This report from @the_AEMC dropped yesterday.

The headline this year: prices go up in the medium term under current policy. That's a reversal from last year.

And yet the prescription is for more renewables, and faster electrification.

What gives? Isn't that what we're doing, that seems not to be working?

The explanation for that contradiction took some teasing out. I think it's scandalous.

AEMC's capacity expansion model builds less renewables than last year, and ends up with a tighter wholesale market, because the demand outlook has changed.

And they've lied about how the demand outlook has changed. They've said it was a reduction in electrification demand. Their sources (ESOO) contradict that.

What they really mean is not a reduction in electrification demand, but a reduction in electric fudge-factors they've relied upon in the past to cram renewables into the model without it exploding. Namely "coordinated" consumer storage (batteries you buy, but let the grid control), as well as flexible hydrogen.

And an increase data centre demand, which is flat and inflexible, the complete opposite of how they assumed hydrogen demand would work.

So this report should be admitting a collision of reality with earlier unrealistic assumptions.

Something like "with real-world demand, renewables don't work so great", followed up with calls for more firm capacity to match more realistic demand profiles.

But instead they double-down on their earlier optimism, and just call for the fudge-factors they previously relied upon to be rushed back in, blaming the lack of renewables in their model (which is the symptom of a problem, not the cause of it) for pushing prices up.

This is really incredible. They've inverted the chain of causality that actually flows through their model.

Such a blatant misdirect in the conclusions of the analysis that they've done (some of which, in parts, they made genuine and respectable efforts to improve on over previous versions, and I was tempted to commend) is just appalling. 1/ Let's start with the conclusion.
They've revised the predicted prices upwards, significantly, throughout the period.

We now have overall price increases.

As a veteran of watching CSIRO adjust its reports year on year, this is... unsurprising, but foreboding. 2/

Ok, I'm working on a thread on how @the_AEMC's latest Residential Electricity Price Trends report.

First, a prelude.

On how the report has become what it is.

We're told now that it "should not be taken as a forecast".

It used to be exactly that. A straight-laced short-run forecast, starting from the firm anchor of a complete financial year.

Now they've made it an "outlook" utterly beholden to government policy aspirations, over the longer run, being successful and achieved. With a bunch of caveats and cautions, and bets both ways split across "price" vs "cost", "system" vs "household", "opex" vs "capex" that make it clear as mud to ordinary people.

And nothing like the crisp reflection of recent reality, with plausible short-term extrapolations, that we previously had.

And this was done at the request essentially of Chris Bowen, or at least the Ministerial Council that he chaired.

Short thread to explain. 1/ First, here's an excerpt from the latest published terms of reference. Which say, explicitly, that it should be a forecast. Despite that being difficult, their instruction is to try, for 3 years, using the last final year as an anchor. 2/
aemc.gov.au/sites/default/…

When a massive 330KV transformer blew up at the Waratah super-battery, I told @SkyNewsAust that this threw the transition into "disarray".

The truth is more complex. Waratah was only ever an expensive band-aid on a self-inflicted bullet wound.

Waratah was the band-aid brain-child of @Matt_KeanMP, the Liberal Energy Minister who launched the NSW Roadmap to transition to renewables, and was determined to see Eraring close in 2025.

But the bullet wound hasn't come about as planned. The Labor government of @ChrisMinnsMP turned the gun away, by delaying the closure of Eraring by at least two years, to 2027.

And now it seems likely that Eraring will be extended until at least 2029.

Which would be 4 out of the 5.5 years that the $700million dollar bandaid was contracted to be in place for. (The Roadmap assumes more satisfying solutions, like major transmission and generation upgrades, will be completed around 2030.)

But wait, there's more. In the rush to implement the "shock-absorber" function that comprises the Waratah band-aid (details to follow) some important transmission lines hundreds of km away were taken out of service for urgent upgrades at an unfortunate time.

