Below is an extract from a document regarding what's going on in the Sugar Cane Milling Industry. Sugar mills have been exporting power to the Grid since Noah was a boy and now they are getting charged to do so. Lets build another Solar or Wind farm and see if we can make the national power grid even more unstable.

It really drives home the importance of having a constant reliable power source (24 hrs a day), which you don't get from solar or wind. Someone say batteries, what a joke.

"Just as an aside, recently we have had negative electricity prices for exporting electricity into the grid for periods of the day. This is not a typo. Generators like us, had to pay the market to export electricity, to stay on-line. We can wind the generation back somewhat, but we also need low pressure steam from these turbines to run our factories. Hence, we cannot cut our output to the grid back to 0MW. On colder days there is a low air conditioning load on the system, and there are now a number of new large solar farms that have fixed forward electricity prices into the grid and the total power supply exceeds demand. So just to keep the big shafts on the generators hot and rolling over at low output in the large baseload coal stations (too expensive to stop and restart), they bid their price in the grid as negative just to keep going.
Then later in the year when the air conditioning load increases and the sun goes down, the demand for electricity is very high and there are forecasts of potential blackouts in southern states. Prices should go high in these periods and then we can recover some of the lower prices now. This shows how unstable the whole electricity generation system is in our country.
Through the milling council, we are also in discussion at state and federal level about how we might in the future, be able to directly supply electricity directly to the irrigation schemes, for the benefit of our whole industry."

Sounds more like it really drives home the reality of supply and demand in a 'free market' to me. And of course by 'free market' we all know that neither the renewable or non-renewable side is operating in subsidy free market.

What do you think the solution is? I don't think in today's world that something like building a new base load power station (coal) is really going to fly and probably doesn't even stack up economically without gov subsidy? Unfortunately we aren't in a country where lot of pumped hydro is a realistic option for all the excess energy generated at times.

I also think it's important to push hard on the development/research of renewable energy. Whether you believe the changes in the climate are man made or not I don't think continuing to use non-renewable sources is a long term solution.

"Free Market", is that where we destroy the local (Australian) dairy industry because we can import milk cheaper from China.

so if we have excess electricity produced by solar panels can we then run an air conditioner to cool the global warming?

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Crusoe said..
"Free Market", is that where we destroy the local (Australian) dairy industry because we can import milk cheaper from China.

That's a pretty poor analogy, can you even buy Chinese milk in Australia? The big dairy processors were the ones that boned the farmers, and yeah that's all about the 'free market' but it's also about supply, demand, shareholder profits and the fact people only wanted to pay $1/L for milk. For the record I buy Dairy Farmers.

Our history is full of complete balls ups in the name of the free market; selling of most of our national grid to the private sector...yeah worked out great...., selling off countless other public assets that are now owned by private companies who now reap all the rewards and profits....what did we get for it....the budget propped up for a year or two, a few tax breaks and if you're lucky a highway. Then there was the forward selling in long term contracts most of our gas reserves....of which we have the largest in the world....worked out real well.

Basically, we are governed by muppets, doesn't matter which party is in power, they'll both balls it up somehow. But I still don't think that means we should stop looking for a long term renewable energy solution.

Edit: By private companies I should say, publicly listed companies that are beholden to their shareholders.

Don't forget that a lot of generators that bid negative prices actually have PPA's (power purchase agreements) with retailers, so they are just bidding negative to ensure they are dispatched, but will actually get paid the price they have contracted.

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CJW said..
Unfortunately we aren't in a country where lot of pumped hydro is a realistic option for all the excess energy generated at times.

People at the ANU who know about things disagree
energy.anu.edu.au/research/highlights/anu-finds-22000-potential-pumped-hydro-sites-australia

My own half arsed idea is that we buffer the system with H2 in big tanks. Use some of it for fuel cell powered transport and some of it for electric grid support.

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Mr Milk said..
People at the ANU who know about things disagree
energy.anu.edu.au/research/highlights/anu-finds-22000-potential-pumped-hydro-sites-australia

My own half arsed idea is that we buffer the system with H2 in big tanks. Use some of it for fuel cell powered transport and some of it for electric grid support.

I wonder where all these are located? Hopefully in good solar and wind areas. Put the renewable generation right next door to the hydro storage and save on losses.

But have they done a full costing? I guess most of these sites aren't next to a transmission line, and probably in difficult terrain to reach. Add this to the cost of building the reservoirs, and it would be interesting to know the overall long term delivered cost of the energy, including the round trip losses. I'd guess it's going to cost a pretty penny.

