Tag: baseload power

AEMO Pricing is making the grid unstable

AEMO pricing, which is designed to achieve the lowest wholesale price for electricity gives no weight to maintaining baseload capacity and gives no consideration to reducing CO2 emissions. These things could be fixed to the addition of a baseload element to the pricing model.

In doing all of these things, the objective to be kept in mind is an end result of global average temperature stabilising at 1.5C over pre-industrial levels.

AEMO pricing model should give priority to baseload generation

Once the medium term baseload demand has been set, those generators that can provide supply that is not dependent on the wind or sun should not be put out of business just because there is a cheaper option. That is current situation. It has already happened with the Pt. Augusta generators where the Chinese-owned operator has demolished the plant so that it can never be used again, even in a crisis.

Unless a change is made in the AEMO pricing model the grid is in danger of all baseload operators being shut down solely to meet the short-term economics of the current model. In this case, the entire grid will be dependent upon the vagaries of the wind and the cloud cover. Even with storage, this will mean that, at times, there will be virtually no electricity supply at all. This should not be allowed to happen.

Wind and solar cannot provide true baseload capacity. This is because it is dependent upon the prevailing climatic conditions, even with storage. The underlying baseload capacity should not come from natural gas: that power source is better suited to meeting demand peaks and is priced accordingly. Hydro and pumped-hydro should also not count, since that depends upon climatic conditions. That is to say, a long drought can knock out hydro and an extended climate event can knock out pumped-hydro.

In a 1.5C world, true baseload capacity can only come from geothermal or nuclear electricity generation. In the current Australian configuration, it can only come from coal-fired generation. These generators can be phased out as “nearly zero” CO2 generators come on board; until that happens they are needed!

Choosing the level of Baseload Capacity

We can start with the smallest level of demand across the grid. Using South Australia experience (which I examined in an earlier piece), average baseload demand was 2/3rds of average daily demand and minimum baseload daily demand was 45% of peak demand.

On this basis, as a rule of thumb, we could say that baseload demand should be set at 45% of average demand, with renewables and natural gas to compete for supplying the rest of the demand. In the event of climate crisis knocking out renewables, storage can be partly replenished on a daily basis by running any natural gas peaking demand on a 24/7 basis. Added to this, government mandated demand management could be used to help the community to power through such an event.

To make all of this work, Australia needs a “baseload protection plan”. We cannot rely upon current AEMO modelling and pricing to deliver on this without some changes to the model.

Coal-fired Baseload electricity

At present, the only option for baseload electricity is coal-fired electricity, even though to meet the 1.5C objective, it must be progressively phased out. Based on published emission intensity data, in NSW, Liddell should not be included in any “baseload protection plan”; in QLD, Gladstone should not be included; and in Yallourn should not be included. These generators are not needed in a “baseload protection plan.” If these three power stations were taken out of operation, if the remaining operations were guaranteed a market share mandated at 60% of capacity, this would generate enough energy to meet baseload capacity requirements.

Under this plan, 60% of the total 24 hour capacity of the “favoured” generators would be sold into the electricity market at an AEMO calculated cost price plus a risk and profit margin, with a total price of around $A60 MWh. (The current AEMO pricing operation would not apply to this “guaranteed market”; AEMO pricing would apply to all other supply that is not included in the “baseload protection plan.”)

Under this plan, as alternative low-emissions supplies come on stream, these coal-fired generators will begin to lose their guaranteed status, one at a time, until none were included.

Geothermal as a Baseload resource

There have been several abortive attempts to get geothermal up in Australia, with the failure of these projects clearly attributed to economic viability, not on technological grounds. They could not survive under AEMO pricing, despite having the ability to provide electricity at a relatively low cost, assuming that were run 24/7.

European economists have calculated that the wholesale cost of enhanced geothermal electricity is likely to be €50 MWh. This is approximately $A80 MWh. With a small margin for risk and profit, an AEMO fixed price could be $A85 MWh. This compares with the current average price of coal-fired generation of around $A60 MWh. It is trivial for most consumers, being $0.025 per kWh on 45% of the supply, with discounts on various tariffs being as high as $0.23 per kWh. Go figure the angst!

Every MWh of electricity that can be produced on 24/7 by the designated baseload suppliers should have priority in supplying to the grid, with its output being sold at a fixed price before any other electricity generators are able to bid for the remaining electricity demand.

