The Real Cost of Renewables

Electricity prices are increasing, we know.  Here is a plot of electricity prices across the eastern states in the National Electricity Market.

Fig. 1:  NEM Prices 2009-2022

There is a shortage of available coal and gas generation, resulting in record prices.

Fig. 2:  NEM Coal & Gas Prices 2009-2022

Of course wind and solar are much cheaper:

Fig. 3:  NEM Wind & Solar Prices 2009-2022

See?  Renewables are cheaper.

Not so fast.

Figure 4 shows electricity consumption for the eastern states last week (Friday 3 June to Friday 10 June).

Fig. 4:  NEM Total Consumption 3 June – 10 June

Note the daily cycle between baseload and peak load.  Figure 5 is a plot of consumption for each 30 minutes of the day:

Fig. 5:  NEM Total Consumption by Time of Day

The baseload- the minimum amount of electricity to meet the needs of streetlights, hospitals, smelters, and households- occurs every day between about 3.30 a.m. and 5.00 a.m., and last week was from 20,600 to 22,300 MW.

Peak load rose to 35,386 MW.

Figure 6 shows how wind and solar performed last week:

Fig. 6:  NEM Wind & Solar Consumption 3 June – 10 June

The bleeding obvious is that while solar provided more than 10,000 MW for 30 minutes on Saturday 4 June, it produced absolutely zero every night.  Wind never reached 7,000 MW.

That’s the reason we need storage.  If we can store the excess from solar, we could use it to supplement wind when needed.  Much money has been invested in large scale batteries.  However, batteries provided a maximum output of 324 MW last week- pathetic really.

We do have hydro-electricity, mainly in Tasmania and the Snowy Mountains.  Figure 7 shows how hydro contributed last week:

Fig. 7:  NEM Hydro Consumption 3 June – 10 June

Hydro helped twice a day at peak times, and also provided a substantial supply in daylight hours- over 2,000 MW on 8 June.  The previous week- at 6 p.m. on Thursday 2 June- wind could manage only 3% of the NEM load, and hydro provided 19.33%, or 5,382 MW.  Last Thursday 9 June at 6 p.m. hydro provided 5,519 MW.

That’s why we need more storage.  Forget batteries- the only realistic storage is pumped hydro, where excess off-peak electricity is used to pump water to storage dams.  Wivenhoe Dam in Queensland has been doing this for 40 years.

So the politicians dreamed up Snowy 2.0.  This scheme, whose timeline for completion has blown out to the end of 2026 according to Chris Bowen (Weekend Australian June 11-12), will cost 4.5 billion dollars to build, plus another $1.5 billion to $2 billion for extra transmission lines.

 “Snowy 2.0 will provide an additional 2,000 megawatts of dispatchable, on-demand generating capacity and approximately 350,000 megawatt hours of large-scale storage to the National Electricity Market. To provide context, this is enough energy storage to power three million homes over the course of a week.”

That’s a cost of $3.25 million per MW.

That’s the “good” news.  Now for the interesting news.

As we saw above, baseload last week was 20,000 to 22,000 MW- and winter has only just started.  If fossil fuels are removed eventually, baseload at 4 a.m. must be met by some combination of wind and hydro as there is no sun at that time of day. 

The current hydro capacity is 9,285 MW.  Snowy 2.0 will provide an extra 2,000 MW.

The current installed capacity of wind generation is 9,202 MW- and that is going full bore day and night, with optimum wind conditions and no stops for maintenance.  32% of capacity is the average reached.

The total installed capacity of wind, current hydro, and Snowy 2.0 is 20,487 MW.  That is still short of baseload with winter to come, and peak load last week was 35,386 MW.  That doesn’t allow for population increase or economic growth either.  Where will the extra 15,000 MW of wind powered and pumped hydro electricity come from?  It’s an impossible dream.

But wait, there’s more.

Here’s the bad news:  Hydro electricity is the most expensive electricity in Australia- more expensive than either coal or gas.  In May 2022 it reached $315.91 per MW.

Because it is rapidly despatchable it is sold at times of very high demand, so the operators get top dollar.  Much more than coal or gas.

Figure 8 shows the average price of hydro for each month to May 2022.

Fig. 8:  NEM Hydro Prices 2009-2022

The real cost of renewables will include the cost of storage and emergency supply.

Don’t hold your breath hoping for electricity prices to come down.

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