Monday, July 9, 2012

The Ruinous Privileges of Renewable Energy

Here's an article that interests me, but that I disagree with sections of strongly.
The similarities between Australia and Ontario, not only government activities in the energy sector, but the timelines for those actions, are striking.

Quadrant Online - The Ruinous Privileges of Renewable Energy:
"Household electricity prices in Australia have risen by more than 40 per cent since 2007, and are projected to rise by another 30 per cent by 2013–14. ...
In March 2009, Quadrant published our article “The Very High Price of PC Power”, which described the forces which were changing Australia from a nation which had enjoyed one of the lowest electricity cost regimes in the developed world, to one where electricity prices would become amongst the highest. All of our predictions have been fulfilled."

Our story begins when the Industry Commission brought down its report on the electricity industry in May 1991. Previously this industry had comprised a set of state government monopolies which, despite the low-cost fuel that powered the generators, were becoming increasingly uncompetitive, owing to the takeover of the industry by the unions. 
There are several factors which have driven up electricity prices. They are:
  1. The mandatory use of so-called renewable energy—from wind turbines and solar panels.
  1. The absence of any new investment in base-load coal-fired power stations since 1992, and the replacement of cheap base-load power with high-cost output from gas turbines.
  1. The attempt to persuade consumers to change their consumption patterns through the use of so-called smart meters—an attempt which has turned out to be counter-productive in Victoria but which has cost hundreds of millions of dollars to date. Presumably the idea is that using smart meters will persuade households to turn on their washing machines in the early morning hours, and turn off their refrigerators during the peak hours of the late afternoon. This would avoid, so the Greens tell us, the need to build new generating capacity.
  1. The use of recurrent revenue to pay for capital investments in transmission and distribution systems.
The entire article can be read at Quadrant Online: 

The article could be more coherent in  identifying a main issue causing most industrial wind jurisdictions to see price escalations.  The article cites a report by the Australian Government's Productivity Commission, "Productivity in Electricity, Gas and Water: Measurement and Interpretation." (electricity chapter).   That report shows declining productivity since 1998, and attributes much of it to the increased peak levels in demand (not overall demand, or average demand) as responsible for much of the decline in productivity.

The article also notes (graphic shown) that wind output is not reliable, and in fact trends opposite, meeting peak demand.  So the impact on productivity due to peak increasing, in Australia, is greatly exacerbated by contracting supply that can only lower the productivity of other sources that are required do meet peak demand - by operating less during all the non-peak hours of the year.

Ontario does not have increasing peak demand - which may very well be attributable to considerable spending in programs to curtail peak demand.
It does have a rapidly shrinking utilization of capacity (capacity factor) as it adds wind generation that is least productive during it's peak summer months.

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