Green Australia coming to a grid near you

Yet another study has come out, this one for Australia, concluding that all-renewable electricity is feasible while maintaining current standards for reliability. The difference here is the authors, the Australian Energy Market Operator (AEMO). These are conservative professional engineers not green activists. They prepared the report (technically still in draft) because their political masters told them to do it, not out of enthusiasm. As John Quiggin points out :

The AEMO is the body that manages the electricity market on a minute-to-minute basis, so it has the expertise to assess this claim, unlike the many amateurs who have tried their hands. And, since it might have to do the job, it has no reason to understate the difficulties of a renewables-based system.

The extra costs are significant but not absurd. Quiggin again:

Second, the estimated cost of $111 to $133 per megawatt-hour represents an increase of $60-80/MwH on current wholesale prices, or 6-8c/Kwh on retail prices. That’s much less than the increase we’ve seen thanks to the mishandling of electricity market reform.

AEMO modelled two scenarios: slow demand growth and rapid technological progress, and higher demand and slower progress.
The resulting generating mixes are these:
Energy-generated_cropped_580
CST means concentrating solar power with storage (example). The capacity numbers are in Tables 15 and 16 in the report.

It’s striking how much despatchable capacity you need (CST, pumped hydro, geothermal, bio) to ensure reliability with majority intermittent sources (PV solar and wind). In the conservative Scenario 2, in 2050:

Solar PV and wind capacity    74 GW    58%
Despatchables                          53 GW    42% (of which 18 GW CST and 15 GW biogas)
          Total                              127 GW

The optimistic Scenario 1 has similar proportions within a smaller total, but CST is largely replaced by geothermal. AEMO assumes successful development of EGS, but not of large-scale battery storage.

The more useful scenario to me is the conservative, little-progress one. It represents a solid worst case. But there are many ways in which things could go better, that is cheaper, which are incompletely handled by the models.

The modelling excluded nuclear by design. This is just as well, as AEMO used a cost database from another government agency (BREE) which is completely out of date on nuclear. To quote commenter Nick on Quiggin’s post:

Unfortunately, on nuclear, BREE’s estimates were in fantasy land, estimating that nuclear plants could be built now for as little as $55-$60/MWh in the low cost scenario – about one quarter of the price quoted to the UK government by the world’s leading nuclear developers.

I would add that the UK has a much longer history with nuclear power than Australia, and hence a far deeper pool of expertise. The likelihood is very remote that real nuclear costs could come down enough to displace any of the other technologies, all of which have normal rather than perverse learning curves.

AEMO did not carry out a sensitivity analysis for say 95% renewable, with the remaining 5% fossil gas. This must make a big difference to the costs. Electricity grids must keep a large reserve of capacity (20% or so) to meet exceptional peak loads and breakdowns, a reserve which is hardly ever used. Gas generators are very cheap. In the pursuit of overall carbon neutrality, it may be much cheaper to offset some gas generation by sequestration, fleets of electric buses, or something than to ensure virgin-pure electricity generation.

The selection of good news in Scenario 1 looks arbitrary. Is working EGS really more likely than cheap grid batteries? A lot more effort and money is going into the latter. (The new US Energy Secretary, Ernest Moniz, recently went out of his way to be nice about geothermal, which his predecessor neglected, so research funding is likely to shift in the US.)

Technical progress in wind and solar, a pretty sure thing, is more or less irrelevant to the capacity mix. Look at this graph from a utility spokesman of the dramatic impact of solar PV on daily load curves in subtropical Queensland in the last four years:
energex-feeder-comparison
Click for clearer image.
A similar projection for cloudy Germany. It’s clear that solar PV will eat up the midday load pretty well everywhere at $1 a watt, just with incremental improvements along the supply chain. But it can’t do more without storage. 50c a watt with plastic panels or nanotubes just lowers the cost, without changing the result. You still have to buy the same amount of expensive despatchables in some form.

Most countries will face the same problem, but the solution will vary; Japan has poor conditions for CSP, but geothermal resources and mountains for pumped storage; the USA could follow the Australian pattern, with long-distance transmission from the Southwest; Denmark already draws on Norway’s ample hydro. God knows what we Brits can do.

A generating mix that looks anything like AEMO’s models has another implication. They include a very large amount of capacity lying idle most of the time with zero marginal cost: around 25 GW on average in the most challenging week of the year in Scenario 2. Marginal cost pricing will therefore break down, probably long before we reach 100% renewables – the pressures are already evident in conflicts between utilities and solar householders. Electricity pricing will have to shift largely to a capacity basis.

This immense idle capacity will be available at no marginal cost (as long as it’s fully interruptible) for large-scale sequestration or atmospheric synfuel. We don’t yet quite have the technology for these, but will surely need both. Moniz could fund the research by taking money away from the now strategically irrelevant solar and nuclear labs.

Comments

  1. RichardC says

    I think the optimal solution, which I’m not sure was considered by this study, would involve
    a smarter grid allowing better management of demand – once we have cheap solar producing
    lots of power in the middle of the day, we should do as much as possible with a smart grid and
    smart appliances to time-shift all non-time-sensitive power uses into that timeslot.

