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The Forum > Article Comments > Blowing away money > Comments

Blowing away money : Comments

By Mark S. Lawson, published 20/5/2010

Engineers have done the calculations that estimate wind power is double the cost of conventional electricity.

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So a conservative financial reporter quotes other conservative financial interests saying they they don't think wind is technically viable.
I bet that this guy supports nuclear...even though it has never been shown to be profitable without black defence funding and "never mind the radioactive waste" policy.
Yes, the 19th century power grid, built for massive central power generation has some technical issues with integrating modern wind generation. Yes, we need to update the grid to HVDC and supplement wind with other renewables, including carbon neutral gas fired plants.
What we cannot afford to do is to delay modernisation because investment funds want a ROI for an overpriced privatised power system. Nor can we afford an expensive switch to nuclear, which will keep all generation central (much more vulnerable), and also centralise profits.
Can you see why finance people are straying into a highly complex topic such as energy and global climate science now? Blinded by $, they arrogantly disagree with industry experts and declare that financial background allows them to comprehend other's professions. This is a bit rich given the issues that the financial "profession" is having at the moment!
Posted by Ozandy, Thursday, 20 May 2010 9:07:31 AM
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What you still writing?
Posted by examinator, Thursday, 20 May 2010 9:18:27 AM
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This is just one more look at the comparative energy costs that fails - deliberately I presume - to consider the costs of the consequences of ongoing emissions. As long as those costs are considered imaginary ones, by people who plan to keep from having to pay them through the power of disbelief we'll keep getting misleading analyses like this. The omission of climate consequences is so fundamental that the article is reduced denialist drivel as a consequence. It's obviously aimed at inflaming short term economic fears in order to prevent serious policy on climate change, making it denialist alarmism with no redeeming features.
Mark, those climate consequences are real, the costs you don't want to take into consideration are real and your apparent belief that we are incapable of successfully avoiding the worst is a worse kind of alarmism than anything those who accept the validity of climate science promotes; it's a kind of pessimism that says we can't succeed so don't bother. Pathetic.
Posted by Ken Fabos, Thursday, 20 May 2010 9:39:29 AM
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This article starts with the statement that there is no proof that green electricity reduces emissions. A substantial part of the article devoted to the findings of the Danish Report Wind Energy The Case for Denmark to provide support for this contention and others in the article. If you go to the report (easily found by typing the title into Google) you will find the statement on page 2 of the executive summary that "Wind energy has replaced some thermal generation in Denmark. It has saved an average emission of about 2.4 million t per year CO2 at a total subsidy cost of 12.3 billion DKK or an average cost of 647 DKK (€ 87 or $124) per ton CO2". The argument is not that wind energy reduces emissions, as per Mr Lawson's contention, rather that it is an expensive way to reduce emissions.

Incidentally, a bit of further searching shows that the Report has been heavily criticised within Denmark for its accuracy or lack thereof. Moreover, Ingeniøren, the Danish Engineers' Journal, reported that the CEO of CEPOS, the Group that prepared the report, Martin Ågerup admitted to Ingeniøren that the report was both commissioned and paid for by IPR. IPR (Institute for Energy Research)an American think tank has confirmed in a press release that it had commissioned the report from CEPOS. IPR reportedly receives funding from the American oil and coal lobby and the Report has been used by conservative elements in the US to criticise Obama's wind policy.
Posted by Loxton, Thursday, 20 May 2010 11:13:05 AM
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Mark Lawson here
Ozandy, Ken F - your points about climate change are entirely beside the point, even if we accept your reasoning, as no-one has yet shown that wind energy saves carbon when connected to a network. It may do in Denmark because that has lots of dams handy - albeit in other countries. This is not the case in Australia. It makes no sense of any kind to back a technology that does not save carbon, even if we agree that carbon is a problem. the immense costs of these systems make them all the more futile.
But even if we factor in duture costs costs of climate change - again, assuming any changes have been induced by carbon - then the economic calculations come up short by billions. Virtually the only group that says anything differnt is Stern, and that report's been kicked around quite a bit.
That's all for a seperate article, or you can read the book when it comes out.
Posted by Curmudgeon, Thursday, 20 May 2010 11:20:24 AM
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Mark, a collegue of mine in the UK has been in the power generation business for 40 years. He wrote the following recently in reference to wind farms.

“Each of the 20 turbines as a hub height of 80 metres with blades 125 metres tip to tip. each of the turbines is rated at 3MW. The cost is £50M. At best output will be 20% ie 12MW although current stats show some wind farms running last quarter at just 6%-10%.
Fiddlers Ferry and Ferrybridge a coal stations, each delivers 2000MW and are due to close in 2015. However each could be given a 15 year life extension for a total of £200M to remove the NOx problem that after 30 years of operations is suddenly such a problem. Those of us simple souls who divide £ by MW and dare to suggest that coal at £50k/MW is better value than wind at just under £1M/MW (and I’m using the ludricrous 60MW rating for the things) are described as flat earthers.”

I pointed to the economic madness of such technology and asked about the basis for justfying such nonsense, he replied.

“ Councils make their decisions based upon the Hayes McKenzie/Dti report. Which links its academic pedigree back to Salford University, which is owned lock stock and campus by Peel Energy, one of the biggest wind farm constructors in the UK.”

He indicates a groundswell of technical opposition to Government(s) investment in renewables which is spreading throughout Europe. The cost of energy is staggering and an impediment to recovery. So much of a concern is this, that “energy security” is seen as a bigger problem then even the horrendous costs.

I guess it’s a bit like “pink bats” and “school halls” in Australia. Put some free money into the market place and everyone who can make a buck, will. Ideologically we are told that all is well regardless of the growing evidence that all is definitely not well. Hope we can learn from Europe?
Posted by spindoc, Thursday, 20 May 2010 11:29:20 AM
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Mr Lawson

You make the statement in your article "As for the actual savings in carbon achieved by renewables, there are virtually no reliable estimates from operating grids." And in your recent post "no-one has yet shown that wind energy saves carbon when connected to a network".

I repeat the Danish Report, Wind Energy The Case for Denmark (which you refer to extensively in your article) says on page 2 of the executive summary that "Wind energy has replaced some thermal generation in Denmark. It has saved an average emission of about 2.4 million t per year CO2." This not only says that carbon is saved, but quantifies it. I have to question whether you actually read the report?
Posted by Loxton, Thursday, 20 May 2010 12:34:26 PM
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Why is it that greenies can never accept facts? Could it be because the facts always show the errors in their thinking?

It is now common knowledge that the Danes have shot themselves in the foot, with their wind power.

