Will the Grid go into a Death Spiral?

You’ve probably heard the term “Death Spiral” applied to many things. Insurance. Economics. Obamacare. TV (or Presidential) Ratings. Whatever.

Recently there was an article quoted by the smartest Wind Turbine in Australia, as seen on Twitter:

I replied, somewhat off-the-cuff, that the “death spiral” was a bit of a furphy, and was subsequently challenged to a blog post about it.

I’ll give it my best shot – but strictly in layman’s terms, and mainly with a view of the Australian market. Apply the lessons where you will.

WestERN Australia Grid Primer

Western Australia, in terms of land area, is big. I’m talking Texas-plus-Alaska big, for those of you playing in the US of A.

While it has a lot of land, it has less than 3 million people. That means a relatively small market for energy provision. They have a local grid (SWIS*) in the heavily populated south west around Perth (pop 1.95M), one of the most isolated cities on Earth.

* South West Interconnected System

The SWIS covers the SW corner of the state, and is serviced by Synergy. That’s right – there is only one electricity company, and its government owned. But you get your choice of two gas companies!

Death Spiral
The gas is also cursed…

Outside of the SWIS, everything else is the responsibility of Horizon Power. That is a big area to manage, and big means expensive.

Large towns (by Australian standards) can be hundreds of kilometres apart, mostly on the isolated coastline facing the Indian Ocean. Inland towns might only exist for mine operations, or reside on historical roads that still provide services for farming or Aboriginal communities.

One bushfire out there, or a car accident into the wrong pole, can cut what constitutes a grid connection in an instant.

A lot of the electricity outside the SWIS is also heavily subsidised. Some communities get diesel shipped in for generators to run in parallel with renewables. Cost price to do so is 60c/kWh once logistics is factored in, and would be unfair to ask consumers to stump up for all of it.

But governments are only able to bear these costs for so long.

WA Government Budget Repair

As another article says,  the WA Government is increasing power prices in order to undertake budget repair. This includes an electricity price increase for consumption per kWh, as well as fixed charges.

The daily charge residents must pay to be connected to the grid will almost double, resulting in a 10.9 per cent rise on the cost from last year.

Of course, being politicians, they’ve blamed the previous government (now the opposition) for “the mess” inherited. Proving the age-old idiom: Politicians can be raving douchecopters.

Prices are also going up in WA on things like public transport, water, sewerage, and other things like port fees.

Consumers never like increases. Particularly in their electricity bill, and especially in the fixed charges.

You can try to make your household import less energy, but its not going to help a set daily fee get any lower. In fact the data shows that energy usage has stopped increasing in recent years in the NEM on the Eastern seaboard.

In some parts of WA, outside the SWIS, they have a cap on solar installations, to prevent network fluctuations. Seems weird that, in one of the sunniest places on earth, they’d stop installing solar panels, right?

Energy stability is key, particularly in a far-flung network like WA. Its interesting to note that Horizon are undertaking trials to regulate solar power flow in the Gascoyne region shortly (there’s that windmill again).

WA is a state with a lot of sun, potential for a lot of wind, but has challenges bringing it to bear in a safe and reliable manner.

The cap on solar installs is something I’m going to address from a market standpoint, in an upcoming post about my time at Renewable Cities Forum in June.

Putting The Article Into Context

The original article quotes Dr Jemma Green of Power Ledger, a company involved in blockchain retail of renewable energy.

“The perverse outcome of increasing the fixed supply charge is that in the short-run you might get more money, but in the longer run you’re going to push people off the network and look for more cheaper alternatives,” she said.

This is a stark warning to electricity generators and retailers. Particularly in the Australian market where prices have risen more than 60% on average in the last decade.

And while Dr Green believes it is a fair way to help the economic state of WA – as a short-term solution – solar households (25% of the state) in particular would feel somewhat resentful.

The point about being a short term fix is important. Governments simply can’t keep forcing consumers to pay more, particularly while solar and storage systems get cheaper.

Would this move by the Government of WA motivate people to leave? Dr Green says:

“… taken to the extreme means the network is no longer getting the revenue needed to support itself and it creates a death spiral.”

A government, or market operator, would be supremely ignorant (or greedy) to miss the warning signs of such a crisis. She has said “extreme” after all.

That is Reason #1 a death spiral is unlikely: despite what we think, the top end of town are not so stupid (or greedy) as to eat their own tail.

