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Paved with good intentions

In May 2016, the last coal-fired power station in South Australia was switched off, as part of the state’s efforts to meet its latest (self-imposed) target of a 50% reduction in carbon dioxide emissions by 2025. South Australia was hailed as a leader in climate change policy, with others sure to follow their example. Fortunately, there has been no rush, as it turned out that electricity prices soared and the state was hit by a number of serious blackouts within months. By August, we could read in the FT that Australian state’s power crisis sparks green energy backlash.

Spot prices during July – the middle of the southern hemisphere winter and not normally a time of peak demand – tripled, hitting energy-intensive industries hard. There were, of course, excuses offered: “The South Australian government says the price rise was caused by a unique set of factors — a lack of wind that cut electricity supplies, a cold snap that boosted demand, a lack of gas generation and the breakdown of the state’s interconnector with neighbouring Victoria.”

Australia is unusual in that, for geographical reasons, each state is self-contained to a large extent, with little interconnection to neighbouring states to help balance supply and demand. However, this is not really an excuse, as electricity generation networks need to be planned with local factors in mind. And it seems that the ‘unique’ set of factors that caused the July price spike might not be so uncommon after all. This week, the Adelaide newspaper the Advertiser carried the headline blame game over rolling blackouts as South Australia promised dramatic overhaul of energy grid.

Again, politicians have leapt to the defence of the state government. The (opposition) Federal Labor Party climate change spokesman offered support to the (Labor) state government: “’What you have really is a government which seeks to jump on every little hiccup, and every big hiccup, in the electricity system and somehow shoot it home to renewable energy policy,’ Mr Butler told ABC radio. ‘In fact, what has happened in South Australia — a very, very bad run in South Australia over several months — on each occasion has had nothing to do with renewable energy.’”

Actually, this has everything to do with renewable energy. Mr Butler’s position shows a misunderstanding of renewable energy generation, whether wilful or genuine. He pointed out in the same interview that the federal regulatory authority, the Australian Energy Market Operator, could have ordered a second generator at a gas-fired station in the state (Pelican Point) to be used to meet demand. This acknowledges implicitly that renewable generation needs conventional backup to ensure security of supply.

This problem for South Australia could have come about in any country or state that set renewable energy targets without proper planning. It has not arisen purely because of emissions reduction targets, but because the received wisdom is that emissions must be reduced largely by moving towards a mix of renewable sources. In Germany, the more established energiewende programme is based on this same credo and, supporters would point out, has avoided the blackouts and price spikes that have bedevilled South Australia.

That’s as maybe, but a major reason for this is the different geography. Germany is surrounded by other countries, including the major economies of France and Poland. It is highly interconnected and has much greater opportunities to balance supply and demand by, for example, importing French nuclear electricity or exporting excess wind energy to Poland.

The other reason is that the clean, green energy system which the country is trying (expensively) to transition to, is not quite as clean and green as people might think. On a cold winter’s morning in early February, Germany was generating 11.5GW from wind (out of a 43.2GW nominal capacity), 4.6GW from solar (39GW installed capacity) and 32.6GW (41% of total demand) from coal (50.7GW installed capacity). Coal has been the biggest single source of electricity for quite some weeks, even though there is enough wind and solar capacity to meet demand on bright, breezy summer days (and, on some occasions, to generate too much electricity for the grid to cope with).

The net result, despite the country having by far the greatest installed capacity of wind and solar energy, at least outside China, is that Germany electricity generation had a carbon intensity of 467 gCO2 equivalent per kilowatt hour with 48% the economy powered by fossil fuels (this morning) . Compare this with the UK, often criticised for lagging in the renewables stakes. Indeed, the installed capacity of wind and solar energy is only about 30% of that in Germany. Not surprisingly, the output is a similarly small proportion of capacity, but in this case over 22GW was being generated by gas and a further 9.6GW from coal. 66% of UK electricity came from fossil fuels, but the carbon intensity was only 417 gCO2/kwh.

There are economic and historical reasons for the different proportions of gas and coal in the German and UK generating fleets, but one of the clear messages that comes through from the German case is that setting a renewables target is an inefficient way to reduce emissions. The unfortunate experience of South Australia shows the big negative impact on energy security as well.

Fortunately, the dangers of a blind faith in renewable energy are now being learned, at least in Australia. In an address to the National Press Club on 1 February, Prime Minister Malcolm Turnbull spoke at some length about energy policy. In particular, he said “…and as the world’s largest coal exporter, we have a vested interest in showing that we can provide both lower emissions and reliable base load power with state-of-the-art clean coal-fired technology. The next incarnation of our national energy policy should be technology agnostic. It’s security and cost that matters most, not how you deliver it. Policy should be all of the above technologies, working together to deliver the trifecta of secure and affordable power while meeting our emission reduction commitments.”

For a politician who was once in favour of the then Labor government’s ambitious emissions reduction policy, this represents a clear recognition of the realities of providing affordable, secure energy. Other leaders could well learn from this change of tone. Perhaps we could even see some change to the energiewende from Frau Merkel after the upcoming election.

Current Issues


Future costs of UK energy supply

The Scientific Alliance recently published part 1 of an examination of National Grid's Future Energy Scenarios, dealing with security of supply. We are now pleased to publish part 2 - cost of supply. The authors - Dr Capell Aris and Colin Gibson - conclude that building more gas and nuclear stations would be considerably less expensive than any of the NG scenarios, as well as offering better energy security.

What's New

14 October 2016: Read the new report by Dr Capell Aris, published jointly with the Adam Smith Institute - Solar power in Britain: the Impossible Dream