When the wind doesn't blow, they have to buy their power fron nuclear France. Luck they have a sensible neighbour. Worse still, when it does blow, they still have to buy their power from France, because the wind power stuffs up their grid. Even worse, they have to sell the the wind power to Sweden, for less than a quarter of the cost to generate the stuff, & much less than they have to pay smart France for their power.

Took some real greenie thinking to get it that wrong.

Spain is another that went sprinting off down that blind alley of green jobs, & clean power. Like some dumb bloke here wanted us to do, they were going to lead the world. Well they just missed. Greece just beat them to it, into bankruptsy that is.

They had a few of their academics investigate what went wrong with the great utopian dream, just recently.

Well it seems that giong green is expensive, damn expensive. Every green job generated has cost $137,000 each PA in subsidies. Then it gets worse. That green power is so expensive they are loosing real jobs, quickly. You know the ones, those that the tax payer don't have to pay huge subsidies to get.

So those green jobs cost $137,000, plus 2 real jobs, for each pretend job generated, & don't bother to excuse the pun.

For heaven's sake you blokes, wake up, do a bit of reading, & stop talking rubbish, & get with the facts.
Posted by Hasbeen, Thursday, 20 May 2010 1:06:46 PM
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'When the wind doesn't blow, they have to buy their power fron nuclear France. Luck they have a sensible neighbour. Worse still, when it does blow, they still have to buy their power from France, because the wind power stuffs up their grid. Even worse, they have to sell the the wind power to Sweden, for less than a quarter of the cost to generate the stuff, & much less than they have to pay smart France for their power.'

Thanks Hasbeen for showing how idiotic Green's policy is. The problem is that we are so prosperous as a nation due to mining that most of the electorate don't give a stuff about how much money the Government wastes in order to keep the Greens vote. The irony is that the Greens would be the first to scream if they were not allowed to fly around the world in jets preaching their religion to others at tax payer expense .
Posted by runner, Thursday, 20 May 2010 1:32:10 PM
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Mark Lawson here
Spindoc - thanks for the note.. saved it

Loxton - I wrote the first comment before I had seen your post. The points you raised are simply irrelevent. If we worried about the political origin or funding of reports then all the green reports would go out first as hopelessly biased. But of course we judge them on their contents. You complain that because the Danish report has been funded by supposedly sinister conservative forces - I note you don't even comment on the German report which says the same things - then my contention that there have been no reliable estimates of carbon savings from wind must somehow be invalid. Neither the Danish nor German report goes near the issue. Both simply assume that there have been savings. The figures you quote are from assumptions. There has been no attempt by them or the grid managers to work it out properly and publish the result.
In fact, for the Danish grid, as the article makes clear, there may well be savings, at immense cost, for obvious local reasons set out in the report and the article, (dams in other countries). But those savings are likely to be considerably reduced due to reserve and retailoring requirements, not considered in the report. Ergo no reliable estimates. In any case, they don't attempt to estimate it, they assume it. The condition that may have led to partially savings in Denmark do not exist in Australia. The case against wind power is overwhelming.
Posted by Curmudgeon, Thursday, 20 May 2010 2:15:55 PM
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Maybe some of you (Lawson included) would be interested in reading this article:

"Wind's latest problem: it . . . makes power too cheap"
by Jerome a Paris

http://www.energybulletin.net/node/52665

A quote from the article:

"The key thing here is that we are beginning to unveil what I've labelled the dirty secret of wind: utilities don't like wind not because it's not competitive, but because it brings prices down for their existing assets, thus lowering their revenues and their profits. Thus the permanent propaganda campaign against wind. But now that this "secret" is out in the open, it's hopefully going to make one of the traditional arguments against wind (the one about its supposed need subsidies) much more difficult to use... The argument remains true for solar, and to a lesser extent for offshore wind, but the utilities are going to complain much less about offshore wind given that they are investing so much capital in that sector right now. The reality is that wind power brings prices down for consumers, even taking into account the cost of feed-in tariffs or other regulatory support mechanisms, which means that these regulatory schemes are not subsidies, but rather smart corrections of market inefficiencies for the public good."
Posted by michael_in_adelaide, Thursday, 20 May 2010 2:17:39 PM
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And you believe that la la land stuff Michael?

Wow.
Posted by Hasbeen, Thursday, 20 May 2010 2:36:53 PM
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Actually Jerome a Paris is described as:

"Jérôme Guillet (energy banker, "Jérôme à Paris") Daily Kos, European Tribune"

i.e. he writes for Daily Kos and the European Tribune.

If I remember correctly, he has a very extensive background in financing for the windpower industry.
Posted by michael_in_adelaide, Thursday, 20 May 2010 2:54:12 PM
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Mr Lawson

Thanks for getting back to me. I actually looked at the German report and the E.ON Netz Report at lunch today. Both these reports acknowledge that wind power does reduce carbon emissions. Specifically, Economic impacts from the promotion of renewable energies: The German experience says "These theoretical arguments are substantiated by the numerical analysis of Traber and Kemfert (2009:155), who find that while the CO2 emissions in Germany’s electricity sector are reduced substantially (p21)". The abstract to the paper is also enlightening. It states "We argue that German renewable energy policy, and in particular the adopted feed-in tariff scheme, has failed to harness the market incentives needed to ensure a viable and cost-effective introduction of renewable energies into the country’s energy portfolio." This is not an argument against wind power or other renewables, rather it is a criticism of the way in which it was done.

The E.ON Netz Report states in the foreword, "In policy terms, E.ON supports the objective of making the production of electricity using renewable energy competitive as quickly as possible. Only the achievement of this objective will enable renewable energy to make a globally significant contribution towards climate protection and the
conservation of resources."

Interestingly you note that "E.ON Netz has said nothing at all on that key issue since the 2005 report." I do not agree that this is ominous as a press release from the company dated 1 October 2007 says
"German Utility E.ON Netz GmbH has awarded ABB (Zurich, Switzerland) an order worth more than US$400 million to supply the power equipment that will integrate a 400-MW offshore wind farm into the German grid.
Scheduled to be operational in September 2009, the wind farm is expected to avoid CO2 emissions of 1.5 million tons per year by replacing fossil-fuel generation."

In summary, none of the reports you cite argue against wind as a viable energy source or as a means of reducing carbon emissions.
Posted by Loxton, Thursday, 20 May 2010 3:40:39 PM
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michael_in_adelaide I think you should read some of the rebuttals to Jerome's claims. In some countries like Germany wind power is doubly cosseted. It not only gets a subsidy (the feed-in tariff) but also electricity resellers are obliged to take any wind power that is going. Wind producers can't lose, only the customers and taxpayers. In Australia I think Renewable Energy Certificates under the RET will have a similar effect.

