Notice: Undefined index: hide_archive_titles in /home/chesterf/public_html/wp-content/themes/modern-business/includes/theme-functions.php on line 233

Author: Arthur Chesterfield-Evans

19/10/2017

A Response to the Libs’ Energy Plan

19 October 2017

The energy plan proposed by the Lib/Nat government has several major flaws based on either their poor understanding of how an electrical network works or wilful misrepresentation. It is a government sanctioned, long term price fixing agreement.

The current plan is to force energy retailers to buy a minimum amount of energy from “reliable” thermal plant to ensure reliability by reducing the input from “unreliable” renewables. The plan is not a surprise as the thermal plant owners had a big input into it. This effectively puts a base price on energy of about $85 per MWh i.e. the typical wholesale price of power from at thermal plant.

The government confuses reliability with despatchability.

Reliability is a measure of whether a power source will be working over some specified time interval. A better metric is availability i.e. the time period over which the power source is performing within acceptable parameters.

Modern well maintained thermal power stations have availabilities in excess of 95%. But for example if Liddell which has 4×500 MW turbo generators has only been able to keep 3 running consistently its total availability would be 95%x0.75 =70% i.e for 70% of the time over the last few years it has been able to despatch, supply when needed 4×500 MW. Its capacity to despatch 3 x500MW has been 95%. Actually Liddell’s performance has been much worse than this.

Base load is the Coalition’s other favourite subject. It takes about 8 hours to start up a large thermal power station and about 12 hours till it comes up to full capacity. These times are dictated by differential expansion of its components. Hence normal practice is to keep these units running continuously. They also exhibit stability problems when run at less than 30% capacity. At night when the demand for electrical energy drops, continuously running operations like steel mills, aluminium refineries, cement works etc. took up this load generally this was not enough to keep the load above 30% hence the low off peak rates offered for water heating.

The problems of differential expansion also mean that thermal plant cannot respond quickly to changes in load especially load increases.

The above limitations meant that in a system dominated by thermal plant you have to keep enough older plant running at low load so that it could take up the power of the largest unit in your system should that unit be forced to shut down in an emergency i.e. trip. This is system spinning reserve. So the price will be set by the needs of the old fossil fuel plants. This will keep the coal owners happy. It will also keep the renewable generators happy as the high price will give them a massive profit margin. It will keep Labor happy, as thye can make a magnanimous gesture of bipartisanship and when they come in there will be lots of renewables built to get the huge profit levels that have been there for the taking.

The people who will not be happy will be the industries that will go broke because unnecessarily high power prices made them uncompetitive, and the long-suffering homeowner.

Renewable energy power systems and hydro have different characteristics. Hydro is despatchable if you have sufficient water. Australia’s lack of water means that all of our large hydro stations do not operate continuously. They are mainly used to handle short and medium length load peaks as they can respond quickly to load changes. Naturally if the water were pumped up when there was spare power they would act as batteries.

Wind and PV systems are not fully despatchable as their output is dependent on wind strength and sunlight. They can respond quickly to load changes.

Their availability here in Australia is much, much better than the Liberals would have us believe and our ability to forecast wind in the medium term is now very good. Hence their availability is quite high. We can also use concentrated solar thermal plant. Here a heliostat field of several hundred hectares is used to concentrate sunlight onto a boiler mounted in a tower to heat a transfer medium, typically sodium carbonate to about 400 deg.C. The molten salt is pumped into a storage tank and then pumped through a heat exchanger to generate steam which drives a steam turbine. One such plant is planned for the head of Spencers Gulf in SA. Here the energy is stored as heat and the molten salt can be drawn from the hot tank to generate steam on demand i.e. the plant’s capacity is despatchable.

For example a wind farm costs about M$2.00 per MW to install. A 1MW unit running at 40% capacity factor, most wind sites do better, will then generate about 3,500MWh pa at $85 per MWh this will be $300,000. Assuming capital costs of say $85,000 and service and maintenance of $84,000 this leaves a surplus of $207,000 a very good financial result especially when you compare this to a thermal plant which will cost about M$30 per MW to build and take 10 years in the building compared to about 3 years for a wind farm.

Older thermal stations like Liddell are worn out especially their boilers which from a large part of the capital cost the boiler tubes suffer from stress fatigue and start developing fractures. Coal and ash handling plant starts to wear out and even the turbine blades erode due to the aggressive operating temperatures. Eventually the combination of wear and loss of availability makes them uneconomic. Try keeping a 40 year old car road worthy if you use it as a taxi.

