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## Experts react to the Finkel Review on the future for Australia's electricity generation

Sou | 7:30 PM
Many of you will have been glued to the internet (or television) over the past few hours, first watching the Comey session before the Senate Committee in the USA, then the elections in Britain. While you were being entertained, an important report was released here in Australia. It's known as the Finkel Review, because the panel preparing it was headed by Australia's Chief Scientist, Dr Alan Finkel.

The report is called the Independent Review into the Future Security of the National Electricity Market. It has important implications for how Australia manages the transition away from fossil fuels (particularly coal) into the new energy economy.

Some people are being pragmatic about it, others are concerned that it will mean that Australia will not move quickly enough, and that we won't meet our international obligations.

Below is an article about the report, just published at The Conversation.

#### Energy solutions but weak on climate – experts react to the Finkel Review

Hugh Saddler, Australian National University; Alan Pears, RMIT University, and David Karoly, University of Melbourne

The keenly anticipated Finkel Review, commissioned in the wake of last year’s South Australian blackout, has made a range of recommendations aimed at delivering a reliable, secure and sustainable National Electricity Market.

Among the proposals is a new Clean Energy Target to boost investment in low-carbon electricity generation, as well as moves to require high-emitting power stations to give three years’ notice before shutting down.

Below, our experts react to the measures.

#### “Security and reliability are first”

Hugh Saddler, Honorary Associate Professor, Australian National University

With so much focus on the design of a mechanism to support a shift towards lower-emissions generation, it is easy to forget that the primary purpose of the Review, commissioned following the “system black” event in South Australia on September 28, 2016, was “to develop a national reform blueprint to maintain energy security and reliability”. It is thus appropriate that security and reliability are the first topics to be addressed in the main body of the report.

System security is defined as the ability of the system to tolerate disturbances. Maintaining security requires the system to be able to prevent very high rates of change of frequency. At present the system has no explicit mechanism for doing this, but relies implicitly on the inertia provided, effectively as a free service, by existing large thermal generators.

The report recommends a series of regulatory energy security obligations to provide this service by various additional means, falling on the transmission network service providers in each of the five NEM regions (states), and also on all new generators connecting to the system.

System reliability is defined as the ability of the system to meet consumer demand at all times. In the old system, this is achieved by “dispatchable” generators, meaning coal and gas generators that can vary their output as required to meet demand.

In the new system, with large amounts of variable wind and solar generation, other supply sources are needed to meet demand at times of low wind speed and/or lack of sun – that is, to act as complements to wind and solar. Existing hydro and open-cycle gas turbine generators are ideally suited to this task, but with the growth in wind and solar generation, this capacity will very soon be insufficient for the task across the NEM (and is already insufficient in SA).

The Report recommends what it calls a Generator Reliability Obligation, which would be triggered whenever the proportion of dispatchable generation (which could include batteries and other forms of storage) in a region is falling towards a predetermined minimum acceptable level. The obligation would fall on all new renewable generators wishing to connect thereafter and, in the words of the Report “would not need to be located on site, and could utilise economies of scale” through multiple renewable generation projects “pairing” with “one new large-scale battery of gas fired generation project for example”.

If implemented, this recommendation would seem certain to greatly complicate, slow down and add to the administrative overhead cost of building new renewable generation. It would involve putting together a consortium of multiple parties with potentially differing objectives and who would otherwise be competing with one another in the wholesale electricity market.

A far better approach would be to recognise that dispatchable generation provides a distinct and more valuable product than non-dispatchable generation. There should be a separate market mechanism, possibly based on a contracting approach, to provide this service. If well designed, this would automatically ensure that economies of scale, as may be realised by pumped hydro storage, for example, would be captured. This approach would be far more economically efficient, and thus less costly to electricity consumers, than the messy processes required under the Report’s obligation approach.

#### “Energy efficiency is effectively handballed to governments”

Alan Pears, Senior Industry Fellow, RMIT University

The Review’s approach to the demand side is very focused. Demand response, the capacity to reduce demand at times of extreme pressure on the supply system, is addressed thoroughly. The past under-utilisation of this approach is acknowledged, and the actions of the Australian Energy Market Operator (AEMO) intended to capture some of its potential in time for next summer are outlined.

However, the deep cultural problems within the Australian Energy Markets Commission regarding demand response are not tackled. Instead, the AEMC is asked (yet again) to develop facilitation mechanisms in the wholesale market by mid-2018.

Energy efficiency is effectively handballed to governments. After making some positive comments about its valuable roles, recommendation 6.10 states that governments “should accelerate the roll out of broader energy efficiency measures to complement the reforms recommended in this Review”.