    Combine that with other demand-side efficiency improvements, such as LED lighting, better
    insulation, more efficient refrigeration/AC, and microcontroller/DSP-optimized electric
    motors, and I suspect that the need for expensive dispatchable power can be greatly reduced.

    • MobiusKlein says

      Is it physically possible to have a fridge that time-shifts it’s energy use? Would it be possible to have a super-chilled component that gets used to absorb heat using less power sensitive times? It would be exciting to have a fridge that kept food cold even through a power-outage for eight hours.

      • RichardC says

        From a quick search, it seems that a normal refrigerator can keep food at the safe
        temperature of below 40F for about 4 hours without power (with the door closed).
        I don’t see any technical difficulty in adding a bit more thermal mass in the
        freezer, and slightly better insulation, so increase that to 8 or 12 hours. It’s
        just not something you would choose to do unless/until there’s an economic
        incentive (cheaper power at certain times of day).

        Smarter controls, with internet access to predictions about future conditions,
        can give more savings. I’m imagining a refrigerator which knows the weight of
        food it currently contains, and thus its thermal mass, remembers when and how often
        you’re going to open the door, knows that a range of temperatures between 34F and 40F
        are acceptable, knows from the weather forecast that it’s going to be cool in the
        morning but 75F later on, knows from power company that they’re power is likely
        to be expensive at certain times of day, and can use all that information to
        decide to cool everything down to the lowest temperature at times when power is cheap,
        and let it rise toward the highest temperature when appropriate.

        We don’t, as far as I know, have this yet. But we have all the technologies,
        and none of it is particularly hard (in fact, a $50 phone has all the compute power
        and connectivity it needs).

        • RichardC says

          Note also that the 4-hours-without-power that a current refrigerator can manage
          would be more than enough to cope with the timescales needed for spooling up
          a fossil-fuel generator. So having a smart grid that can time-shift the power
          usage of refrigerators and other appliances is a more efficient, and probably cheaper,
          strategy than having a bunch of generators ready to respond to unpredictable
          short-term fluctuations of demand.

        • MobiusKlein says

          I was imagining an additional thermal mass that is chilled to some very low temp (-40F) and used as a passive or low-power source of chilling.
          Put a display on outside showing how many hours of full cold are left, and tell people if the fridge temp went too high during a power outage. All sorts of useful stuff, and does not have to be a $10k device

          • RichardC says

            Interesting idea, but I think you would need different – and more expensive, and less efficient -
            refrigerant/compressor/heat exchanger technology to get down to the lower temperature (and you
            would also have more problems with unwanted ice forming on the -40F components).

      • Ken Rhodes says

        Also interesting to note that most modern refrigerators with separate freezer compartments have two distinctly different temperature disciplines:

        (a) The refrigerator compartment keeps the food around 38-40 farenheit, which is approximately optimal for most foods. Thus the 4 hour window before the temp rises too much.

        (b) The freezer, OTOH, is generally set around zero farenheit, which is far lower then necessary to keep the food frozen. If you keep the door shut, the freezer has a much longer “safe” time.

        • RichardC says

          On (b) you’re assuming that all the freezer needs to do is keep the food frozen to keep it safe.
          But firstly, solids in solution (such as salt) tend to lower the freezing point of water,
          and foods are not pure water, so you need to be well below 32F just to ensure freezing. And
          secondly, some organisms can grow and multiply at temperature well below 32F:

          http://www.ask.com/question/what-is-the-safe-freezer-temperature

          “The safest freezer temperature setting for a freezer should be set at 0°F (-17°C). Freezing of food does not kill bacteria but it just slows their growth and keeps food edible for a much longer period of time. At 15°F yeast will start to grow while Salmonella grows at 7ºc and listeria organisms double every eight hours at 10ºc.”

          So the range of acceptable long-term temperatures for the freezer compartment is probably about
          0-20F, which is not *that* much wider than the 33-40F range for the refrigerator
          compartment (though I guess you also have the latent heat of freezing in the refrigerator,
          so the total energy that would have to come out of the freezer to get into a really
          dangerous above-freezing range would be big).

    • OKDem says

      In AC dependent regions the utilities are already moving to price by demand, higher rates at peak midday loads. To have renewable sources peak at midday would actually tend to ameliorate the current demand-capacity problem. Assuming the infrastructure will handle the load and not accounting for storm damage; individual power outages from the Moore tornado are still being cleared, not to mention the El Reno tornado.

      A smarter grid means hardening the grid as well in the middle of the country.

  2. RichardC says

    … From a quick read, it looks as though they do allow for demand-side
    management, but only for up to 10% of the load. That might well be a
    reasonable estimate of what you can influence by different tariffs for different
    times of day, but I would hope that an investment in smart grid technologies
    could allow you to time-shift a much higher percentage of the load.