If Lawson is right it wouldn't help to bring back the ETS or the Green's $20 carbon tax since no CO2 will be saved. It is not clear that major transmission networks or energy storage will help at present. However I think gas fired backup may rapidly get more expensive so the economics will change. The next question is can we afford the high electricity prices? We being both households and aluminium smelters. If only there was a low carbon alternative cheaper than the gas/wind combo.
Posted by Taswegian, Thursday, 20 May 2010 3:49:45 PM
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Not with standing, the economic arguments advanced by Mark Lawson reference to the Caithness Wind Farm site* shows that wind energy is not free from both a human morbidity and mortality incidence.
The details given are admitted to be not fully comprehensive. Rather they should be read as a “tip of the iceberg.”
Briefly, since the decade of the 70s up to 31 March 2010 their records demonstrate:
731 accidents,
Over 60 fatalities (47 were wind industry employees, 19 included workers not directly employed by the wind industry i.e. transport workers,
38 accidents resulting in human injury (29 wind workers, 9 members of the public).

Blade failure was the commonest cause of accident (172 recorded). Pieces of blade were documented as travelling up to 1300 meters from the turbine.
Fire accounted for 139 accidents. The biggest problem with turbine fire is due to the scattering of burning embers over a large area.
Other related causes of accident include: structural failure of the turbine, “ice throw,” and transport accidents related to the industry.
As far as I know the wind industry does not provide statistics in relation to health and or safety. Does anyone know if it is possible to determine a rate for wind induced fatalities and/or injury in terms of kW generated per year? Chapter 6, Switkowski report quotes the direct fatality rate in terms of GWe/year for a number of modes of energy generation, in respect to wind generation the report refers only to the Caithness data which is continuously up dated.

*http://www.caithnesswindfarms.co.uk/accidents.pdf
Posted by anti-green, Thursday, 20 May 2010 4:25:58 PM
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It's not been a good week for alternative energy -- the Port Kembla wave power generator sank in a storm a few days ago. My favourite Green scam comes from Spain, though, where the locals discovered that they could shine arc lights on to solar panels and sell the 'solar' electricity back to the grid at inflated prices for several times what it cost them to run the arc lights. What fun you can have with other people's money!

http://wattsupwiththat.com/2010/04/13/the-insanity-of-greenery/#more-18452
Posted by Jon J, Thursday, 20 May 2010 6:08:27 PM
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Mark Lawson here
Michael_in_ Adelaide - looked at your Jerome a Paris article. Its straight nonsense. The man is crazy. Not even the greeniest of the wind power lobby would dare claim that wind power reduces prices. Ignore him.
Loxton - you've misunderstood (or ignored) what I was driving at and, while it is commendable that you read the reports, you have confirmed the original article. I didn't say the German report was critical. I said it gave a true indication of cost. It does. After some desperate hunting you found talk of THEORETICAL estimates of carbon savings, which is completely worthless. I'm not sure where that came from in the report but it was clear in the conclusion that they thought carbon saving should be left up to market forces. Quite so. They are not against the need to save carbon, its not what they are on about. But they have made no estimation of carbon saving in their own right. Where is the net operator's estimation of carbon saved?
As for Netz Gmbh report, again the various comments you identify add up to precisely nothing. Netz is expanding its wind network because it is paid to do it, and of course they are paying lip service to wind. I never said they were against it, what I did say was that they made these statmeents about alarmingly high reserve requirements, then nothing from anyone.
So how much carbon has been saved from real life operation of networks? What are the losses from reserve requirements? How much efficiency is lost by retailoring the network. Answer those questions from real life experience and I'll thank you. These attempts to respin the reports are a waste of time..
Posted by Curmudgeon, Thursday, 20 May 2010 6:09:37 PM
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This report makes interesting reading!!

It appears to refute the opinion piece completely.

With England becoming a net exporter of wind power.

http://www.guardian.co.uk/environment/georgemonbiot/2010/may/20/offshore-renewables-pirc-report
Posted by PeterA, Friday, 21 May 2010 7:30:14 AM
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Peter A. - tnks for the link. The report Monbiot is referring to is another example of the crankiness you get in this area. It even talks about jobs created which is eyewash. Consumers have to pay for those jobs, and that means jobs lost elsewhere. the result will be a net job loss..
Posted by Curmudgeon, Friday, 21 May 2010 11:09:51 AM
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Mr Lawson

On the contrary, I think I understand very what you are driving at. You have two main contentions in your paper. First, in your own words "no one has shown that green electricity supplied to an operating power network actually reduces emissions" and second that "additional backup generator capacity will be required for intermittent power sources". You cite three sources to support your arguments. In reading those sources (as I have previously indicated), I have found that none of the papers agrees with your first contention. You argue that the figures stated (and also presumably those in the subsequent press release from Netz) are theoretical, but that means by logical extension that your argument is also theoretical rather than definitive.

If I have an issue it is that you cannot cite sources then selectively use them to support your argument while ignoring those parts of those self-same sources that you disagree with.

I note that you are releasing a book soon which presumably deals with the IPCC among other things. Would you accept such a methodology from the IPCC?

I will get on to you second contention in due course, but there is a 350 word limit on these comments.
Posted by Loxton, Friday, 21 May 2010 12:40:34 PM
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Many bloggers believe that carbon dioxide is driving planetary heating.
The Intergovernmental Panel for Climate Change, when asked for the science that proves that CO2 is a pollutant couldn't find it in their files.
Here is their email;
I am going to try to help in answering your questions. I work at the IPCC Secretariat in Geneva....On your question about whether CO2 is a pollutant, I can not answer that as I have not found the answer in one of our reports. I know that whether CO2 could be considered as a pollutant under the US Clean Air Act was a controversial issue for many years - and I think that now there was an EPA decision in favor of it and therefore it can now be considered a pollutant according to the Clean Air Act's definition of a pollutant. Perhaps that definition depends on each country's legal definition of a pollutant.
Best, Mary Jean Bürer
CO2 is a legal pollutant because a legal decision was made in the USA. This was so that the traders in carbon credits and derivatives can make money out of selling hot air. Paid for by our taxes.
Don't believe me? Why don't you write to the IPCC?
Posted by phoenix94, Friday, 21 May 2010 12:41:39 PM
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Loxton - one more go to make you see reason. Again you have it almost entirely turned around.. You are the one citing theoretical arguements. I never cited any press release. You are the one doing so. The very point about the article is that there is hardly any references to carbon saved. The one reference is the Netz report. The rest of the Netz report is relevent only in your own mind. the German report talks about the immense cost of green power. Quite so. Its immensely costly. Both reports are as I set out in the article.
If you want to make a difference then rather than search desperately in reports for material that can be twisted to confuse the issue, find real world calculations of carbon saved. Find real world examples of the cost of green power. Leave it with you.
Posted by Curmudgeon, Friday, 21 May 2010 2:06:13 PM
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>> If I have an issue it is that you (Mark Lawson) cannot cite sources then selectively use them to support your argument while ignoring those parts of those self-same sources that you disagree with. <<

Loxton - the author (Mark Lawson) has a habit of cherry picking then changing goal posts (even playing fields) when challenged

http://forum.onlineopinion.com.au/thread.asp?article=9484#151550

Some 'authors' deliberately distort and misrepresent their subject matter - why you may well ask.

