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No issue better connects the environment to people’s lives than energy. In order to deliver clean, affordable electricity we need to change our undemocratic system of supply

We are on course for a climate catastrophe. 2016 is set to be the hottest year on record. Unless the Paris agreement’s target of limiting the rise in temperatures by 1.5C is met, heatwaves like that in 2003, which killed tens of thousands of people in Europe, will become the norm. And that is before considering rising sea levels and desertification that will sink cities, and kill and displace millions, or the fact that the Earth has already lost half its wildlife in the past 40 years.

The task for politicians is to propose real solutions to the single most important issue facing humanity. Too often, the environment is considered a matter for scientists, enthusiasts and activists. To increase public understanding and energise the political debate, we need more than facts – we need a programme that resonates with people’s everyday experiences, offering not just warnings but opportunities and improvement.

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Labour leader to announce plans to massively increase renewable energy and phase out coal power earlier than currently planned

A Labour government under Jeremy Corbyn would ban fracking, ditch all coal-fired power stations and massively increase renewable energy, his leadership campaign has announced.

In the clearest signal yet that the party intends to embrace an ambitious environmental agenda and break its traditional strong links to mining and fossil fuel extraction, the Labour leader has pledged to phase out all coal power stations by the “early 2020s” and invest heavily in energy-saving to avoid building many new power stations.

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ARENA believed to have proposed a compromise on its funding position, in an effort to continue its support of new technologies and critical research.

More than half the shortlisted large-scale solar projects expected to get funding from ARENA tender. A total of 12 projects, mostly with single axis tracking technology and costs as low as $100/MWh are expected to win grants, with solar module costs set to slump again next year.

Heritage Lottery Fund report warns of a continuing a decline in the condition of parks as austerity budget cuts squeeze council budgets

The UK’s hugely popular public parks face falling into decline and neglect as a result of budget cuts, a new report warns.

Park use is rising, with 57% of adults now visiting their park once a month or more, while 90% of families with children under five head to their local green space at least monthly, the State of UK Public Parks 2016 study reveals.

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Lindisfarne On the table around the crust in my fingers it was like a dancefloor, with dominant birds and watching wallflowers

Sparrows had gathered in a coffee house courtyard on a late summer afternoon on Holy Island. Most of the tourists were chasing the ebb tide across the causeway as the North Sea wiped and revealed a sacred history every few hours. With the tide out, the island’s holy precincts endured their heritage quietly, with a few stragglers and the birds.

Furtive and mouse-like, the sparrows scuttled under tables, the lookouts venturing on to chair backs to scope out possibilities. They have an acute instinct for a good mark, and I had a sparrow-friendly vibe and a sandwich.

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Good news for Tesla drivers, with CTO JB Straubel saying the company expects "10 maybe 15 year life at a minimum" from its EV batteries.

The European Commission’s latest Quarterly report on electricity markets makes sobering reading down under.

Over the last year wholesale electricity prices have been falling just about everywhere across the developed world except here in Australia, where they are skyrocketing.

Figure 32 from European Commission’s Quarterly report on electricity markets analysing wholesale market price trends to the end of Q1 2016, in Euros per megawatt hour. The Platts PEP is the Pan European Power price index. Note that as recently as early 2015, Australia had the cheapest prices, now it is heading rapidly towards the most expensive. European Commission Quarterly report on electricity markets, see https://ec.europa.eu/energy/sites/ener/files/documents/quarterly_report_on_european_electricity_markets_q4_2015-q1_2016.pdf

Australian prices are now above European prices, well above the US prices and rapidly converging with Japan, which is still recovering from the shock of Fukushima in 2011 when prices rose to over eight times Australian.

With Japan now reactivating nuclear power production, and Australian LNG exporters putting the squeeze on domestic gas markets, it can be anticipated that Australia will soon be top of the price tree. Indeed, with 2016 Q2 and Q3 Australian prices rising at unprecedented rates, it probably already is.

Combined with exorbitant power distribution costs, the alarming trends highlighted by the EC’s report will be exercising the mind of our new Federal Minister for the Environment and Energy, Josh Frydenberg.

Comparison of wholesale electricity prices shown in the figure above as percentage of Australian prices. Note logarithmic scale. Data sourced from European Commission's Quarterly report on electricity markets, see https://ec.europa.eu/energy/sites/ener/files/documents/quarterly_report_on_european_electricity_markets_q4_2015-q1_2016.pdf How fast are Australian prices rising?

