The Coastwatchers Association Inc

The Australian Energy Market Operator (AEMO) recently appointed (March 2017) Audrey Zibelman, an American, as its new CEO.

Zibelman was one of the leaders of New York’s “Reforming the Energy Vision” following the 2012 Hurricane Sandy, in which thousands of New York residents were left without power for weeks.

The reforms increased energy security through a range of measures, including smart grid technology, battery storage and distributed generation strategically placed throughout its network.

This appointment could signal the biggest shift in culture and technology of the AEMO, which is responsible for the operation of Australia’s mains grid. It also comes at a time when the Finkel Review is only months away from reporting.

The AEMO has been criticised for its slow responses to adapting policy to renewable energy and other new technologies. This was highlighted after the South Australian blackout when renewables were blamed for the problem. Withing a week AEMO required new standards be introduced throughout Australia, which would avoid wind-farms automatically turning off early. The technology had been in use in Europe for over a decade!

For those wanting more information, listen to an interview between Audrey Zibelman and Geraldine Doogue on ABC Radio National on April 1st 2015.
https://radio.abc.net.au/programitem/ pgPG9LeZ27?play=true

By Sophie Vorrath, Renew Economy, 17 March 2017

As state and federal politicians duke it out over energy policy and investment, the Independent Review into the Future Security of the National Electricity Market, led by Australia’s chief scientist Dr Alan Finkel, remains on track to release its final report mid-year, having gathered more than 360 submissions from industry stakeholders and observers.

After a dramatic week of surprise investment announcements and live-toair spats, the Review, which was established in October off the back of South Australia’s state-wide blackout in September, remains the nation’s best hope at establishing a bi-partisan blueprint for national power security, as well as achieving a considered reexamination of the rules governing Australia’s energy markets. And while the submissions to the Review, the majority of which were made public on Friday, reflect the many different views and agendas of a broad range of industry players and stakeholders, there are two strikingly common themes:

a) Consistent, bipartisan policy on both energy and climate policy is crucial to progress; and
b) We need to move on from the fossil fuels vs renewables debate.
“Currently there is a disconnect between political party aspirations and state aspirations for the energy markets which is creating confusion resulting in a hiatus in actions to address the problems being faced,” said the submission of the Major Energy Users, whose member companies include some of the biggest manufacturers on the NEM.
“If emissions reduction policies impact the energy markets, it becomes essential that the emissions reductions policies are integrated into energy policy; further, emissions policy needs to reflect the ability of the energy markets to accommodate the emissions policy.
Inevitably, this means that energy market policy and emissions policy must be aligned,” it says. “Stable, long term and predictable policy is critical to attract the investment to address the current issues and undertake the transition,” says the submission from the Australian Aluminium Council.

The Australia Institute uses its submission to express the hope that the Finkel Review can “steer Australia back towards a policy path that looks after the interests of energy consumers and the environment. “With political stability and support the RET can rapidly increase investment in renewables and aid a transition to a lowemissions energy system,” TAI says. “We hope the Finkel review can provide firm direction towards a renewable future for Australia’s energy systems.”

And the Australian Energy Regulator makes a similar plea: “There is an urgent need for energy and emissions reduction policy to be better integrated,” the AER submission says. “This needs to happen at the overarching policy level. Ultimately, policy makers will need to balance objectives of emissions reduction and energy security and affordability, but this can only happen effectively if the interrelationships between emissions reduction policy and energy policy are well understood.”

Finkel, himself, has said the nearly 400 submissions, alongside the insights gained from consultations in Australia and internationally, will help inform the development of a “comprehensive blueprint” for government. “The breadth and depth of these submissions is a mark of the community’s determination to help shape the future of our electricity sector,” he said in comments on Friday. “It is also reflective of the message the Review Panel has received from the outset: a nation like Australia can and must rise to the challenges we face.

Notably, though, he points out that the energy market experts that he and two other panel members met with in Europe and the US were coming from a place that was “well advanced” in managing the policy and technology driven changes transforming their electricity systems.

Some such experts, including Californian EV and battery maker, Tesla, and New York based blockchain microgrid start-up LO3 Energy, were among those who contributed submissions to the Review.

“LO3 Energy’s view is that we are currently only at the very beginning of market and grid architecture changes that will begin to take place in an exponential fashion over the next 3 to 5 years,” the company said in its submission.
“We believe the grid will need to align with transactive energy principles, where consumption, production and the transportation of energy will selforganise according to economic efficiencies.

“The regulatory structure would also need to change, to be aligned with these principles. Market participants would need to be rewarded for of maximising the efficiency of energy production, storage, etc, and therefore should earn returns based on increasing the efficiency, resiliency or adaptive nature of the grid.

