Finance Finance News Malcolm Turnbull’s baseload power claim is out of date and wrong

Malcolm Turnbull’s baseload power claim is out of date and wrong

malcolm turnbull Liddel AEMO Finkel AGL
Prime Minister Malcolm Turnbull knows the facts on 'baseload' power, but is choosing to misrepresent them. Photo: AAP
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Is Prime Minister Turnbull’s political career really going to end in complete capitulation to anti-science, anti-economics agitators on the Coalition backbenches?

Not only is he reportedly set to water down plans for a Clean Energy Target, but he has started talking out-of-date nonsense on energy policy.

In a doorstop interview on Tuesday he told journalists: “The gap that is going to be created if Liddell [coal power station] were to close, is, we’re advised, around 1000 megawatts of power, but that is dispatchable power.

“It’s not like 1000 megawatts capacity from a wind farm that’s only there when the wind is blowing … really, if you’re talking about wind and solar, they are not baseload.”

Those comments contradict the ultra-cautious Australian Energy Market Operator report handed to him last week.

It showed that there is plenty of capacity in the national energy market, but that the market mechanism that is supposed to turn generators on and off isn’t up to the job.

He also knows that the Finkel Report showed that wind power plus ‘firming costs’ is the cheapest new power to build – and as explained below is already capable of providing reliable ‘baseload’ power.

An analogy may help show why.

Let’s imagine Mr Turnbull has bought a large caravan and then realised that his car was too small to tow it, and his lawn too small to park it. He could choose to rent an expensive storage unit and buy a gas-guzzling SUV to tow it.

Alternatively, his neighbour might suggest a better deal: “Pay me a small amount to park it on my driveway. Keep driving your small car to work each day. Rent a large SUV for holidays. And agree that if I ever need to clear the drive in an emergency, you’ll pay for a tow truck.”

If Mr Turnbull chose this optimal mix of technologies, his new hobby would be considerably cheaper.

Optimising energy

Energy markets are already moving in a similar direction, even with the out-of-date structure of the National Energy Market.

The Finkel Report named “wind power plus firming costs” as the cheapest new-build power source, so let’s unpack that term.

Mr Turnbull likes to talk about a single wind farm, because obviously sometimes a single location will have no wind.

However, as the map below shows, the major wind-generation assets within the National Energy Market grid are spread across 1500 kilometres – about the same distance as from Paris to Tunisia.

Australian wind farms national energy market

Variation in wind across such a vast region means it’s usually possible to pump a decent average supply of power into the grid.

Occasionally, however, that average will not be met, and ‘firming costs’ are incurred. In its simplest form that means paying gas-fired peaking plants.

Gas is expensive, but because it is switched on and off as required, the combined price of ‘wind plus firming costs’ is still low.

There remains one problem in the smooth operation of ‘wind plus firming’ baseload power – the time it takes for the peaking plants to come on-line.

Gas plants are quick to start up, but not immediate. As Alinta Energy puts it: “It takes a mere 10-20 minutes for a gas turbine power station to reach full-load capacity, compared to multiple hours for coal power stations.”

When freak weather patterns occur – as they always will – what can buffer the grid to stop emergency cut-off switches triggering blackouts?

The answer is the new generation of large-scale storage batteries, such as those being built in South Australia and Victoria.

Hydro power also does this kind of bridging supply pretty well.

Batteries, then, are like the tow truck in the analogy above. Very expensive, but only needed for short bursts.

Put together, those technologies can easily provide ‘baseload’ power to replace the Liddel power stations – and it’s likely that AGL, its current owner, will say exactly that in a plan the PM has asked it to prepare within 90 days.

It’s worth noting that extending the Liddel plant’s life for five years is expected to cost taxpayers around $500 million – 10 times the estimated cost of the world’s largest lithium ion battery, being built by the Tesla company to firm up South Australia’s power grid.

That is why Mr Turnbull’s comments are so egregious.

They are intended to deceive voters so he can deliver an out-of-date and more expensive plan for keeping the lights on – and, of course, retain his prime ministership in a hostile party room.

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