A recent demonstration of the frailty of coal dominated electricity grids

On the 25th of May at 1:45pm  Queensland Coal and gas were generating about 5,300 MW out of a total of 7,500 MW. Then Unit 2 at Callide C exploded taking 400 MW of generation off the Queensland grid. Immediately its twin also disconnected, whether due to damage or safety reasons is not clear.  However the total loss was still only 800 MW or just over 10% of Queensland supply at the time. Over the next few minutes Queensland swapped from exporting about 400 MW to importing 200 MW so theoretically recovereing 2/3rds of the lost generation

However twenty minutes later another nearby unit, in a different building went offline, together with a transmission line and at least another 7 coal and gas generators. Then due to lack of inertia, wind and solar plants in North Queensland were immediately limited to 50% of peak (not actual) output. This resulted in 400,000 customers temporarily losing power.  According to some expert observers AEMO did a sterling job preventing the state going black. Probably having learnt some lessons from SA.

Now although Queensland has 12.8 GW of dispatchable capacity of which probably 11 GW was available after allowing for the first Callide outage and maintenance, it ramps up so slowly that it could not meet 4.6 GW of net demand (after allowing for wind and solar generation and swap from exports to imports at the time). In fact the coal plant disruption effectively managed to drive half the wind and solar offline as well.

Since recovery, spot power prices have remained high, averaging $296/MWh in the 21 days since the incident. At the same time last year they were averaging $39. Almost every evening QLD prices have peaked to between $2,500 and $14,000.  These price effects spread throughout the grid as Queensland exported less and imported more power, although still remaining a net exporter, For example NSW has averaged $196/MWh so far in June vs $48 last June even though renewable output is up significantly. Victoria is up from $48 to $65

Contrast the fallout from this event with the relatively mild effects of the flood at Yallourn in Victoria. Yallourn output on last Saturday at 2PM was about 700 MW which was then ramped down to 200MW as the threat of a mine flood became apparent. That was 14% of Victoria’s fossil fuel generation or about 10% of total generation at the time. It also corresponded to a period of very low wind. Yet there were no blackouts and prices only moved up briefly. Since then average prices only reaching $100 and peak prices rarely went above $300 in spite of still, overcast conditions and continuing lack of output from Yallourn.

Now a key difference is that Victoria ramped down gradually instead of in two big steps so one would have expected a more benign response. However Queensland has only been running its remaining 6.6 GW of coal and 1.2GW of base load gas plants at 65% and 45% of capacity respectively, with maximum coal output of 4.9 GW. Seven of its 22 coal generators have been offline for at least the last week, so either the remaining coal plants are off line for service and are nowhere near the 24/7 availability that their proponents claim, and therefore can’t be brought online or, the owners are withdrawing capacity from the market to force prices up. Such behaviour is more difficult in Victoria because renewables supply (30%) almost double Queensland’s share of 18% and Victoria has a theoretical maximum import capacity of about 2,600 MW vs Queensland’s 450 MW. 

If Queensland had followed SA and Victorian practice of installing batteries, somewhere between 300 and 600 MW of batteries would have supplied sufficient reserves to limit voltage and frequency instability so the second trip would almost certainly not have happened. This week, with 7 coal units offline and wind and solar still limited, Queensland manages to export power every day. Therefore it has plenty of capacity to recharge batteries and pumped hydro to meet the evening peak without requiring huge jumps in prices. Even if batteries had only reduced the jump in spot prices by one third and spot prices only account for 15% of Queensland power trade, sufficient batteries would have saved Queensland and NSW customers $60-100m in the last three weeks, not including the costs of the blackouts. Almost every day they would reduce peak prices and improve the operating efficiency of remaining coal and gas by absorbing power when demand is low and releasing it when demand is high. Alternatively, additional coal and gas plants would only add to the surplus capacity and do little or nothing to improve grid reliability in a case such as this.

The superiority of renewables/gas /storage has been clearly demonstrated in SA where prices this financial year are down 62% since the peak year in 18/19, whereas NSW is only down about 20%. The SA renewable/gas grid is not only cheaper to run but has at least twice survived generation/transmission losses of 30%+ of load, a feat totally unimaginable in Queensland or NSW.

It is not as though Queensland has not had warnings, on 9th of October 2019 Kogan Creek coal power plant tripped and caused small blackouts in southern Queensland and NSW. On 25th of August 2018 a lightning strike on the 800 MW inter-connector between NSW and Queensland caused short localised blackouts in Queensland, NSW and Victoria, and almost caused the entire NSW system to go black.