These lines being down when Eraring had some unexpected problems in May 2024, and contributed directly to a series of massive price-spikes in NSW that led to the suspension of the electricity market. The wholesale price spikes in that month led to an additional ~800 million in wholesale electricity costs for NSW electricity consumers, and contributed to NSW having the highest wholesale costs for the calendar year of 2024 in the NEM by far.

So I think I was wrong to say that this transformer failure pushed the energy transition into disarray. That implies that the transition was somewhat orderly before that happened.

Actually, the very existence and continuation of the Waratah project tells a story that is borne out of tragedy, to be overcome with fantasy, which soon descends into farce.

The tragedy was climate and carbon rhetoric encouraging Origin to pull forward the scheduled closure to 2025.

The fantasy was thinking a 700MW "shock absorber" battery with 2 hours duration would enable Eraring's 2.8GW of dispatchable capacity to exit as planned in 2025.

And the farce is the ongoing execution, which has done and will do far more damage to consumers already than it could ever realistically have prevented.

This isn't just the "band-aid on a bullet-wound" story.

It's the rush to reach a band-aid, in anticipation of a self-inflicted bullet-wound, where in that rush you turn the gun away for a while, but also slip and fall backwards on an upwards-facing knife. And then keep lurching back to get the bandaid, and recommit to shooting oneself.

Please read and share this. The arrogance and incompetence of those who began and still perpetuate this energy nightmare surprises me more and more every day.
1/

skynews.com.au/australia-news… Where to begin? The official declaration by Matt Kean, using his powers under his signature legislation to 'direct' a priority project to be carried out by Transgrid.

In order to close Eraring by 2025.
That much is black and white. 2/

Five years ago, people said integrating renewables at scale was cheap.

Now? Uhh... not so much.

What happened?

We rolled up our sleeves and got started.

Turns out every earlier estimate was wishful thinking. A hopeful hand-wave at best, and we're being mugged by reality, more and more violently, every month that goes by.

Don't believe me? Check out this 80-page mea culpa for the largest Renewable Energy Zone planned for NSW.

The main trunk-line, the 8GW one that should carry 24 billion dollars worth of generation capacity back to Sydney that we spent years identifying a refined corridor for..

When we thought about how to actually build it, we realised the route was bad. Really bad. So we're going to shift it, like 40km East, and start planning again.

Implications for cost and schedule? All secret. 1/

Basically, it was un-buildable. Or rather, the scale of civil works required, on "non-conventional" construction required, like lifting tower segments in place with helicopters, made the cost/complexity/safety too.... whatever. Un-buildable.
This is really bad. 2/

Ok, I know you don't need yet another piece of evidence supporting this thread... But anyway.

In 2024 NSW had a spate of massive high-priced days which resulted in the market being suspended.

A line outage right in this pocket of wind contributed a lot. 1/

https://twitter.com/FootnotesGuy/status/1990450132840788199

Now this isn't the exact same line as is proposed for the Sydney Ring South upgrade. It's actually just upstream, kinda in the thick of the wind pocket.

But it's also just one of three 330KV lines connecting that area to Sydney.

So it indicates the sensitivity. 2/

Last night I stayed up late to write a mega-thread on the terrible mess that is NSW transmission planning.

But I forgot to add the chapter that turns farce into tragedy.

All was foretold.
By the Energy Security Board. But they were ignored. 1/

https://twitter.com/FootnotesGuy/status/1990450132840788199

They wrote a major paper about these problems.

This was when the ESB was comprised just of the heads of AEMO, AER, and the AEMC. The CURRENT heads of these organisations.

They suggested systems that amounted to locational marginal pricing, or LMP. 2/

energy.gov.au/sites/default/…

When Jesus said "the first will be last and the last will be first" he wasn't giving instructions on how to build out transmission lines.

And yet... In NSW...

This is the story of Sydney Ring South.

Probably the most urgently needed transmission line. Approved to be... delayed??!

Until? Ummm... sometime... after 2033? We'll kick off the first stage of planning and approvals next year.