If they're not distorting or misrepresenting the science deliberately, they don't know their subject matter very well - as we have seen.
Posted by qanda, Friday, 21 May 2010 2:53:57 PM
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Mr Lawson

One more attempt to make you see reason.

The three reports you source quite clearly say that renewable energy, wind and other sources reduce CO2 emissions and I have quoted the relevant sections of those reports in previous posts.

You have clearly ignored these statements.

I quoted the NETZ press release, although it didn't appear in your article for two reasons. One it was a further statement from NETZ saying that wind power reduced emmissions (with quantification) and two to respond to the statement in your article that "E.ON Netz has said nothing at all on that key issue since the 2005 report."

QANDA is right - this is deliberate distortion and misrepresentation.

Mr Lawson admit your error, the IPCC did regarding the Himalayan glaciers. You cannot hold them accountable for this error when you are committing the same sin.
Posted by Loxton, Friday, 21 May 2010 5:16:34 PM
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As an electrical engineer I occasionally feel that I should be simple to show any intelligent person, on the back of an envelope, that an intermittent generator such as wind power with a capacity factor of <30% could never really compete with a fueled generator (fossil fuel or nuclear) with a capacity factor of >90% - even if some (yet to be invented) economic energy storage medium is available.

However, reading some of the above comments, it seems to me that the Dunning/Kruger effect coupled with a strong religious conviction is rampant in this area = so I don't think I'll bother to even try.
Posted by mayrog, Saturday, 22 May 2010 12:07:54 AM
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Dear Hasbeen,
Why should cost be a problem to socialists. They believe in social justice and wealth transfer, equal pay for all, after all you can always print more money. The greatest majority get no pay so when they transfer all the wealth from the rich which is us to the poor them, we will all be equal and ole sticky fingers satin who is in the detail will have acheaved his aim to rob, kill, and destroy Gods chosen which is all. Just put Qld health nopay czar in charge and we will all be saving the planet in no time at all.
Posted by Richie 10, Saturday, 22 May 2010 5:17:01 AM
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Mark, there is something really strange in the opposition to your article. There seems to be a suspension of reality that defies description.

Ten years ago, the AGW phenomena began to gain strong political support from the EU and Scandinavian countries. The globe was warming and carbon emissions were the cause. Renewable energy sources were seen as an effective alternative, although even then, they were recognized as expensive however, to offset this cost differential, the intention was to raise the cost of carbon based energy. This had the effect of artificially lowering the already known high cost of renewable energy.

Governments began to invest in renewable energy because private enterprise would not invest in a zero return on investment. Private companies in renewables began to flourish as long as governments were paying.

The prospect of a high premium on carbon emissions and Global Carbon Trading scheme were the intended cost mitigation mechanism for renewables to cover research, development, construction and land purchase.

In 2010, we now know from real life experience that wind farms are “eye wateringly” expensive and inefficient, which would still be OK if the costs could be covered by carbon pricing and trading.

Now the base assumptions have evaporated. No price on carbon, no international trading scheme and no carbon tax revenues for governments to fund renewables.

Even if there was still hope for carbon revenues to cover renewable costs, the issue of the maximum contribution of renewables remains. In his publication “Sustainable Energy-Without Hot Air”, David MacKay calculates that maximum practical contribution for all forms renewable energy for the UK to be 18 kWh/d per person, (kilowatt hours per day per person) against an average demand of 125 kWh/d per person (excluding imports, and ignoring solar energy acquired through food production.).

Just what is it they can’t grasp?
Posted by spindoc, Saturday, 22 May 2010 2:01:19 PM
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On the issue of wind costs it seems to me that the most telling evidence comes from the wind farm investors. When the RECS price dropped recently, wind projects were put on hold and a local company making towers lost a lot of business. The most likely explanation is that building wind farms only made financial sense when the RECS price was high. It's probably safe to assume that if the RET scheme was abandoned then no wind farms would be built at all. How would this be if wind farms on a level playing field really could put coal plants out of business? Wind generation is fairly mature technology and has probably hit the flat of the learning curve so probably isn't going to get a lot cheaper.

On the issue of can wind reduce significant emissions, I agree with Mark that the evidence is thin. If wind is treated as negative load and can reduce the use of some fossil fuel plants then it will save emissions. The big open question is at what cost per tonne saved. An escalating carbon price with no other incentives would answer this question.
Posted by Martin N, Sunday, 23 May 2010 11:15:22 AM
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Interesting Mayrog, you say that a “generator such as wind power with a capacity factor of <30% could never really compete with a fuelled generator”.

A study “Wind Power in Ontario Its Contribution to the Electricity Grid” by the University of Waterloo, Ontario, Canada found that the wind farms' capacity factors vary from 27.6% to 35.6%, with higher values in winter as compared to summer; wind power performs better than the seasonal average during peak periods; wind is a better "partner" for the Ontario electricity system in the winter.

Also I note from the Danish study quoted by Mr Lawson that “In the USA, responding to more pragmatic considerations, most wind turbines are built in windy areas where the capacity factor is usually over 30%.” Of course, the US and Canada (and Australia for that matter) have more energy options than Denmark.

So Mayrog, presumably you would agree that wind power is a viable alternative in the US and Canada.

You and the study point out the other major concern I have with Mr Lawson’s article ie that you cannot extrapolate for the whole planet based on a couple of cases. Moreover, it ignores local issues such as off-grid situations which Australia has in abundance in rural and remote locations. There are also many more renewable energy options than wind (geo-thermal and mini-hydro) are two that can provide base load power, for example. So to damn renewable energy based solely on wind is also specious.

Additionally, I would also refer you to this response to the CEPOS study (http://www.energyplanning.aau.dk/Publications/DanishWindPower.pdf) which makes the interesting point that "the payment to wind power does not make Danish electricity prices any higher than those in other countries. In fact, Danish electricity prices (excl. tax and VAT) inclusive of all payments for 20 percent wind power are among the cheapest in Europe."
Posted by Loxton, Monday, 24 May 2010 9:06:51 AM
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Loxton, if the economics of wind power are so good, perhaps you could explain the 1700 abandoned wind generators in the hills of California.

When the contract subsidies expired the various owners simply walked away from them. It is cheeper to let them rot, than maintain them, & sell the power they generate.