A system black in NSW in the middle of the grid is a far more serious issue than the last one in SA. It could quite easily have cascaded into Victoria and because of NSW reliance on coal, it would not have recovered in 6 hours like most of SA, it would have taken days and maybe weeks. The Texas power authorities estimated that it would have taken months if their system had gone offline in February to bring everyone back and Texas has a far more flexible generating fleet than NSW.

In conclusion, both reliability and economic competitiveness of coal fired power stations has been vastly exaggerated by their proponents and even if there were no such consideration as pollution, water use etc. a renewable grid backed by gas and storage is a a far more reliable and economical system at today’s state of the technology. 

Thurs 9th Sept 2021 – Dean McCarroll – MD Okuma Australia

Dean McCarroll, Managing Director of Okuma Australia & NZ will be presenting Advance Machine Tool Cutting Technologies

Thurs 12th Aug 2021 – Peter Crock

Peter Crock – Medical Cannabis – A new manufacturing industry for Australia

Thurs 8th July 2021 – Marteen Burger & Dave Budge

Marteen Burger & Dave Budge from Jaunt Motors – Australia’s largest electric conversion workshop – making Electric Vehicles for Adventure

Thurs 10th June 2021 – Ross Garnaut

Ross Garnaut EVENT HAS BEEN CANCELLED DUE TO LOCKDOWN

Thurs 13th May 2021- Chris Stoltz & Josef Stoltz

Chris Stoltz will provide a brief background about manufacturing in Bendigo and the work of the Fraunhofer initiative. Josef will talk about technology upgrades and manufacturing expansion at MSD

Thurs 15th April 2021 – Ross & Lyn George

Ross and Lyn George present “How innovation breeds innovation – the Austeng case-study”

Thurs 18th March 2021 – Max Myer, George Juliff & Thomas Miles – Admix

Max, George and Thomas are the founders of Admix Pty Ltd and their current focus is building software tools to make programming effective toolpaths easier.

Thurs 11th Feb 2021 – Steve Dowey – Sutton Tools

Steve Dowey from Sutton Tools will discuss the adoption of the adoption of the industry 4.0 framework in companies. 

Victoria won’t run out of power when Yallourn closes

After seeing all the commentary about the risks of power shortages when Yallourn closes, let’s examine the numbers.

Victoria and South Australia currently have a significant excess power generation capacity. In the last six months Victoria’s net exports were 2,300 GWh, roughly 40% the output of Yallourn while its gas plants only ran at 5% capacity for the period. SA also is a net exporter and it has 3,400 MW of dispatchable capacity, which lately has not exceeded 2,100 MW.

At the same time SA and Tasmania are adding wind, solar and battery capacity so even after some closures, their gas plants will still be only running at about 15% capacity in 2021/22. Thus, if there was a shortage in Victoria, SA and Tasmania could easily change the import export balance with Victoria by 4,000-6,000 GWh per year without unduly stressing the existing interconnections. To be clear, changes in export/import balance alone could almost replace Yallourn’s annual output.

In addition Victoria is installing about 50 MW of rooftop solar per month so by the end of 2028, behind the meter generation will increase by about 4,500 to 5,000 GWh per year 40% of Yallourn’s output. Victoria has so much spare capacity in its gas plants that this new rooftop solar combined with running the gas plants at 50% capacity would entirely replace the output of Yallourn.

But more importantly Victoria also has 2,400MW of large scale wind and solar due on stream over the next two years. That alone will supply about 75% of the output of Yallourn. Continuing installations at that rate for 8 years would displace Loy Yang A as well

By 2028 if Victoria continues its current rate of large scale solar and wind installations and ran its gas plants at only 35% capacity, not only will all of Yallourn be replaced, it could probably close Loy Yang A and B as well.

When Minister Taylor speaks of system stability he is presumably talking about peak demand, which in Victoria is about 9,100 MW. A focus on energy efficiency and flexible demand could reduce that to less than 8,000 MW by 2028. If we were as efficient as Italy is today, peak demand would not exceed 6,000 MW.  After Yallourn closes we still have 7,700 MW of coal, hydro, gas, diesel and landfill. There will also be import capacity of 700 MW from SA, 450 MW from Tasmania and 1,500 MW from NSW even if none of the proposed transmission upgrades are built. In other words total supply capacity of  more than 10,000 MW if no new transmission or storage is built, while wind and solar are an improbable zero.

