Future of the Australian Electricity Market

[Chris Parks]

Paul is right; lighting does not use much power and heating uses heaps. Increase your thermostat by one degree and the increased electriity would have kept all lights running 24/7. In a domestic setting, by far the best thing you can do to save energy is by improving insulation; the world leaders are in northern europe - Germany, Scandinavia, etc. Part of the drive is called "passivhaus" and well worth reading about. To achieve those standards your probably need:

• R=10 insulation in ceilings,
• R=7 insulation in walls,
• R=5 insulation in floors,
• Double glazing on all windows,
• Triple glazing on those windows facing the pole,
• No air leaks.

Then you can heat a large house including domestic water for less than 15 kWh per square metre per year.

Compare that to an "average" Australian house that might have R=3 insulation in ceiling, and nothing else.

You are in Hobart; your cheapest options for heaing are:

1. Cheapest = wood heater, provided you chose an efficient model that is properly installed and maintained
2. Next Cheapest = heat pump,
3. Third cheapest; There is no third cheapest, all other options are expensive.

We installed gas heating about ten years ago, which almost made sense then, but is now very expensive.

I am going to install a few Infra Red panels after a trial run to prove they do what is claimed and they do. They primarily heat the mass of the building and its contents and then this heats the air as a secondary function so turning them on and expecting to get hot instantly is not going to happen. I have been watching the data coming off our solar panels and our solar is still exporting when the IR panels are operating so we are banking the heat in the building and releasing it at night by programming the thermostat to turn the panels off. Our house was insulated in the walls and ceilings which is better than most but I have said it here before Australian houses are generally leaky tents compared to those in cold climes overseas. Pelmets and well designed curtain systems will also save a lot of heat going through single pane windows.

[FenceFurniture]

Ten years ago we mainly had NiMH and NiCd - who knows the future?

And Li-Ion batteries in tools seem to retain their charge capacity very well for about 7 or 8 years, and then they enter the death spiral and die quite quickly. Will tesla's do the same?

I purchased my Makita Li-Ion cordless kit 12 years ago, and Li-Ion was well and truly established by then. I think losing the charge capacity may have more to do with inbuilt obsolescence rather than the ability to perform. AFAIK, Makita batteries have a chip that says "No" after a given set of circumstances arrives (the number of recharges??). If this is true, then the marketing doesn't work on me because I only ever buy third party replacement batteries. Cheaper, and with a significantly longer lifespan.

[Beardy]

I purchased my Makita Li-Ion cordless kit 12 years ago, and Li-Ion was well and truly established by then. I think losing the charge capacity may have more to do with inbuilt obsolescence rather than the ability to perform. AFAIK, Makita batteries have a chip that says "No" after a given set of circumstances arrives (the number of recharges??). If this is true, then the marketing doesn't work on me because I only ever buy third party replacement batteries. Cheaper, and with a significantly longer lifespan.

Interesting, I have found aftermarket batteries to be rubbish and only use genuine. Come to think of it I can’t recall ever seeing any aftermarket batteries on the building sites.
But if you have found a good supplier and they are doing the job that is great.

[Bushmiller]

Paul
Forgive my cynicism, but to me it looks like the AEMO may have been gamed by "persons yet to become known"

Attached is a snap shot from 20:40, June 14, 2022 for Tasmania.
You can clearly see the price spikes >$15,000/MWh over the past day or so.

Don't know about you, but a spot price above $15,000/MWh -- in a state that just opens a tap a bit wider to generate power -- suggests to me that some sort of gaming is occurring.
Perhaps, the Market participants have twigged that if they don't bid a price (to generate any power) over the next 5 minute period, the only price offered will apply to all the market participants.



Attachment 513051

Ian

Your comments are not without some substance. As we know, it is a competitive market and there are rules set down for this market, which the "players" must follow. Transgressions are, and have been, taken to court. There was one very significant event about five years ago that comes to mind. However that is not to say that the rules are satisfactory. Unfortunately the "banker" can change the rules when he feels like the game is not going his way. The players cannot do that when things are not going their way. While I have some reseravtions about the rules and the way they can be used I find myself thinking that this is what was set up in the first place.