19/10/2017

Energy Plan- why it is bad, and why there is not much protest.

19 October 2017

No one quite understands the new energy policy, (National Energy Guarantee -NEG) which is why there is not much protest. But I suspect it is very silly. Here is why.

The National Electricity Market worked because suppliers put in bids for a price on 5min supplies. But big producers could withhold creating a shortage, then put in a late bid at a high price. That segment would then go out at that highest price with every supplier getting the higher price. Logically then,the cheaper producers simply made more money. I have heard that a wind turbine in a good location could be paid off in 18 months, and that the price will settle at about $87 a megawatt hr.

The new plan puts big stress on reliability, so the solar and wind people are disadvantaged, but can still make a lot of money. The coal technology is still not much use, as they cannot compete with renewables when the sun shines and the wind blows, and they cannot ramp up supply quickly. They are, as everyone keeps saying, better for base (=constant) load. Added to this they are obsolete as the pipes in the boilers get stress fractures after a certain time and maintenance becomes uneconomic.

Gas is good at turning on and off quickly, but as we know, gas contracts for export has left us short, so Malcolm will create some problems there.

So a system that has been rorted by a few inside players who get supernormal profits will be given a licence to continue. The price of electricity will not fall much, and the consumer will continue to be gouged, with vulnerable industries simply going broke to allow the energy players to get profits that they really should not have. But there is not much protest because either people do not understand what is happening, or they are beneficiaries of a little understood rort that will continue because they have cleverly used fear of blackouts to get a cushy system.

And I suspect Labor will support it, as it has support from the energy industry, and they can claim bipartisanship, and they have been too lazy to get a better plan.

See also the Post ‘A Response to the Libs’ Energy Plan 19/10/17′

www.abc.net.au/news/2017-10-17/explainer-energy-policy-what-is-the-coalitions-new-plan/9057158

11/10/2017

The Decline in Trust.

11 October 2017 It is getting harder to trust people. Once we trusted our teachers, our doctors, our bank managers and our politicians to lead us. And people trusted that people could do their jobs. But we became obsessed with competition instead of cooperation. Everything had to make money. Everything was a commodity. It was […]

04/10/2017

Political Change or Economic Change? Which comes first?

14 October 2017 There is an interesting book review in the SMH today entitled ‘Endgame for the Russian Revolution’ in the print version. The book is ‘Gorbachev: His Life and Times’ by William Taubman. It points out that Gorbachev was a hero in the West as the man who modernised the Soviet Union, but he […]

28/09/2017

Tobacco Control Lobby goes silly on vaping.

28 September 2017 People who see the world from a very narrow perspective generally get it wrong, however clever they are in their own specialty. If the only problem in health were smoking, perhaps vaping could be justified. But the realities of money and marketing is that a whole industry will try to get the […]

17/07/2017

Poland Revisited

17 July 2017 I have recently visited Poland and wanted to record some impression while they are fresh in my mind. I had previously visited Poland in 1989, which was only a few months before the Berlin Wall came down with the collapse of the USSR under Gorbachev. This had immense implications for Poland, and […]

01/07/2017

NDIS- National Disability Insurance System.

1 July 2017 I have grave fears for this system. I am unsure even of the goodwill of some of its advocates. I was on the Social Issues Committee of the NSW Parliament and we looked at Disability services and the way that these were delivered. Basically if you ask how big the disability problem […]

15/05/2017

Limits to the Market? A New Paradigm Needed!

15 May 2017

Since the last two world wars were over markets, it was assumed at the conference at Bretton Woods that if there were free markets everywhere there would be no wars and countries who did well would prosper. It worked. Germany and Japan traded in markets that had been denied to them pre-war and ‘won the peace’. The dogma was that because there was efficiency in production we would all be better off as goods would be available all over the world quickly and cheaply. And, helped by the overwhelming dominance of Milton Friedman’s economic theories the market has spread into every aspect of life. The fact that when Friedman’s theories were actually implemented in South America that they failed miserably was merely a blip ignored.

Now the market is assumed to be better than anything else as a way of allocating resources efficiently. It is better than government, better than planning, hey it is infallible, and probably inevitable as well!

Governments do not have to manage anything; they can sell it, even if they do not need the money. Inner city buses are the latest.

If you read Chapter One of most economics books, it tells you about competition and how you cannot charge too much or a competitor will uncut you, so prices are kept down.