Now there are times when wind drops to 2% of capacity and solar disappears at night but the highest Victorian grid demand recorded in recent years was 9.1 GW. At the time large scale wind and solar were contributing 1.1 GW although wind was actually unusually low for a hot day. By 2028, wind and solar output will have quadrupled, so with no new controllable demand, no new transmission and no new storage we would have a nominal capacity of 14,700 MW vs demand somewhere between 8,000 and 9,000 MW or probably significantly less. Rooftop solar is also eating away at peak demand which, this summer, was less than 8,000 MW. By 2028 there will be another 4,000 MW of rooftop solar. Now even if rooftop solar is constrained and the peak occurs late that is still at least another 1,000 MW off peak grid demand.

Then there are batteries. By 2028 Victoria will have between 2,000 and 3,000 MW and possibly much more capacity on the grid and at customers.

The net result is that during the middle of breezy very hot days by 2028 apparent demand from the grid will be between 6,000 and 7,000 MW, utility wind and solar will be supplying about 4,000-5,000 GW, hydro 1 GW (50% of capacity), batteries charging so – 500 MW. Imports from SA and Tasmania running  500 MW (45% of capacity) and the remaining 5,600 MW of coal and gas running at around 35% of capacity exporting 1,000 MW to NSW.

At 7 pm when rooftop solar is gone, grid demand might reach 7-8,000 MW, wind and hydro combined will be 4-5,000 MW, batteries 1,500 MW, Tasmania 450 MW and exports to NSW 1,500 MW enabling coal and gas to run at between 15 and 25% capacity. If Snowy II is operating and wind and solar installations continue at the current rate, it is quite possible that coal might not operate at all in Victoria during summer.

This scenario is just business as usual. If NSW reverses its historical trend and has enough capacity to become a net exporter or someone was crazy enough to build Marinus link and a matching 700 MW of wind in Tasmania or Energy Connect enables another 6,000-8,000 MW of wind/solar/storage in South Australia, then not only will all Victorian coal plants be at risk but most of NSW coal as well.

In summary the chance of Victoria running out of power in 2028 are extremely small, almost certainly less than they were in 2015.

 

Renewables Generation

While I am not attempting to downplay findings that sea level rise is happening faster than expected, last year was yet another equal hottest year, methane emissions are climbing etc, here are some things that are happening which are hopeful signs;

  1. Regenerative or restorative agriculture is already a major priority in China and is becoming a priority in the new Biden administration and in the EU’s Green recovery and has even been given a higher priority in the Morrison government with an office and budget for the Soils Advocate. Done well, regenerative agriculture could sequester almost as much carbon as emitted by coal generation, but we have to both reduce emissions and sequester carbon.
  2. In almost all northern hemisphere regions reforestation is accelerating, sometimes not perfectly but in more and more cases using better techniques to increase biodiversity and resilience. Since 1990 forests in Europe have increased by almost 100,0000 square km. In the US it is slightly increasing and China is expanding forest by about 70,000 square km every year
  3. Renewable generation in the US passed coal for the year; In the UK, Germany, Spain, France, Sweden, and a number of smaller countries, renewables passed all fossil fuels combined.
  4. In Australia in the last 12 months, renewables have passed brown coal and gas combined. This summer wind and solar alone have provided 24.5% of electricity, gas and brown coal combined at 22.4%. On current trends more than one third of the electricity generated in Australia this year will come from renewables and we should hit 50% renewables by H2 2024. The southern states Victoria, SA and Tasmania combined use as much electricity as NSW. They will probably achieve a combined 50% renewable share for this year, while prices in Victoria and SA have crashed. SA wholesale spot prices have fallen from $110 in the 18/19 year to $33 so far this financial year while demand has increased marginally but renewables have increased from 53% to 60% of supply. Victoria price has fallen from $109 three years ago to below $40 this financial year while renewables have increased from 20% of supply to 30%.
  5. Examination of the data in Germany, the UK, Spain and Australia shows that as the technology improves and geographic dispersion of renewables widens, the need for storage and backup falls. For example in the last 6 months minimum whole day renewable share on the NEM was 25.2% vs an average of 30.1%. In other words if we wanted to maintain 30% renewables every day for the past 6 months we would only needed storage for about 5% of average demand for one day and less than 3% of demand for three days. To cover 3% of demand for three days we would need 50 GWh of storage. If announced battery storage projects are all built they will provide 25 GWh, Snowy II averaging 60% capacity for 3 days will provide 90 GWh
  6. Renewable installations are increasing even faster than predicted even three months ago. The world is now expected to install between 150 and 190 GW of solar (some say 200 GW) and 70-90 GW of wind this year. Even at the lower figures this will generate as much electricity as Germany and France combined or three times as much as the entire Australian electricity demand.
  7. China added 48 GW of solar and 71 GW of wind last year. Installations in the last quarter were enough to meet Australia’s entire annual electricity demand. Overall renewable output in China rose by 16.6% for solar and 15.1% for wind contributing to a total 2,082 TWh from all renewables (Australia’s total demand is 235 TWh) Unfortunately Coal and gas rose by 2.5%. Overall China reached 27.3% renewable share slightly ahead of Australia on 26% and well ahead of the US on 22%. It expects to install another 140 GW of renewables this year.

