The cock up that is the east coast energy market

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I wonder why they chose 2020 as the relevant year

_111866166_wti.oil_20042020-nc.png



I wonder if a serious independent enquiry will find Mark as a deceptive individual who was trying to mislead the public?
Lol yes I chuckled when I saw this being shared on social media. “Oh 2020, I wonder what happened to the oil industry in that year”
 

Kwality

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And that is the exact bluff WA called

& exposes the absolute FAIL by the State Governments on the east coast .
Carpenter showed the way: you can take a horse to water but you cant make it drink.
 

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Kwality

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Indeed, why bother as they disappear off at a tangent .....


See this example of exactly how cocked up the east coast energy market is:

Solar farms pocket eye-watering returns as fossil fuels drive power prices higher​


Its not a problem in WA because its State Government acted close on 20 years ago.
 

SaintsSeptember

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Indeed, why bother as they disappear off at a tangent .....


See this example of exactly how cocked up the east coast energy market is:

Solar farms pocket eye-watering returns as fossil fuels drive power prices higher​


Its not a problem in WA because its State Government acted close on 20 years ago.

That reflects an overall shortage in electricity.
If we keep building Solar/Wind , we should get to a point where, on a sunny breezy day, we have a huge oversupply.
If that happens, those in fixed price contracts will be fine, those without will be ignored.
Then the opposite will happen, they will be dumping it for chicken feed.

With a normal commodity, you can choose whether to sell it at the market price , or put it away for later.
Can't do that with electricity , if you have it , you might as well get what you can , even if its a pittance.

If you were operating a battery or a pumped hydro facility , you wouldn't buy Solar at high price. Your business plan would be based on buying when there is a surplus (low price ) and selling at high cost.

Only a West Australian would think that "the east coast " is a single market.


W.A have overall good capacity vs needs so don't have high prices due to general shortage.
1677MW Coal.
4842 MW Gas and Gas turbine.

30MW Hydro
1018MW Wind ( peak power, based on averages this would be capable of making the equivalent overall electricity to a 300MW gas station ).
192MW of Solar ( not counting rooftop or private installations , I'd expect mines and other industries to be using a fair bit ).

---------------------------
Queensland
8080 MW Coal.
3714 MW Gas

671 MW Hydro
645 MW Wind
17298 MW Solar. ( Planned operational or under construction ).

You can see how it hits when the sun goes down.
 

Kwality

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Only a West Australian would think that "the east coast " is a single market.
;)
As a Victorian consumer I can tell you our Minister does not accept responsibility for Victoria's needs:
“There’s this hopping around and chopping and changing, whether it’s Marinus that comes first or Kerang link,” she said.

“The fact is [coal-fired] generators are going to be leaving and we have to get the transmission done.”

D’Ambrosio said Victoria will press other ministers at their next gathering to set firm dates for the major projects – costing more than $12bn and involving more than 10,000km of new lines – and get on with building them. Her concern was that future versions of the roadmap, which is called the Integrated System Plan (ISP), would shift the dates again.

 

Power Raid

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I love how the focus is gas, a big distraction from the actual issue, when the actual issue is far simpler.

We had an energy market that was reliant on reliable coal. We all accept we have to move away from coal but instead of transitioning based on engineering, we transitioned based on "hope" and market based.

A market based system of 6 minute blocks, favoured unreliable power generation of renewables. It also meant no matter how the market played out, coal couldn't make money. Gas also couldn't make money but for price gouging and capitalising on the unreliable nature.


Perhaps we need to ask ourselves, why are we following the FAILED German model which is high CO2, high security of supply risk, expensive, unreliable and carries massive geo-political risk.

We don't need coal, we don't need gas, we don't need renewables which relies upon gas. We need to look at jurisdictions that achieved 14-70g CO2 per kwh by the 1980s and copy them. Tassie, Ontario, Norway, Sweden and France are all wonderful leaders..........almost half a century ahead of the pack.
 

sonofafrank

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and norway's fund is much smaller than our superannuation and Australia's super has a much broader base than one reliant upon O&G revenue


and yes government could run low risk mining operations such as iron but:
1) is it better government collect 50+% interest on a risk free basis or collect 100% and operate on a risk basis and tie up capital that should go towards government services?
2) can governments restructure quickly to adapt to changing economic conditions?
3) can governments innovate?
4) can governments operate effectively with the tail waging the dog, being a large union based employer. History says no.
5) Can governments separate trade with geopolitical issues? Germany, Russia ad Ukraine says blood is on their hands
6) Issues, including those outlined above, can happen to government or private enterprise......but who governs independently, if government is the operator? Should we outsource governance to private enterprise, if government is no longer independent?
Norways economy and politics is completely different to Australia’s and can’t really be compared. But if Australian owned som of its assets like in the past it could easily create a sovereign fund. But the ALP made sure that won’t happen.

In theory any government project or operation would be ideal but has there ever been Australian department or projects known for its efficiency or coming in around it’s budget
 

Kwality

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Power Raid

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Consequences ?