Geothermal should be the first option for Baseload supply and should provide Australia with the mechanism to wind-down the use of coal-fired generators. With Australia’s vast land-mass, it likely that they are many opportunities for geothermal electricity, as the following figure shows.

Hot prospects for geothermal-sourced electricity in Australia.
Hot prospects in Australia for geothermal energy

Nuclear as a Baseload resource

The kind of nuclear that may be acceptable in Australia (using a modular molten-salt reactor) is not yet commercially available. When this kind of reactor has been successfully installed elsewhere, it should be considered here, especially if geothermal does not prove to be a satisfactory solution.

Baseload and Storage

Setting up a “baseload protection plan” doesn’t of itself normally require storage, since this supply is planned to be always available, with the quantum being pitched at the lowest level of demand over a weekly cycle. However, there is a good possibility that, when coal-fired electricity has ended and geothermal and nuclear supply have taken over, there will be occasions when supply will be greater than demand at a particular moment in the cycle. To cover these occasions, rather than curtailing production, it would be preferable if the surplus electricity were stored in a large-scale facility, like Snowy 2.0 pumped-hydro. In this situation it could be sold to that facility at a very low price, such as $A5 MWh, thus providing a negative incentive to owners of the baseload power not to provide more baseload power than is required.

It is recognised that storage is needed to handle the daily and weekly cycles of demand. This disconnect between demand and supply is a natural functions of drawing much of the supply from intermittent renewables. Ironically, the 6 pm peak demand arrives at the very time that solar-generation is quite weak, even on a cloud-free day in Australia.

In addition, a case can be made for some level of natural gas peaking demand, for something like one hour a day. Such a facility could be run 24/7 during any climate event that stops renewables producing electricity, which would reduce the severity of such a crisis in terms of electricity production.

In the normal event, storage from liquid air and batteries can probably handle the week-day cycles, with Snowy 2.0 taking up the surplus supply over the weekend.

Conclusion

Our collective objective should be to manage our use of fossil fuels so that global average temperature stabilises at 1.5C over pre-industrial levels.

The changes suggested here can be undertaken almost immediately and will measurably contribute meeting expectations that Australia’s fossil fuel usage can be drastically cut. (Ethanol for oil is the other limb to this strategy.)

However, to successfully navigate a change of this size, it is necessary to change the AEMO pricing structure to protect coal-fired baseload capacity and to ensure that baseload power in the future is not undermined by aggressive pricing and lobbying on behalf of the operators and owners of wind and solar assets.

Baseload power in a renewable environment

Baseload power should be reconsidered in the light of the recent blackouts in Texas. While storage can do much to reduce the frequency of blackouts, storage is limited by the electricity that has been already “stored” in either batteries or via pumped-hydro.

In Texas this week, millions of people were stuck without electricity. There wasn't enough baseload power.
In Texas this week, millions of people were stuck without electricity

The primary role of batteries is to manage the difference between supply and demand for electricity during the day. If the surplus supply is greater than the capacity of the batteries, the surplus can be diverted to pumped-hydro facilities, if available. These can be configured to provide much greater electricity “storage” capacity.

In the event that demand exceeds supply over many successive days, it is possible that both batteries and pumped-hydro dams will be emptied. In this case, blackouts have just been deferred for those initial days and not avoided for the whole period. A baseload power strategy is required to reduce the possibility of a catastrophic failure of electricity supply during an unusual climate event.

How much baseload power is required?

The maximum quantum of baseload power required is the maximum unavoidable demand. This is equal to the maximum demand at any time at day or night less the demand that can be cut off by fiat of the regulator, or by negotiation with business. Things that can be planned to be shut off include:

  • Aluminium and steel works can be put into standby mode provided sufficient warning is provided.
  • Domestic and business use of electricity can be scheduled to be shut down in different suburbs and towns at different towns for a short time in order to reduce the peak load.
  • Certain usages can be banned, depending on the predicted willingness of individual users to comply. For example, cooking the evening meal could be postponed until a later hour or brought forward. In a country like Australia, this would not be welcomed but compliance is likely to be widespread. (For the impact of the 6 pm peak see this analysis done a few years ago for South Australia.)

There will be political price to pay for any requirement to reduce demand for electricity, but there will also be a political price to pay if the cost of more baseload power is more than necessary. It is a matter of balancing costs and risks.