In India combined wind and solar capacity reached 78 GW ( Australia is about 21 GW) and the government is pressing on with its target of 175 GW by the end of next year, although it will almost certainly fall short. Prime Minister Modi laid the foundation stone for a combined 30 GW wind and solar park in Kutch i.e. a single renewable park with double the combined current capacity of every wind and solar farm in Australia.

In Korea the Government initiated the commencement of an 8.2 GW offshore wind park, which will supply the equivalent of Victoria’s entire electricity consumption,

In the UK another 8 GW of offshore leases were approved with the aim to increase the UKs offshore wind to 30GW by 2030. Based on the productivity of latest wind turbine models, 30 GW of offshore wind will supply almost 60% of current UK electricity demand. The UK now has a development pipeline of 14 GW of batteries which combined with hydro, biomass, imports and minimum wind could supply 60% of UK night-time minimum

The Danish government was approved the largest construction project in its history- a wind island which will serve as a base for enough offshore wind to supply 125% of Denmark’s current electricity supply. The energy will be used to supply data centres, transport and heating electrification, hydrogen production and export power to Germany etc.etc.

  1. Floating solar particularly on hydro dams is becoming a thing. Covering 1-10% of a hydro dam with floating solar doubles the annual energy production of the dam with no new transmission infrastructure and reduces evaporation from the dam. The absence of shading and the cooling effect of the water increases the annual output of the solar panels by about 7-12% compared to nearby land based units
  2. Outside Australia electric vehicle sales are exploding in China and Europe. Q4 sales were more than double the same time last year even though the overall market was down. Growth has continued in January, with Norway at 81% EV, Sweden 31%,  and 21% Germany. This is in spite of a shortage of stock for the two top sellers the Tesla model 3 and Volkswagen ID3. GM has announced plans to eliminate ICE light vehicles by 2035. With new medium sized electric SUVs coming to market from Volkswagen, Nissan, Ford, Mercedes, BMW, Peugot/Citroen/Fiat, Volvo and many Chinese brands this year as well as the opening of two Tesla factories EV deliveries could grow by 3m vehicles this year. Citroen is selling a basic city EV car in Europe for €6,000 and GM is selling one in China for about US$4,500 ($5,000 with air-conditioning) . They are very basic but flying out the door as fast as they can be built. Indian electric motorbikes are now available for around A$2,000
  3. Finally for those who worry about what will happen when the wind doesn’t blow and the sun don’t shine. As you can see below renewable generation on the NEM is never zero and as newer wind and solar technology become more dominant, the wind and solar curves will be smoother allowing the hydro share to be more spiky to fill many of the remaining gaps. New storage and demand response will be needed but in far smaller quantities than most people imagine.

Peter Farley

Christmas Message from Vernier

Just to cheer you up a bit, this is focused more on Australia: It is an edited extract from my end of year speech to the Victorian Vernier Society

As far as I am aware, no members of our group or their families have had significant health impacts from Covid. In some parts of the US and Europe, everyone here would know of someone who had died. If Victoria had the same death rate as New Jersey we would have had almost 14,000 people die, Belgium almost 11,000. Overall the increased health precautions seem to have saved more lives than have been lost to Covid. Only a few countries in the world can say that. The number of extra deaths in the US in the 12 months since the end of February will exceed all their deaths in WWII. No jurisdiction that I can find anywhere has recovered from a daily case load of 100 cases per million people to zero as Victoria has.

Although the economy has some way to go, particularly for our friends in the arts community and it will be changed forever, on balance it is recovering well. Employment is recovering and the manufacturing PMI has jumped back above 50 to 53, while 70% of bank customers that deferred loans have resumed payments. Early hints are suggesting that state and federal government deficits, will not be as bad as expected just 6 weeks ago.

