Wednesday, May 28, 2008

Enfeebled for lack of energy

Apologists for the destructive energy policies of successive governments airily dismiss the increasing evidence of the destructive results of their anti-industrial policies -- they blithely assert that switching off heaters and changing a few lightbulbs will fix the job.  And uber-apologist Energy Minister David Parker insists that the result of banning the construction of new thermal power stations and making impossible the construction of hydro is a "twenty-first century power system."

This is the "twenty-first century power system" that had its first blackout in Wellington on Monday.  This is the power system that is already at capacity -- the system that is hostage to low rainfall, low wind, and the intermittent failure of aging and overstretched transmission facilities -- the sort of the failures that caused Auckland's famous blackouts a few years back.

These are the sort of apologists that give apologists a bad name.

Energy demand in New Zealand has increased at an annual rate of roughly 150MW, but energy generation hasn't.  Energy generators have wanted to, but haven't been allowed to.  And the result this week is news that factories from Bluff to Auckland aren't just switching off heaters and changing a few lightbulbs, they're already running fewer shifts and producing less wealth, all because of the parlous state of the present system, and with no new real generation capacity in sight.

This means we're already making ourselves poorer because of the restrictions on supply caused by the policies of successive governments.  And given that construction of new generators has been made all but illegal, we've got much worse to come.

Who's responsible?  There are two main culprits: The anti-industrial dream team of the RMA and the Kyoto Protocol. The ban on the construction of new thermal power stations because of our Kyoto commitments (commitments signed up to by the National Party), and the near-impossibility of constructing serious new generating capacity because of the Resource Management Act (drawn up under Labour's Geoffrey Palmer and introduced by National's Simon Upton).  Between them they're making us poorer.

Fact is, we either meet that increasing annual demand of 150MW per year, or we make ourselves poorer.  If we're going to have any show of meeting that continually increasing demand -- which means, to remain as an industrial economy -- we need to build new power now, so when we're in need of 750MW more in five years time it's there to draw on.

It's not enough to say we can achieve this target by "conservation."  Conservation is not a source of energy, it's the complete abandonment of the goal of producing energy.  As George Reisman points out, "Conservation is not a source of energy.  It's actual meaning is simply using less.  Conservation is a source or energy for use only at the price of deprivation of energy use somewhere else."

Our factories and producers are already being choked off.  If our energy supplies continue to dwindle there can be no other result for our industrialised economic system than progressive and inexorable enfeeblement.

Is that what you want?

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10 Comments:

Anonymous Anonymous said...

You’re chock full of hyperbole today but shortchanging on the facts.

To find cause and effect between energy policy and a mechanical breakdown at a substation in Wellington is like saying I got a flat tyre because the govt hasn’t invested in roads. The one does not follow the other without a lot more evidence. Power supplies get interrupted all the time. There was another in Auckland today. Is that the fault of policy, asset stripping or just normal wear and tear that mostly happens without comment somewhere in New Zealand every week?

The system is not at capacity. There’s a lot more available in need than demand. What we are having to do is use more expensive fuels because the cheap fuel is in short supply. We’re “hostage” to low rainfall because that is what the market has delivered, and most of the time it provides large volumes of very cheap power.

Generation growth has been about 1300 MW since 2000 which is 160MW/year. The supply margin is as high or higher than almost any point in the last 15 years. Investment is lumpy and there will always be cycles of over capacity and tighter supply. We are not that tight comparatively.

There have until now been no external restrictions outside the RMA on generation. Contact have a site consented and ready to go for a gas plant. They CHOOSE not to build one. Genesis did build one last year. There is no ban at present and even if there were, it would have no relevance to today because it only affects future not current plant.

Why are factories switching off? They are making rational choices in response to the market. Would you prefer a centrally planned system that doles energy out or that these factories have unfettered access to excess energy at no cost? Who will pay for that? Won’t that too make us poorer as a country?

insider

5/28/2008 02:29:00 pm  
Blogger PC said...

