The cock up that is the east coast energy market

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Dave

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If they are not meeting contractual requirements, then they are in the wrong and there should be repercussions. If they are meeting contractual requirements and are choosing not to supply, then this is because it is not profitable, or contracts are poorly designed or pricing mechanisms are poorly designed or whatever.

I am a pragmatist. I don’t like the privatisation that had occurred, but the situation is what it is, and it is necessary to come up with a way of getting thru the winter reliably, then the next few years, and so on.

Those. I'm not saying they didn't meet contractual obligations. I'm saying essential services go beyond that.

What they did may well have been legal. Doesn't make it moral or ethical.

campaigners the lot of them.
 

Saint

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Expecting them to lose money is unrealistic too.
None of what they're doing has been to avoid losing money. They can see the emergency spot prices on the horizon, so they stop adding profit-making generation in the hope of holding out until the system is near breaking point when they can then supply super-profit-making generation.

They were playing chicken with each other and the regulator.

If you're the last company with capacity to add. Would you supply it at 120% of the production cost, or wait until 200% of the production cost as blackouts sweep the country?

They were doing the latter, so the regulator stepped in to make them supply it at the 120% mark.

You think they signed a contract where they might lose money? You don't know big corporations.

Power generation is currently a near-monopoly. With Snowy 2.0 now 2 years late, there's a gap in the market.
 

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Taylor

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If you set aside climate change goals, could a coal fired plant be used to both ensure base load power and make it crazy cheap - forcing the rest of the market to adapt to lower price points to be competitive?

Could this have been the reason they closed down their production all along? No way...
 

kranky al

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What would we get first - nuclear power or nuclear submarines?

Talking about nuclear does not really answer our short term requirements.
I think battery storage is the short term solution. Think of all the rainwater sumps having community batteries installed on them so solar can start being more of a force.

My 7 kw system is currently derated via software to 5kw so it doesnt overload the grid. Theres a lot of us out there that export lots and can export even more with a grid able to store it.
 

Kwality

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So going into business is a no-lose situation? Pretty good business if you can guarantee no losses.

That is remarkably naive to suggest a producer does not know its cost of production, its break even ... you want them to sell at a loss.

See primary producers who let fruit rot on the ground - not Einstein stuff DA.
 

Kwality

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I think battery storage is the short term solution. Think of all the rainwater sumps having community batteries installed on them so solar can start being more of a force.

My 7 kw system is currently derated via software to 5kw so it doesnt overload the grid. Theres a lot of us out there that export lots and can export even more with a grid able to store it.

What is your informed guesstimate of the battery storage required for everyday Australia's 24/7 electricity requirements, not just householders.
 

Kwality

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None of what they're doing has been to avoid losing money. They can see the emergency spot prices on the horizon, so they stop adding profit-making generation in the hope of holding out until the system is near breaking point when they can then supply super-profit-making generation.

They were playing chicken with each other and the regulator.

If you're the last company with capacity to add. Would you supply it at 120% of the production cost, or wait until 200% of the production cost as blackouts sweep the country?

They were doing the latter, so the regulator stepped in to make them supply it at the 120% mark.

You think they signed a contract where they might lose money? You don't know big corporations.

Power generation is currently a near-monopoly. With Snowy 2.0 now 2 years late, there's a gap in the market.
Perhaps Aunty can help you understand what is going on here:

"It's not necessary to stay in the national electricity market to keep the lights on this, it is just a completely broken heap of rubbish.

"States need to take back control themselves because nothing nationally is going to happen which is going to be in their interest."

YOU only look at WA to know its doable. Stop hiding behind politics to blame the other mob.
 

Festerz

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That is remarkably naive to suggest a producer does not know its cost of production, its break even ... you want them to sell at a loss.

See primary producers who let fruit rot on the ground - not Einstein stuff DA.

Try reading up on how our electricity market operates or is meant to operate before making false comparisons. Your comparisons of multinational energy companies with with farms the horticultural industry is just plain dumb. i.e. 'not Einstein stuff'.

Under legislated Australian energy market rules suppliers do not have to 'sell at a loss'. They are compensated for any production losses.

For example, last year AEMO paid almost $100 million in compensation to generators.

However to receive that compensation they have to provide proof that they actually suffered a financial loss by supplying at the price set by AEMO.

Most independent experts suspect that what happened this week was generators trying to maximise returns by taking their supply off line to force a supply crisis in an attempt to force AEMO to lift the set price to be closer to the record high spot price.

AEMO did not fall for this ruse and intervened to suspend the spot market to ensure supply. An unprecedented action - but totally consisted with AEM rules agreed by energy companies as a condition of participation.

