Fearing More than Fear Itself

An Adelaide resident, in the righteous grip of nuclear fear, felt that expressing his intractable opposition trumped laws against vandalism.

An Adelaide resident, in the righteous grip of nuclear fear, felt that expressing his intractable opposition trumped laws against vandalism.

Have you ever had that feeling when something which has plagued your thoughts and gripped you with dread has abruptly melted away as you finally comprehend that your fear is unnecessary? That almost indescribable, almost embarassing relief that comes when your mind, working with newly-aquired knowledge, is freed from some crushing weight of anxiety?

I think this is happening with humans and nuclear energy. The deployment of more nuclear energy – already the largest source of climate-friendly electricity in the US and the EU – as called for by the IPCC, the IEA, the UNFCCC, and the WEC, has suffered a partly vocal and partly perceived opposition for decades, substantially influenced by disciplined anti-nuclear organisations.

Michael Shellenberger recently explored the background to this fear-based opposition.

But when no less than Cosmopolitan is printing articles rejecting this fear; when New Matilda passionately defends the on-going nuclear discussion, the signs are clear that fear is being put aside.

When Friends of the Earth – represented by Dr Jim Green – phones in its contribution to the debate with stale fear-mongering; when South Australia’s anti-nuclear parliamentarian resorts to sabotaging his own parliamentary delegation to France’s waste facility; when such thought-leaders – who dig inexpertly for their own answers when they can’t face the questions – organise a 1970s-style demonstration to crap on the official consultation process while simultaneously being more than fairly represented in that very process… it starts looking like the desperate fear of becoming irrelevant to the grown-up discussion is eclipsing the fear of nuclear itself. The songbook they continue to sing from is really starting to show its age, considering that mere years have passed since a triple reactor meltdown in an OECD country, and that this shift in perception – this accelerating lifting of the public’s fear – is the opposite affect they had hoped for.

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The Merit of Baseload

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South Australia 2015 load duration curve, annotated from Appendix A.

Over the course of a year, Australian demand for electricity tends to peak during air conditioned summer afternoons, and reach its minimum in the hours after midnight. The lumpy day-to-day profile of this demand can be rearranged in order of highest to lowest in what is termed a load duration curve.

This chart is the duration profile for South Australia in 2015, as described by the black curve. By viewing the state’s demand and proportion of wind generation this way, certain features become clear.

  • Baseload of roughly 700 megawatts is defined by the grey line, and is clearly truncated below 80% of the year by the addition of wind generation. This is the basis for the diminished economics of “baseload” power stations, and the claims of no further need for such capacity.
  • Wind helps meet demand between the black line and the blue line (the residual load curve) as a wavy wedge, with its least contribution up at the times of highest demand near “0%” which is instead met by expensive stand-by “peaking” capacity. The consequence is that the “baseload” and other capacity greatly displaced by wind down near 100% are the cheaper sources of power which tend to maintain downward pressure on wholesale supply prices.
  • Clearly then, even with South Australia’s noteworthy wind capacity which has worked to cut state electricity sector emissions by roughly one quarter, that peak demand up around 3000 megawatts requires the operation of as much firm capacity as if the blue curve weren’t there.

Further analysis was offered recently by the Grattan Institute (page 8):

Increasing supply in any market when demand is falling or flat will push down prices. But a further characteristic of wind power suppresses wholesale electricity prices in the short run.

The marginal cost of wind generation – the amount it costs to generate an additional unit of power – is near zero. In fact, if a wind generator chooses not to generate, it will effectively lose money since it will not generate a subsidy under the Federal Government’s Renewable Energy Target (RET) scheme… This is why, at times, a wind generator may bid into the market at a negative price – it is prepared to pay the market to take its electricity because it knows it will get revenue from the subsidy.

Intermittent generators must also either dispatch or dump the electricity they create. When the wind blows, power is generated. If wind generators are to dispatch, they need to make sure that their electricity gets bought or that they pay someone to take it.

Increasing the supply of low marginal cost generation leads to changes in the ‘merit order’, reducing the price that all generators are paid in the NEM. This is known as the merit-order effect.

But these lower wholesale spot prices will not cover wind farms’ long-term costs. The long-term cost of wind generation is around $100 per megawatt hour, although this can vary with individual projects. This cost is very much higher than today’s average NEM prices of around $50 per megawatt hour. Consumers must eventually pay to cover the long-term costs of all generation.