Renewables will still contribute to power in a crisis

It is not possible to guarantee that renewables can supply any level of electricity, but the reasonable probability of renewables being able supply a certain level of power can be calculated. The likelihood of an unusual climate event significantly causing the electrical “storage” system to be exhausted will be reduced wherever there is a wide distribution of renewable energy resources. In Australia, this could encompass all the east coast states plus South Australia. The chance of an unusual climate event having the same impact everywhere is almost zero, but some effect can always be expected.

In calculating the quantum of power that can be sourced from renewables in an extended climate-change crisis one must realistically consider impact of such an event if it happened and consider the probability of such an event, say in the next thirty years. This is a matter for engineers and statisticians to consider.

These calculations will not be easy, but they can be done. Once completed, a reduced maximum quantum of baseload power outside the renewable sector can be calculated.

Gas-fired electricity generators can be used

Even though this conflicts with the idea of “net zero” emissions, there can still be a case for at least 10% of the current use of natural gas to be continued into the future while still holding firm to the target that temperature increase since industrialisation are to be held at 1.5C.

The advantage of continuing to use gas-fired electricity generators for peaking electricity demand is that if an unusual climate event happens that leads to electricity supply being curtailed, the peaking-demand generators can be turned on in off-peak times in order to generate electricity to meet the demand and, if possible, to replenish the electricity “storage”.

The electricity that can be supplied by gas-fired electricity in this crisis will also reduce the calculated maximum quantum of baseload power that is required outside of renewable resources.

Meeting the final baseload power requirement

There are three available methods of providing baseload power:

  1. Electricity from biomass.
  2. Electricity from geothermal resources.
  3. Electricity from nuclear power.

The downside of burning biomass is the possible negative environment impact of doing this on a large scale.

Geothermal resources, deep underground, provide an excellent means of providing a constant supply of electricity with virtually no environmental impact (even though a project near the Cooper Basin in South Australia was abandoned because it was not economic at the time). Under the scenario considered here, the electricity produced from geothermal sources could be immediately stored and dispatched as required.

Nuclear energy needs to find a new spot in the world’s electricity network. To do this it will be necessary for its advocates to increase the community’s confidence in the long-term safety of nuclear-powered electricity generation. This could be possible via the smaller modular nuclear molten-salt reactors that are currently being considered.

Final baseload power requirement

Using the Australian National Energy Market as a guide, let us try some rough numbers to calculate a safe capacity:

  • Peak demand capacity: 2019-20: 35,626 MW.
  • Measures to manage demand reduced anticipated peak demand in a climate-related demand crisis by, say, 25%.
  • Geothermal contributes, say, 6% to supply by continuous running = 1318 MW (running 24 hours operation 365 days = 11.55 TWh out of 192.4 TWh).
  • Assume gas-fired peaking capacity (for 1 hour a day) contributes 5% to peak supply to help meet demand = 1,781 MW.

We now move to model total electricity demand per day in a climate-related demand crisis:

  • Total electricity demand in a year = 192.4 TWh
  • Daily electricity demand in a day less 25% = 395,000 MWh
  • Demand that is met by peaking capacity = 1,781 MWh
  • Additional capacity from peaking = 40,963 MWh
  • Daily demand met by geothermal = 31,632 MWh
  • (Normal demand met by wind and solar renewables = 493,000 MWh)
  • Daily demand met by renewables at 25% (assuming storage has been exhausted) = 123,250 MWh
  • Net demand to be met by other baseload capacity = 197,394 MWh.

If the other baseload capacity to meet this situation was able to run 24 hours a day, the installed baseload capacity would need to be 10,000 MW (including a 25% contingency). This represents about 30% of peak demand. If a climate-related crisis is expected to result in increased demand, this will need to be taken into account by providing additional baseload power.

Conclusion

On this indicative numbering, electricity from intermittent sources like wind and solar should, on average, be less than 70% of supply. This can be managed by contracting the above pure baseload generators at a fixed price with a guarantee that these generators will meet the available demand before any intermittent supply is taken up. Unless intermittent sources are subjected to this kind of control, baseload power sources will atrophy and close due to lack of use. Therefore, they will not be available when they are needed.

Of course, these numbers are only an indicative example, with other factors to be included as required, but they do show that 100% renewables could bring problems in its wake.

If the first-call use of baseload capacity is not maintained the whole system is likely to become unstable, leading to serious problems in the supply of electricity to those who desperately need it.