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This is true and it blows my mind. It also makes me sad. We have some really smart and educated people in this country. What's the problem here?

by jazoom 8y ago

stephen_g 8y ago
Mostly the Coalition. Seriously. It’s clear from the AEMO market makeup etc. that almost all the cost increase was attributable to the cost of gas (due to Santos having contracts to export more gas than they had supply for to Japan etc., while the international gas price has fallen. So they are sucking up gas on the domestic market pushing up domestic prices and their liquefication operation is unprofitable anyway). But the Coalition instead chose to use the cost of electricity as a political tool in a bizarre anti-renewables push. Economists have suggested that a large enough gas reservation policy (like WA has) would rectify that. The LNP could legislate it in a few weeks at worst. This would also benefit industrial gas users that have been struggling with big increases. A more minor part (like what this battery is helping to stop) is the privatised generators gaming the market by constraining supply artificially to push up prices at certain high-demand times. Some of this also naturally happens with some of the older coal stations tripping out and falling off for a few hours (I think Liddel is only achieving something like 46% capacity on average or something?).
- wallace_f 8y ago
  >almost all the cost increase was attributable to the cost of gas Unfortunately natgas prices determines price because it's often the price at the margin. If policy makers care about efficiency, fairness, and reducing pollution, they would better-allow, or outright demand, price signals flow through to the marketplace.
- roenxi 8y ago
  > Mostly the Coalition. Seriously. Pull the other one, the risk is something like what happened in Germany. The cheap, reliable option in Australia is coal. So an investor has 2 options: 1) Invest in coal. At some point a Labor-Green government gets in and copies the German model - all your capital now makes a loss (ie, the plant you just built). 2) Invest in something else. This isn't as politically risky, but if the government decides that high power prices have to go and pours money into something (eg, new coal plants) then you just got set up as a marginal producer. I mean, I haven't crunched the numbers, but unless wind/solar are legitimately the most cost effective options (which historically they most certainly have not been) then you would have to be a real risk taker to get involved. Blaming that situation on the Coalition is too much; the political risks go way beyond them. The issue is that the Coalition wants cheap, the greens want clean, and Labor isn't committed either way as far as I know. And the regulator is a long way from perfect.
  - plantain 8y ago
    Fortunately, people have crunched the numbers: https://reneweconomy.com.au/plunging-costs-make-solar-wind-and-battery-storage-cheaper-than-coal-83151/ https://reneweconomy.com.au/plunging-costs-make-solar-wind-a... The Coalition doesn't want cheap - they've spun coal so hard it's no longer politically tenable to unspin it.
    - aplummer 8y ago
      isn't their only major energy investment a bigger hydro dam?
  - stephen_g 8y ago
    Sorry, that doesn't make any sense. We have no pressing need for additional baseload capacity at the moment. The problem is entirely in high-demand times, and that is entirely sourced from dispatchable generation. This is mostly gas and hydro in Australia, and the price of gas drives the price, given the way the AEMO bidding market works. Renewable energy only takes pressure off this demand (i.e. solar is fairly well correlated with hot weather, so actually helps a lot in reducing the peak on hot days (presumably from air-conditioning etc.) by hundreds of megawatts).
    - roenxi 8y ago
      Australia's number 1 problem is that the grid itself is too expensive. That isn't the Coalition, because it has been happening through the late Howard, Rudd-Gillard-Rudd, Abbott and Turnbull governments. Typical slow government problem, not any particular party. Obviously you aren't talking about that, so I didn't mention it. Australia's number 2 problem is all our power plants are aging and shutting down. I addressed that; because you seemed to be talking to it (eg, Liddel is only achieving something like 46% capacity). That is a looming issue. The problem here is also not the Coalition, as I mentioned. Now SA appears to have a tertiary problem which is they have lots of wind energy and not enough storage to balance out the grid. The battery is addressing that and seems to be going well. This is also nothing to do with the Coalition, because the SA state government controls SA and the majority bounces between the two majors. The Weatherill government seems to have had the battery installed extremely quickly despite whatever you think the Coalition did to prevent it. You aren't assigning blame correctly here. The big picture problem isn't that gas prices are high, and power problems aren't happening because of "mostly the Coalition".