Anatomy Of A Death Spiral

To make something spiral (up or down), you’ve got to have some fairly consistent motivating factors. These factors may be constant, or under acceleration.

We certainly have consistent price rises, here in Australia. New South Wales customers are looking at price rises of up to 16% as of this month, as one example.

The quoted figure over the last decade is a jump of prices in the order of 60-100%, partly due to increased network connection costs.

At the same time, we’ve got larger energy providers like Energy Australia posting profits in the tens of millions. So there is a bit of fat to be trimmed there, if needs be.

But will it force customers to leave the grid?

That is probably the wrong question. A more pointed one is: can customers afford to leave the grid?

Certainly not for today’s prices on storage. If you went out and bought a Powerwall 2, and a solar PV system on the larger side (6kW+), you’re looking at about $16K. The number of households who can afford that is in the minority.

Even then, with only 13kWh of storage, the average household won’t make it through a 48 hour period without sunlight. WA gets clouds, too.

Most off-grid types recommend a minimum of 4 days’ storage, plus a generator for emergencies. Now you’re talking about upwards of $30k, because most people don’t fancy sitting in the dark.

Reason #2 the grid won’t death spiral: in the near future, consumers can’t afford to leave en masse. Therefore the network charges, and consumption fees, are still going to keep the grid afloat.

Pardon My French

Plus ça change, plus c’est la même chose

 – Jean-Baptiste Alphonse Karr

Don’t worry, that will make sense in a minute.

As the landscape changes in our energy network, newer technologies are emerging, and disrupting, the status quo.

repositpower

Reposit Power are one of the companies at the forefront of changing this landscape. The concept of Virtual Power Plants is the here and now, and Reposit, along with other companies, want to make it available to everyone.

At Energy Networks Australia last year, and again at Renewable Cities this year, you could see the shift in thinking.

The analysts are vocal because they’re trying to get people to listen. The see a bright future and a market of endless technological possibilities.

The salesman are animated, because they’re trying to set up a market. They see great opportunities to put their products into action, and get that market share.

The industry, both generating and retailing, are a equal parts bemused, scared, and curious.

As we see battery uptake increase across Australia, a lot of these technologies are going to change the market place. Horizon Power are trialing control of domestic solar PV output.

How much easier would that be with a grid scale battery in front? Networks could start doing their own frequency regulation and dispatch, with strategically-placed storage (battery, pumped hydro, train full of rocks, whatever).

They could limit long-term infrastructure spend by tapping user storage in times of need, and at a lower price than it costs to run traditional or renewable generation. And you don’t have to transmit it over kilometres; its right there in the neighbourhood!

If you’re a consumer in 2020, how mad would you be to disconnect from the grid, when you can contribute, and profit, from it?

As old mate Jean-Baptiste said above: the more things change, the more they stay the same. Staying connected to the grid will be as normal tomorrow, as it was yesterday.

Reason #3 the death spiral won’t happen: consumers will eventually become participants.

Rumours Of My Death Spiral Have Been Greatly Exaggerated

Prices go up. That’s capitalism.

Anyone reading this article who isn’t on board with the solar + storage thing is going to accuse me of being a rich man. Of leaving the poor people behind, and forcing those left on the grid full-time to pick up the tab.

And that is certainly a risk that the WA Council of Social Services highlighted when the government announced these price rises. Those who are already struggling to pay the bills are going to be hit hardest.

Of course, it would be nice if prices didn’t go up quite so much as 10-16% in one year. But you can’t blame renewables for that – or you can, but you’ll look like an idiot.

If you want to blame someone, point your finger at the Federal Government’s appalling lack of energy policy.

Death Spiral
Not pictured: coherent, forward-looking energy policy (c) abc.net.au

Look at the State Governments and their mates in the energy industries, lobbying for bigger, gold-plated networks we don’t need.

Now think about the private players who are entering the market. They’re seeking profits, sure, but they’re bringing technology and ideas designed to minimise spending, while maximising value. They’re not interested in a death spiral.

Renewable energy without subsidies is now beating fossil fuels. Distributed microgrids are cheaper (and quicker) to build, and easier to maintain than massive, centralised networks. Even companies like Horizon Power know that, and are putting it into practice.

I don’t think we’re going to see the grid die. I think we’re going to see it grow into something more secure, resilient, and flexible. And the longer term costs of running it will decrease per capita.

The grid will still be there for us, and we’ll be there for the grid. It might get a bit bumpy, so keep your limbs inside the ride at all times.