Now don't get me wrong, I'm firmly opposed to building excessive transmission to facilitate an enormous build-out of weather-dependent generation that has no hope of providing reliable electricity at anything the like the cost of centralised, thermal generation for baseload.

This isn't a giddyup.
This is exhibit A in an epic cluster....

As it happens, a large chunk of wind energy that is ALREADY BUILT in NSW is stuck in a pocket that often can't reach the Sydney load basin when needed most.

At times, we have gigawatts of electricity flowing in the WRONG DIRECTION, exporting electricity from NSW to Victoria, when their spot price is negative, and ours is very positive because we can't get enough power into Sydney, which drives up costs to consumers.

And, here's the kicker:
This project was specifically requested by Transgrid, @Transgrid_AU (the regulated NSW transmission company) to be made 'actionable' in the 2024 ISP framework, after the consultation draft was published without it, because... reasons... big rush.

The Market Operator, @AEMO_Energy, obliged.

And this year, when the process kicked off in the 2024 ISP was meant to deliver its first major regulatory milestone, Transgrid then asked the Regulator to push the deadline back almost a year.

Buckle up... 1/ Where to start... How about where I started. The point of intrigue.

A few weeks ago, there was some noteworthy weather. Very hot. So high demand.

Very windy. And mostly sunny. (So high supply) And a forecast price spike.

2/

https://x.com/FootnotesGuy/status/1980769974580088920?s=20

Oh boy, this is embarrassing. US energy expert completely misreads the Australian news.

This is not the fruits of energy abudnance, but a desperate attempt to head-off an economic disaster that arises from a subsidy-fuelled rush into solar.

Let's correct Jesse's take here. 1/

https://twitter.com/JesseJenkins/status/1986233040788398096

First, millions of Australian's won't get free power at all.

Nothing is free.

So-called "Free Lunch" plans are already on offer with some retailers in Australia. They are... not that popular.

Because you pay more at dinner. 2/
globirdenergy.com.au/energy-saver/f…

Breaking news: @AEMO_Energy suprised again by their absurd assumptions not turning out in reality.

Here's why Virtual Power Plant's (consumers handing control of their batteries to their retailers) don't and won't work at scale, and anyone could see it coming:

1. Retail power prices are around ~30cents/KWh
2. That means the general cost (or opportunity cost) for a VPP to discharge a home battery is over $300/MWh, or more with losses.
3. This means that the all the routine price arbitrage opportunities from wholesale being negative during day, and moderately high (say, a bit over $200/MWh) in evening are eliminated.
4. Spot prices are hard to predict confidently. So a retailer isn't likely to frequently bet on forecast spikes that have a thin margin, like $400 or $500/MWh, incase it doesn't materialise.
5. The remaining arbitrage opportunities are for lucrative FCAS services, or for severely high price events. These are very rare, and quite unpredictable.
6. Retailers can't offer very much reliable benefit to consumers for an ability to capture a rare and unpredictable benefit. So their offers are small, like discounts of $20 or $30 off a bill.
7. Most consumers place some value on the security/sovereignty they get over their energy supply from buying a battery. The value the ability to help themselves above the miserly offer they get to help the grid.
8. VPP uptake stays low.

AEMO's models, of course, abstract away the agent incentive structures of our electricity system. And model the whole 'system' being magically orchestrated in a way that minimises costs. 1/ This is a massive problem for AEMO, because 'coordinated' (ie VPP) battery storage is the largest part of storage by capacity in their electricity transition blueprint, the Integrated System Plan. Hundreds of billions worth. 2/

This is a super-sophisticated (and brazen) piece of lobbying and propaganda.

The story should be about expensive renewable electricity crushing industry.

But it's been presented as a plan to secure "cheap energy" from renewables.

The cunning. The gall... 1/ Who could be behind this deft manoeuvre? The Sunrise Project.

"At the heart of the issue for many manufacturers is getting access to cheap, reliable, RENEWABLE energy."

That's the journo writing. As though it's a thing. Taking the implausible figures as fact. 2/

Remember the headlines about how we're all going to die from the heat due to climate change?

