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Dictating when and if power consumers get electricity was once the preserve of communist dictatorships (think the USSR, North Korea and Cuba).

Thanks to a maniacal obsession with intermittent wind and solar, Australia now sits comfortably in the same dismal ranks.

No longer can industrial users expect to have power according to their business plans – nowadays it’s all determined by the weather.

A couple weeks ago, big industry in New South Wales got a taste of what’s been dished up for years in wind and solar ‘powered’ South Australia, when the grid manager shut off power to its Tomago aluminium smelter.

The alternative was to watch the entire grid go black, as wind and solar output collapsed across NSW on 7 and 8 June:

RE promoters desperately tried to pin the blame on NSW’s coal-fired power plants, wildly claiming that they had ‘failed’.

A number of plants weren’t delivering electricity because they were undergoing scheduled maintenance and one suffered a fault in 2 boilers, a problem which was soon fixed.

There is (and will always be) a critical difference between coal-fired plant and wind and solar. The sun sets according to a preordained schedule – and dead-calm weather can be forecast a week in advance – but neither wind nor solar are capable of increasing output according to customer’s demands. Whereas, once the engineers have certified it fit to run, a coal-fired plant can match demand to the MW, constantly adjusting to follow the changes in load, while maintaining the grid at its critical frequency.

With wind and solar capacity increasing across the Eastern States, this means more chaos and Soviet-era power rationing in Victoria and NSW.

Over the last few years, Eastern-staters have had many a quiet chuckle at South Australia’s expense. Particularly when the entire State went black in September 2016 – with a number of similar near-death experiences during peak summer demand periods, when tens of thousands of homes were cut from the grid – that placed SA firmly at the butt of jokes about candles and being forced to run on diesel generators etc, etc.

Now that NSW has got a taste of what life has been like for South Australians, the sniggering has given way to a sense of fear and panic.

Shutting down businesses and whole industries is no laughing matter. The class of characters that builds stuff are watching their bottom lines shrivel up; not only by reason of rocketing power prices, but because they can no longer get electricity as and when they need it.

In this interview with Ross Greenwood, Matt Howell (CEO in charge of the Tomago aluminium smelter) details the existential threat posed by Australia’s suicidal renewable energy policies.

Energy grid at ‘crisis point’ as power prices surge 160 times the usual rate

2GB

Ross Greenwood and Matt Howell

13 June 2018

The state’s energy grid is at a “crisis point” as power prices soared to more than 100 times the usual rate last week.

Several major electricity power stations went down on Thursday night, unprepared for a spike in demand caused by a cold snap along Australia’s east coast.

It forced one of Australia’s largest aluminium smelters to shut down its potlines for an hour at a time to help keep the state’s lights on.

On three separate occasions Tomago, the state’s largest single energy user, was forced to halt production as spot prices soared to a staggering $14,000 per megawatt hour.

CEO Matt Howell tells Ross Greenwood the price hike would be like a motorist paying over $400 a litre for petrol and would have seen his business lose $5 million an hour.

“What we need is constant energy supply. The question is, when the sun is not shining and the wind is not blowing, where does that energy come from?”

Mr Howell has hit back at suggestions New South Wales should go down the same track as South Australia and buy a giant Tesla battery.

“The largest battery in the world… would power this smelter for all of eight minutes. It’s clearly a nonsense.”

2GB

Here’s the full interview – transcript follows.

Transcript

Ross Greenwood: Well, while all of the crisis in electricity was taking place last week, one person who was living with it real-time is Matt Howell. Now Matt Howell … We’ve had him on the programme quite a number of times before … is a Chief Executive of New South Wales’ biggest electricity consumer and that is the Tomago Aluminium Smelter.

Now, the Tomago Aluminium Smelter, as you may be aware has in the past hit almost crisis point during summer months, but in the past rarely has this occurred during winter. So, when all of that conspiracy of events took place last week, when there were the outages, planned and unplanned outages, especially of the coal-fired power stations, guess what? Matt Howell, the largest user at the Tomago Smelter suddenly almost again had to compromise his own operations as a result of the need of the overall community to have that electricity.

He’s on the line right now. Many thanks for your time, Matt.

Matt Howell: Good to be with you, Ross.

Ross Greenwood: You and I have discussed before about your arrangements with AGL. Your arrangements are that they can come to you and seek agreements to be able to take down pot lines for temporary periods of time to try and make certain that the overall electricity grid in New South Wales remains robust. Is that pretty much what happened last week?

