zinc and copper found Australia an attractive host and establishing their facilities in our country brought high levels of employment and other economic benefits. All those industries are struggling today. Those that have survived have often only done so by injections of funds from the Australian taxpayer. Much of this discomfort has come as result from unduly promoting renewable energy.

The stand-out example is of course, South Australia. In their frenetic efforts to remove fossil-fired plant from their generation mix they have left themselves unduly exposed, suffering blackouts and the highest electricity costs in the world.

Constitutionally, the states hold responsibility for energy. This is probably now an anachronism. Since the establishment of the National Electricity Market and the substantial electrical connection between Queensland, New South Wales, Victoria, Tasmania and South Australia, what any of those interconnected states do with respect to their generation and associated issues, inevitably has an impact on the others. South Australia’s attainment of 50% renewable generation, or Victoria’s closure of Hazelwood Power Station, have implications far beyond their state boundaries. I believe it is paramount that we should have a national energy policy if we are to optimise the benefits of our electricity assets.

It also appears to me that the frenetic push to undue levels of renewable generation will have further deleterious impacts.

When we began our push to develop renewable projects, I always assumed that the transition to renewables would take decades. I also assumed that part of the transition would entail an increase in gas-fired generation. At that stage gas was relatively inexpensive and gas turbines were far less carbon intensive that coal-fired plant. But now we have various states putting an embargo on gas exploration and extraction. This, combined with Australia’s recent moves to be a major exporter of liquefied natural gas, has resulted in both high domestic gas prices and potential shortages of gas in the domestic market. This has served to ensure that the natural transition from coal fired to gas-fired generation hasn’t occurred. Many of our coal-fired plants are reaching the end of their commercial life and are programmed to be shut down in the next decade or two. As a result, unless government intervenes we are rushing towards a cliff of excessive renewable energy capacity which will certainly ensure even higher prices and less reliability of supply. In such a future the de-industrialisation of Australia is assured.

I have no doubt that renewable energy is indeed the way of the future. But we need time to embed the technologies and sort out the issues of reliability. Unfortunately the race for renewables is being whipped along by environmentalists and populist politicians that have little idea of the technical problems associated with a large scale move to renewable technologies.

The undue haste to embrace renewable technologies has been driven by alarmist predictions of some environmentalists regarding global warming. That alarmism has hijacked the debate and caused us to impose unrealistic timetables on the adoption of renewable technologies.

Such an unrealistic timetable for the adoption of renewables is inappropriate for Australia for two reasons:

  1. Meteorological records are indicating that the global warming process is much slower than the alarmists would have us believe.
  2. Australia’s emissions are minuscule on a global scale and have little impact on global warming.

Consequently we should take the time to manage this energy transition process properly and in a manner which minimises the deleterious effects to our economy.

Currently one of the methods being proposed to deal with the intermittent generation emanating from renewable technologies such as wind and solar, is battery storage. Despite the hype of Elon Tusk’s spectacular marketing effort in South Australia, lithium-ion batteries are still largely unproven technology at large scale. Moreover the carbon dioxide generated in the mining and processing of the lithium, nickel and other materials for the battery are considerable. We also know that lithium-ion batteries are slow to recharge, if not cycled properly give off a lot of heat, are subject to premature failure and have a potential to explode.

Now I am not a nay-sayer and am confident that eventually battery technology will develop to meet these demanding applications. But I just counsel it is wise to hasten slowly. Whether our electricity grid is supplied by 100% renewables by 2050 or 2080 will be of little consequence to humanity. But an accelerated trajectory towards that outcome is likely to do immeasurable damage to our economy and consequently our standard of living.

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  1. 3 Comment(s)

  2.   By Patrice on Jul 15, 2017 | Reply

    Sensible essay that provides context at at time when Australia rushing toward decisions to solve rising energy prices and appease social media hacks. Thanks Ted

  3.   By Mark Shaw on Jul 15, 2017 | Reply

    If my research is correct,
    (a) Global consumption of coal has risen by about 1/3 in the past 20 years.
    (b) China and India will burn 70% of the world’s thermal coal in coal-fired power stations for at least the next 30 years.
    (c) Japan is replacing its nuclear power plants with coal fired power plants.
    (d) Most of Australia’s base-load coal fired power stations are nearing or past their design life.
    (e) Any renewable target still means we need 50% baseload.

    Yet South Australia is replacing its traditional coal fired baseload supply with gas turbines and batteries.

    Due to (potentially extremist) ideological defeating science, unfortunately I see regular and long-term load-shedding across Australia as inevitable within 5-10 years. I wonder what the latte-drinking ‘progressives will do then?

  4.   By Matt on Jul 16, 2017 | Reply

    I will eat my scepticism if Musk’s batteries are fully operational (with warranty) and fixes South Australia’s power problem before summer 2017.
    Note: It has actually been some 3 months since that Altassian guy said he would have the politics sorted in 7 days.
    Also note: Amongst all the deafening hype that drowns out any rational detail, it could be difficult for many to see that the promise has already had some slippage. Musk’s original offer (as reported in the media) was to fix the power problem in 100 days or it’s free. Now it appears he will be delivering the batteries in 100 days. A thinking person can see that that is a vastly different promise to the original.
    It has been reported before that Musk is rich on taxpayers money. Tax payers should realise that the risk is on them. i.e. we could be paying for a battery that doesn’t fix the problem. And there will be no accountability! To me this example epitomises the power issue in this country.
    May I offer some perspective on this project in which many think anybody like me is just a naysayer;
    – the battery will last just over an hour under a blackout situation.
    – South Australia’s peak electricity demand is 30 times higher than the output of the battery (yet many people believe that in 100 days the state will be powered by Musk’s battery). These same people also seem to believe that there is no reason why every other state on in the world cannot just switch to a heroic Elon Musk battery and save the planet.
    – let’s assume the battery is delivered in 100 days, it could take a substantially longer time for the interface to work that may contribute (ever so slightly) to fixing the power problem.

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