“As such, the power markets and utility industry will be faced with having to embrace and eventually adopt new ways of thinking, operating and competing,” LO3 Energy said.

Many Australians are totally disheartened with the political impasse and policy inertia in Australia. In turn this leads to significant disrespect for the elected politicians at both Federal and State level. Talk to them in private and their aspirations are commendable, combine them together, and they are no more than a meek shadow of those aspirations.
The fact they call themselves “a political class” is a euphemism, and helps explain why they are so out of touch. Many believe their IQ jumps 20 points when they enter Parliament. Most have evolved as staffers or trade union officials, and few have had ‘real’ jobs especially in policy and social areas. They raise their hands and voices as “a class”, because the rigidity of nonconformity, is political extinction.

A recent analysis of Australian and Norwegian politics, sought to answer the question as to why their had been so much greater unity both within and between parties in the post war period up until the mid 1970s. The answer was simple – many members of all parties had fought or been prisoners together in WWII, and their survival depended on cooperation, and unity. Post their retirement there appears to be no common bond to unite the “class”, not even the future of this nation.

Add to this the emasculation of the Public Services, and the country has what Laura Tingle calls “Policy Amnesia”. The result is a lack of review, an entrenchment of policy bias, and the complete lack of development of ideas and directions that will enhance the well being of the generations that will follow, rather than the member’s survival at the next election.
The GFC was a wake up call for the world, but not in Australia as we cruised through the crisis, more from luck than sound planning. We are certainly a lucky country, but at some time that can and will change.

Then the politicians will have to perform, and if their performances to date are any indication, it will be a disaster for this country, as the wardrobe of policy options and expertise will be empty.

In recent years, energy policy in this country, has been described by commentators and experts as ‘shambolic’. There is little serious energy policy direction from governments. Meanwhile pollution continues at an unprecedented pace with little to no consideration of the future legacy that is being left.

The recent failures in the electricity grids to South Australia and NSW, the shortages of gas, when Australia will shortly be the largest gas exporter to the world, and the cheap political point scoring by politicians at any opportunity, is a complete disgrace.
The Finkel Review will certainly try and lay a policy road map into the future of energy in this country. But whether our politicians are capable of stepping up is concerningly doubtful.

By Hugh Sadler, Honorary Associate Professor, Centre for Climate Economics and Policy, Australian National University
(The Conservation 18 February 2017)

