Doctor and activist
09/09/2018
I visited Switzerland to see the Swiss Parliament and to try to get a feel for how their direct Democracy works. Their basic system is more like Australia’s than might be imagined. They have two houses of Parliament. The lower one has members elected by a first post the post from individual electorates, and the […]
25/07/2018
25 July 2017 It is good to have a health record available for a complicated case. It saves doctors a lot of time. When Records started to be computerised in the early 1980s the people at North Shore Hospital where I worked had a working party. I offered to help, but they said that they […]
31/10/2017
The Liberal/National Energy Plan is simply a lifeline to non-renewable energy that will keep electricity prices high.
It is getting praise from the Guardian, perhaps because it is a policy at all, and from Bloomberg , presumably because it is a solution that empowers retailers and gives a financial solution to a technical problems that leaves lots of fat for the key players, lots of bills for the consumer and slowed progress on climate change.
Why Have Prices Been so High?
The existing dysfunctional system is responsible for the current high prices due principally to:
1. The regulator permitted agencies to ‘gold plate’ the network of poles and wires so that electricity could be transmitted anywhere on the national grid. They were able to borrow money and build, which is what engineers like to do. The most likely trend with renewables was towards having more ‘embedded generation’ where electricity came from more diversified and smaller sources with fewer large power plants. So resource allocation to the network effectively favoured big existing generators and gobbled up the resources that could have been used for smaller more flexible generation. It also raised prices.
2. A National Electricity Market was created where bids were put in to supply power to the grid at 5 minute intervals, the assumption being that a market would drive prices down. In fact, vertically integrated big companies gamed the system, withholding power so that the price went up at key periods. The system was made ‘fair’ for that every suppliers was paid the latest (highest) price, and suppliers who had put in low bids earlier were not disadvantaged! The public and businesses consuming the power were gouged.
What is the New Scheme?
The new scheme mandates that electricity comes from a variety of sources, ‘reliable’ fossil fuel power, and renewables, which are assumed to be unreliable. The mix of sources changes over time, hence there can be a move to renewables as they as defined as more ‘reliable’. The scheme was devised by the existing companies, particularly the thermal players, which is probably why it has so few critics. But it will lock in the cost and pricing structures which are the cause of the problem.
The problem is that the government has confused reliability and despatchability (?deliberately). Reliability is measure of whether a power source will be working over a specified time period. Despatchability is whether power can be put into the system. Coal fired power is reliable as ‘base load’ in that it can have a relatively constant output. But it is slow to vary that output, so it cannot despatch power quickly in response to a fall elsewhere, and as such is not ‘reliable’ when needed to despatch a greater quantity quickly. Coal is much more expensive than renewables and the plants have to be kept going at a minimum of about 35% capacity to be able to increase, which does not happen quickly anyway. Keeping the coal plants as a ‘system spinning reserve’ effectively puts a base price on energy of about $85 per MWh, i.e. the typical wholesale price of power from a thermal plant. This makes this plan a government mandated, long term price fixing agreement.
Characteristics of Renewables
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 is pumped up when there is spare power they act as batteries. Hence the interest in ‘Pumped Hydro’, which just needs 2 reservoirs, one higher than the other.
Wind and Photo-Voltaic (PV) systems are not fully despatchable as their output is dependent on wind strength and sunlight. They can respond quickly to load changes. With a grid and a lot of different sites wind can be reasonably reliable overall.
A solar thermal plant uses a heliostat field of several hundred hectares of reflectors 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.
The availability of renewables in Australia is much better than the Liberals would have us believe and the ability to forecast wind in the medium term is now very good. Hence their availability is quite high.
Relative Costs
In terms of the economics, a wind farm costs about M$2.00 per MW to install. A 1MW unit running at 40% capacity factor, which is less than most wind sites can achieve, will generate about 3,500MWh pa at $85 per MWh this will be $300,000. Assuming capital costs of approximately $85,000 with 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.
So what is the politics of this plan?
Because the electricity price will be set by the needs of the old fossil fuel plants the coal owners happy will be 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 they can make a magnanimous gesture of bipartisanship in the short term 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 domestic consumers.
Alternatives
The alternative, a national bold move to all renewable power has been suggested by the research group, Beyond Zero Emissions (BZE). They have pointed out that Australia has a huge natural advantage in renewable energy because of this abundance of both solar and wind, but as the whole world moves to solar, we can only get the advantage of cheap power and the experience and equipment to export if we move quickly and decisively, which is exactly what we are not doing and what this expensive plan actively retards.
Need for Action
It seems that just as the US cannot go forward because of its gun lobby, Australia is in the same position with its coal industry. We need to demand action now, before this plan is implemented.
The South Australian Blackout
As a post script it is worth looking at the cause of the South Australian blackout. SA was getting about 40% of its electricity from wind, which had been very reliable. It was supplemented by two cables from the East, one of which was down for maintenance. The other source was a French-owned gas plant, which had a ‘pay whether you use it or not contract’ for natural gas. One of the gas exporters from SA had independently sold more gas than they could produce and were in a situation that they needed gas. As the wind was so reliable, the gas plant not generating but was taking gas it could not use and losing money. The solution for the gas plant was to sell the gas to the distressed exporter. Thus when the wind blew too hard, the link to the East blew over at the time the gas plant has no gas and the wind turbines had shut down as the wind was too strong. This was an unfortunate set of coincidences, but hardly a reason to return to coal. But it has been used to talk up unreliability of renewables and get this plan up. Politics!
21/10/2017
21 October 2017
The privatisation of the Land Titles Office will allow developers to search systematically for any land that can be bought. With the total emasculation of the NSW planning process, and a tax system which rewards land development over all other forms of financial activity in this country, this will result in the largest systematic transfer of wealth from the public to rich individuals that has ever happened in this State.
Well done the Libs- you have rewarded your donors admirably! Tough luck the commons.
But having got all this easily and probably cheaply, there will quite a lot of support for the renationalisation as suggested by Jeremy Corbyn in England. We are perpetually lectured about the need to have huge rewards for risk-takers as they might lose things. ‘Easy come, easy go’ might be the slogan for a new age, replacing ‘Once grabbed, always mine’, the inherent assumption of the privatisers.
I had observed Sydney Water put all its water plans on a computerised system. This had an highly developed mapping system with all the pipers and boundaries. It was not clear whether they had intended to use this for revenue or merely to keep track of their own facilities and works, but the system, which had been developed by funding from Water rates was taken from them by the NSW government and given to the Land Titles office and combined with the Land Titles Register. This combination was then absolutely State of the Art. It was the ultimate private monopoly as I warned in this post on 21/10/17, though at that time Jeremy Corbyn in the UK may have let a push to reclaim some of the more outrageous privatisations. That was not to be and he lost the UK elections dramatically.
What happened in NSW was a huge abuse of the private monopoly with a 1900% price hike as described a year later on 4/10/18 in the SMH.
www.smh.com.au/politics/nsw/unauthorised-privatised-nsw-land-titles-registry-hiked-fees-by-1900-per-cent-20181004-p507ri.html
11/10/2017
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
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 […]
17/07/2017
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
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
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?