This echoes the illustration of the merit order effect provided by Deloitte in 2015:

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The merit order effect can be induced by any form of generation or demand side resource that has a lower short-run cost (i.e. ignoring fixed costs and the capital costs of building the plant) and is a feature of an efficient market. The limiting factor is usually that the new plant needs to be able to recover its fixed and capital costs over time as well, so the price cannot be pulled too far down. However, by incentivising renewable plant outside the market, policies such as the Renewable Energy Target (RET) move this limit.

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Imagine that a new type of combined cycle gas turbine power station could operate without emitting carbon dioxide. The ultimate purpose of the RET – climate action – should mean it would be compensated by something like these Large-scale Generating Certificates. Suddenly, the short-run market advantage claimed by wind generation is gone.

Armed with this perspective, we can begin to see where some enthusiasts for exclusive energy supply scenarios begin to go wrong. Take GetUp/Solar Citizens, for example:

Renewable energy generators have low marginal costs (the cost of producing one extra unit of electricity), which means they can bid into the wholesale market low. This pushes more expensive generators out of the stack of successful bids and lowers the overall wholesale price of electricity for all of us. This is called the ‘merit-order effect’, and why it’s not called the ‘renewables winning effect’ is beyond us.

Hopefully at this stage it isn’t beyond you, dear reader.

sa2015_from_mcconnell_2So, what happens if storage is added to this equation? Household-scale batteries for the time-shifting of rooftop solar generation obviously enable the use of renewable energy after dark. In contrast, storage scaled up to the wider electrical grid – which exists only in the form of pumped hydroelectric – is dominated by the economics of covering the costs of operation, maintenance and input electricity with the revenue of selling output electricity. This means arbitraging supply from low demand periods to high. The result can be seen in this version of the load duration curve: if storage were paired with wind in South Australia, operators would effectively move supply from the thick end of the wedge back as close to the point as practicable, to maximise financial return. This could actually begin replacing high cost peaking capacity. Ironically, enough of this would start to bring baseload back, at the same time as eroding the arbitrage economics for further addition of storage. It should be obvious, though, that the absolute last position on the demand profile which would be economically served by stored capacity would be baseload itself.

 

Storage in the Cold Light of Day

battery-deadPeople want energy in modern society when they want it, and so you’ve go to have supply and demand matching. And, again, there’s a new delusion that’s spreading through the world at the moment which is, “oh yes, now solar is coming down in price, wind is coming down in price, and batteries are coming down in price as well.” People seem satisfied with these simple statements: the prices are coming down so it’s all going to be fine, but they haven’t done the numbers to think through actually how big the batteries would need to be if you wanted to do a solar-and-batteries-only solution.

A solar-plus-battery solution in a place like Las Vegas, I can definitely see playing a large role… Society still needs reliability, though… Society stops functioning if we don’t have a reliable electricity system going all the time, and so for a place like Las Vegas you’re still going to want other technologies in that mix as well. So, I’d advise Las Vegas to get a nuke, for example…

I’m delighted how the book has been helpful… but I’m also still irritated that these delusions about the easiness of getting by with a bit of renewables and a bit of batteries… I think there’s still a lot more to do.

~ Sir David MacKay

It was a relief to hear that sensible projections regarding the role of batteries in Australia’s near-term electricity supply challenge were authoritatively expressed at the meeting of energy ministers last month:

The AEMO told the recent COAG Energy Ministers meeting it may be 10-20 years until battery storage would be able to exert an influence on grid stability and support.

There’s understandable disappointment from some commentators. However AEMO’s sober assessment merely echoes that of the CSIRO.

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AEMO itself expects approximately 6.6 gigwatt hours of battery storage distributed amoung rooftop solar capacity by 2035-2036, which sounds like a whole lot more than exists now.

Yet, to get a sense of perspective, 6.6 gigawatt hours would provide no more than 2/3 of one percent of the 62 hour becalmed period described by WattClarity (with a hypothetical ten-fold wind capacity connected to the present national market).

The COAG Energy Council and its independent review process must maintain this realism as it strives to “maintain the security, reliability, affordability and sustainability of the national electricity market” and integrate climate and energy policy. This should encompass a technology-neutral approach, and recognise that avoiding consideration of the future benefits of modern nuclear capacity – potentially available on a comparable timescale to batteries, but historically proven – serves only a diminishing, out-dated activism, when we really have a whole lot more to do.