Insider, I have to say your comment is chockful of sophism, and almost wholly fact-free.

YOu said, "To find cause and effect between energy policy and a mechanical breakdown at a substation in Wellington is like saying I got a flat tyre because the govt hasn’t invested in roads."

No, in fact it's like saying my car broke down because it's an ill-maintained wreck working beyond its capacity. Or like saying we're seeing third world maintenance issues in a third world infrastructure. Or like saying, as I did, that the intermittent failure of aging and overstretched transmission facilities -- the sort of the failures that caused Auckland's famous blackouts a few years back -- is not the sort of thing one expects to see in a so called "twenty-first century power system."

YOu said, "The system is not at capacity. There’s a lot more available in need than demand. What we are having to do is use more expensive fuels because the cheap fuel is in short supply."
YOur comment is difficult to understand ("a lot more available in need than demand"?) but frankly to say we're not at capacity when industry is already switching off is evidence that you're wearing blinkers. You respond that factories are switching off because "they are making rational choices in response to the market." Well , to the limited extent there is a market (a 'market' largely controlled by government-owned entities, artificially separated by government edict, and overseen by government bureaucrats) we see that spot prices are going through the roof [pic] -- and they're going through the roof largely because of the problems with supply that you wish us to ignore.

The problems with the RMA, and with Kyoto. The problems with using coal for example (of which we have economic reserves that could last us 200 years), which has been made more expensive by the RMA essentially making the extraction of new coal illegal, and the Kyoto protocol leading to the government making the construction of new coal-burning plants impossible.

It's not enough to say that "generation growth is about 1300MW since 2000," since the bulk of growth in generating capacity has been in wind generation, and given the vagaries of wind generation this means that actual generation capacity is whatever you'd like to claim. And the fact is that, without backup capacity, wind generation capacity is almost notional.

The fact is that the Government's energy strategy, on the basis of which David Parker is presently telling Parliament that we're all alright, Jack, has declared that only 1200MW of new capacity using fossil fuels will be needed by 2030. This is at least 100MW per year less than the present demand, and this even given that the wind generating capacity is vastly over-stated.

As Brian Leyland points out, for example, the "more wind/no thermal" strategy "ignores the need to replace at least 3000MW of existing thermal stations. If, as it predicts, the percentage of energy supplied by wind and wave power increases from 300MW to 6000MW (20 per cent more than all our hydro stations) we will need additional thermal power stations to back up this unpredictable supply in calm conditions.

"The predicted increase in wind generation is huge. Laid out in a line the wind turbines would stretch for 700km. Lots of new transmission lines would also be needed. Most of these wind farms will need to be in the North Island - along with the 4000MW or so of thermal backup plant. It will be the consumers who will pay for all this backup. Not the developers of the wind farms."

So where's this backup capacity to come from, Insider?

You ask, "Would you prefer a centrally planned system that doles energy out or that these factories have unfettered access to excess energy at no cost?"
You think that's the only option? No, clearly, we need a genuine free market in energy production, so that supply can increase to bring down excessive energy costs.

YOu say, "There have until now been no external restrictions outside the RMA on generation."
What the hell do you mean? I"ve mentioned two restrictions on new generation, the RMA and Kyoto. The RMA has effectively ruled out new hydro generation from Waitaki to Marlbourough to Whanganui, and even the renovation of thermal plants such as Marsden B. Kyoto has effectively banned new thermal generation capacity.

To say "There is no ban at present" is just flat wrong -- that's what a ten-year moratorium means, for goodness sake.) To say "There is no ban at present and even if there were, it would have no relevance to today because it only affects future not current plant" is just insanely short-sighted.

The power shortages already signaled for this winter are only a heads up for what's to come. What we build now, if we could, is building for the capacity we expect to need in years to come. Or are you saying that we should just accept we're now a non-industrial economy and have done with it?

As I ask at the end of my post, "our factories and producers are already being choked off. If our energy supplies continue to dwindle there can be no other result for our industrialised economic system than progressive and inexorable enfeeblement. Is that what you want?"