Here are some other numbers that might cheer you up.

The second biggest company on the Australian stock Exchange is a manufacturer CSL, worth as much as ANZ and Westpac combined. Earlier in the year it was the most valuable company

In 2006 Australian liabilities to foreigners were 50% larger than Australia’s overseas assets- Today Australian ownership of overseas assets is 10-15% larger than foreigners ownership of Australian assets. Manufacturing companies such as Bluescope, CSL, Resmed, Visy, Orica, Amcor and Orora and our own ANCA and Planet Innovation, have large overseas operations – in many cases larger than their local businesses. Others such as SDI, Lovett Technologies, Cochlear, Aristocrat, Quickstep, Carbon Revolution, Resmed and many others export 90% of their products

Australian manufacturing companies have been buying back the farm, Vegemite is Australian owned for the first time ever. RM Williams, Lion beverages and Owens Illinois Glass have all returned to Australian ownership. An interesting aside is that Visy, the buyer of Owens Illinois, is trying a bit harder to gain Australian business and has recently won back from China much of the glass business for one of Australia’s biggest agricultural product bottlers. Even oil refining and transformer manufacturing although smaller than they were, are now majority Australian owned.

Local companies are investing in advanced manufacturing and Australian companies such as Vernier member H&H are building large machine tools that have never been built here before and there are now at least six Australian companies including our Spee3D building and exporting 3D printing machines using novel technologies. Even government policy has at last shown a chink of recognition that we must maintain some strategic industries, The pandemic supplies manufacturing push was a real success, Vernier members Planet Innovation and ANCA played a key part. A number of our members are reporting order intakes recently up 50% on the same period last year

On the technology front, Australian technology companies such as Atlasian, Computershare and REA world class companies and are making a significant contribution to the economy, employment and foreign income.

As for cost pressures, spot wholesale power and gas prices have more than halved from three years ago and over the next three years some of that will flow through to industrial rates. Further, the transition to renewables which we were all assured would destroy manufacturing, has progressed faster and cheaper than anyone imagined. In spite of what you might read, supply reliability has improved and costs are continuing to fall. In fact because of our vast spaces and an almost unique combination of good wind, plenty of sunshine and high peak hydro capacity, Australia should be one of the lowest cost producers in a renewable world

You all know I am an energy policy nerd. In 2014 I forecast that with supportive policy Australia could reach 24% renewable electricity this year. While the policy has been anything but supportive, we have still been been running at 30% renewables for the last 5 months and the lowest real wholesale prices for at least 10 years. Spot wholesale prices in Victoria have fallen from an average of $109 in 2018/19 to $46 so far this financial year, from 20% above NSW to 12% below. Gas was running between $9 and $12/GJ with spot peaks up to $25 it is now down to $5-6.50. The Victorian Essential Services commission has recommended lower standing offer electricity prices next year.

It now appears that investment in transmission and storage to enable a high renewable economy is far less than was envisaged even a year ago, because the combined output from new technology wind farms and solar farms is more stable and more predictable than was ever expected. Interstate power trading is actually falling down 30% since 2015 and by the end of 2022 SA will be able to run with zero gas for hours or days at a time with just one or two new large batteries and no new transmission. In my view almost all the proposed interstate transmission projects are now unnecessary and uneconomic.

Outside manufacturing, the value of farm production this year will be at a record $67 bn, about double the value of all coal output. Large foreign owned agricultural land holdings have in some cases been returned to Australian ownership. Water storages are up almost 60% on the same time last year. Water prices have fallen from a peak of $900/Ml in March to less than $200 now. For one of my horticulture mates that is about $4 million per year per $100.

In mining as we know, iron ore income is booming as is the value of almost every other commodity except coal and gas, and even those have picked up in the last week or two

You might be surprised to know that income from foreign student fees, travel and accommodation are almost double that from thermal coal. That appeared to be an imminent disaster. However at least for some universities, foreign student income has held up far better than expected as students study from their home countries and many didn’t take the advice to go home in the first place. At least two engineering schools that I know of have gained foreign students

On social policy, we have slowly started to do something about re-invigorating TAFE, making the dole almost livable, improving aged care and building more social housing while boosting spending on mental health. All long overdue moves to make life tolerable to the less fortunate among us.

And finally every cloud has a silver lining, your Christmas wine and lobster will be cheaper than last year.

In summary 2020 has turned out to be a far better year for Australia and manufacturing than anyone expected in June.

A Happy Christmas and a wonderful New Year to you all

Peter Farley