For many years it was a battle for a generator to even break even. Many was the year we considered ourselves lucky to be getting $30/MWhr and that was certainly not viable, but we persisted, because there was no other option. Times have changed and we are now at a point where a generator can make a good return on billion dollar investment. We mainly hear about these price spikes to the max: Now around the $15,000/MWhr but little is made, in the press, of the times the price goes to -$1000/MWhr for protracted periods up to five hours on occasions. The units are throttled back to their safe minimum load, sure, but this could be a couple of hundred MWs. That certainly takes a bit hit to a profitable enterprise.

In recent times there have been a couple of significant changes in the rules. The first is that bidding is now done on a five minute segment rather than the half hour segment. The effect of this is to limit the time a price spike remains effective. A price spike now lasts normally no more than five minutes. Prior to this generators were paid that high price for at least thirty minutes. This represents a saving of five times arguably. That is fair enough, although the actual bidding process does take a little longer, but that is what it is. If the old system was still in place n todays market the average price might well be in the thousands/MWhr!

The second major change is to availability. A generator must always convey to AEMO their availability as soon as there is any change. The reason for the change must accomany that adjustment.At any power station there are two groups that come in to play: The operators and the traders. The operators are responsible for availability while the traders dictate the pricing. If, for example, there are 500MW available, the first 200MW will be available at say $30MW, the next 200MW at $80 and the last 100MW at $300. These prices can be revised by the traders at any time. I suppose your cynicism around gaming has some foundation. It is a game that has been played for many years with the "banker" having the whip hand. Now the whip is in different hands and the players havn't forgotten the hurt. It is a vicious commercial market. I lay the blame squarely at the respective state governments who sild off their assest for a quick money grab. It is like a grazier selling off his breeding herd: He still wishes to grow cattle so now he has to buy back from the market and he is at their mercy.

One aspect that we have not emphasised for a long time is that the MW value is paid according to the last player in. So, if a gas generator comes in at $500/Mwhr, everybody gets $500/MWhr even if they only bid in at $30/MWhr.

For a long time I have thought, from my humble position of zero influence, that the market rules are outmoded and largely inappropriate. The recent turn of events in particular and really for the whole of this year have highlighted the inadequacy of the competitive market structure. All the problems we have described in previous posts as the holes in the swiss cheese lining up have served to exacerbate the problem.

So back to your orginal comment regarding "gaming." If there is any such activity ocurring, it is done within the scope of the rules. You can't flog the dog for years and not expect it to bite back when it gets the chance.

Regards
Paul

[Bushmiller]

A most interesting article that goes some way to explaining the "big hammer technique" but not completely.

Power companies accused of engineering crisis for profit (thenewdaily.com.au)

There is still a lot of hurt ahead of us to my mind.

Regards
Paul

[GraemeCook]

Paul
Forgive my cynicism, but to me it looks like the AEMO may have been gamed by "persons yet to become known" ...

I think that you have been extremely perceptive, Ian, and from a distance of 10,000 kms.

This mornings ABC News alleged that certain unnamed electricity producers including 5 government owned powerplants (also not named) were (allegedly) deliberately reducing supply to the grid and forcing up prices and creating chaos. It was "justified" by a garbled argument about (alleged) disatisfaction with long term margins in a competitive market.

Looking at those graphs, I must also wonder if there is also some other sinister force involved. eg A hedge fund manipulating and already distorted market? The latter is guess work. Remember when the Hunt Brothers tried to corner the world silver market in 1980 and forced the price from $6 to $50 per ounce.

[Chris Parks]

Game on Australian Energy Market Operator suspends spot market for wholesale electricity - ABC News

[havabeer69]

Game on Australian Energy Market Operator suspends spot market for wholesale electricity - ABC News

yep. wierd times ahead.

so part of the reason for market suspension is that aemo/NER needs a certain capacity as a spare, 1500MW is the number banted about, and at one point today we had 38MW spare in the grid. soooo they have to suspend the market to actually keep a certain safety factor built into the grid by peeling back peoples contribution to the spot market.