The 444% increase in heat-related deaths made plenty of headlines. The footnotes confirm that heat deaths aren't a thing. It's a big increase on a base of nothing.
Cold is worse. 1/
Take this SMH headline "Like a Mad Max Movie"...
It's no exaggeration to say that the likes of @smh want us to believe an apocalypse is coming. 2/

smh.com.au/environment/cl…

As promised, a more thorough review.

The headline claim is a really disappointing word-squirm, because it shifts costs to expensive capital purchases (which are ignored) to reduce operating costs (bills).

But there are other deep problems with their price analytics. 1/

https://twitter.com/GrattanInst/status/1977313663426916695

Firstly, what are they arguing for?

To introduce some explicit carbon pricing, because coal isn't leaving fast enough to reach our carbon emissions targets.

They say that coal is leaving for financial and ages reasons, but too slow. 2/

I missed a crucial footnote.

Remember this drawn-out exchange with @DavidOsmond8 about CSIRO's capacity factors? Post-curtailment or pre-curtailment?

@CSIRO made their method explicitly clear in a previous report, which they reference in the latest.

Let's finish this. 1/

https://twitter.com/DavidOsmond8/status/1970438479504121909

And on page 80 of the 2022-23 report we have CSIRO's explanation.

These are historically achieved capacity factors in the NEM.

They explicitly discuss economic and transmission curtailment being reflected in these.

Dave was wrong. 2/

Chris Uhlmann asked the NSW goverment whether they've modelled electricity prices.

And he's found a trove of modelling and analysis.

Which the NSW government has entirely refused to disclose to the public.

They know prices are going UP.
And are hiding it. 1/
This is a recent document... from a serious consultancy, all about "Price impact of coal exit". And some industrial loads.

That would tell us for sure whether the energy transition is working, or whether we still need coal.

REFUSED.
2/

What do farmers actually think about wind farms adjacent to their land?

Take 5 minutes to hear my discussion with Tom and Jen, wool growers who are about to be surrounded by the Navarre project. It’s a bit windy outside, which is why we had the longer chat in the wool shed. But this is on top of Tom’s hill, next to where the turbines will start. Either side of the valley will be covered in turbines.

Round 4 on my latest take on GenCost. 🥊

Dave and I are duking it out on 2 key questions:

1. CSIRO's definition/use of 'capacity factor'. Is it pre-curtailment or post-curtailment?

2. Is Marginal Loss Factor (MLF) a fair representation of transmission losses? Or Average?
🔔

https://twitter.com/DavidOsmond8/status/1971101643275108765

Let's start with capacity factor.

The crux of David's latest reply is in this highlighted quote.

"these capacity factors are not used at all in the modelling of renewable integration costs".

This is correct, and I understand. 2/

https://x.com/DavidOsmond8/status/1971101658240409761

As promised, a critical thread. 🚨

Here's the simplest sufficient proof that any realistic roll-out of integrated renewables will drive prices up.

$176/MWh is, in fact, the LOWEST cost that CSIRO's GenCost analysis supports, and it could be much, much more.

It's all in the capacity factors: the key performance metric of renewables. There are dozens of additional flaws and shortcomings, but this is the cleanest, clearest kill-shot for all the "renewables are cheapest" nonsense. The rest is bonus material.

CSIRO's "range" of integrated costs comes from their selection of upper and lower bounds for how much power, on average, wind and solar produce.

But their upper bounds are insane (32% solar, 48% for wind), essentially the highest imaginable from a single star-performer, in ideal conditions. Not a credible average for a massive roll-out.

Their lower bound is really close to the current average. Just 10% below, to be precise. But even this is still in ideal conditions.

But even that's an optimistic average to expect as we scale up, since the best and easiest renewable sites are taken.

And neither of these upper and lower bounds incorporates the real-world conditions that we know renewables actually face, including transmission losses, equipment degradation etc.

With just transmission losses incorporated, we land on CSIRO's worst-case as the current best-case, and it'll inevitably get worse from there.