The Finkel Report

The Finkel Report* was released this week. Those watching the energy market in Australia were keen to see how it framed the future energy discussion.

* aka Independent Review into the Future Security of the National Electricity Market

Alan Finkel
Hail to the Chief (Scientist)

Alan Finkel is Australia’s Chief Scientist, having taken up that post in January 2016. He’s a pretty smart cookie, too, as both a qualified electrical engineer and neuroscientist.

You can see some more information about the report itself on the Department of the Environment and Energy website. The report runs to 212 pages, but there is an Executive Summary available.

Following hot on the heels of its release, the Chief Scientist appeared on ABC TV’s Q&A program. Along with some politicians and consumer advocates, the opportunity to discuss some details about the report and the energy market generally.

Key Themes

Look, I don’t generally watch Q&A; what started out as a great premise – get politicians in front of the public to make them answer questions on live, national TV – soon turned into this:

The best episodes were those featuring scientists with no politicians. No surprises there. Any episode involving politicians soon turned into a battle of wits between unarmed opponents.

While there were politicians on last night’s showing (one from each major party), the key inclusions were from the consumer advocacy sector.

Voice Of The Consumer

 

(c) Climate Council
Amanda McKenzie

Amanda McKenzie is CEO of the Climate Council. Formed via crowd funding, after the Climate Commission was abolished by the current government.

 

Along with other advocates from Public Health through to Biology and Business, the role of the Climate Council is to provide independent, authoritative climate change information to the Australian public.

(c) ECA
Rosemary Sinclar

Rosemary Sinclair is the CEO of Energy Consumers Australia. ECA aims to provide a voice for residential and small business consumers of energy. Of particular concern to their mission is fair pricing, and reliability.

Of particular interest to ECA is ongoing survey of Energy Consumer Sentiment. This is key to understanding the market as it affects users.

While the two politicians sought to score points, both the CEOs on the panel stayed above the petty bickering. The refreshingly factual dialogue on what consumers want should serve as a reminder to our politicians that their role is to represent us.

The discussion moved to CCS (Carbon Capture and Storage), which seems like a good idea until you look at the economics. Like a lot of fossil-fuel related initiatives, it seems great until apples are compared to apples, as McKenzie said: new renewables beat new fossil fuels.

The Finkel Report, and the man himself, argue that any approach should be tech-agnostic. Therefore we must assume any initiatives that come out of this are economically sound. Coal – in any guise – simply isn’t, even before the healthy impacts are measured.

The most important part of the night were Rosemary Sinclair’s closing remarks. It really sums up our frustration, both at a consumer level for certainty on pricing, and for industry in terms of investment.

We will see where this goes. Hopefully governments at State and Federal level, in light of the Finkel Report, drop the partisanship and legislate for the network we deserve.

Renewable Cities

As I mentioned on twitter, I’ll be attending Renewable Cities in Sydney this week.

With the release of the Finkel Report so close, I predict there will be a lot of interesting discussion. The goal of the forum is to merge minds on the way forward for our ever-expanding cities and towns.

There are workshops on EVs, a few people like Reposit Power will be there, and I’m looking forward to having a chat to people as I seek out the next stage in my career.

I’ll also bang out a few Twitter Live experiences so make sure you’re following @AuPowerwall!

 

A List Of Stuff

Realised it has been over a month since my last update. I’ve been kind of busy doing stuff with work, family events, and also putting a Rugby Club through its pre-season setup.

Finding time to sit and think has been a bit hard. At the same time, there is so much happening here in Australia with regards to renewable energy, its difficult to keep up!

Hydro stuff
Thanks to wikipedia

So here’s a scatter gun approach to energy blogging:

Scamwatch Stuff

Part 1 of this is a scam warning. A group listed “50% OFF!” specials for LG panels and LGChem batteries here recently. One example:

LGscam stuff

Now, nobody in their right mind should be writing 7.2kw’s as that’s just bad grammar.

Second issue is they’re using a lower case “w” to represent “Watt” for both panels and battery, which is wrong in every scientific manner.

Third issue is the battery is listed as “kw” instead of “kWh” – always remember that batteries are energy storage. This means they should always be listed with their kWh (kilowatt hour) figure to understand.

Beyond all that, the pricing is just cray-cray, and so is the manner of billing. A friend of mine contacted them and they sent him an invoice for the full $12,990. This is weird as most equipment sales would take a deposit (maybe as little as $1000), instead of the full amount to get started.