The trends highlighted by the EC’s report are expressed in Euros, so they somewhat obscure local dynamics. In reality, Australian wholesale prices are rising more steeply than ever before, having risen by around 45% over the last year. Prices over the last six months are now higher in aggregate than at any comparable time during the carbon tax period, which added around 50% to wholesale prices in the period 1/07/2012 - 17/07/2014. When the impact of the carbon tax on 2014 prices is removed, prices are up by more than 65% in just 2 years.

Wholesale prices averaged by season, on the Australian National Electricity Market (NEM) from spring 2009 through to winter 2016. For the carbon tax period 1/7/2012 through 17/7/2014, filled coloured bars show the prices with the carbon tax component subtracted, assuming an emissions intensity of 0.85 tonnes per megawatt hour. Actual prices for this period are shown by the open lines. Data sourced from AEMO half-hour aggregated price and demand datasets.

Compared to the same period one year earlier, wholesale prices have risen across all seasons and all jurisdictions in the last year, excepting summer in Queensland. The rate of increase has risen steadily from the spring 2015 through to the winter 2016. For the winter period of 2016, prices were up by an average by 85% compared to the previous winter, with the increase ranging from 65% in Queensland to 115% in South Australia.

Annual percentage changes in wholesale electricity prices on the National electricity market. The prices are calculated for the Spring of 2015 through Winter of 2016, compared to the same period one year earlier, for each of the mainland regions comprising the NEM. Data sourced from AEMO half-hour aggregated price and demand datasets. Why are electricity prices falling everywhere but Australia?

The reasons for wholesale electricity price falls in Europe and Japan are straightforward.

Both are dependant on imported gas, and with the oil-linked price for gas falling, so too are electricity prices. In the US market, the flood of shale gas greatly exceeds export capacity, so there is a continuing glut of cheap gas [1].

The story in Australia is quite different. Despite a three fold increase in gas production in the last few years, due to the opening up of new coal seam gas (CSG) fields in Queensland, the Australian domestic market is being squeezed as LNG exporters struggle to meet supply contracts.

In the Australian CSG industry it is an open secret that some exporters agreed punitive clauses in contracts should they fail to fill their LNG trains. Despite strong opposition from former industry champions such as John Ellice-Flint, exporters such as Santos stretched themselves on production by committing to two LNG trains. Now gas is being diverted from domestic markets to avoid industry collapse. The consequence is that Australian gas consumers are increasingly subject to scarcity pricing when domestic prices can rise to many times that which international buyers have contracted for the same gas.

Not surprisingly, steep rises in the cost of gas is causing a reduction in gas use in domestic electricity markets. In Queensland gas fired power output in winter of 2016 was down about 250 megawatts, over 20% on the year before. Meanwhile black coal generation was up 450 megawatts, with Queensland’s CO2-production from the electricity sector increasing by 5%.

An illustration of the impact of the rising cost of gas on the Australian electricity market are summarised in the figures below, which show how market prices varied with gas dispatch in Queensland over the winters of 2015 and 2016, respectively. In winter 2015, when gas dispatch averaged 1076 megawatts, there was no correlation between wholesale prices with the amount of gas dispatch, consistent with gas generation being a price taker. Then the average price of electricity was $39.6 per megawatt hour.

By winter 2016, when gas dispatch averaged 833 megawatts, a strong price correlation had established as gas generators increasingly set the price. Average prices had risen to $65.2 per megawatt hour with spot prices increasing on almost $100 per megawatt hour for each additional gigawatt of gas dispatch in winter 2016.

Pattern of market prices with gas dispatch in Queensland in winter, 2015. Abundant ramp gas during this period meant there electricity prices were decoupled from gas use. The grey points represent individual 5-minute dispatch intervals. The violin plots shown the distribution of price event for 8 gas dispatch bins, while the black circles show the means for each of the 8 bins. The red shade shows the linear fit to the 5 minute data at the 95% confidence level. Data sourced form AEMO 5-minute dispatch tables. Pattern of market prices with gas dispatch in Queensland in winter, 2016. Gas scarcity in the domestic markets during this period meant there electricity prices were strongly coupled to gas use, with prices rising on average $92/MWhour for each additional gigawatt of gas dispatch. Data sourced form AEMO 5-minute dispatch tables. We really need to talk about gas

In 2015, the availability of “ramp” gas made Queensland settings somewhat analogous to the US, where cheap gas increasingly fuels electricity generation. By winter 2016 when more LNG export trains had been commissioned, scarcity pricing was manifesting in our domestic gas markets impacting our electricity market, big time.

As the EC’s quarterly market report flags, this is a terrible outcome for Australia, obliterating our competitive advantage as a cheap provider of electricity in a little over a year. And it is hurting like hell, most severely in South Australia which has always been more exposed to gas prices than other states by virtue of its limited coal reserves.