This is a disappointing outcome, given the enormous untapped potential of energy markets to drive effective energy efficiency improvement. But it clearly shows governments that they have to drive energy-efficiency initiatives unless they instruct energy market participants to act.

#### “It follows the wrong path on greenhouse emissions”

David Karoly, Professor of Atmospheric Science, University of Melbourne and Member, Climate Change Authority

The Finkel Review says many sensible things about ways to improve the security and reliability of Australia’s electricity sector. However, it follows completely the wrong path in what it says about lower greenhouse emissions from the electricity sector and Australia’s commitments under the Paris Agreement. This is disappointing, as Alan Finkel is Australia’s Chief Scientist and a member of the Climate Change Authority.

All economy-wide modelling shows that the electricity sector must do a larger share of future emissions reductions than other sectors, because there are easier and cheaper solutions for reducing emissions in that sector. However, this review’s vision is for “emissions reduced by 28% below 2005 levels by 2030” – exactly the same as Australia’s target under the Paris Agreement. It should be much more.

Australia’s commitments under the Paris Agreement are “to undertake ambitious efforts” to limit global warming “to well below 2℃ above pre-industrial levels”. The Targets Report from the Climate Change Authority in 2015 showed that this means Australia and the electricity sector must aim for zero emissions before 2050, not in the second half of the century, as suggested in the Finkel Review.

Hugh Saddler, Honorary Associate Professor, Centre for Climate Economics and Policy, Australian National University; Alan Pears, Senior Industry Fellow, RMIT University, and David Karoly, Professor of Atmospheric Science, University of Melbourne

1. Sou,

Thanks for providing context on Australian electricity generation, which, weirdly, seems to have become a cause celebre among deniers across the globe. See for instance https://tallbloke.wordpress.com/2017/06/08/last-chance-hotel-australias-energy-crisis-at-the-crossroads/ , one of many of Tallbloke's cross postings on the subject, which appeared just before your post. It bizarrely paints Turnbull and Frydenberg as a couple of corrupt renewable energy zealots presiding over the imminent collapse of electricity supply in Oz.

1. That's bizarre. Here Frydenberg and to an increasing extent Turnbull are known for delaying the shift to renewables.

Frydenberg is regarded as captive of the coal industry who is anti-renewables. Turnbull is regarded as a turncoat.

A few years ago Turnbull castigated our then Prime Minister Kevin Rudd for not moving decisively enough towards a carbon tax and climate change mitigation, but now he's the one who's holding it all back.

2. The government whose treasury minister brings a chunk of coal to parliament as a prop is somehow filled with renewable energy zealots?

Reality is even more challenging for these guys than I thought!

2. The Finkel review hits the renewable camp with a hammer. The most important thing that matters in a civilized society is reliable and affordable energy at any time. Before renewables can deliver that (if ever), many adjustments to the operation of renewable power generation and storage are required. People will realize now that this is never going to happen and therefore renewables will not be sustainable.

1. That's a brilliant head in the sand pose you have.

2. I cannot think of a word for a tirade of opinionated assertions. Can anyone suggest one?

3. UK currently 23% wind - Lights still on! I think there is till a distribution problem 7Gw seems to be the peak. Upgrading still going on solar seems to deliver 8GW +rooftop stuff.

https://s25.postimg.org/j7q0m35wv/uk_ng.jpg

4. "The most important thing that matters in a civilized society is reliable and affordable energy at any time."

According to Bojangle there can have been no civilisation before the fossil fuel industry. So now climate change deniers have to rewrite the history books to keep their nonsense going.

What's happening here is the politicians have failed us. Even the Paris agreement was, in reality, utterly inadequate. But human scientific ingenuity still offers us hope because renewable energy is becoming so cheap it will replace fossil fuels if it is left to market forces.

So now the same people who denied climate change for the fossil fuel industry are obstructing the development of renewable energy on behalf of the fossil fuel industry.

5. @ Millicent
You said: ¨According to Bojangle there can have been no civilisation before the fossil fuel industry.¨
Well, that is to say Millicent, of course there has been civilization, but of a totally different kind than the one you know today. So if you want to go back to the dark ages, be my guest. But please be aware that almost anything we can now enjoy in our modern society (electricity, medicine, hygiene, computers, (public) transport, safe drinking water and food, long and healthy life etc..) is the direct result of the immense success of fossil fuels. This does not mean that it should not change in the future, but denying that our beautiful modern society owes everything to oil is plain stupid. For now and the near future (30 to 40 years), fossil fuels are the only source of energy that can sustain our standard of living (or nuclear should be invoked). People who tell us that we can replace fossil fuels with the current renewables are plain stupid (no knowledge of mathematics and physics) or are showing bad faith, or both.