The neg prices and blackouts are simply the market signalling that the supply of electricity is becoming increasingly unstable. Used to be isolated to south oz and tassie but the problems now so big its spreading.

Nothing new here and nothing will be done in time to avoid it getting far worse. All forecasted years ago but precious little has been done due to our "climate wars" freezing policy direction for near on 15 years now.

really its just laughable how much this will end up costing us in the long run.

3 completely seperate thougts:

AEMO have just halved the output of 5 solar farms in Victoria with the stroke of a pen. They are having trouble controlling the system voltage because the solar farms don't contribute enough fault level.

The short run marginal cost of running a coal fired station is negative and that is why they bid negative. In English it costs a coal fired station to shut down so it's cheaper to keep them ticking over.

There is some evidence that some conventional stations may be gaming the system to force prices negative. During recent negaive price events some Queensland generators have increaded generation. What's more Wivenhoe pumped storage didn't pump when te price was negative (that's just crazy). It doesn't take much conspiracy thinking to guess they are trying to break the Solar guys economic model.

killerwhaletooth.wordpress.com/

A free market on electricity would be when we could choose the supply of our electricity

For example, for those of us that want cheap electricity we could have the free choice to buy our power from the cheapest source, which is coal and gas for now.

Those that want to pay more for their electricity for religious reasons can buy expensive unrealible renewable power.

Free market is freedom to spend your money how ever you want with out a big hands-on government manipulating the markets to suit their own agenda

Imported milk from China destroying the Australian dairy industry .............. WTF?

If the long term aim of society is to reduce fossil fuel emissions as a result of electricity generation then electricity will become more expensive, it's a no brainer. Coal technology is mature and robust, alternative energy technology is new and fragile. If society wishes to ultimately change over to alternative technologies then the cost must be subsidised by society (via government).

Back to the milk ..................... isn't it funny how society can threaten to revoke the social contract of a company like Woolworths when it comes to operating poker machines; but will happily purchase as much $1/litre milk as they can fit in the trolley and not give a flying f@#k about the effect on dairy farmers ................. and the ignorant point the finger at the supermarkets when they should be shouldering the lion's share of the blame for blissfully creating the demand

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Paddles B'mere said..Back to the milk ..................... isn't it funny how society can threaten to revoke the social contract of a company like Woolworths when it comes to operating poker machines; but will happily purchase as much $1/litre milk as they can fit in the trolley and not give a flying f@#k about the effect on dairy farmers ................. and the ignorant point the finger at the supermarkets when they should be shouldering the lion's share of the blame for blissfully creating the demand

Why don't the farmers collectively tell Coles and Woolies where they can stuff their $1/litre? I guess that is collusive price fixing. The duopoly that Coles and Woolies have is no different though, just doing the same from the other side of the fence. Not to mention the supposed competition of the four pillars.

Hey Harrow, they'd only be able to tell Colesworths to shove it if they had another buyer for their milk and unfortunately they don't. It's not collusion if they negotiate a price with Colesworths and then the milk is onsold to the consumer with a markup, it's just that Colesworths are in a position to smash their suppliers ...................... unless society intervenes ................ which they don't because they are in a quandry about being over the moon with their $1/litre milk and being outraged about big business smashing Australian primary producers .............. oh yeah, they love the dividends on the shares owned by their super funds too

Electricity isn't too far different though is it? A new technology is being subsidised by an old technology, and if an electricity supplier cannot supply electricity to the market for the price that the market is paying then they need to have a rethink about how they do business. Could cane producers create their own energy "co-op" and simply purchase all surplus mill power to use themselves? It does sound like a timing/storage issue if I've interpretted it right.

Isn't this exactly the same, milk versus electricity? But they are different when you consider the social components of each.

I always buy the expensive milk, as I figure its worth supporting an industry, but it seems that enough people want the cheap arse milk at Coles, that they create that demand. Who's job is it to fix that? Where is the ultimate end? Do we end up with Coles and Woolies arguing to the government that they 'NEED' to import milk from China because the local manufacturers can't supply it at the price they want to pay?

It seems that Coles and Woolies do have control over the market demand for milk, so they are able to manipulate the market price.

Who's going to work out what a fair price is, where it can keep enough farmers in business?

I don't pay extra for green electricity though. I would prefer the government to subsidise this and encourage development of renewables. Should it be up to the government or lone individuals?