If our idiot is going to let contracts for wind generation, he should demand, & hold a large gurantee. This should be great enough to pay to dismantle, & remove the eye saw, when they have proved uneconomic.
Posted by Hasbeen, Monday, 24 May 2010 9:31:43 AM
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Thanks Hasbeen

Unfortunately, you don't provide a reference to where you got the information on the abandoned wind generators in California. I did a google search and the one reference I found that seemed relevant was this http://webecoist.com/2009/05/04/10-abandoned-renewable-energy-plants/. It states that "There are over 5,000 wind turbines in the area thanks to the wind rush of the 1970s and 1980s...Some of the hundreds of turbines not spinning have been derelict now for decades. There is no law in Kern County that requires removal of broken or abandoned wind turbines, and as a result, the Tehachapi Pass area is an eerie mix of healthy, active wind farms and a wind turbine graveyard/junkyard."

I think the answer to your question is simple, they reached the end of their useful life and because there is no requirement they be pulled down, they have been abandoned. Maybe you have additional information. I agree with your assertion that they should be pulled down rather than create an eyesore, but then again I don't live in Kern County.

I find it significant that the article also states that there are "healthy, active wind farms" in the area. This is borne out by the California Energy Commission website (http://www.energy.ca.gov/wind/overview.html) which says that Tehachapi is one of the three main wind farming regions in California.
Posted by Loxton, Monday, 24 May 2010 10:49:33 AM
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Mr Lawson,
The sooner we can get expensive power ,water and food, the sooner we will get to some state of Environmental Sustainability.

Giving cities cheap power, water and hence the ability to increase populations for economists and a big business desire for GROWTH is a sure recipe for disaster.

I really do think that Big Business and Economists must spend at least a year studying the Worlds Environmental Future .
Posted by kartiya jim, Monday, 24 May 2010 11:27:21 AM
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The reason wind generation is difficult and costly is that they only
achieve about 15 to 25% of nameplate output.
The reason is simple.
The out put is proportional to the cube of the wind speed.

Therefore a reduction to 1/3 in the wind results in a fall to one ninth
of the rated output.

With a wind sensitivity like that it is no wonder they are uneconomical
and difficult to control.
Posted by Bazz, Monday, 24 May 2010 5:32:54 PM
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I'm no expert in wind power generation, unlike other OLO'ers. Nevertheless, solving the world's energy problems is crux of the matter, imho.

It is so disappointing that some contributors/commentators can't see (or refuse to see) that wind power, in SOME circumstances and situations, MUST be part (i.e. PART) of the solution.

Here is one investor who thinks it worthwhile;

http://tinyurl.com/yasvth3

Although a 'dated' news piece, is he so stupid, too?

Can the same be said for those investing in geothermal, solar thermal ... or tidal, PV, nuclear, or whatever alternative you can think of, to fossil fuels?

Some people are visionaries ... but others (I term the 'deny-n-delay' brigade) want business as usual to prevail and seem intent on allowing sustainable progress be damned!
Posted by qanda, Monday, 24 May 2010 6:47:24 PM
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Sorry loxton, they were abandoned when the contract subsidies ran out, & without those subsidies, they have no useful life.

Some people aquired some of them, still working, virtually for nothing, & tried to earn a living with them. It just don't work. They gave up.

Qanda the world has NO energy problem, except that imagined by greenies, who hate coal. Years of research, & billions of dollars have been spent, trying to prove that CO2 is a problem. No proof has been found.

That does not stop fools hating coal, & trying to invent a problem. They have lost. The cause is dead, just some of it's missionaries don't know it yet.

However, you should not worry. The use of hydrocarbons is just a passing phase, as has been power supplied by man, water, wind, horses, & steam. None of these lasted too long, before they were surpassed by something better. You will just have to wait for the next improvement, however, you will have to accept, it doesn't exist yet.

Trying to force the use of inferior technology will not work, at least not for long. Too many of us will not be dictated to, by the massire mob.

We must stop wasting taxes, by using them to try to find a new power source. Governments are hopless at these things, except at war. Name one breakthrough that has come from government that did not relate to war. Private "boffins", with a dream, not government funding will find your dream power supply, & probably reasonably soon.
Posted by Hasbeen, Monday, 24 May 2010 7:30:10 PM
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Hasbeen

I agree ... “the use of hydrocarbons is just a passing phase”. Unfortunately, some people just don’t get it and are incapable of seeing past their own use-by date.

You obviously don’t think government should ’invest’ in new power sources; I would have thought it in the national interest.

Further ... you don’t think we have an energy problem – please don’t complain when your next power bill arrives.

I do understand you want absolute “proof” of the science ... and I do understand you have absolutely no clue about what you demand of science. Ergo, no one can prove the sun will rise tomorrow.

In reading your last post, following ‘your logic’, progress is impossible.

Now, you finish your last post asserting a correlation between breakthroughs and government funding wars:

>> Name one breakthrough that has come from government that did not relate to war <<

You are trying to change the playing field again, Hasbeen. I am not surprised.

ps: you obviously know what you are talking about when it comes to sailing, good stuff.
Posted by qanda, Monday, 24 May 2010 9:15:30 PM
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Btw, Hasbeen ... I DON"T HATE COAL! It will be around for a long time yet.

We just have to find a better way of supplying our energy needs ... it's ok, I accept that you just don't get it.
Posted by qanda, Monday, 24 May 2010 9:22:06 PM
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Hasbeen

I asked for your reference, not your supposition. You said, "Some people aquired some of them, still working, virtually for nothing, & tried to earn a living with them. It just don't work. They gave up." So why is the region in question still generating energy from wind farms? That doesn't sound like giving up. Give me some proof.

One more thing, this article http://www.treehugger.com/files/2009/12/multiple-us-coal-fired-electricity-generating-plants-closing-what-gives.php reports on the proposed deactivation of 11 coal fired electricity plants in North Carolina. The number one reason, "The closing plants are very old, and are relatively inefficient, with many parts and components at the end of design life. Physical size of the property may not allow for large scale upgrades." Additionally, it has been reported that China has closed down a total of 7,467 coal fired generating units and is replacing them with larger and more efficient coal fired power stations. (http://www.treehugger.com/files/2009/08/china-speeds-up-closing-inefficient-coal-plants.php)

Using your logic Hasbeen, this must mean that "They just don't work. They gave up." In the real world, technology gets outdated and has to be replaced with newer more efficient technology.

QANDA - not just T Boone Pickens (love that name), but also Warren Buffet has put $270 million of his own money into renewable energy, and the Google partners, Bill Gates and a lot of others are all investing in renewable energy and other clean technologies.