A detailed investigation into breaches of electricity market dispatch and offer rules by generators is now under way. Expect massive fines (albeit no where near the damage caused) to be dished out later this year.
 
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Demonic Ascent

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That is remarkably naive to suggest a producer does not know its cost of production, its break even ... you want them to sell at a loss.

See primary producers who let fruit rot on the ground - not Einstein stuff DA.
You want them to capitalise the profits and socialise the losses is that correct?
 

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Kwality

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Try reading up on how our electricity market operates or is meant to operate before making false comparisons. Your comparisons of multinational energy companies with with farms the horticultural industry is just plain dumb. i.e. 'not Einstein stuff'.

Under legislated Australian energy market rules suppliers do not have to 'sell at a loss'. They are compensated for any production losses.

For example, last year AEMO paid almost $100 million in compensation to generators.

However to receive that compensation they have to provide proof that they actually suffered a financial loss by supplying at the price set by AEMO.

Most independent experts suspect that what happened this week was generators trying to maximise returns by taking their supply off line to force a supply crisis in an attempt to force AEMO to lift the set price to be closer to the record high spot price.

AEMO did not fall for this ruse and intervened to suspend the spot market to ensure supply. An unprecedented action - but totally consisted with AEM rules agreed by energy companies as a condition of participation.

A detailed investigation into breaches of electricity market dispatch and offer rules by generators is now under way. Expect massive fines (albeit no where near the damage caused) to be dished out later this year.
I replied to a post..
 

Kwality

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I didn't say I expected them to lose money, which in any event is a risk they took when they bought into the system.

It wasn't about losing money, it was about making more by being bastards.

The problem has been imposed on the generators who existed before AEMO was thought of.
 

kranky al

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What is your informed guesstimate of the battery storage required for everyday Australia's 24/7 electricity requirements, not just householders.
Id have to put a lot of research into that.

I can say that households utilise 40% of power generation so if we get community batteries in densely populated areas or individual batteries in less dense areas we could eliminate a huge chunk of our emissions, make power cheaper for all households as well as more reliable.
 

Kwality

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They never should have privatised essential services

The problem is here today.

Albo is saying 18% of power will continue to be supplied by fossil fuels in 2030.
We cant live with this cock up on the east coast forever, or will we?

Germany to fire up coal plants as Russia turns down the gas​

The German economy minister says Germany must curb its gas use as Russia reduces its supply. Otherwise, things "could get tight in winter," he said.

 

Gough

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Given that it's looking like we're going to be forced to pay fossil fuel generators to produce power you could argue that this is energy debacle of the very few examples of a Scott Morrison government policy success. This is exactly what they were hoping for, government money propping up dying industries.
 

Kwality

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Given that it's looking like we're going to be forced to pay fossil fuel generators to produce power you could argue that this is energy debacle of the very few examples of a Scott Morrison government policy success. This is exactly what they were hoping for, government money propping up dying industries.

You & I both know this cock up will continue until renewables can offer dispatchable power 24/7.

Enormous demand for more power in decades ahead​

'The board warned there was going to be significant demand for more power to enter the national grid in the coming decades, meaning stability and certainty will be vital to encouraging new investment.

It warned that many coal generators were reaching the end of their useful lives, while electricity demand was expected to more than double over the next 30 or so years.

Forecasting ahead to 2050, it said the grid would require the equivalent of 50 new Snowy Hydro schemes to enter the market.'

& here in in Victoria Ms D'Ambrosio is using weasel words to placate the green lobby:
Victorian Energy Minister Lily D'Ambrosio said the ESB's plan provided the flexibility they wanted to see.

"We have always been clear that a capacity market operating in Victoria would make payments to zero-emissions technologies and not fossil fuels," Ms D'Ambrosio said.
 

Festerz

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Forecasting ahead to 2050, it said the grid would require the equivalent of 50 new Snowy Hydro schemes to enter the market.
Just a little over a month ago Morrison, Dutton and his supporters were saying there was no need to have a carbon pricing scheme because private sector 'technology breakthroughs' will see Australia meet reductions targets to 2050.

And yet we now have the same LNP supporters pointing to forecasts out to 2050 that assume NO technology breakthroughs in grid distribution and storage.

While conveniently ignoring both massive new renewable projects already under development and the fact that Australia has ample gas reserves owned by Australians to see us through the transition if only the previous government had put some effort into an energy policy framework that wasn't based on cheap climate wars politicking.

Fools and Hypocrites.

What is needed is a comprehensive and flexible national energy market policy framework. Including a complete overhaul of the current morass of state - commonwealth governance and oversight committees, boards and mechanisms that were designed decades ago with a focus on 1980s free market economics principles and have no place at a time when the sole goal is to ensure a reliable, safe and cost effective transition to a zero carbon environment over the coming decades.
 
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