A very interesting case study of management and culture:

A number of years back the head Peter Meurs (FMGs head engineer - now retired) presented to one of my mining companies going into construction phase. He gave a story where he explained a serious issue to Andrew Forrest which would cost hundreds of millions to fix and a couple of years. Andrew said thank you "just tell me it will cost no money to fix the issue and no additional time".

Peter thought Andrew didn't understand the issue and he explained it again. Andrew had the same response.

Peter repeated the story but a little frustrated that Andrew couldn't understand the issue and emphasised the cost and time blow out. Andrew's response was "why do I pay you big money if you can't solve the problem"

Peter ran a process internally and a junior come up with a solution that resolved the issue for $10m and only 6 weeks. Essentially Andrew's inability to accept bad news saved the business a couple of hundred million in cost, time and probably a billion in lost revenue.



However the same inability not to hear or deliver bad news can be very damaging. Iron Bridge was always going to cost $3.5B to $5B more than planned and never meet schedule. However the team covered up this fact as the messenger would get shot.........as they have been.

Magnetite has never worked in WA and for good reason.

We are already seeing the same failure in FFI with hydrogen and staff leaving.



So on one hand a culture can deliver amazing outcomes but the same culture can be very toxic and damaging.
 

kranky al

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A very interesting case study of management and culture:

A number of years back the head Peter Meurs (FMGs head engineer - now retired) presented to one of my mining companies going into construction phase. He gave a story where he explained a serious issue to Andrew Forrest which would cost hundreds of millions to fix and a couple of years. Andrew said thank you "just tell me it will cost no money to fix the issue and no additional time".

Peter thought Andrew didn't understand the issue and he explained it again. Andrew had the same response.

Peter repeated the story but a little frustrated that Andrew couldn't understand the issue and emphasised the cost and time blow out. Andrew's response was "why do I pay you big money if you can't solve the problem"

Peter ran a process internally and a junior come up with a solution that resolved the issue for $10m and only 6 weeks. Essentially Andrew's inability to accept bad news saved the business a couple of hundred million in cost, time and probably a billion in lost revenue.



However the same inability not to hear or deliver bad news can be very damaging. Iron Bridge was always going to cost $3.5B to $5B more than planned and never meet schedule. However the team covered up this fact as the messenger would get shot.........as they have been.

Magnetite has never worked in WA and for good reason.

We are already seeing the same failure in FFI with hydrogen and staff leaving.



So on one hand a culture can deliver amazing outcomes but the same culture can be very toxic and damaging.
Karara will be profitable if you just hang on one more quarter.

If not, just read this sentence again.
 

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SaintsSeptember

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I love how the focus is gas, a big distraction from the actual issue, when the actual issue is far simpler.

We had an energy market that was reliant on reliable coal. We all accept we have to move away from coal but instead of transitioning based on engineering, we transitioned based on "hope" and market based.

A market based system of 6 minute blocks, favoured unreliable power generation of renewables. It also meant no matter how the market played out, coal couldn't make money. Gas also couldn't make money but for price gouging and capitalising on the unreliable nature.


Perhaps we need to ask ourselves, why are we following the FAILED German model which is high CO2, high security of supply risk, expensive, unreliable and carries massive geo-political risk.

We don't need coal, we don't need gas, we don't need renewables which relies upon gas. We need to look at jurisdictions that achieved 14-70g CO2 per kwh by the 1980s and copy them. Tassie, Ontario, Norway, Sweden and France are all wonderful leaders..........almost half a century ahead of the pack.

Tassie , Norway , Sweden, and Ontario all enjoy a lot of water per capita, a lot of dams per capita. How would you emulate that? ( Maybe climate change can make Australia wetter ).
Ontario and France use Nuclear of course.

Ontario are still planning new gas facilities, but that's better than us running our old vintage ones. This one is future proof.
 

SaintsSeptember

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A very interesting case study of management and culture:

A number of years back the head Peter Meurs (FMGs head engineer - now retired) presented to one of my mining companies going into construction phase. He gave a story where he explained a serious issue to Andrew Forrest which would cost hundreds of millions to fix and a couple of years. Andrew said thank you "just tell me it will cost no money to fix the issue and no additional time".

Peter thought Andrew didn't understand the issue and he explained it again. Andrew had the same response.

Peter repeated the story but a little frustrated that Andrew couldn't understand the issue and emphasised the cost and time blow out. Andrew's response was "why do I pay you big money if you can't solve the problem"

Peter ran a process internally and a junior come up with a solution that resolved the issue for $10m and only 6 weeks. Essentially Andrew's inability to accept bad news saved the business a couple of hundred million in cost, time and probably a billion in lost revenue.



However the same inability not to hear or deliver bad news can be very damaging. Iron Bridge was always going to cost $3.5B to $5B more than planned and never meet schedule. However the team covered up this fact as the messenger would get shot.........as they have been.

Magnetite has never worked in WA and for good reason.

We are already seeing the same failure in FFI with hydrogen and staff leaving.



