Losing control of affordable reliable power

We're in a brave new energy world. Until recently, intermittency in power supply was demand-driven. Demand peaks meant having pricey spare capacity on hand to meet them, to keep the lights on.

We still have those demand peaks: each day, week, and seasonally. But the supply side has changed. Once we controlled total supply. We had base-load power 24/7. We had 'peaker' power generation that we triggered when extra demand put more pressure on the grid. We had a very reliable, geographically huge, power grid (the NEM).

Not today. Existing base-load and 'peaker' generation is prematurely shutting down. New investment is discouraged. Subsidised growth in solar and wind generation is soaring. 'Pumped hydro' is hyped. Surging renewables are destroying economics of traditional supply.

The NEM is not alone. The Western Australian grid is suffering too.

Grid managers warn power transmission and distribution infrastructure increasingly can't cope, either. Anybody watching PocketNEM knows how frantically they are paddling just to keep the lights on right now. This summer looks ominous. Without expensive upgrade remedies, will the grid become a 'stranded asset'?

Why is this happening? The root cause is we're fast losing control of the supply side of the electricity market. Increasingly, it's the weather and seasons that control power supply, not us. Supply peaks no longer match demand peaks. Both are often out-of-phase.

Renewables can be thought of as 'peaker' generators, but beyond our control. So grid managers now have to contend with different peaks: both on the demand side, and for supply.

Reliability is under threat, as is grid stability, because both are being cut by the two 'blades' of our energy 'policy' scissors. Subsidies go to intermittent and unreliable renewables, and politics bans or cuts investment in alternatives. Increasing renewables supply reduces viable 'dispatchable' power supply.

How can we maintain the current reliability standard (99.998% reliability, or only 10.5 minutes of outages each year)?

There are two broad options. Neither is cheap.

The first is to duplicate any given renewables capacity with 'dispatchable' capacity. Given political constraints in Australia, that's coal (preferably as base-load) or gas (despite East Coast costs).

Reliable generation capacity with renewables therefore is about double demand requirements. How supply is actually delivered depends on the weather, the sun cycle, seasons – and drought.