While several compounding factors have played out in extreme price rises in South Australia, as discussed in my last post, the broader rises across Australia have their underpinnings in the rising gas prices as well as contractual arrangements in the gas market, including piping. The smoking gun is the steep rises in Queensland - a market that to this day remains essentially a renewable free zone.

The damaging reality of the situation is highlighted by a recent post on the tech website Whirlpool

• “We are a business in SA [South Australia] with high usage (use up to 14MW), on spot pricing since June 1st – and are turning everything off when a spike hits – but the last 5 minute spike was at the end of the half hour pricing cycle (price is averaged in half hour periods). We just chewed through $75,000 worth of power in a half and hour! (we are used to paying $1000). This period while the interconnector is down could effectively burn about 3 years of profits in 4 working days if the forecast prices come to fruition.”

One might ask why such energy users exposed themselves to spot (wholesale) pricing (the norm is via the contract market). Whatever, the cautionary is that 14 MW represents 1% of average South Australian power consumption. Ten such business at threat of going under would be devastating, with potential to reduce South Australian electricity demand by 10%.

The horse has bolted, so what next?

The EC’s quarterly market report was already flagging in Q1 2016 that Australian electricity production was expensive by international standards. Since then, further steep price rises across the NEM in autumn and winter 2016 have further exacerbated price differentials, surely now placing Australia amongst the most expensive producers of electricity in the world.

No doubt the gas lobby will absolve the gas industry from any responsibility for the recent events that have transpired on our electricity markets, arguing the solution lies in even more gas production, and that renewable energy policies are more to blame.

To be sure, eastern Australia is short on supply of cheap conventional gas from the offshore Gippsland Basin and a few other locations. Expanding the gas base by exploiting unconventional resources such as CSG was always going to come at a price, since such resources are inherently more expensive.

But developing the new CSG fields at such scale was always going to risk that production would fall short of targets. As much was acknowledged by the joint Department of Industry and Bureau of Resources and Energy Economics study into Eastern Australian gas markets

The current development of LNG in eastern Australia and the expected tripling of gas demand are creating conditions that are in stark contrast to those in the previously isolated domestic gas market. The timely development of gas resources will be important to ensure that supply is available for domestic gas users and to meet LNG export commitments. Such is the scale of the LNG projects that even small deviations from the CSG reserve development schedule could result in significant volumes of gas being sourced from traditional domestic market supplies

The hope is that the events of 2016 are transients, related to temporary development schedule difficulties. If they are not, then god help domestic consumers. A broader question for our gas exporters is why should so much risk from such development schedule difficulties be defrayed onto domestic consumers?

In prosecuting the case to deliver more of our national gas resources to market, perhaps it is not too much to ask that domestic consumers are offered some insurance against any further development schedule difficulties incurred by our exporters? After all, it is our gas.

Domestic reservation, anyone?

Notes

[1] Shale gas economics in the US is linked to co-produced liquids, and thus differs markedly from the CSG fields in Australia where there is no liquid hydorcarbon production.

Disclosure

Mike Sandiford receives funding from the ARC for geological research.

Researchers have created an interactive web tool to estimate how much energy could be generated by wind or solar at any global location.

NSW property development offers a tree change, and a share in an energy utility: a purpose-built, embedded network through which to buy, sell and store solar electricity, peer-to-peer.

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More than 150 of Australia's best environmentally sustainable homes will open their doors to the public across the country this Sunday, September 11.

ANU-based research program that aims lead the world in grid-scale battery storage innovation and integration has won $5m grant from ACT government.

End Coal Coal plants under development A new CoalSwarm assessment finds that the amount of coal power capacity in the developmental pipeline has declined by 14% since the beginning of 2016, due primarily to new restrictions in China and a slowdown in India.   by Christine Shearer and Ted Nace The amount of coal power capacity under […]

Australia has sought to water down climate declarations made through the Pacific Islands Forum

The success of commercial lighting continued to weigh heavily on energy efficiency prices in Victoria, while audit delays causes prices to rise in NSW.

US and China decision to join the pact to combat climate change means Paris climate agreement could come into force as soon as next year.

UK researchers are developing ways to spot the early signs of oesophageal cancer, which is often not detected until its advanced stages.

• Nine of 14 distinct populations to be removed from endangered list
• Four populations still listed as endangered, one as threatened

Federal authorities are taking most humpback whales off the endangered species list, saying they have recovered enough in the last 40 years to warrant being removed.

The National Marine Fisheries Service (NMFS) said on Monday that nine of the 14 distinct populations of humpbacks will be removed, while four distinct populations remain listed as endangered and one as threatened.

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New research from Swansea University challenges the idea that older people are dangerous drivers.