Hasbeen, not only Governments but some very smart (and very rich) people are backing alternative energy.
Posted by Loxton, Tuesday, 25 May 2010 7:15:45 AM
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Whoops !
I said;
The reason wind generation is difficult and costly is that they only
achieve about 15 to 25% of nameplate output.
The reason is simple.
The out put is proportional to the cube of the wind speed.

Therefore a reduction to 1/3 in the wind results in a fall to one ninth
of the rated output.
*#*
Sorry I should have said that output falls to one twentyseventh !
*#*
With a wind sensitivity like that it is no wonder they are
uneconomical and difficult to control.
Posted by Bazz, Monday, 24 May 2010 5:32:54 PM

I just don't see how they van ever be successful with characteristics
like that !
Posted by Bazz, Tuesday, 25 May 2010 9:04:23 AM
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Mark Lawson says, inter alia, that:

"The Australian government has dived head-first into renewables
with both eyes shut, and with the general approval of the voters,
who mostly have no idea of what they have approved
or how much it will cost."

I don't agree with this statement.

So far as I can see, the only renewables into which the Australian government has dived head-first are, primarily, wind, and to a much lesser extent, photo-voltaic solar. Quite rightly, the article deals mainly with contention as to the real emissions reducing effect of incorporating wind-generated electricity into the grid supply. As to whether the Australian government has dived with its eyes shut, I would suggest that at least some of its members have had their eyes well and truly open with respect to the opportunities that have been able to be created with but the stroke of a legislative pen, in relation to wind-generated power.

With wind power it is possible for relatively small investors (compared to those required for the whole grid and large coal, gas, nuclear or geothermal power stations) to enter the energy supply industry. With a mandatory renewable energy target (MRET) established, a commercial environment which more or less guarantees the investor in as little as one wind turbine a viable return, is created. I just wonder to what extent parliamentary, senior public service, political party, and political lobbyist retirement funds are represented in Australian wind farms. It would be nice to know, wouldn't it?

Mark's use of the term 'general approval of the voters' is possibly misleading. I suggest a majority of voters support the idea of adopting renewable energy into a publicly-owned electricity supply system, which is largely what they perceive the NEM to be. Some of the more informed voters would also have expectations as to the potential competitiveness of some renewables, such as HDR, with coal. I think voters know exactly what they approve, but have no idea as to what government has actually done and who stands, and to what extent, to benefit.
Posted by Forrest Gumpp, Tuesday, 25 May 2010 11:05:13 AM
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Martin N's post, of Sunday, 23 May 2010 at 11:15:22 AM, makes a telling observation with respect as to how the investment market sees wind energy competing, in an Australian context, with coal-fired electricity generation. It seems it doesn't. Such comparison, however, is perhaps somewhat of a red herring with regard to what Mark doesn't want to discuss, Large-scale Renewable Energy Targets.

Clicking the 'Visit this user's web page' icon at the bottom of Martin N's post, and upon arrival clicking the 'Preface' link, will take the viewer to this page: http://energyinachangingclimate.info/con03.htm

It is the preface to Martin Nicholson's book 'Energy in a changing climate'. An indication as to the content and coverage of that book is given in the 'Chapter Titles' link, which takes you here: http://energyinachangingclimate.info/con02.htm . For those intending to observe Hasbeen's exhortation to "..., wake up, do a bit of reading, ...", it seems on the basis of those chapter titles as if it might be a good place to start.

Martin Nicholson (OLO userID 'Martin N') makes the claim that:



"We need our governments to actively encourage the
development of new clean energy technologies because
private industry won’t do it on its own in the time required."



More informed voters know that Australian governments have committed upwards of $450M of taxpayers funds to the development of hot dry rock (HDR) geothermal electricity generation. They would also know that there are indications that HDR has prospects of being cost-competitive with coal-fired generation. They would also have reasonable expectations that upon scaling up, any existing substantially publicly-owned electricity distribution system would be the major customer for cost-competitive HDR generation technology. It is here those 80% of voters who favour grid electricity remaining a public utility may also expect to be beneficiaries, via electricity pricing, of that publicly-funded HDR technology.

In the light of such expectations, the apparent mothballing of Geodynamics Ltd's Hunter Valley, NSW, HDR prospect, one virtually right on the existing grid, in favour of its remote Innamincka prospect in SA, is disconcerting. NSW electricity not suitably privatised yet?
Posted by Forrest Gumpp, Wednesday, 26 May 2010 5:31:10 PM
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Forrest

Innamincka 'hot rocks' is on the horizon (with hiccups). The 'powers' that be will have to find a 'way' to connect it to a remote grid (not insurmountable). GDY's Hunter tenements are competing with proven coal seam gas reserves. While it may be disconcerting, until a price is put on carbon, gas (in this context) will win out. At least it's not as 'dirty' as Ol' King Coal. Obviously, I won't be around in 2100 to see our (Oz) energy mix, but my guess is that geothermal will be right up there with nuclear and solar thermal. Fossils will be very much on the wane. Wind, tidal and the like, will have limited, but necessary, input - depending on location and situation.
Posted by qanda, Wednesday, 26 May 2010 6:20:26 PM
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Thank you Forrest for your very generous plug for my book (order from Amazon or your favourite book store - sorry I couldn't resist).

I wrote that book over two years ago and I have continued to extensively study the energy field since then. I must admit that I have become less confident about the contribution that renewable energy can make to our electricity supply - particularly in the timetable needed to replace fossil fuels if the IPCC is correct.

Those who have read my more recent articles published here on Online Opinion will realise I am becoming more convinced that if we are serious about GHG abatement from electricity supply we really only have one cost effective option for the bulk of the supply (baseload) and that, of course, is fission energy.

CSP could certainly technically do the job with enough heat storage but the energy cost is still over 3 times that of nuclear and there isn't much evidence that it's going to change. I would love to believe that engineered geothermal (hot rocks) will actually work one day but we are still waiting for the first pilot power plant and the final cost is very uncertain - even if consultants like EPRI will quote figures to ABARE - the accuracy of which really cannot be substantiated yet. As to the variable sources, we might get a technology breakthrough that can deliver cost-effective and scalable energy storage that would indeed be game changer for wind power.

But this is all uncertain and we don't have decades to wait while we keep burning coal. There is a very good reason why so many countries have got new fission plants underway or on the drawing board. It's the least cost GHG abatement solution for electricity generation.
Posted by Martin N, Thursday, 27 May 2010 9:36:35 AM
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>> For those intending to observe Hasbeen's exhortation to "..., wake up, do a bit of reading, ..." <<

A good link to Martin's book Forrest.

Martin, good luck with the sales. Could you perhaps link to chapter summaries, or would that defeat the purpose?

Here is something from America's Research Council of the National Academies.

http://tinyurl.com/38mjpfc

The US (contrary to popular belief amongst OLO's "pseudo-sceptics') is committed to doing something about climate change. Of course, their Senate is compromised by 'stick-in-the-muds', much like Australia's.

