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Published on March 2nd, 2016 | by Giles Parkinson

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Base Load Power Is A Myth Used For Defending The Fossil Fuel Industry

March 2nd, 2016 by  


Originally published on RenewEconomy.

Last week, leading lights of the global fossil power industry gathered at a conference in Houston, Texas, for CERA, known in the sector as the “Davos of Energy”. They reportedly got the shock of their professional careers.

They had invited the most senior executives from the biggest network owner (Chine State Grid Corp) in the biggest energy market in the world (China). The organisers fully expected their Chinese guest to endorse the “all of the above” marketing pitch, which is underpinning the “keep coal” campaign.

No such luck. Despite prodding by leading oil industry commentator Daniel Yergin, the chairman of State Grid Liu Zhenya reportedly said the “fundamental solution was to accelerate clean energy, with the aim of replacing coal and oil.”

Gasp number one. And then to more stunned silence, he and State Grid’s R&D chief Huang Han dismissed coal’s claim to be an indispensable source of “base load” generation.

As the network operator builds out its clean power sources, they noted, coal-fired generators could only serve as “reserve power” to supplement renewables.

“The only hurdle to overcome is ‘mindset’,” Liu said. “There’s no technical challenge at all.”

The “base load” mindset, though, is a pretty big and powerful hurdle. Across the world it infests incumbent utilities, the coal and nuclear lobbies, conservative politicians, energy regulators, and many in mainstream media, who are clinging to the concept of “base load generation” as the last resort to try to ridicule wind, solar and other technologies.

In Australia, which has more coal generation as a percentage of its energy supply than any other developed country, this perpetuation of this idea has reached fever pitch, particularly with the imminent exit of the large coal-fired power station in South Australia.

But according to Tim Buckley, from the Institute of Energy Economics and Financial Analysis, the idea of “base load” generation as an essential part of the energy mix is becoming redundant, and turning into a myth dreamed up by the fossil fuel industry to protect its interests.

“It’s as dangerous as the marketing term of “clean coal” and the idea that coal is “good for humanity”,” Buckley says.

New data bears this out. In China, thermal power plant utilisation rates (capacity factors) declined from 56.2 per cent on average in 2014 to a record low of just 50.9 per cent in 2015.

“This highlights coal is not ‘base load’, even in China,” Buckley says. “It is the marginal source of supply. Coal-fired power plants aren’t designed to run only half the time, but that is what is happening in China, and increasingly that is occurring in India as well.”

Indeed, CLP, the Hong Kong-based owner of the Yallourn and Mt Piper coal-fired power stations in Australia, revealed this week that its “flagship” Jhajjar coal plant in India ran at a capacity factor of just 49.9 per cent in 2015.

In Australia, it was even worse. The 1,400MW Mt Piper power station near Lithgow in NSW operated at just 45 per cent of its capacity, even after its neighbouring Wallerawang coal plant had been shut down.

Other black coal generators have been similarly afflicted, so much so that the Northern power station in South Australia is to shut permanently in May.

Grid operators also understand this. The head of UK’s National Grid says that “centralised energy” will soon be a thing of the past. The Australian Energy Market Operator says that the exit of “base load” coal generation in South Australia should not impact reliability or security of supply.

It does mean that supply it is dependent on other factors, including a connector to the main grid, but also a “different way of doing things.” Culture, not technology, is the biggest challenge here.

A study by energy consultant Energeia suggests that wind energy will become the default “base load” generation in South Australia, and dispatchable power sources – which previously dominated the grid, the markets and the business models – will have to fill in the gaps left by wind and solar.

The study conducted on behalf of South Australia transmission network operator ElectraNet, and released in December, illustrated a range of scenarios that suggested there was no room for “base load” generation.

And it wasn’t needed. The gaps would be filled by flexible plant such as solar towers, or battery storage, or from gas – as long as it can compete with the new technologies.

energeia-conventional-wisdom-590x288

In this first graph – it shows the “average daily” supply over a year – the big change is the dominance of wind energy and the role of solar, most of this on rooftops of homes and businesses.

The impact is even more dramatic in the following graph, that shows a high uptake of rooftop solar and battery storage (although not as much as many might predict). Still, it shows that solar accounts for a large part of daytime demand.

energiea-baseload-DG-590x312

Part of the reason for this uptake of solar and storage is the cost of transporting that centralised power to consumers, who are being asked to pay more than $300/MWh to boil a kettle at home.

Those on time-of-use tariffs are being asked to pay more than $550/MWh – that makes solar and storage so attractive that a major study conducted by the CSIRO suggested that up to half of all generation could be supplied locally.

“Base load is not a technical concept, it is an economic concept and a business concept of the coal industry that is no longer feasible,” says Sven Teske, an analyst with the Institute for Sustainable Futures in Sydney.

“Baseload is a myth, but it is so deeply rooted in the debate that it will take a number of years to change perception. It’s a bit like going from analog to digital, it is a different way of operating the system.”

He says the focus is now on renewable energy, and on flexible generation, demand management, and energy efficiency.