So on one hand a culture can deliver amazing outcomes but the same culture can be very toxic and damaging.

The company i work for is German owned.
They usually come up with an obvious solution to an issue ,throwing tech at it, and inevitably costing a small fortune ( a much smaller fortune than Twiggy was staring down ).
The thing is, the obvious solutions are not the only solutions, and when you approach the problem from another angle you often find a much simpler , more cost effective solution.

The other thing they tend to do is not accept any solution that doesn't totally address 100% of the issue. It has to be perfect or nothing.
In a lot of real world issues , fix 90% of the problem , and its a much smaller problem.

We have people calling for ZERO emissions. It usually involves inventing something.
If we could reduce it by 90% in reality, it would be a much smaller problem than it is now. You can then plan for further improvement from that point.
 

Power Raid

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Tassie , Norway , Sweden, and Ontario all enjoy a lot of water per capita, a lot of dams per capita. How would you emulate that? ( Maybe climate change can make Australia wetter ).
Ontario and France use Nuclear of course.

Ontario are still planning new gas facilities, but that's better than us running our old vintage ones. This one is future proof.

Yep

We can either build mountains, with great natural storage and encourage rain

Or build nuclear reactors

Australia has committed itself to 22 reactors already for science and defence. So I’d advocate following Chalk River.
 

kranky al

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That reflects an overall shortage in electricity.
If we keep building Solar/Wind , we should get to a point where, on a sunny breezy day, we have a huge oversupply.
If that happens, those in fixed price contracts will be fine, those without will be ignored.
Then the opposite will happen, they will be dumping it for chicken feed.

With a normal commodity, you can choose whether to sell it at the market price , or put it away for later.
Can't do that with electricity , if you have it , you might as well get what you can , even if its a pittance.

If you were operating a battery or a pumped hydro facility , you wouldn't buy Solar at high price. Your business plan would be based on buying when there is a surplus (low price ) and selling at high cost.

Only a West Australian would think that "the east coast " is a single market.


W.A have overall good capacity vs needs so don't have high prices due to general shortage.
1677MW Coal.
4842 MW Gas and Gas turbine.

30MW Hydro
1018MW Wind ( peak power, based on averages this would be capable of making the equivalent overall electricity to a 300MW gas station ).
192MW of Solar ( not counting rooftop or private installations , I'd expect mines and other industries to be using a fair bit ).

---------------------------
Queensland
8080 MW Coal.
3714 MW Gas

671 MW Hydro
645 MW Wind
17298 MW Solar. ( Planned operational or under construction ).

You can see how it hits when the sun goes down.
Orrrrr the huge oversupply is stored via various means
 

Kwality

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A very interesting case study of management and culture:

A number of years back the head Peter Meurs (FMGs head engineer - now retired) presented to one of my mining companies going into construction phase. He gave a story where he explained a serious issue to Andrew Forrest which would cost hundreds of millions to fix and a couple of years. Andrew said thank you "just tell me it will cost no money to fix the issue and no additional time".

Peter thought Andrew didn't understand the issue and he explained it again. Andrew had the same response.

Peter repeated the story but a little frustrated that Andrew couldn't understand the issue and emphasised the cost and time blow out. Andrew's response was "why do I pay you big money if you can't solve the problem"

Peter ran a process internally and a junior come up with a solution that resolved the issue for $10m and only 6 weeks. Essentially Andrew's inability to accept bad news saved the business a couple of hundred million in cost, time and probably a billion in lost revenue.



However the same inability not to hear or deliver bad news can be very damaging. Iron Bridge was always going to cost $3.5B to $5B more than planned and never meet schedule. However the team covered up this fact as the messenger would get shot.........as they have been.

Magnetite has never worked in WA and for good reason.

We are already seeing the same failure in FFI with hydrogen and staff leaving.



So on one hand a culture can deliver amazing outcomes but the same culture can be very toxic and damaging.
My point was sometimes in the private sector there are consequences, no more.
 

Power Raid

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This is the type of embarrassing reply that is a big part of the issue. Please think about the words "Perhaps we need to ask ourselves, why are we following the FAILED German model which is high CO2, high security of supply risk, expensive, unreliable and carries massive geo-political risk."

Why compare Australia to Germany? Surely a sensible response would be to compare Germany to successful jurisdictions.



what is Germany's CO2 per kwh vs France, Tasmania, Ontario, Sweden, Norway and every other successful nation?

This is why Germany's $1.5 trillion 45 years model is a failure..............especially when successful nations achieved their goal half a century ago
 

Power Raid

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Did you see how the blue bars haven't gotten bigger in one of those graphs? Was that what they were trying to show you?

I would suggest places like Tasmania, France, Ontario, Norway and Sweden have the recipe for success when it comes to clean power

Germany on the other hand is a failed model produce 10 to 35 times more pollution per kwh


Should Australia follow the failed German model or should it pursue a recipe of success during this climate emergency? but then again renewable fanbois don't care for environmental outcomes; right?
 

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