My analogy is this:

Imagine trying to raise an army, and assess the performance your soldiers advancing on foot.

For an upper-bound, you take Usaine Bolt's track time for the 100m.

For the lower-bound, you take a near-average recruit (just slightly lacklustre) but still assess them running without gear on the flat, firm sports-fields used for PT.

With a range that starts near the average, and extends out to stardom, you claim the 'mid-point' as your expected value. This is already far, far higher than the average recruits can manage on exercise.

But the situation is worse... not only do people slow down when you put them in rough real-world conditions, ie rough terrain, and load them down with gear, the average quality of recruits is declining too:

Imagine is the second, or third year of the war. The pick of the litter have already been recruited and been deployed.

So in reality, if you want to roll out absolutely massive scales of renewables, you can rule out the performance of your star-performers, just as you can't raise an army of Usaine Bolts. Individual peak performance is a useless metric. The exception will never become the rule. The average will be, by definition, pretty average, and won't get any better than the average you've had to date.

Which is all you need to prove that renewables are not cheapest, and never will be. Details below.
1/ Here are the ranges for CSIRO's 'ideal' mix of integrated, firmed wind and solar. Their chart just shows a mid-point. I'll focus on the 90% Variable Renewable Energy (VRE), because that's what policy says we're aiming for, but it's much the same.

(See Apx Table B.10, page 96 to see those numbers come from CSIRO's GenCost at source. Not my calculation, I've just drawn them on the chart.) 2/

Our Prime Minister:

"I can guarantee that the cheapest form of new energy is renewables."

This is insane. At some stage soon I'll write up why CSIRO's GenCost actually proves the opposite.

But below, I'll just re-link the earlier commentary on the AEMC's work quoted. 1/ In this thread, I spell out how the @the_AEMC has created a piece of fan-fiction for the ISP, abandoning their terms of reference. It repeats and accepts the most ridiculous assumptions of the ISP. Like ignoring costs of consumer investments. 2/

https://x.com/QuixoticQuant/status/1864288957321892048

It's pretty to easy to see how utterly debased the @CSIRO modelling underpinnning the economic claims regarding the 2035 targets is.

They assume the whole world is committed to Paris targets, ie. Net Zero. They don't have any baseline where that doesn't happen. 1/ That's right, they derive a "global carbon price" commensurate with the world hitting net-zero targets. And apply it to Australia.

(Without saying anywhere in the document what that price is!)
2/

Late last week the Business Council @BCAcomau released a report prepared by @McKinsey on the 2035 carbon targets, showing that over $500bn capex was required for a 70% target. It was widely interpreted as a call for caution and realism.

But the report is still anchored in a fantasy, assuming that the 2030 targets are achieved first, and net zero by 2050 can be achieved affordably thereafter.

So the call for grounded, well-informed consideration of the 2035 target, amidst the utterly fanciful, unrealistic targets on either side, is plainly absurd.

This is like the captain of a ball sport giving a pep talk warning about how gravity and Newtonian mechanics still dominate the ball's behaviour. But the game is Quidditch, and the balls are animated by magic, and the entire team is riding around on broomsticks.

The Business Council of Australia, in particular the CEO @JAWestacott, need to decide which world they actually claim to inhabit. 1/ Here's the spiel announcing the report. Fully committed to net zero by 2050, claiming that can can be "affordably and reliably achieved".

Then pivot to suggesting that only 50% should be targeted for 2035.

This is hard to take seriously, as I'll explain.
2/

We now have the official reason that @CSIRO won't reveal the modelling behind GenCost.

- CSIRO is a "commercial entity"
- The modelling in GenCost was done for CSIRO's "exclusive benefit"
- Revealing the model would put CSIRO at a "considerable commercial disadvantage" 1/ This was in response to a Freedom of Information request @CISOZ put in, inspired by this brilliant take on CSIRO's refusal to disclose their model in this year's publication, despite repeated requests. 2/

https://x.com/jaelubberink_/status/1950015398818017614