Matt Howell: Yes. Last Tuesday and Thursday it was a lack of dispatchable reserve capacity in the electricity market. This was, indeed, confirmed by the market operator AEMO. So, quite simply, our energy system in this country has become degraded.

Now when that happens, as it did on Tuesday and Thursday, wholesale process spiked to a crazy level, around $14,000 a megawatt hour. Now, that may not mean a lot to the average listener or certainly to motorists. We could put it in terms they would understand. It would be equivalent to paying more than $400 a litre of petrol.

Ross Greenwood: Four hundred dollars a litre for petrol? Think about that. And that’s what it spiked to. That was only for a brief period of time. It came back relatively quickly, but they were the spikes. Those spikes happened not only on Tuesday, but they occurred again on Thursday and again on Friday.

Coincidentally, it happened generally when people came home at around 6:30 in the evening and everybody got home, realised it was cold, turned their heaters on … pretty much all at the same time.

Matt Howell: Correct. This is not about our contract with our energy supplier. That’s actually working exactly as it was intended to do. What was not intended is the wholesale price spiking to ridiculous levels far too often, because when we need the power most, as you say early mornings and late evenings in the winter, the solar resources are simply not producing.

Have a look out your window right now. There’s often very little wind. So, when we don’t have the solar, we don’t have the wind, and the electricity system becomes distressed, somebody has to shed load.

Now, it’s true that we could stay online, but we would be losing around $5 million per hour. Even then, if there’s insufficient reserve capacity like we saw, it’s likely the electricity grid will hit a critical level as it did in February 2017, and the market operator will physically remove our load to avoid rolling blackouts elsewhere.

Ross Greenwood: So, in other words, to avoid you having to pay $5 million per hour effectively for your electricity, which makes yourself thoroughly uneconomic, you can deliberately take down your pot lines, push the electricity that you might have otherwise used back into the grid. That, of course, gives more supply into the overall market, and hopefully means that others further down the line … maybe people at home or people in other sorts of industries … don’t either have brown-outs or blackouts.

Matt Howell: That is absolutely true. Last Tuesday and Thursday, late evening when the solar panels weren’t working and with very little wind, something had to give, and that was us.

What we say is that if we want to be a manufacturing powerhouse in this country, we need internationally affordable and reliable energy.

It cannot be dependent on the weather. This is the very essence of the federal government’s national energy guarantee, which we’re very strong supporters of, that requires intermittent generators to firm up or guarantee their output by contracting with conventional thermal generators, because we just can’t have the lights going out on industry because the weather’s no good.

Ross Greenwood: Okay, so a lot of people will come in and I get abused of all sorts of people of being, “You’re old-fashioned,” or “You’re all about coal,” and this is all a terrible thing. But the truth is, if you actually have a look at where the electricity is generated in, not only this state, but all of the states around Australia, it is broadly the base-load of coal.

It’s not about putting more wind or more solar into it, because the truth is with the wind and the solar it’s not a lot of electricity in totality.

Secondly, as Matt says, if the sun is not shining and when you’ve got a very cloudy day on very cold days when there’s peak electricity usage out there, guess what? You don’t actually have any solar going into the system. That is part of the fundamental problem of why you need the base-load of something, such as coal fired power or gas generation or nuclear if we had it, which we don’t.

And they are the issues, aren’t they, Matt?

Matt Howell: That is absolutely true. There’s no aluminium smelter anywhere in the world powered by wind and solar and backed up with batteries. Let’s call a spade a spade.

The largest battery in Australia, the so-called Hornsdale Power Reserve in South Australia, it would power our smelter for less than eight minutes. Clearly, it’s a nonsense.

There are smelters around the world that are powered by hydro, but they all have access to a large nuclear fleet. Canada, France … 70% of France’s energy comes from nuclear. The bottom line is if we want energy-intensive manufacturing industries in Australia, we need conventional thermal base load generation.

I would say that if it’s good enough to export millions of tonnes of high-quality thermal coal from Australia to feed the world’s growing fleet of advanced low-emissions power stations, then it must be good enough to do the same thing here. To do anything less is rank hypocrisy.

Ross Greenwood: Okay, and then the final part of this comes in, that even though we have got those various power stations that were down for either planned outages because this is unseasonal weather that has conspired to cause this situation last week, but on top of that also those that had issues because many of the coal-fired power stations are ageing. They’re going to have increasing issues of maintenance going forward, especially if you close things such as Hazelwood last year in Victoria, now Liddell is coming 2020.