For those that are serious in wanting to know more about what the US is doing; put the cursor over the separate icons, click and download a PDF, and read a bit. Of course, you could always pay for the full Monty :)
Posted by qanda, Thursday, 27 May 2010 10:11:17 AM
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>> For heaven's sake you blokes, wake up, do a bit of reading, & stop talking rubbish, & get with the facts. <<

Somehow, I doubt very much Hasbeen Hasread;

"Merchants of Doubt", Naomi Oreskes and Erik M. Conway, Bloomsbury, New York, 2010, 365 pp.

"Why We Disagree About Climate Change", Mike Hulme, Cambridge University Press, Cambridge, 2009, 432 pp.

"Storms of My Grandchildren", James Hansen, Bloomsbury, New York, 2009, 320 pp.

"Science as a Contact Sport", Stephen H. Schneider, National Geographic, Washington, DC, 2009, 303 pp.

"The Lomborg Deception", Howard Friel, Yale University Press, New Haven, CT, 2010, 270 pp.

"The Climate Solutions Consensus", David E. Blockstein and Leo Wiegman, National Council for Science and the Environment. Island Press, Washington, DC, 2010, 328 pp.

"Climate Change Science and Policy", Stephen H. Schneider, Armin Rosencranz, Michael D. Mastrandrea, and Kristin Kuntz-Duriseti, Eds.
Island Press, Washington, DC, 2010, 542 pp.

"The Politics of Climate Change", Anthony Giddens, Polity, Cambridge, 2009, 272 pp.

I suspect pseudo-sceptics do most of their reading at well known 'denialist' blog sites, or get their soundbites from well known media shock-jocks.

Sure, anyone can write a book about issues dealing with 'climate change', but that doesn't mean their book will hold 'weight' - unlike scientific papers published in reputable journals.

More often than not, books written by interested writers are really just the opinions of the author.

However, if these books are reviewed and acclaimed by the scientific community, then the claims in the book will obviously hold more 'weight' than if they were not.

For example, Ian Plimer's book "Heaven & Earth" is acclaimed by pseudo-sceptics the world over, but in the scientific community it is derided as an affront to the very claims made by Plimer himself.

Before anyone goes out and buys a book, especially on issues such as climate change, perhaps they should read the reviews first (can't wait to see the reviews of Mark Lawson's book).

Here's an essay reviewing the 8 books listed above - I lifted it from that published online 27 May 2010; 10.1126/science.1189312

http://www.sciencemag.org/cgi/rapidpdf/science.1189312v1.pdf
Posted by qanda, Friday, 28 May 2010 11:35:14 AM
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Thanks, qanda, for what I trust is a more fully-informed confirmation that the Innamincka (Geodynamics Ltd) HDR prospect is now 'on the horizon'. It is only to be expected that there have been, and may continue to be, hiccups as this new approach to grid-distributed electricity generation is developed.

In my first post to this thread (on Tuesday, 25 May 2010, at 11:05:13 AM) I made the observation that:

"Quite rightly, [Mark Lawson's] article deals mainly with contention
as to the real emissions reducing effect of incorporating
wind-generated electricity into the grid supply."



To return to the subject of the article, I feel compelled to acknowledge that Mark may well be correct in contending that wind-generated electricity is in reality twice as expensive as coal-generated electricity.

The question is, is that a relevant comparison, given that the objective of stated public policy, whether soundly based or not, is aimed at at least the partial replacement of coal-burning as a means of electricity generation?



What has made this comparison of questionable relevance more interesting is the post by michael_in_adelaide, of Thursday, 20 May 2010, at 2:17:39 PM, containing this quote from Jerome a Paris (Jerome Guillet, an energy banker):

"The key thing here is that we are beginning to unveil
what I've labeled the dirty secret of wind: utilities
don't like wind not because it's not competitive, but
because it brings prices down for their existing assets,
thus lowering their revenues and their profits. Thus
the permanent propaganda campaign against wind."

Now I don't know whether Jerome is right about any intrinsic competitiveness of wind-generated electricity with, in an Australian context, coal-fired, but I think this quote highlights that the real contention is one as to access to the captive market of electricity consumers. Wind is capable of battening on, and what are essentially either corporatised or privatised utilities don't like sharing their access to profitability. Jerome's clients are investors in the electricity supply 'sure thing' via wind energy.

TBC
Posted by Forrest Gumpp, Saturday, 29 May 2010 12:33:30 PM
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Continued

It seems Mark Lawson is arguing that in the Australian context at least, wind-generated electricity is not effectively substituting for coal-fired generated electricity, even though it may be being fed into the national electricity market (NEM) via the grid. Why would it be, when incipient under-capacity characterises the Australian electricity generation industry in general? The German situation with regard to the adequacy of non-renewables generating capacity may well be different, one that may allow, say, coal-fired generation capacity to be temporarily stood down as wind generated electricity becomes available: in such situation the reduction in emissions could be real, rather than imaginary. All that would be required is the German national policy and regulatory environment necessary to effect the shut-downs as opportunity for substitutions arises.

This is where I am disappointed in qanda's observation, in relation to prospective HDR baseload generation that "[Geodynamics Ltd's HDR] Hunter tenements are competing with proven coal seam gas reserves."

With all due respect, 'competition' should not come into the matter. With electricity generation in NSW being a long-existing public utility, if it is public policy to reduce emissions (as is claimed to be the case), then all that is required is a decision by the NSW government to commission an HDR generation facility and use its output. An HDR resource exists right at the door-step, so to speak, of the existing NSW coal-fired generation hub and its existing grid.

Given that the development of HDR technology has been a substantially publicly-funded one, that around 80% of NSW voters are against the privatisation of the existing NSW electricity utility, and that HDR generation is a zero-emissions technology that is fully in line with public (and voter endorsed) policy, why should not the government and voters of NSW expect that Geodynamics Ltd promptly enter into a plan to develop a generating capability in the upper Hunter region to supply competitively-priced electricity to the NSW public utility, or forego its tenements in favour of a State HDR enterprise at that location?

TBC
Posted by Forrest Gumpp, Saturday, 29 May 2010 2:29:59 PM
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Forrest, I think what Jerome is referring to is discussed in this document:

EWEA – Wind Energy and Electricity Prices, April 2010
http://www.ewea.org/fileadmin/ewea_documents/documents/publications/reports/MeritOrder.pdf

Wind could finish up at the top of the merit order because it has no fuel or carbon cost. The actual impact on the coal plants will depend on the amount of wind power available in any dispatch period but it is possible that wind could reduce the return from coal plants. Whether the wind farms can make money in the electricity market without the RET scheme is another matter. In any event, nuclear power is a much bigger threat to coal than wind.
Posted by Martin N, Saturday, 29 May 2010 5:21:23 PM
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Forrest, I should have been clearer. Geothermal is definitely an option in Australia, despite its competition – it just has to go through certain stages to prove itself. You’re an accomplished sleuth; check out Geodynamics media releases or preferably, their quarterly reports.

