It’s time we stopped kidding ourselves that coal is “low-cost and dependable”

Scott Morrison Coal

The status of coal as a supply of low-cost and dependable baseload has been additional broken by the newest official quarterly market report that blames coal plant outages and coal market bids for the sharp soar in electrical energy costs within the March quarter.

Australia’s local weather coverage during the last decade has been repeatedly hijacked by conservatives and the fossil gas business who’ve insisted that coal is important for a low price and dependable grid, and that extra renewables will result in increased costs and extra outages.

However the market’s current lived expertise reveals the alternative to be true.

The 2 states with the largest dependence on coal – Queensland and NSW – now endure considerably increased wholesale costs than these states additional south, Victoria and South Australia, the place renewables have a far larger share.

This north-south divide was first recognized by AEMO final yr and in its newest Quarterly Power Dynamics report, AEMO says it’s getting worse.

“Power costs have been once more considerably increased in Queensland and New South Wales than within the southern NEM areas,” it says, and coal was primarily guilty, helped by constraints on the circulate of energy from Victoria to NSW that may have relieved the stress.

The north-side divide is worse in the course of the day. Daytime costs in NSW, as an example, have been greater than double these of Victoria within the March quarter, exceeding them by a median of $48/MWh, or 146% of the Victoria value (see graph beneath).

The community constraints left the northern states hostage to the pricing set by their coal turbines, which dominate their grids.

And since the value of coal has soared, so has the bidding practices of the coal turbines, which – simply to make issues worse – had their lowest availability charges in 20 years due to outages.

“Wholesale costs in Queensland and NSW have been once more considerably increased than in southern states,” AEMO’s basic supervisor Reform Supply, Violette Mouchaileh, mentioned in an accompanying assertion.

“This was as a result of bigger price-setting position of black coal era and system safety constraints limiting daytime electrical energy transfers from Victoria into NSW, regardless of a median power value distinction of $48/MWh.

“In comparison with the primary quarter of 2021, over 3,000 MW of black coal provides shifted from lower-price bands to above $60/MWh – the biggest year-on-year quarterly change since 1998.

“Whereas increased quarterly provide costs coincided with the surge in worldwide coal costs to document ranges, provides had already trended upwards within the months main as much as Q1 2022,” Mouchaileh mentioned.

“Coinciding with unplanned coal era outages, Queensland skilled important episodes of excessive demand, with general value volatility contributing $47/MWh of the area’s common Q1 value of $150/MWh, its second highest for any quarter since 1998.”

Distinction this with the renewables-dominated South Australia, which has a world main share of round 64 per cent wind and photo voltaic.

“Volatility in different NEM areas was much less important, including $11/MWh to South Australia’s quarterly common value and $3/MWh or much less elsewhere.”

AEMO says that in South Australia, center of day costs have been continuously set by provides from renewable era and batteries, with black coal provides setting value in solely 17% of dispatch intervals between 0700 hrs and 1900 hrs, and 26% throughout all hours.

“The comparatively excessive frequency of South Australian value setting by hydro provides displays the affect of Tasmanian era bidding on southern NEM costs.”

Queensland, it needs to be famous, skilled a few of its highest ever pricing in the course of the quarter, the results of increased temperatures and surging demand, together with a number of coal plant outages.

This was largely pushed by excessive volatility in Queensland, the place common day by day spot costs on  February 1 and March 8 have been amongst the very best 10 values recorded because the market began greater than 20 years in the past.

The scarcity of energy on February 1 in a state powered 80 per cent by coal brought about AEMO to intervene with emergency reserves and resulted in $51 million of added prices.

It wasn’t all dangerous information within the March quarter. The share of renewables general rose to 33.7 per cent, and black coal fell to its lowest first quarter common output because the NEM was created, thanks largely to unplanned outages and however its dominant affect over costs.

A few milestones of observe: The very best ever output of wind and enormous scale photo voltaic of 8,375MW at 10am AEST) on March 31, and highest grid scale photo voltaic output of 4,493MW within the  half-hour ending 1030 (AEST) on February 14.

NEM emissions – because of extra renewables and fewer coal – fell to a document first quarter low of 30.4 million tonnes carbon dioxide equal (MtCO2-e), which was 4% decrease than a yr in the past regardless of elevated operational demand.

The autumn of emissions within the NEM over the previous few years has been important since 2017 as wind and photo voltaic deployment boomed after the Abbott-era funding drought.

Different objects of observe from the QED report:

The quantity unfavorable pricing occasions jumped considerably, significantly in South Australia (16.4 per cent of all intervals) and Victoria (12.5 per cent), actually because renewables have been unable to service markets additional north due to these transmission constraints.

Battery storage and pumped hydro income jumped considerably, batteries to $12 million and pumped hydro to a document $56.5 million, largely as a result of actions of Wivenhoe cashing in on value volatility in Queensland.

The introduction of 4 synchronous condensers had a big influence in South Australia, decreasing the price of instructions by AEMO by some $30 million within the quarter, whereas additionally considerably reducing the quantity of fuel era wanted to offer grid providers.

And, for the primary time within the NEM, Wholesale Demand Response (WDR) capability was dispatched as Victorian and South Australian afternoon spot costs spiked to excessive ranges in January.

“WDR permits massive business and industrial companies to take part within the spot market by committing to decrease utilization, aiding energy system safety and reliability, together with peak demand days and intervals of excessive wholesale electrical energy costs, and growing competitors with potential flow-on value advantages to customers,” Mouchaileh mentioned.


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