I did even notice today advertisements being put out through SEEK, seeking teams of people to start in August, this week to actually facilitate the shut-down of the Liddell Power Station. God forbid that happens. You also then had an email over the weekend, today coming out with a statement saying, “It again underscores AEMO’s concerns about the impact of the Liddell retirement and our support for the complementary emission and reliability components contained in the national energy guarantee.”

So, even the agnostic regulator is warning about the closure of Liddell.

Matt Howell: Correct, and rightly so because you will remember Ross back in February 2017 when we had during the heat wave all of our pot lines off at one stage or another late afternoon. It was summer, but New South Wales solar resources were producing at just 18% of capacity.

Anybody that tells you we’re going to have a high proportion, 50% or more renewables, and no coal, quite frankly that’s using a black and white mind on a colour-coded problem. It’s nonsense.

Ross Greenwood: Tell you what, always good to have you on the programme. We’ll continue this conversation because it’s too important to let it go and it’s too important to let not only industry go, but to basically allow the electricity grid to be held to ransom and also for very, very high prices.

Matt Howell is the Chief Executive of the Tomago Aluminium Smelter, the largest electricity consumer in New South Wales.

And again, last week as a result of outages, he had real problems in trying to make certain that the electricity grid and his own smelter were not really compromised at that time.

Matt, many thanks for your time.

Matt Howell: Good to speak with you, Ross. Thank you.

2GB

Those that keep trying to convince the public that wind power is a ‘winner’, have come up with an elegant piece of fake news, claiming that wind power is the cheapest generation source, of all.

In a clever piece of accounting trickery, the story is being run that wind power is being sold under Power Purchase Agreements for as little as $60 per MWh.

Like most of the half-truths peddled by the wind industry, the price paid for the electricity generated may well be $60 per MWh. However, what’s being concealed is that on top of the contracted price for the electricity itself there sits the value of the Large-Scale Generation Certificate (LGC or REC), currently worth around $85 each.

A wind power generator collects one LGC for every MWh it delivers to the grid.

With a PPA price of $60 per MWh, the wind power outfit receives a total of $145 per MWh, when the $85 value of the LGC is included. Hoodwinking the public that wind power costs a mere $60 per MWh might be the pinnacle of cynical marketing, but the chaos delivered by wind power is no joke.

We have already set out what happened to wind output in NSW on 7 and 8 June. What’s depicted immediately above is what happened in the spot market for power in NSW (from the AEMO data dashboard).

On 7 June, at 5:30 PM and again at 6:30 PM, the spot price (depicted in dark blue) topped out at the regulated market cap of $14,200 per MWh – as the day wore on and demand rose (depicted as the feint grey line in the AEMO graphic).

During the critical time when power demand was rapidly increasing (5:30-6:30 PM), total wind power output in NSW was never more than 400 MW (or 31% of its 1,294 MW of notional capacity) and – plummeted to an almost trivial 250 MW (or 19% of notional capacity).

The right side of the AEMO graphic above depicts the spot price for power on 8 June when, at 5:30 PM the spot price hit $14,000 per MWh. Between 9am and 5pm total wind power output was around 450 MW (but never more than 500 MW) (or between 34% and 38% of notional capacity).

As demand again increased (like clockwork) in the early evening – as householders fired up ovens, lights, heaters and air conditioners – wind power did just exactly the opposite of what’s expected from a power generation system: it collapsed, again.

Dropping – without warning – from 500 MW to 270 MW, just when grid managers needed it most, no sentient being would ever describe wind power generation as a ‘system’, at all. It is, of course, a patent nonsense.

No household, hospital, business, industry, transport system (think electric trains and trams), traffic control system, you name it, can operate around the vagaries of the weather.

Business and industry are being shot from both sides: power prices are rocketing out of control; and, even if they’re in a position to afford what’s on offer, depending on the weather, they may not get power, at all.

Putting paid to the myth that adding wind and solar to your generation mix inevitably leads to lower prices, not only are Australian states with substantial wind and solar capacity already suffering the highest power prices in the world (wind and solar powered SA sits at the top of the league table – see above), but power costs to business have jumped between 20 and 28% in those states engaged in the ‘inevitable transition’ to wind and solar (see below).

The notable exceptions are Tasmania – which runs on hydro and gas – and Queensland – which runs on coal.

At the other end of the spectrum, the Australian Capital Territory is suffering the inevitable consequence of its ludicrous 90% renewable energy target, a RET that’s been satisfied by purchasing huge volumes of wind power from operators in Victoria and SA, under its very own PPA terms. So, if wind power isn’t the cause of the ACT’s rocketing power prices, it’s hard to imagine what is?

Welcome to your wind powered future!