A short note at the end of a busy week, to note that on Monday 22nd February we saw the release of this 61-page report ‘Fast Erosion of Coal Plant Profits in the National Electricity Market’ published by Green Energy Markets (including occasional guest author, Tristan Edis) and the Institute for Energy Economics and Financial Analysis (IEEFA):
Particularly telling in the report was a section titled ‘The Coming Tidal Wave of New Solar and Wind Supply’, with the premise being that there’s a lot of it at various stages of development, and that it would push out coal more quickly than some expect (i.e. in the officially stated scheduled retirement dates).
I’ve posted this here today to ensure that WattClarity® readers are all aware that it was published – but also because it’s likely we’ll be referring back to this in later articles.
(A) External coverage of the ‘Fast Erosion of Coal Plant Profits’ report
As has been our process for the past 6+ months, we’ve tagged any third party coverage we’ve seen of this report in our expanding Asset Catalog, so those who have access can see the fuller list there – however worth flagging just a few things we have noticed:
On Wednesday 24th February:
In RenewEconomy, Michael Mazengarb wrote that a ‘Tidal wave of new wind and solar will force early plant closures’.
In the AFR, Elouise Fowler and Peter Ker wrote how ‘Up to five coal plants unprofitable by 2025’.
On the ABC, Ben Millington wrote ‘Renewable energy boom could force coal power to close early, says new report’.
On Thursday 25th February:
In PV Magazine, David Carroll wrote how ‘Renewable energy tidal wave tipped to wipe out coal-fired power stations’.
Even Alan Kohler was in on the action noting ‘Australia’s solar tsunami to trigger coal collapse’ in The New Daily.
It was not only in the established media brands, however – for instance we also noticed that Steph Byrom wrote ‘There’s more to the grid than just electricity’ on LinkedIn.
So on Friday 26th February:
I guess you could add this short note on WattClarity as another reference!
The ‘tsunami’ and ‘tidal wave’ theme from within the report was clearly picked up on some of the articles above.
All of the above (and more in the Asset Catalog) are listed not because we agree (or disagree) with any particular perspective, but as a general service to our readers – in the same way as we have done before. In everything we do, we strive to make complexity understandable – so people can make (their own) better decisions.
(B) We’ve been asked ‘Is it credible?’
For a number of reasons I was not really surprised that we have fielded a number of questions from WattClarity readers this week which might be summed up with the general question ‘how credible is this modelling?’.
1) Readers should keep in mind that I’ve previously written how ‘Forecasting is a mug’s game’ (which others have probably put, more helpfully, along the lines of ‘all forecasts are wrong, but some can be useful’). Long-time readers might also remember that I did provide a ‘Forecasts, of sorts, for the NEM‘ back in mid 2017 for the Clean Energy Council.
2) I’m also cognisant that we’re in a somewhat unique position, perhaps, having cranked up ‘BEAST’ again to produce the ‘Generator Statistical Digest 2020’ update released at the start of this month, which:
(a) took a detailed look at 2020 unit performance;
(b) as part of a review of 10-year operations for all DUIDs operational through 2020.
… all of which could help to explore the question ‘how have coal, solar and wind units actually been performing?’
3) Following from this release, we (in conjunction with Jonathon Dyson and his team at GVSC) are thinking more seriously about completing the work to update our well-received 180-page analytical component in the GRC2018 with a Generator Report Card 2020 (release perhaps late July 2021).
(a) Were this to happen, it would definitely include a detailed consideration to topic of ‘the End of Coal’.
(b) Again, in doing this (as in everything we do) we’d not be producing our own forecasts, but instead saying ‘how can changes in historical performance help inform a view of the future?’
With all of this in mind, it’s possible that we might find some time to use historical data to explore that headline question about this weeks release.
It’s Economics101 that if the ACCC sits on its hands with solar and wind dumping on the communal grid with power at the beck and call of the weather and sunlight then alternative dispatchable power with FCAS will be driven out. Basically we’re giving up reliable large scale hub and spoke generation and distribution for unreliable spaghetti and meatballs. When that fails or looks like it will State Govts step in with the diesel generators to save the day like SA and Tasmania you’ll recall-
https://www.themercury.com.au/news/tasmania/basslink-backup-fast-tracked/news-story/f338dfade76e55495ccdffe18d98f247
It’s politically nicer if you pop in a Unicorn Big Battery for the mainstream media to drool over while you’re fast tracking that Govt intervention of course. My local IGA supermarket in Adelaide installed a permanent large backup diesel generator after the Labor Govt did that. Probably at the behest of their property insurers who mightn’t renew their insurance or else charge prohibitive premiums if they didn’t.
There are three or four factors which most analysis understates which may make even this report end up being too optimistic in the case of coal fired generation.
1. More governments and businesses are focussing on energy efficiency. Even though Italy has three times as much industry as a share of GDP and its major cities are hotter in summer and colder in winter than ours, Italy uses 40% less electricity per capita than us. i.e. we have huge scope to continue reducing demand from the grid which has already fallen from a peak of 210 TWh to less than 190 TWh in the last 10 years.
2. New solar technologies such as bifacial panels, tracking systems and coatings which improve offaxis collection and finally the increasing share of tracking solar vs fixed tilt systems will mean that annual solar output will increase faster than capacity.so a doubling of solar capacity over the next 5 year will probably mean a 250%+ increase in output
3. New wind farms are approaching 50% capacity factors vs an average of around 30% for those installed by 2018 so the next 5 GW of wind will probably supply as much energy as the last 7 GW.
4. The increasing geographic divesity of renewable installations will mitigate the effects of wind lulls in SA by allowing more excess production in NSW and Queensland to flow south.
5 Batteries , syncons, synthetic inertia can provide most FCAS services at very low cost further depressing revenue for coal plants.
6. If all the above proves out and grid demand falls to 165 TWh, wind output doubles and utility solar rises by 250%, even if gas output halves, coal output will fall by closer to 35%
Peter, your points 2 and 3 claim dramatic improvements in capacity factors for solar and wind in only a few years. Do you have any credible sources for these claims?
Similarly is there credible modelling you can point to that supports your claim that “diversity” of output is likely to be meaningful and not impacted by transmission congestion?