As it is, he cold-called LG Australia directly, who were aware of it, but couldn’t say much for legal reasons. He also dug a little deeper on the website with the original promotion to see what he could turn up.

Both leads turned him onto the fact that this wasn’t all that it seemed, so he backed right off. Good move.

The BILLIONAIRE Battery BOOM Stuff

As reported both here in Australia and overseas, some interesting tweet action went down between Atlassian’s Mike Cannon-Brookes and Tesla chief Elon Musk.

         

I don’t need to bore you with the details of the tweets themselves; if you’re here reading my blog, you probably saw it go down.

 

However, if you’re reading this from overseas, what you need to understand is that the talk about batteries is going ballistic here.

MCB and Musk really kicked things off for South Australia’s call for grid-scale battery proposals. But the process was also well underway in the state of Victoria, seeking to go large on storage as well.

Several people I’ve talked to in Canberra (our nation’s capital) are saying the phone is off the hook from government offices.

Suddenly people are realising that a smart, integrated grid is a thing we need. The people in power are starting to come around to the fact that coal is going to collapse, and that idiot behaviour about it needs to stop.

Coal stuff
Pictured: idiot behaviour (c) abc.net.au

That is the Australian Federal Treasurer, waving a lump of coal around in our House of Representatives.

Of course, politicians are populists by nature these days, so it remains to be seen whether talk of batteries survives the Next Big Issue they invent.

New Hydro Stuff

And from the book of “Hey! I’m a Populist, too!” comes our own Prime Minister. He’s decided that expanding our big hydro power scheme in The Snowy Mountains* is an awesome idea, and is framing it as “nation-building”

* some of the place naming in Australia is not wildly original…

Lenore Taylor provides a great breakdown in The Guardian on why this is important, in terms of how a leader, thought of as progressive, is still held back by the dinosaurs in his own party. You should read that article. Go ahead – I’ll wait here.

My issue with it is in the execution.

Expanding the Snowy Mountains Scheme in this way is an increase of 2000MW (2GW), which is not insignificant. It’ll cost AUD$2B which is also a pretty fair price.

BUT it will take somewhere between 4-7 years by all estimates. That means it isn’t really going do much more than keep up with demand, if at all.

There is also the danger that the goal posts will have moved entirely during that time. As I posited last year in Agile Energy Projects In The Marketplace: big projects can quickly become unwieldy.

Projects designed for even 30-year life cycles will find themselves at risk of rejection. It will be simply uneconomical to support such inflexible systems.

This is true in a market where things are changing rapidly, and particularly true in Australia, where we are shutting down old infrastructure.

The removal of the “baseload” paradigm is going to become more common, and require a smarter, more responsive network to cater for integration of many new technologies.

Hydro Power is as subject to this brave new world as much as wind, solar, or other sources.

I think we’d be better off kickstarting a solar thermal industry.

Solar stuff
Tower of Power. Wikipedia

Powerwall Stuff

This month sees the Powerwall v2 landing on our shores. It promises to be interesting times as we move from the early-adopter stage into mum-n-dad market.

The housing market is already seeing the potential, with Metricon offering Solar + Storage in home builds in the state of Queensland.

Powerwall v2 promises to really shift the landscape, offering twice the capacity of my unit, for roughly the same price. Other manufacturers are going to need to start offering more capacity or other desirable features to keep up.

Along with the big battery moves, 2017 looks like its going to be a very interesting year. Most predicted we wouldn’t hit this stage until 2020, but here we are!

Many jobs, with new types of infrastructure projects, will be required to make this happen. That means opportunities for people to jump on the train as its leaving the station.

Note: I’m always open to proposals in this regard.

Statistics Stuff

Here in Sydney it has been rather damp the last month or so. Tropical cyclones off the northeast coast of Australia have caused a lot of damage there. The storm train they pushed south has kept the cloud in play for many days.

Looking at my statistics, the last 28 days have seen generation below 21kWh / day, compared to a lifetime average of a little over 23kWh / day.

Consumption is also down, which is in part due to tapering off the pool pump now we’re in the cooler months.

Import is sitting around the average, though I haven’t needed the grid too much. The occasional Reposit Power off-peak import has bumped this number up a little, but I’m thankful for saving a few dollars.

Now that its been a year, with statistics, I’m satisfied that things will just tick along without my intervention. I don’t really have time to watch it 24/7 anyway!

I’ve started overriding my obsession with checking the system every 10 minutes.

Its more like hourly, now 😉