The rest of the economics book tells about monopolies or oligopolies, where there is poor competition and you can charge what you like, or there are high set up costs as barriers to competition, or regulatory hurdles, artificial training or registration requirements, geographical limitation, existing facilities, impractical duplication costs etc etc, which make monopoly or ‘supernormal’ profits a certainty. Yet Governments plough on creating private monopolies and compliant political parties are rewarded by campaign funding to keep on winning elections.

What I am writing is not new or original and is known by anyone with even the most basic grasp of economic theory. Do the politicians not read past Chapter One? Do they never think that they are creating uncontrolled monopolies as they transfer assets from ownership by all the society to ownership by a moneyed elite? Are they so ideologically committed to privatisation that they no longer think at all? Do they not care, or will they do anything for their own short-term interest? It seems that the answer to all these questions is YES!

They have sold the airport, the sea port, the water supply (an endless subsidy to an unused desalination plant), the railways, the electricity, the road network and easements under it, the world standard database of land titles registration, the small councils power to control development, the list goes on and on. The health system is being sold by stealth. Medicare is being starved to death, as private health insurance is just subsidised inefficiency, and NDIS disability services will go the same way, no government services, oligopolies for profit paid for by the ‘Medicare’ levy rise, which is not even committed to Medicare. The education system no longer produces tradesmen to do the job and private education rip offs abound from dodgy day cares to non-Gonski funding to schools to post-TAFE colleges selling dubious certificates to phantom colleges ripping off visa-seeking migrant students.

The public service is being ‘hollowed out’. It no longer retains centres of expertise as it can always buy ‘consultants’ who carry briefcases and impressive CVs and have no interest except the public good. It closes offices, hires short term workers, relies on PR driven websites and replaces people with knowledge by ‘Services NSW’ which has someone who might know which department might do what you might want.

Our existing political system seems unable to govern in our interest. The interest of the political parties no longer coincide with the public interest. Our governments’ decisions have been bought like everything else. I do not think that money can be held at bay by electoral funding law reform. When we fought the tobacco industry, it sponsored sport and culture to get political allies. When that was banned, it sponsored ethnic groups, rescue boats and helicopters, any worthy cause that could lobby for it, and that was without gifts in kind, dodgy ‘foundations’ or other less visible influence-buying.

The only answer that I can think of is Swiss-style democracy where major decisions are taken by referenda of the people, and Parliaments merely implement decisions that the people have made. Any other suggestions?

05/03/2017

The Political Power of Social Media

5 March 2017 Social media is increasingly important as it replaces mainstream media and mixes personal interaction with news and information. It is dollar driven but also personal, so that we identify ourselves and our values. Those who communicate with us individually do so with personal or mutual interest, but those who do mass communication […]

03/03/2017

The Power of Social Media- Articles 5/3/17

Social media is increasingly important as it replaces mainstream media and mixes personal interaction with news and information. It is dollar driven but also personal, so that we identify ourselves and our values. Those who communicate with us individually do so with personal or mutual interest, but those who do mass communication do so for financial or political interest. Since those at the big end who harvest the data are able to match the personal with the financial and political, it gives them immense power. At the little end getting someone to click on something can give you a lot of money that you would not have had, so a gimmick or a headline that makes people click on something is a trick to be striven for, without necessarily thinking through the consequences.

To illustrate this important thesis, I offer this article from The Saturday Paper, which is its later part suggests that fake news was merely headlines that would get clicks to make money and that Trump was used as he would make people click. The fact that this favoured his campaign was an incidental to the primary object of the fake news creators, who merely wanted the royalties from making people click. The idea that the tiny fractions of a cent per click on a website can create a President of the USA shows how far our decisions and lives are at the mercy of the short-term profit motive.

www.thesaturdaypaper.com.au/news/politics/2016/11/26/how-fake-news-online-skewed-the-us-election/14800788004023

The power of collected data is that it allows the correlation of people interests, values and core values. Knowing what people believe, what is important to them and having access to them either through friends, honest communications or disguised communication gives the ability to change large sections of the populations values and actions, which gives a whole new meaning to the concept of ‘Manufacturing Consent’. This is very significant for the nature and use of power.
Marx said that power was control of the means of production. In nominal democracies power will become control of the means of information. This is frightening stuff. It was in the Guardian. Read on if you missed it.

www.theguardian.com/politics/2017/feb/26/robert-mercer-breitbart-war-on-media-steve-bannon-donald-trump-nigel-farage

Note also

www.theguardian.com/technology/2017/may/07/the-great-british-brexit-robbery-hijacked-democracy?CMP=share_btn_fb