Can Elon Musk Fix Our Power System?

I spent a decade working in the Australian energy industry. So last week's tweet by Elon Musk, that he could “fix” Australia’s power issues by installing enough battery powering 100 days was intriguing.

One of the things that makes understanding how the power system works is that the supply of energy is dependent on a number of components. And how those components are utilised is dependent on both engineering constraints and the accompanying wholesale electricity market.

In simple terms, AEMO, the Australian Energy Market Operator, runs the market and directs the generation of energy to meet the needs of consumers. There are a bunch of complex algorithms that do this but the long and short of it is the market is designed to meet the demand by supplying energy at the lowest possible price to users.

The price is set every five minutes and the market is paid on the average price per half-hour interval.

By the way, AEMO’s hands are largely tied when it comes to penalising parties that “game” the market. AEMO is a market operator, not a regulator. The electricity system is regulated by the Australian Energy Regulator which is part of the ACCC.

It’s important to understand Musk’s offer doesn’t bolster energy production in any way. It just gives the market a place to stash a bunch of energy just in case the amount of energy that can be reduced at any given time isn’t adequate to meet demand.

If you’re running a data centre, you could potentially insulate yourself from rising prices by installing your own batteries (from Tesla or local company Redflow Ltd to name a couple of options). And rather than filling them from the grid, you could install solar or some alternate power source to keep the batteries full.

As well as giving you protection from the effects of power outages, you can protect yourself from rising energy costs. As old coal power plants, such as Hazelwood in Victoria, are being closed down, there is likely to be more constraint in energy availability. And this could lead to increased costs.

One other thing - while the press often makes a big deal of the wholesale price jumping to the regulated maximum price of $14,000 per MwH - not every electricity retailer will be paying this price during times of constrained supply.

Electricity retailers (the companies that send you the bill) enter into supply contracts where they promise to use a particular amount of energy at a set price. So, while some energy will be charged to the market at the $14,000 price, a large portion is traded in contracts outside the wholesale market.

This is supposed to ensure generators don’t withhold supply in order to drive the wholesale price up - an action that generators aren’t allowed to do.

So, back to the original question: Can Elon Musk fix our power system? The short answer is no, in my view. The technology that underpins the system is based on central generation on demand. Battery tech is relatively new, especially at the scale we're talking about. And we have increasing use of decentralised generation. The electricity system and associated markets were created in the late 1990s and things have changed a lot over the last 20 years.

For these innovations to make a difference existing operational and market assumptions need to change. If batteries are to be a major part of the central power system, then the market needs a way to integrate them into the system.

Musk's battery tech (and Redflow and others that are currently in development and available in other markets) will be part of the new power supply system. But you still have to fill the batteries. And that means enough generation to supply a growing population of 28 million.

One thing that is clear is our power system is facing uncertain times. Our thirst for energy is not slowing and we no longer want to pump lots of black smoke into the atmosphere to meet the supply need. So, as so called “dirty” plants are decommissioned and the incentives and appetite to use cleaner sources such as wind, solar and tidal remain weak, we can expect more market volatility and, potentially, a less certain power supply.


Comments

    is it just me or does article seem to be half finished?

      Yeah, that was a bit of a weak finish....So, Can Elon Musk Fix Our Power System?

    I thought that electricity demand dropped during the evil "carbon tax" years?

    Also, I want to know if Elon Musk (or Redflow etc) can "fix" the power system.

      or the CSIRO Ultra-battery.
      and remember that the National grid control companies gets up to 30% of your bill.

      Last edited 14/03/17 2:47 pm

    OK - fair enough guys. Appreciate the comments.

    The short answer is Elon Musk can't fix the system in my view. The technology that underpins the system is based on central generation on demand. Battery tech is relatively new, especially at the scale we're talking about. And we have increasing use of decentralised generation.

    The electricity system and associated markets were created in the late 1990s and things have changed a lot over the last 20 years.

    For these innovations to make a difference existing operational and market assumptions need to change. If batteries are to be a major part of the central power system, then the market needs a way to integrate them into the system.

    Musk's battery tech (and Redflow and others that are currently in development and available in other markets) will be part of the new power supply system. But you still have to fill the batteries. And that means enough generation to supply a growing population of 28 million.

      Sorry your reply sounds like "we have always used :horse and buggy/whale oil/stone tools/insert any dead technology, there is no proven other way". My full comment below.
      But thank you for asking the question.

        That's the challenge of changing a decades old, government regulated institution. There's a lot of vested interest in the status quo. I left the industry for precisely that reason - opportunities to make things better (even stuff everyone agreed was junk) were limited because of conservative thinking. Many of the people working in the business when I quit a few years ago were the last remnants of the state-based electricity commissions. I think there are lots of better ways but I got sick of banging my head against brick walls. Perhaps now things will change. I hope they do.

          thanks for replying, i just found the the article seems to finish rather abruptly.
          Now I will say that you are only the 5th person that ive seen that doesnt think Musk can do it, however your wording is mostly because of red tape unlike the other 4 who just dont want him to succeed in general because it will make Turnbull look good (those 4 are Andrew Bolt, Cory Bernardi, Michael Costa and Cambell Newman)

      It's the wrong question to ask, and potentially misleading. He is not offering to 'fix' it, merely to provide a solution for times when demand exceeds supply.

    Red-Flow Or The CSIRO Ultra-Battery THAT ARE FULLY developed and used for years on King island, used in California for smoothing. As for filling the batteries please look at usage cycle. All power grids go to 100%-110% twice per/day, and at night between 10pm-4am how much of the power capabilities of the grid is used 50%-60%??? Will you tell people that peak power generation are paid even when not making power?. One of the problems with Australia's grid is self made. the wholesale price has dropped, because the free-fall of feed-in from solar rates have given retail day time @$0.06/Kw. please find link from 2012 https://youtu.be/vX0G9F42puY this is from 2012 were the use of battery for peak power and power spike smoothing. Solar and battery, even Hydrogen powered cars that the CSIRO worked on from 1970's. Funny the ACT, TAS and NSW has more renewable power than SA, Yet the National Control grid company never blacks out Canberra?

      Interconnectors are an issue. The interconnecter from NSW to SA is long, and can carry only so much power without damaging it. Also, long interconnections are relatively inefficient. By contrast, NSW & ACT are close to sources of baseload power, so when the renewables are not generating, they are not "up the creek" like SA.

        So todays Snow mountain fix looks more like a Snow job, Thank's for the tech lowdown Mikew.

    The biggest problem for Musk will be Red Tape, even if they say they will clear it, there are too many regulations to meet and no way that will happen within the 100 days promised.

    And that means enough generation to supply a growing population of 28 million.I though Musk was only fixing South Australia, not the whole country.

    Also, according to the ABS: "On 14 March 2017 at 04:08:16 PM (Canberra time), the resident population of Australia is projected to be: 24,389,863."

    Where are the other 3.6 million?

      Where are the other 3.6 million?
      Getting conceived during the next power outage.

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