The great energy stitch-up

Our electricity system is coming apart at the seams in the race to meet our climate goals. BY NIck Cater.

Fiddling with the design of an aircraft in mid-flight is rightly regarded as poor practice in the safety-conscious aviation industry. But standards are less rigorous in the energy sector, judging by an extraordinary speech delivered last week by Daniel Westerman, chief executive of the Australian Energy Market Operator.

The accelerated plan to decarbonise the electricity grid “requires our industry to redesign and rebuild the aeroplane while we’re flying it”, he told an industry conference on Tuesday. “And we have to keep the lights on and the gas flowing today, while we assemble the new system of tomorrow, as the old system of yesterday gradually gives way.”

The head of the organisation, tasked with realising Chris Bowen’s impossible low-carbon energy targets, should quietly take the Energy Minister aside and tell him he’s dreaming. Reducing the proportion of electrons generated by coal and gas from 70 per cent to 18 per cent by the end of the Albanese government’s third term simply isn’t going to happen.

Yet instead, Westerman is leading the cheer squad, as he told the industry gathering he and almost everyone else were on board with the plan to do away with “old-school coal” and replace it with “a kaleidoscope of technologies and solutions”. He said the debate was no longer about whether this will happen, but how quickly.

Unfortunately, Westerman’s technological kaleidoscope is somewhat less colourful than it otherwise might be. It does not include zero or close-to-zero technologies such as carbon capture and storage, biofuels, geothermal, conventional nuclear or small modular reactors.

Crucially, it does not include any form of generation that acts as a baseload; that’s to say, power that can be relied upon 24 hours a day whatever the weather. So it might be helpful if Westerman told us a little bit more about how AEMO expects to achieve this incredible feat against such hard deadlines, while at the same time doing its most important day job, which is to match supply with demand in five-minute segments every day of the year.

Running an entire continent with wind, water and solar alone makes for an interesting thought experiment. Theoretically, it can be done if resources were unlimited, technology ripens, the social licence is assured and adverse consequences are ignored. Yet since none of these constraints is trivial, prudence dictates that the market operator should explore other ways to skin the cat.

He could learn from countries such as Finland, Canada and France, where the grids already run with emissions of 15 per cent or less. All of these countries have embraced nuclear. It would be instructive to know how much attention, if any, AEMO has been paying to the lively scientific debate in the US between hardcore renewable-only purists and the pragmatists who are open to other zero-carbon options.

Mark Z. Jacobson published an influential article in the Proceedings of the National Academy of Sciences in 2015 proposing the construction of a coast-to-coast grid to facilitate the expansion of wind, solar and hydro generation.

He concluded that 100 per cent of power demand in the 48 contiguous US states could be supplied by wind, water and solar without any need for natural gas, biofuels, stationary batteries or nuclear.

It was followed by a devastating critique by Christopher Clark, who asserted that Jacobson had used invalid modelling tools, contained modelling errors and made “implausible and inadequately supported assumptions”.

Westerman and his team would be wise to note Clark’s warning that policymakers should “treat with caution any visions of a rapid, reliable and low-cost transition to entire energy systems that relies almost exclusively on wind, solar and hydro-electric power”.

Jacobson lodged a $US10m claim for defamation against Clark and the journal in the District of Columbia Superior Court in 2017, but the case was dismissed and costs were awarded against the plaintiff in 2020.

Westerman isn’t blind to the difficulties of the NEM Reform Implementation Roadmap. In his speech he pointed to a strong pipeline of potential wind, solar and battery projects, but said “the crucial word here is ‘proposed’ … bringing these new projects to market and connecting them into the grid urgently is critical”.

Ominously, Westerman said there were no new financial commitments to large-scale wind and solar generation projects in the first quarter of the year. He is more optimistic about the installation of rooftop solar, but hints at the challenge of connecting so much uncontrollable power to the grid. He admitted AEMO’s operational technology is not keeping pace with a grid that is becoming “infinitely more complex”.

That’s before we consider the transmission system that Westerman says is becoming gridlocked because of the way our electricity is being generated.

We have already reached peak renewables on the current grid, with the links between Victoria and NSW and Victoria and Tasmania running at their limits for 42 per cent and 57 per cent of the time from January to March. Curtailment of renewable energy generation has increased by 40 per cent in the past year.

Coal generators are falling like skittles. NSW’s largest plant, Eraring, is scheduled to close in two years and Westerman warned that almost two-thirds of coal generation could be gone by the end of the decade, which might lead to a few issues on a winter Sunday morning like at the weekend. At 6.45am, the east and west coast grids combined were running on 60 per cent coal, with Queensland the highest at 86 per cent.

The expansion in the grid, which might have allowed Sunday’s glut of southern wind to flow north, is being delayed at every turn as planners discover (to their evident surprise) that rural communities aren’t exactly clamouring for steel towers rising higher than the Sydney Harbour Bridge.

Westerman insisted the AEMO’s Integrated Systems Plan setting out the path and timetable for transition remains “credible”. Yet his rhetoric casts doubt. “We’re attempting to stitch together a new system … with a vast number of smaller generators, storage and firming technologies, and 3.5 million rooftop solar systems,” he said.

When the energy market operator uses a phrase such as “stitch together” in a scripted speech, it is hard to suppress the image of an electricity system falling apart at the seams.

Westerman’s appeal for urgent investment in firming technology, such as pumped hydro, flexible gas generation and battery storage, suggests the nay-sayers’ concerns about weather-dependent technology weren’t that stupid after all.