Looks like you do. I don't.

5/28/2008 04:06:00 pm  
Anonymous Anonymous said...

PC

Here are some facts;

Offers by generators into the electricity market this week are peaking at around 7000MW, demand is peaking around 6200MW. In my maths that;s a surplus of supply over demand.

Hedge prices for next two winters are only $60-$90. Obviously the market disagrees with your assessment of the lack of system capacity. That doesn’t mean things aren’t tight at present but is it smart to design everything around the 1% possibility or around the 99% and then manage through the 1%?

“No, in fact it's like saying my car broke down because it's an ill-maintained wreck working beyond its capacity.”

But where’s the evidence it is? It’s just your assumption that is what has caused the problem. Does a bulb blowing indicate your home’s wiring is falling apart? If you look at the actual outage data you will see NZ has an IMPROVING power system reliability, which is not the sign of a wreck to me. Are you saying that nothing ever breaks down in first world systems? If so, you need to take a look at some of the cascade failures in Europe and the US in recent years.

The famous Auckland blackout was a design and management issue, nothing to do with stress. Transpower did not do basic maintenance. the Otahu site was built in such a way that there was little redundancy so a small failure could impact a large area – that is a design issue to me.

“but frankly to say we're not at capacity when industry is already switching off is evidence that you're wearing blinkers.”

Not at all. Think of the way resources are exploited. You start with the cheap stuff and only go to the more expensive when you need to. We are currently short of the cheap stuff and using the expensive stuff. Doesn’t imply anything but a short term shortage of the cheap stuff. Some people don’t think it is worth paying the price, even though they could get energy if they want to. These guys choose to ride the spot market and take the risk of prices rising. Most of the time they benefit, currently they are losing. Isn’t that a good sign that markets can work by allocating resources based on who values them most?

“the bulk of growth in generating capacity has been in wind generation”

Bollocks. That just displays a cavalier disregard for facts and shows your prejudice. There is about 380MW of wind total in NZ. We have had two equivalent sized gas plants built in that time let alone the incremental improvements at other generators. Contact has 200MW of peaking gas planned to support its wind gen plans and Genesis is pushing for up to another 400MW.

I’m not going to defend Parker and his strategy – I think it’s wrong, but repeating falsehoods won’t invalidate it.

You say we need a genuine free market, yet we have (bearing in mind restraints that are not unique to NZ) had one for many years. Nothing stopping anyone building plant, and they have done so. You say we need to bring down costs, but costs are low. We are in the bottom five in the OECD for industrial energy costs. You really need costs to rise to incentivise even more investment. But no-one is going to do it based on two months of high prices. That’s commercial suicide.

“The RMA has effectively ruled out new hydro generation from Waitaki to Marlbourough to Whanganui”

So why are there currently applications for hydro stations on the Wairau and Waitaki underway? Why are there two on the west coast? Why is Contact talking about two on the upper Clutha? What about the 4-500MW of geothermal planned?

“To say "There is no ban at present" is just flat wrong”

No it’s not, it’s still only a proposal – it has no force in law - and you might not have noticed there is significant debate going on around it plus an election coming. It is not set in stone. So it has no relevance to the issues we are currently going through around short term issues which you are conflating out to systemic ones.

"As I ask at the end of my post, "our factories and producers are already being choked off. If our energy supplies continue to dwindle there can be no other result for our industrialised economic system than progressive and inexorable enfeeblement. Is that what you want?"

That's all very dramatic but ignores a basic fact - they are not dwindling. Projected growth of power station development shows us well within historic norms for security margins. Are you really calling for overcapacity? Who will pay?

insider

5/28/2008 05:26:00 pm  
Anonymous Anonymous said...

Phew. Lucky we don't have a third world power system like this country.

