Wind, solar power need back-up ‘to keep the lights on’: The Economist

February 24th, 2017

An article in the latest edition of The Economist magazine provides insight into the global situation on the advance of renewable energy and the difficulties it is creating for electricity network managers and baseload generators.

Without a new pricing model for renewables, and adequate back-up from coal/gas/nuclear, the renewables movement is in danger of stalling

Green energy “has a dirty little secret”, the article says with some tongue in cheek.

The secret is that it can be addictive for politicians, but difficult for Governments to deal with.

Wind and solar are intermittent and they present voltage management problems for electricity network operators.  But their more insidious element is that once built, they provide very low cost energy, so they are very attractive to politicians who are see the environmental benefit and the promise of cheaper energy as playing well to voter sentiment.

Unfortunately, as European experience has showed, it is just not that easy.

If the balance tips too far the wrong way, investment incentive disappears and Governments are forced to pay more subsidies to restore stability.

In a number of places in the northern hemisphere, having paid big subsidies to build renewable plant, Governments are now having to subsidise fossil fuel back-up plants to stabilise the electricity grid and “keep the lights on”.  Alternatively, they are forced to pay high prices to import energy to plug the gap, and this may be from nuclear or fossil fuel sources, which undermines the economics and the voter appeal.

So taxpayers get stung twice – subsidising the building of the renewable plant and then the back-up plant needed to add security to the energy flow for when the sun is not shining and the wind is not blowing.  And the environmental benefits are not what they were initially described as.

This is analogous to the current South Australian situation, where subsidised renewable energy has squeezed out coal-fired power and put a lot of pressure on gas-fired back-up.  The lifeline is an interconnector to Victoria, but his is electricity from a brown-coal-fired furnace 1000 kilometres away.   Result:  environmental benefits nullified.

The Economist:

Green energy has a dirty secret. The more it is deployed, the more it lowers the price of power from any source. That makes it hard to manage the transition to a carbon-free future, during which many generating technologies, clean and dirty, need to remain profitable if the lights are to stay on. Unless the market is fixed, subsidies to the industry will only grow.

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According to the Economist, these combined factors are making Governments nervous:

“Policymakers are already seeing this inconvenient truth as a reason to put the brakes on renewable energy.

“In parts of Europe and China, investment in renewables is slowing as subsidies are cut back.”

The phenomenon described by the magazine is a problem which will not go away until a more appropriate pricing mechanism is devised to ensure renewable energy pays its way, including in the times when it is dormant.

This is exactly what long time Australian energy leader David Byers was getting at in an opinion article in the Australian Financial Review this week.

South Australia has been a world leader in deploying wind and solar power, but it has not adapted its local electricity generation system to effectively and efficiently operate with the intermittent  40% renewable content.    Like the European countries mentioned in The Economist article, it relies on ‘imported’ power (from Victoria) to fill the gap.

The result:  It has the highest priced electricity in the nation and the least reliable.

The Economist opinion was that this problem could be fixed – but it needed a pricing fix, as the renewable subsidy model was proving difficult to implement successfully in both a technical and economic sense.

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