  3. paul says

    Large-scale efficient storage has been just around the corner for 30 years or so, but it’s never really been needed. On the smaller scale, even residences seem to be able to manage decent cost numbers for storage with just a pinch of backup.

  4. RichardC says

    Lots of stuff about demand-side management here:

    http://www.ferc.gov/legal/staff-reports/06-09-demand-response.pdf

    … and that report suggests that 20% reduction in peak load is possible.

    Though I’m actually even more optimistic than that: smart thermostats,
    LED lighting, and cheap solar panels are here now. Combine those with
    a smart grid infrastructure which allows you to save money by time-shifting
    your energy use, and it seems a whole lot of good things could happen
    really quickly.

  5. Ken Rhodes says

    James, I had to chuckle when I red “The extra costs are significant but not absurd.”

    I’m not at all sure where “significant” crosses a line and becomes “absurd.” But I know how to do arithmetic. “The estimated cost of $111 to $133 per megawatt-hour represents an increase of $60-80/MwH on current wholesale prices.”

    Ummm … that’s a 140% increase.

    It may be good policy, for a variety of important reasons, but I still had to chuckle.

    • James Wimberley says

      Germans have so far accepted a surcharge of 5.2 c€ per kwh for the EEG, on top of a baseline price of about 20c€ per kwh, so Quiggin is is right to think this sort of increase may be OK in Australia over three decades. The current residential rate is 23cA$/kwh, so Quiggin’s's upper price increase of 8cA$ is 34%, not 140%.

      The analysts’ mandate was to assess technical feasibility. This is now proven, so the remaining question is costs and optimisation. As I wrote, and other commenters have confirmed, the AEMO technology assumptions are conservative. My 95% suggestion also lowers costs a great deal: you could replace 20GW or so of CSP, geothermal, etc with cheap gas generators.

      What’s wrong with Americans? Is keeping your 10c/kwh electricity worth the planet?

      • Ken Rhodes says

        James, I have to guess that, as a participant here and a follower of American politics, you know what’s wrong with Americans (at least a lot of us).

        “I’m not underwater, so coastal flooding isn’t a problem, it’s just a left-wing theory.”

        “I’m not out of gasoline, so depletion of our non-renewable resources isn’t a problem, it’s just a left-wing theory.”

        “I’m not out of water, so depletion of our aquifers isn’t a problem, it’s just a left-wing theory.”

        “I pay my bills every month, so predatory lending isn’t a problem, it’s just a left-wing theory.”

        “I’ve got my Blue Cross, so health care coverage isn’t a problem, it’s just a left-wing theory.”

        Shall I go on?

      • Leland Unruh says

        “What’s wrong with Americans? Is keeping your 10c/kwh electricity worth the planet?”

        Won’t somebody please think of the children?!

    • RichardC says

      Prices are low right now because we’re in a global economic slump. The more interesting
      comparison would be between projected prices in two different future scenarios, one
      with mostly-fossil-fuel generation (using projections of future fossil fuel prices),
      and the other with mostly-renewable generation. I’m pretty sure that would shrink the gap.

      • James Wimberley says

        You are right that the comparison is not with unsustainable current prices. However, I suspect that in Australia the mainly-fossil scenario is already seen as fantasy. The opposition leader Tony Abbott flirts with denialism, but his party have only promised to abolish the carbon tax, not the more important renewables target. The scale of household PV (2.5 GW, about one Australian household in ten) has created a large vested interest in renewables and climate realism, as in Germany.

  6. Aidian Holder says

    I stopped reading after “The estimated cost of $111 to $133 per megawatt-hour represents an increase of $60-80/MwH on current wholesale prices or 6-8c/Kwh on retail prices.”

    I’m skeptical that with wholesale prices more than doubling, the retail rates would only go up by 6-8 cents/kwh. I guess the upshot is that retail consumers are already getting robbed, and the report assumes the providers will decide to just pass along costs instead of costs + markup.

    But even assuming that happens, a 6-8 cent/kwh hike is a 30 to 50% bump in my electricity costs, and I live in Cali where electricity costs more than the national average. That would likely put me out of business, and would be a significant hit to the standard of living of most American households. Of course, only the rich actually count in public policy discussions, so who knows, but I’m having a hard time seeing renewables being adopted as the primary source for on grid power if they cost 30-50% more than fossil fuels.

    • Richard C says

      Put you out of business ? What business are you in ? Let’s suppose this change would cost you $10K/year,
      that would mean you must be using 142857kWh/year, or at 52*40 hours that’s 68.7kW during working hours.
      Are you doing arc welding ? Aluminum smelting ?

      My whole house runs on about 0.8kW average.

      Anyhow, as I said above, you need to consider that 20 years from now fossil-fuel electricity is probably
      going to be more expensive than now (as will nuclear, on current trends, if we even have it at all),
      whether or not we have a large renewable-based capacity. Indeed, one way of looking at it is that the
      renewables are a way of stretching our finite fossil fuels over a longer period of time, and using
      them for the purposes which suit them best. A future with no renewables would imply scarcity of fossil fuels
      and more rapidly rising prices.