"British Energy races against time after worst power cuts in a decade"

Half a million people were hit by unscheduled power cuts on Tuesday after seven power stations, including Sizewell B in Suffolk, unexpectedly stopped working within hours of each other.

http://www.guardian.co.uk/business/2008/may/28/britishenergygroupbusiness

insider

5/28/2008 10:24:00 pm  
Anonymous LGM said...

Insider wrote (amongst other rot),
"You say we need a genuine free market, yet we have (bearing in mind restraints that are not unique to NZ) had one for many years."

Liar! You're a low bullshitter. What a liar. You filthy low scum!

For a start, there is no free market in electricity in NZ. What there is here is a government controlled, regulated, artificial game operated according to arbitrary rules set by government fiat.

Insider I put it to you that you know fuck all about what you're writing about. How about you go visit a real electricity generation plant and see how it actually operates, instead of making up such silliness.

Your entire diatribe is deliberately selective and false. Insider? Ignorant Outsider more like.

LGM

5/29/2008 12:27:00 pm  
Anonymous Anonymous said...

LGM

Sigh. Putting aside your rather childish “liar liar pants on fire” approach, did you read the qualifier “bearing in mind restraints that are not unique to New Zealand”?

I mean it may not fit your libertarian wet dream of a market, but as electricity markets go the New Zealand market is not unusually restricted.

I’m not really interested in arguing endlessly about the philosophy of property rights. I accept the need for some restrictions, where a good case can be made, so let’s agree to disagree on that from the start.

What are the real restrictions on entering the generation market? You can’t be a lines company. You might think that’s outrageous, I’m ambivalent but know there are good theoretical reasons for it. You have to comply with NZ law such as the RMA. Well again you might think that is an outrage, but arguing about its rights and wrongs are pointless. It exists and exists equally for all.

The only other restrictions are compliance with market rules. You really think they are a problem? What stops existing generators offering their energy for sale? What stops people buying it? What unfair or unusual barriers are in place to stop retailers setting up and competing?

IF there is a risk, IMO, it is not so much of government fiat (which is always a possibility) but a cosy oligopoly writing the rules to suit themselves to exclude outsiders.

AS for your other claims, how about some examples?

insider

5/29/2008 02:00:00 pm  
Anonymous LGM said...

Insider

Shit-oh-dear, are you a dishonest bastard or what! You've admitted there is not a free market in this sector. So instead of trying to slime out of what you wrote, just admit you were fibbing and apologise.

Meanwhile, let's see just what you do know. Starting with an easy one. Can you explain what type of power generator is presently sited at Otahuhu? What does it do? What special significance does it have internationally?

How about this one next? Can you explain what condition monitoring is and some of the techniques employed for, say, rotating machinery. How about transformers? Can you tell us about how to condition monitor those in real time? Tell us, oh inside one, how to interpret results gained from such an activity. Are there some results that should be of significant concern presently? What might they be?

That'll do for starters. Reckon you can't answer any of this with significant, direct fact.

LGM

5/29/2008 05:34:00 pm  
Anonymous Anonymous said...

LGM,

Can't you fuck'n debate without insulting people? No one here owes you anything even a blog post, whether it fits your fucking preconceived philosophies or not. People don't come here to be abused by fuckers like you. Show some respect or otherwise fuck off.

5/29/2008 11:25:00 pm  
Anonymous Sean said...

Anon,

We all know very well that LGM is simply incapable of argueing with out throwing around a sacks full worth of abuse.

But that does not mean that his arguments are not with out merit. Either he is right or he is wrong. If he is giving the truth an unpleasant taste, that is unfortunate, but in the scheme of things that are actually important, ie the actual truth, the taste is a trivial issue.

All that ultimately matters in the search for truth is its ascertation. If we are more worried about our feelings getting hurt than finding out right from wrong, then we are fucking liars.

5/30/2008 12:09:00 pm  
Anonymous LGM said...

Anon,

Thought as much. You have not got a clue about the topic.

What is there to repect in the likes of you? Not much. You don't deserve any.

LGM

5/30/2008 08:36:00 pm  

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