If a big business that operates in our society believes that its social contract may be revoked by the society it trades in, then it will change (look up the poo storm about Woolies and their poker machine business). One of the big changes in modern business is the social impact of the business on society, you only have to look at the annual report of a big publicly listed business to see where (by law) they must disclose risks to the business. You'll see social/political risks and also even more recently, environmental and climate change risks. The bottom line is that a big retailer will happily screw their suppliers until their customers revolt and shop elsewhere.

You're right FN electricity is a little different in that it is an essential service. But if we consider that enough political pressure has been brought to bear by voters to embrace transition to alternative energy sources, then we are simply paying for the transition mandated by the bulk of society, energy becomes more expensive across the board to pay for the development of the new technology and the old technology reduces in value. So in an investment/finance sense, if the smart cookies do end up figuring out how to get us away from fossil fueled electricity, imagine how worthless all fossil fueled assets will become. This is how the financiers are thinking right now and that's why they are reluctant to put their money into the older technology. Absolutely agree with your call on not paying extra for green power, it should be up to government to manage the economics of it, as society (hopefully sometimes) steers government policy.

Sorry to tell you, but it's not Colesworth branded milk that is crushing dairy farmers. It's sanctions on Russia.
Since farm gate milk price was deregulated in 1998, farmers have been forced to take the world price for milk, at least roughly. Before deregulation about 1/2 production was by quota with fixed prices for farmer, processor and retailer. The rest, used to produce cheese, yoghurt, milk powder etc was at "market price", but it was a strange market, with farmers contracting their production into the future with the (mainly farmer owned) processors being able to change the price retrospectively.
When Russia got busy in Crimea, the EU stopped exporting cheese etc to Russia which led to a collapse in the world price for milk. The farmers no longer have a quota at a higher price to cushion them from that. Add in drought feed price and it must be heartbreaking. But buying branded milk makes no difference to the farmers' incomes, except for that A2 stuff. It all comes out of the same bucket of milk.
And we won't be importing milk from China any time soon. NZ, on the other hand, has a lower cost product that is a threat to the local industry.
I could easily see Colesworth getting their home brands there.

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FormulaNova said..
I don't pay extra for green electricity though. I would prefer the government to subsidise this and encourage development of renewables. Should it be up to the government or lone individuals?

I pay less for "green" power than the standard stuff.
When the new pricing structures came in in July my feed in tariff went from 15c to 21c. Metered rate went from 26c to 28c. Net effect is that the money I pay the energy company to store my solar went down from 11c/kWh to 7c. Since I feed in more than I draw down, I'm ahead on the deal

Too true MM, being part of a world market can hurt when it comes to price pressure. At least our exchange rates will be giving local producers a little bit of breathing space at the moment even if the cost of fuel goes up a bit.

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Mr Milk said..
Sorry to tell you, but it's not Colesworth branded milk that is crushing dairy farmers. It's sanctions on Russia.
Since farm gate milk price was deregulated in 1998, farmers have been forced to take the world price for milk, at least roughly. Before deregulation about 1/2 production was by quota with fixed prices for farmer, processor and retailer. The rest, used to produce cheese, yoghurt, milk powder etc was at "market price", but it was a strange market, with farmers contracting their production into the future with the (mainly farmer owned) processors being able to change the price retrospectively.
When Russia got busy in Crimea, the EU stopped exporting cheese etc to Russia which led to a collapse in the world price for milk. The farmers no longer have a quota at a higher price to cushion them from that. Add in drought feed price and it must be heartbreaking. But buying branded milk makes no difference to the farmers' incomes, except for that A2 stuff. It all comes out of the same bucket of milk.
And we won't be importing milk from China any time soon. NZ, on the other hand, has a lower cost product that is a threat to the local industry.
I could easily see Colesworth getting their home brands there.

Okay, I follow that, but who gets the price difference if I am paying over $4 for 2 litres versus someone else paying $2 for 2 litres? Is it the milk processor getting the extra $2 or so? Is the farmer getting a higher price for the proportion of their milk that goes to those products?

Edit: I see this going the way of everything else in this country. If someone decides that everything should be 'free market', dairies here will fail in drought times, and do well in good times. Is that really something that should be encouraged?

The money does not go to the farmers. It goes to the brands and their ad agencies.
As for the farmers, that's how capitalism works. Profits get competed away if the system is efficient.

Kinda funny the majority of people complaining about Colesworth milk prices screwing farmers. At one stage they had their home brand milk at $2 for 2 liters and the same 2 liter bottles for $2.30 if you wish to spend a bit more to help out the farmers, consumers could choose,
they sold hardly any of the $2.30 bottles, which goes to show most will complain about the big companies not helping farmers but are unwilling to help them themselves if its gunna cost them 30cents a week.