As far as the topic is concerned, sure ... horses for courses. It’s complex though, there are many horses and many courses ... the riders and trainers, owners or syndicates, and innumerable stakeholders, all conflate the issues even more.

I find the articles and discussions on this website http://tinyurl.com/Barry-Brook more informative than OLO’s, despite the best intentions of its contributors and commenters, me included.

Nuclear for the big energy users, it's happening now.
Posted by qanda, Sunday, 30 May 2010 5:22:00 PM
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I also believe that geothermal has a lot of opportunities for baseload generation in Australia. While HDR still has a few bugs, we shouldn't forget that shallow geothermal is alo a viable option and can probably be found closer to the grid. Although Geodynamics activities seem to be grabbing attention, Australia already has one modest geothermal station at Birdsville. Its well is 1230 metres deep and generates a 120 kW net power output. Small I know, but the plant saves about 160,000 litres of diesel fuel, clearly displacing CO2 emissions.

Tuscany has also had geothermal power since 1904, so it is a well proven technology. The State has 810 MW installed geothermal capacity. You can read more at http://www.cegl.eu/index.php?option=com_content&task=view&id=41&Itemid=64.

Also with ground source heat pumps (GSHP), you can generate energy (or more correctly displace energy usage for heating and cooling) from as little as 60m. This 2001 paper http://geoheat.oit.edu/bulletin/bull22-2/art4.pdf found that there were between 110,000 and 140,000 GSHPs in Europe at the end of 1998 representing almost 1,300 MW thermal capacity.

This all goes back to my earlier point that it is unwise to dump all renewables into one bucket and say that "no one has shown that green electricity supplied to an operating power network actually reduces emissions", based on examples of wind power in two or three places.
Posted by Loxton, Thursday, 3 June 2010 9:51:04 AM
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Thanks for your post, Martin N, of Saturday, 29 May 2010 at 5:21:23 PM, and for the link therein. I have downloaded the PDF document titled "Wind Energy and Electricity Prices: Exploring the ‘merit order effect’", and have attempted to come to grips with it.

I can't quite make up my mind whether the Merit Order Effect represents a sophisticated energy management tool, or a piece of finance industry sophistry. It would be logical for the finance industry to emphasise any merit, real or imaginary, in the wind energy field, as it is a field suited to the mobilisation of much smaller units of funding (like self-managed personal superannuation funds of near-retirement politicians and senior public servants) than the very large loans to governments generally made at lower interest rates for other sorts of electricity-generation infrastructure.

It does seem to me that the plugging-in of wind generators into any electricity market is dependent for its viability upon existing, or impending, inadequacies of base load generation capacity, or at least a widely held belief that such inadequacies exist. Talking up shortage in any market tends to increase prices. Is that what has been happening in Australia?

Mark Lawson's contention that wind-generated electricity is likely to be more expensive than hydro, coal, or gas powered generation may well be supported at least in the case of NSW wind-generated electricity. With the completion of construction of the Capital Wind Farm near Bungendore, which will supply 'offset' power for the Kurnell desalinator of Sydney Water, seven eigths of all NSW wind-generated power will come from that source. A current OLO article by Kellie Tranter, 'Dead in the water', http://www.onlineopinion.com.au/view.asp?article=10492&page=0 , is the source of this information.

The comments thread to that article yields some interesting insight into the possible extent of NSW government price-support for 87.5% of wind-generated electricity in that State. See: http://forum.onlineopinion.com.au/thread.asp?article=10492&page=0

Is government focus upon maintaining artificial shortage for price manipulation, rather than developing competitive renewable base load capability?
Posted by Forrest Gumpp, Tuesday, 8 June 2010 8:49:32 AM
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Forrest,

The merit order effect is neither particularly sophisticated or sophistry. It is something much more prosaic.

To understand the merit order effect it is necessary to know how electricity markets work. Most electricity networks have a trading market where generators can offer to supply a certain quantity of electricity in a given period during the day. The price offered into the market is based on the marginal cost of the generator. Marginal cost is the cost of producing an additional unit of electricity (eg MWh) and mainly reflects the fuel and additional operational costs.
Which generators are used in any given period is based on the price offered by the generator, with the cheapest getting first priority. This is called the merit order and ensures that electricity is delivered to the market’s customers (typically retail suppliers like AGL or Origin) at the lowest possible cost.
The price actually paid to the generator operators (and charged to the customer) for electricity in that period is based on the highest-price generator used in that period. This gives incentive to the generator operators to have the most efficient equipment as the lowest-cost generator earns the most profit. I cover more about electricity markets in my next book - yet to be released.

Continued in next post ...
Posted by Martin N, Tuesday, 8 June 2010 10:32:19 AM
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The reason wind can upset the merit order is that wind has no fuel cost and low marginal operating costs. So if wind is bid in a period (and available in that dispatch period of course) then it could get highest dispatch priority. Coal plants need to run continuously and prefer to run as fully loaded as possible. So wind accepted in a period is likely to reduce the demand for coal output and so reduce coal profitability.

Mark is probably correct when he says wind is more expensive than coal or gas but he is referring to the life-time cost not the marginal cost. Coal plants could always bid a zero (or even negative) cost to ensure high priority but there is still a risk that the introduction of signficant wind will lower the price paid to all the generators in the period.

Sorry if this sounds like trying to explain the RSPT but it is relatively complex but important to understand.

It's early days for Australia accepting wind power into the wholesale market so we are probably yet to see what the real impact will be on wholesale prices. At current wind penetration I suspect it hasn't had much effect at all. Don't forget the article I suggested to you is produced by the European Wind Association so it relates to Europe and is hardly an independent assessment.
Posted by Martin N, Tuesday, 8 June 2010 10:38:46 AM
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Forest and others;
There are at least two types of geothermal power.
The common ones like those in New Zealand where hot thermal springs
occur and the hot dry rocks like Geodynamics in South Australia.

The rocks are some miles down and are granite which has been heated by
radio active decay. They are building a pilot plant there of I think
10 Megawatt.

They have another site in the Hunter Valley, close to the grid and
when they perfect the technique they expect to build a major plant there.

This will be a base load plant with all the operational advantages
of gas fired power stations. If they perfect the system all wind
farms will be out of business.
Most solar systems I imagine would not be able to compete as the
losses in storage systems would be too great.
Posted by Bazz, Tuesday, 8 June 2010 1:18:52 PM
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