You also say : ¨But human scientific ingenuity still offers us hope because renewable energy is becoming so cheap it will replace fossil fuels if it is left to market forces.¨
This is simply untrue. The energy density and power density of solar and wind are way too low to compete with fossil fuels on an economic level. The only way to make them appear to be competitive is to introduce all kind of dubious externalities to put an extra financial burder on fossil fuels.

6. Utilities disagree with bojangles, e.g.:

http://www.kpbs.org/news/2017/may/26/sempra-vp-surprises-says-100-percent-renewable-gri/

“I am speaking with confidence now. We have a solution now to adjust the intermittency of solar and wind energy that is no longer a technology challenge. Now it is an economic decision," said Patrick Lee, Sempra Energy vice president for major project controls. “So installing a base load power plant is no longer your only option. You can now look at solar, wind and storage as alternatives, and still be able to manage the reliability of the grid. So that is the takeaway I would like you to have.”

7. "Well, that is to say Millicent, of course there has been civilization..."

There are plenty of non dark age civilised societies too. Classical Greece was not a dark age society. I'm sorry, but if you have a limited vocabulary then don't blame me. The term you are looking for is "industrialised society".

As for the rest: repeating your fossil fuel industry gobshite doesn't make it any truer.

"The only way to make them appear to be competitive is to introduce all kind of dubious externalities to put an extra financial burder on fossil fuels."

Meanwhile back in the real world: Fossil fuels subsidised by $10m a minute, says IMF 8. 'a tirade of opinionated assertions'='bojangling'? 9. @Nick Yup, that works. 10. Bojangles, im wondering how much energy is used by factories making kitchen knick knacks, hanggliders, jet skis, christmas lights, gourmet salad dressing, slippers that look like animals, and a million other bits of crap? Perhaps some conservation is in order, seeing as things are turning to crap really fast. 11. "Meanwhile back in the real world: Fossil fuels subsidised by$10m a minute, says IMF"

The IMF does not say that. (It specifically states the report authors conclusions are their own).

The report itself concocts all sorts of spurious fossil fuel "subsidies", including the cost of road accidents and traffic congestion.

At the end of the day, the single biggest unpriced externality of fossil fuel burning is the co2 emission. All other "subsidies" and "externalities" listed in the "IMF" report (air pollution, road repairs, consumption subsidies, etc.) are subsidies for personal mobility, political stability (OPEC countries), poor smokestack scrubbing (non-OECD countries), etc.

12. "The report itself concocts all sorts of spurious fossil fuel "subsidies", including the cost of road accidents and traffic congestion."

Ohh "concocts". Why justify what you write when you can use words like that instead. So people being maimed and killed are just "spurious costs" now are they? Just because you don't care how much harm burning fossil fuels does does not make it "spurious". And that most obvious point shows us what all the rest of your post is worth.

"...are subsidies for personal mobility"

This is just mind boggling. I walk into town. The guy over the road from me drives into town and pumps toxic crap into the air when he does so. And you think I should subsidise the guy who can't be bothered to get off his arse.

13. Everything I've read, health effects of air pollution and CO2 emissions are about equal. Those are directly related to fossil fuels -- electric cars don't do this.

Road construction seems a stretch, but I'd have to read the article to get their justification.

The other subsidies are subsidies that incentivize the use of fossil fuels. They may be intended for other things, but intent doesn't matter.

14. "The report itself concocts all sorts of spurious fossil fuel "subsidies", including the cost of road accidents and traffic congestion."

Joris should do the calculations without those, and enjoy getting a somewhat smaller number.

That it will still be an e-nor-mous number, who cares?

15. Is a straight up grant a subsidy? I'd say so.

Trump recently took credit for a coal mine that opened recently. It was announced a year ago, well before Trump took office. It's going to employ a hundred people.

It looks as if that Pennsylvania coal mine needed a \$3m handout from the government to get it going - a government grant, not even a cheap loan, according to this article.

http://www.mining.com/new-met-coal-mine-opens-pennsylvania/

16. Joris is absolutely right. The mentioned IMF report is one of the most surreal examples of assigning costs in a ludicrous manner. This has got nothing to do with reality.

@ Millicent, numerobis, Marco
Looking at your answers to Joris, it shows that you are all living in a fantasy world. You still don´t understand what brought you all the privileges of modern society (electricity, medicine, hygiene, computers, (public) transport, safe drinking water and food etc..). Furthermore, the over all effect on human health, resulting from scientific developments facilitated by the use of fossil fuels, is immensely positive (despite relatively minor effects of air pollution that are diminishing rapidly worldwide).
Furthermore, you still don´t want to accept that current renewables (solar and wind) will never be able to replace fossil fuels. It is just not going to happen (use your calculator!). So in the coming decades, we will burn a lot of fossil fuels, because there is no other option, unless nuclear would be invoked (but funny enough, that is not what you want, despite the fact that you are sooooo concerned about the “irreversable damage” that CO2 does to the climate and threatens the future of the planet).