Generators also won't get compensated for the last revenue due to the 300MW cap (its in the rules, and you're made aware of this when getting your license to generate). If you needed a bit of plant to get you back into service to meet the demand, you can apply for costs for that, or if you needed to buy some extra coal to meet the demand you can apply for those loses but not actual lost revenue.

[woodPixel]

Some things that have been agitating me that few have seemed to consider:

South Atlantic Anomaly - Wikipedia
The Collapse of an Atlantic Ocean Current Would Ripple Across The World, Says Study

There is, on top of these two interesting reads another that I read in a geology paper that found the inner working of the planet are changing and doing something odd in the south Atlantic. Apparently the magnetic field itself is changing (as it ever does, but this is "added change")

Earth’s magnetic poles not likely to flip: st | EurekAlert!


Its curious to plug these together as the three sciences don't seem to be talking to each other.

What does this all mean? No idea. But for us Aussies it means wet wet wet.

[Bushmiller]

yep. wierd times ahead.

so part of the reason for market suspension is that aemo/NER needs a certain capacity as a spare, 1500MW is the number banted about, and at one point today we had 38MW spare in the grid. soooo they have to suspend the market to actually keep a certain safety factor built into the grid by peeling back peoples contribution to the spot market.

Generators also won't get compensated for the last revenue due to the 300MW cap (its in the rules, and you're made aware of this when getting your license to generate). If you needed a bit of plant to get you back into service to meet the demand, you can apply for costs for that, or if you needed to buy some extra coal to meet the demand you can apply for those loses but not actual lost revenue.

I slightly misled in an earlier post when I said the week of average prices around $600 (I think it was abou $580/MWhr)led to the cap of $300. Those average prices were contributary, but the final trigger was several hours around $9000/MWhrs with little prospect of the situation improving. I read an article just now that said this is the first time a cap has been invoked, but I recall a situation several years ago where the price hit Vol (an abbreviation for maximum volatility) for several hours and and the cap was invoked, but it was lifted almost as soon as the price volatility stabilised. Perhaps they are refering to a protracted period such as in force right now and not due to be lifted for another couple of days at least.

Once a generator is instructed to generate in these circumstances, out of pocket expenses can be claimed. Haveabeer mentioned extra coal and another example would be the burning of oil (oil support is normally only required to introduce a new mill and during the startup of a unit.) It is much more expensive than burning coal probably by a factor of up to five or six times depending on the cost of the coal. The oil is usually diesel fuel such as used in our private vehicles or trucks.

I suspect that gas generators may be able to claim fuel if the cost exceeds $300/MWhr, but not certain on that one.

The dire situation is expected to improve within the week I am told.

That 1500MW used to be 2000MW spinning reserve, but that was before the advent of the competitive market. The competitive market changed many things.

Regards
Paul

[Bushmiller]

A synopsis of where we are at with the electricity market: The spot market has been shut down and this article explains some of it at least. Not too many local providers making money from the misery.

AEMO has taken over the national energy market. Here's what that means (thenewdaily.com.au)

Regards
Paul

[ian]

HOWEVER
As I understand operation of the East Coast Gas market, the operator's "owners" borrowed the money to construct the LNG plants at 2% interest (or possibly an even lower rate), on-lent the funds to their Australian subsidiaries at 9% (or perhaps an even higher rate) -- meaning that the possibility of any acknowledged profit from their operations is remote, let alone the possibility that their operations might generate a "super profit".

[Mr Brush]

"The future has been cancelled due to lack of interest."

- Me, 2022

[woodPixel]

Doesnt help the perception of being ripped off when we are being actually ripped off....

Prime Minister says gas generators were '''gaming''' the energy crisis and threatening supply - ABC News

[Bushmiller]

While the "gaming" link in WP's post basically outlines the current situation I take issue with this statement by Albanese:

"Some generators withdrew from the market this week, after soaring power prices were capped, and were then compensated by the market operator when directed to pump power into the network."

To my mind this is not what those generators wanted. A $300 cap with expenses above cost is not what they were wanting at all. They were chasing several hundred dollars or a thousand dollars while the market was still in competitive mode. The trick would have been to keep the market high but beneath the threshhold that triggered cessation of the competitive market. It is true to say that those generators, that are the alleged culprits, misjudged that big time.

Regards
Paul