On the early evening of Wednesday, February 8, electricity supply to some 90,000 households and businesses in South Australia was cut off for up to an hour. Two days later, all electricity consumers in New South Wales were warned the same could happen to them. It didn’t, but apparently only because supply was cut to the Tomago aluminium smelter instead. In Queensland, it was suggested consumers might also be at risk over the two following days, even though it was a weekend, and again on Monday, February 13. What is going on? The first point to note is that these were all very hot days. This meant that electricity demand for air conditioning and refrigeration was very high. On February 8, Adelaide recorded its highest February maximum temperature since 2014. On February 10, western Sydney recorded its highest ever February maximum, and then broke this record the very next day.
Brisbane posted its highest ever February maximum on February 13. That said, the peak electricity demand in both SA and NSW was some way below the historical maximum, which in both states occurred during a heatwave on January 31 and February 1, 2011. In Queensland it was below the record reached last month, on January 18. Regardless of all this, shouldn’t the electricity industry be able to anticipate such extreme days, and have a plan to ensure that consumers’ needs are met at all times?
Hugh Sadler
Much has already been said and written about the reasons for the industry’s failure, or near failure, to do so on these days. But almost all of this has focused on minute-by-minute details of the events themselves, without considering the bigger picture.
The wider issue is that the electricity market’s rules, written two decades ago, are not flexible enough to build a reliable grid for the 21st century.
Vast machine
In an electricity supply system, such as Australia’s National Electricity Market (NEM), the amount of electricity supplied must precisely match the amount being consumed in every second of every year, and always at the right voltage and frequency. This is a big challenge – literally, considering that the NEM covers an area stretching from Cairns in the north, to Port Lincoln in the west and beyond Hobart in the south.
Continent-sized electricity grids like this are sometimes described as the world’s largest and most complex machines. They require not only constant maintenance but also regular and careful planning to ensure they can meet new demands and incorporate new technologies, while keeping overall costs as low as possible. All of this has to happen without ever interrupting the secure and reliable supply of electricity throughout the grid.
Until the 1990s, this was the responsibility of publicly owned state electricity commissions, answerable to their state governments. But since the industry was comprehensively restructured from the mid-1990s onwards, individual states now have almost no direct responsibility for any aspect of electricity supply.
Electricity is now generated mainly by private-sector companies, while the grid itself is managed by federally appointed regulators. State governments’ role is confined to one of shared oversight and high-level policy development, through the COAG Energy Council.
This market-driven, quasi-federal regime is underpinned by the National Electricity Rules, a highly detailed and prescriptive document that runs to well over 1,000 pages. This is necessary to ensure that the grid runs safely and reliably at all times, and to minimise opportunities for profiteering.
The downside is that these rules are inflexible, hard to amend, and unable to anticipate changes in technology or economic circumstances.
Besides governing the grid’s day-to-day operations, the rules specify processes aimed at ensuring that “the market” makes the most sensible investments in new generation and transmission capacity. These investments need to be optimal in terms of technical characteristics, timing and cost.
To borrow a phrase from the prime minister, the rules are not agile and innovative enough to keep up. When they were drawn up in the mid-1990s, electricity came almost exclusively from coal and gas. Today we have a changing mix of new supply technologies, and a much more uncertain investment environment.
Neither can the rules ensure that the closure of old, unreliable and increasingly expensive coal-fired power stations will occur in a way that is most efficient for the grid as a whole, rather than most expedient for individual owners. (About 3.6 gigawatts of capacity, spread across all four mainland NEM states and equalling more than 14% of current coal power capacity, has been closed since 2011; this will increase to 5.4GW and 22% when Hazelwood closes next month.) Finally, one of the biggest drivers of change in the NEM over the past decade has been the construction of new wind and solar generation, driven by the Renewable Energy Target (RET) scheme. Yet this scheme stands completely outside the NEM rules.
The Australian Energy Markets Commission – effectively the custodian of the rules – has been adamant that climate policy, the reason for the RET, must be treated as an external perturbation, to which the NEM must adjust while making as few changes as possible to its basic architecture. On several occasions over recent years the commission has successfully blocked proposals to broaden the terms of the rules by amending the National Electricity Objective to include an environmental goal of boosting renewable energy and reducing greenhouse emissions.
Events in every state market over the past year have shown that the electricity market’s problems run much deeper than the environmental question. Indeed, they go right to the core of the NEM’s reason for existence, which is to keep the lights on. A fundamental review is surely long overdue.
The most urgent task will be identifying what needs to be done in the short term to ensure that next summer, with Hazelwood closed, peak demands can be met without more load shedding. Possible actions may include establishing firm contracts with major users, such as aluminium smelters, to make large but brief reductions in consumption, in exchange for appropriate compensation. Another option may be paying some gas generators to be available at short notice, if required; this would not be cheap, as it would presumably require contingency gas supply contracts to be in place.
The most important tasks will address the longer term. Ultimately we need a grid that can supply enough electricity throughout the year, including the highest peaks, while ensuring security and stability at all times, and that emissions fall fast enough to help meet Australia’s climate targets.

The Commonwealth Chief scientist Alan Finkel who chairs a five-member panel, presented a preliminary report to the Commonwealth Government on renewable energy, in early December 2016.

He outlined the need for serious and urgent market reform in Australia’s energy markets. He said the shift to renewable energy was unstoppable, and was being lead by the consumers, not the industry or government. He pointed out that the market structure and supporting policies were not in place to assist this transition.

He noted that consumers were being hit by soaring grid costs, at a time when they have technologies available to reduce their bills. He said these technologies, such as rooftop solar and battery storage, are the “antithesis of the centralised energy model”.

The Finkel report calmly notes these changes, and the solutions, in contrast to the defensive claims (for coal) of many politicians. The Report indicates that the lack of policy was a major reason South Australia was caught short in its blackout of September 28 2016 and why other States may also be at risk. He said the answer is to look forward to new technologies and system designs, not to old centralised thinking.

The Finkel preliminary review highlights the inconvenient truth that Australia’s policy settings are lacking and are not sufficient to meet Australia’s modest Paris climate targets.

The report notes that the Renewable Energy Target does not extend or act beyond 2020, and its effectiveness has been undermined by policy instability and uncertainty driven by numerous reviews.

It says options exist to reduce emissions. These included the emissions intensity scheme ruled out by the Government in late 2016, and carbon price scrapped by the Abbott Government.

The Finkel review looks at the issue of system security and reliability, particularly in the light of recent events in South Australia, Victoria and Tasmania. He said systems are available to effectively integrate variable renewable electricity generators into the electricity grid, but the existing systems will have to change.

The Report notes that the transition to a lower emissions economy “cannot be reversed”, and residential and commercial consumers are at the centre of this change, with distributed energy resources (such as solar and storage) allowing them to become investors and electricity traders – with or without the National Electricity Market.

Finkel’s report has similar conclusions to the findings of recent reports from CSIRO and Energy Networks Australia. These reports suggest that half of all Australia’s power needs will come from consumers by 2050.

It is clear the Commonwealth Government needs to get into step.