@ Li D
Your comment is interesting, as it shows the train of thought of many of the respondents on this site. You say that conservation may be imposed on the western world, because a lot of products produced nowadays are not suitable (to you). So, because Li D does not like a certain lifestile of other people or the products they consume, he believes that he has the moral right to impose restrictive measures in terms of energy use to the rest of the world.. He makes a distinction in cases for which energy should be available or not.
Li D, let me make this clear: it is not up to you to decide where the energy is used for or not (nor is it for me).
So the only thing we can strive for is energy conservation in general terms, which is a good thing. At the same time, energy conservation will not solve the problem of worldwide energy need. As the world develops further, whether you like it or not, the amount of energy needed will increase dramatically in the coming decades (and thus the unavoidable burning of fossil fuels).

17. bojangles, we get that you're upset. However you're mistaken if you think that repeating yourself over and over and over again will achieve anything except clog up the comments section.

In addition, you putting words into the mouths of other people reduces your already low credibility further.

18. BTW, I don't think anyone doubts that the scientific, medical and industrial revolution, fueled by fossil fuels, has resulted in the world we have today, with a bigger proportion of the population than ever living well.

I also doubt that anyone here is under the illusion that all use of coal and oil will cease tomorrow.

There would also be few people who advocate such a thing, because of the disruption it would cause.

What most people want is to fast track the restructuring of the energy sector to avoid the worst that could happen with global warming. What most people object to is the strong and vocal opposition to moving to a cleaner, safer world, which is coming from corrupt individuals and their ignorant fans.

I for one don't want to see civilisation, plants and animals destroyed by our own actions. It may indeed be inevitable (I hope not), and if so, it doesn't mean I have to like it or stop doing what I can to prevent it from happening.

19. Mr. bojangles appears to be of the school that states until one can do everything, one must do nothing at all. There is, in his mind apparently, no benefit to burning, say, 25% less fossil fuel on the way to reorganizing the energy sector over a period of decades.

It took most of a century to go from wood to coal around the 19th century. Using his "logic" nothing should have been done until everything was ready for the shift.

There is precisely zero economic sense in proposing this line of argument. Change on a society wide scale takes decades of investment, labor, and adjustments of many sorts. It cannot be done as a step change.

20. I wonder does bojangles mistakenly think that because coal and oil transformed societies it is somehow sustainable in the medium and even long term.

It's not.

We are in a very precarious situation, with a population explosion of the human species, the serious depletion (and extinction) of plants and animals essential to us, enormous damage to ecosystems we are part of, and the world heating up way too quickly for us to cope with.

21. BojanglesJune 13, 2017 at 6:19 PM
"Joris is absolutely right. The mentioned IMF report is one of the most surreal examples of assigning costs in a ludicrous manner."

When its climate science, the climate scientists must be producing fraudulent information or else Bojangles and Co. are a bunch of empty headed jerks parroting fossil fuel industry propaganda.

When its renewable energy, the economists must be producing fraudulent information or else Bojangles and Co. are a bunch of empty headed jerks parroting fossil fuel industry propaganda.

There's a bloke called William of Occam who tells us who Bojangles and Co. are. I imagine William of Occam is therefore another guy whose reputation is to be trashed in the fossil fuel industry's interest.

3. I would like to write some brilliant comment, however i find that all i can say is that humanity will keep bumbling along in its pathetic way and when the reality comes to pass those then will as "Why" and as usual " No body told me".
This is how we have life the idiots are in control and put up with it.

4. I applaud all efforts to transition away from use of fusil fuels. However, the elephant in the room is agriculture and especially the live stock industry. Going vegetarian or, better still, vegan is the most cost effective way for individuals​ to combat global warming. Not only is it better for the environment, is better for your own health and its also cheaper. However it means throwing off the brainwashing that you're exposed to every day via the media, cinema and television that makes you believe that you need to eat plenty of animal products.

1. Yes, I'm thinking of doing a series on the food supply problems we're going to be facing - maybe later this year.

For now, a lot of people probably already find meat too expensive. It seems as if it's doubled in price in the last 2 or 3 years here in Australia, anyway.

In coming decades our diet will probably be very different to what it was (at least in western countries) in the twentieth century.

2. Sou, im not sure where i read it, but climate issues aside, theres a coming crisis with soil viability appearently.
Sixty years left from memory.
You may want to look this up if you are doing a series.
Perhaps land clearing and aquaculture could be examined as well.

3. Found it.