This is true and it blows my mind. It also makes me sad. We have some really smart and educated people in this country. What's the problem here?

by jazoom 8y ago

This is true and it blows my mind. It also makes me sad. We have some really smart and educated people in this country. What's the problem here?

stephen_g 8y ago

Mostly the Coalition. Seriously. It’s clear from the AEMO market makeup etc. that almost all the cost increase was attributable to the cost of gas (due to Santos having contracts to export more gas than they had supply for to Japan etc., while the international gas price has fallen. So they are sucking up gas on the domestic market pushing up domestic prices and their liquefication operation is unprofitable anyway). But the Coalition instead chose to use the cost of electricity as a political tool in a bizarre anti-renewables push. Economists have suggested that a large enough gas reservation policy (like WA has) would rectify that. The LNP could legislate it in a few weeks at worst. This would also benefit industrial gas users that have been struggling with big increases. A more minor part (like what this battery is helping to stop) is the privatised generators gaming the market by constraining supply artificially to push up prices at certain high-demand times. Some of this also naturally happens with some of the older coal stations tripping out and falling off for a few hours (I think Liddel is only achieving something like 46% capacity on average or something?).

wallace_f 8y ago
>almost all the cost increase was attributable to the cost of gas Unfortunately natgas prices determines price because it's often the price at the margin. If policy makers care about efficiency, fairness, and reducing pollution, they would better-allow, or outright demand, price signals flow through to the marketplace.
roenxi 8y ago
> Mostly the Coalition. Seriously. Pull the other one, the risk is something like what happened in Germany. The cheap, reliable option in Australia is coal. So an investor has 2 options: 1) Invest in coal. At some point a Labor-Green government gets in and copies the German model - all your capital now makes a loss (ie, the plant you just built). 2) Invest in something else. This isn't as politically risky, but if the government decides that high power prices have to go and pours money into something (eg, new coal plants) then you just got set up as a marginal producer. I mean, I haven't crunched the numbers, but unless wind/solar are legitimately the most cost effective options (which historically they most certainly have not been) then you would have to be a real risk taker to get involved. Blaming that situation on the Coalition is too much; the political risks go way beyond them. The issue is that the Coalition wants cheap, the greens want clean, and Labor isn't committed either way as far as I know. And the regulator is a long way from perfect.
- plantain 8y ago
  Fortunately, people have crunched the numbers: https://reneweconomy.com.au/plunging-costs-make-solar-wind-and-battery-storage-cheaper-than-coal-83151/ https://reneweconomy.com.au/plunging-costs-make-solar-wind-a... The Coalition doesn't want cheap - they've spun coal so hard it's no longer politically tenable to unspin it.
  - aplummer 8y ago
    isn't their only major energy investment a bigger hydro dam?
- stephen_g 8y ago
  Sorry, that doesn't make any sense. We have no pressing need for additional baseload capacity at the moment. The problem is entirely in high-demand times, and that is entirely sourced from dispatchable generation. This is mostly gas and hydro in Australia, and the price of gas drives the price, given the way the AEMO bidding market works. Renewable energy only takes pressure off this demand (i.e. solar is fairly well correlated with hot weather, so actually helps a lot in reducing the peak on hot days (presumably from air-conditioning etc.) by hundreds of megawatts).
  - roenxi 8y ago
    Australia's number 1 problem is that the grid itself is too expensive. That isn't the Coalition, because it has been happening through the late Howard, Rudd-Gillard-Rudd, Abbott and Turnbull governments. Typical slow government problem, not any particular party. Obviously you aren't talking about that, so I didn't mention it. Australia's number 2 problem is all our power plants are aging and shutting down. I addressed that; because you seemed to be talking to it (eg, Liddel is only achieving something like 46% capacity). That is a looming issue. The problem here is also not the Coalition, as I mentioned. Now SA appears to have a tertiary problem which is they have lots of wind energy and not enough storage to balance out the grid. The battery is addressing that and seems to be going well. This is also nothing to do with the Coalition, because the SA state government controls SA and the majority bounces between the two majors. The Weatherill government seems to have had the battery installed extremely quickly despite whatever you think the Coalition did to prevent it. You aren't assigning blame correctly here. The big picture problem isn't that gas prices are high, and power problems aren't happening because of "mostly the Coalition".