Teske has been working on a new analysis of the possibility of 100 per cent renewable energy generation in Australia, on behalf of advocacy group Solar Citizens. It will be released later this month.

He says his study shows that renewable energy can supply 100 per cent of Australia’s electricity needs by 2035, and 100 per cent of all energy needs (including transport and heating) by 2050.

“A 100% renewables Australia is definitely not a technology challenge it is a political one. And that is because it needs stable policy, something it has not enjoyed for a decade or more.”

In the meantime, the transition will bring about pain and complaint. The Australian Financial Review continues on Wednesday its documentation of the complaints from large energy users about future energy contracts.

It all rather forgets the fact that the high prices are not set by renewable energy sources such as wind or solar, but by the cost of fossil fuels, as Tasmania is finding out to its cost following the depletion of its hydro assets and the loss of the cable to the mainland.

If Tasmania had encouraged more wind and solar, it would not be paying ridiculous prices for gas-fired generation and importing 200MW of diesel gen-sets. If investments in large-scale renewables had not hit a two-year drought under federal policy shenanigans, then South Australia would not be so exposed to volatile price swings.

Buckley points out that as more renewable energy is deployed, and more storage with it, this will not just bring savings in network costs, it will also bring down the cost of peak power prices.

“Electricity demand is variable. It is not fixed. With smart grid technologies what we need is variable sources of supply to accommodate variable sources of demand.

“Base load is an archaic term that is no longer commercially relevant. Once that capacity is built – coal-fired generation is the most expensive marginal cost of supply because of the fuel cost, because it has to burn coal to operate.

“We believe that with more renewables and storage, peak electricity prices will halve over the next 20 years. Once you build solar and you build storage, the marginal cost of production is zero.”

Reprinted with permission.






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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • drchemy

    I think the country that has to be studied more to determine the amount of capacity that can be renewables is the netherlands. They generate so much wind power that they are reaching the limits (because of its intermittency) in the amount that can be utilized on the grid.

    • JamesWimberley

      Huh? The Netherlands only have about 3 GW of wind and are struggling to meet EU renewable targets. Wind power met 5.2% of electricity demand in 2014 (The Economist). If Dutch grid managers have a problem dealing with this, they don’t know their jobs.

      Perhaps you are thinking of Denmark, a different country with majority wind output? The Danes have the world’s most reliable electricity supply, measured by SAIDI. Their backup solution is called Norway.

      • Frank

        I want my backup solution to be Indiana, Pensylvania, Kentucky, Michigan, and West Virginia. 🙂

    • Hans

      You need to produce some evidence. Being Dutch, and actively following renewable enrgy news, I never heared about these problems in our little mud country.

      • drchemy

        Hans you are right (as well as the other posters). For some reason I thought the Dutch were generating much more of their energy than the rest of the world with wind energy. Didn’t realize they were only generating 10% of their energy with wind.At that level I don’t think the intermittent nature of wind is going to put a strain on their grid

  • Matt

    If fig 21 is correct, then Oz is curtaining wind for 4.5-7 hour, depending if you look zero-to-zero or max-to-max. I would think wind farms would be looking to buy storage, to move that flushed power into the peak a few hours later. Of course the wind curve look very flat the rest of the day so maybe there was some fiddling going on there.

    • JamesWimberley

      Yes. An interesting fight is brewing up between wind and solar when they jointly produce more than total demand. Distributed solar is physically closer to demand, so logically should go first to minimise transmission costs. But how do you choose between utility wind and solar plants, all with zero marginal cost?

      In this world – nearly there in Denmark, a decade away in Germany, two decades elsewhere – there will be very large volumes of interruptible electricity available for the cost of transmission. P2G could be the way to use this, or some yet-to-be invented sequestration technology (olivine grinders?). The winner will have to have very low capital costs, efficiency be damned.

      • Ronald Brakels

        Wind turbines have moving parts and so will save on wear and tear by shutting down while solar basically costs the same whether it is supplying power to the grid or not.

        The cheapest form of energy storage at the moment, beyond already existing pumped storage facilities, looks to be thermal storage. This can be very cheap, but very inefficient. Maybe as low as 25% for storage that doesn’t go above around 540 degrees Celsius to avoid the need for expensive alloys and which isn’t fully “cycled” each day.

        This thermal storage could work exactly like solar thermal storage, just with electrical resistance heating running off surplus electricity instead of the solar part.

        But with home and energy storage getting closer to being cost effective in Australia despite a recent entrant turning out to be a pile of pony and trap, and the presumably impending electrification of transport, we might get our energy storage there. Australia also gets a greater portion of its electricity from hydro than the US or Europe which is helpful and we have three existing pumped storage facilities – one large, one medium, and one small.

        • Frank

          Wait, how about putting car chargers in at destinations, like work.

          • Ronald Brakels

            That is definitely an option. And in Australia a normal power point (socket) will suffice as it can add around 100 kilometers of range in eight hours and most people’s one way commute distance is much less than that. Also, in Australia, the majority of private vehicles are parked at home for most of the day, so there will be plenty of opportunity for daytime charging of electric vehicles.

        • Calamity_Jean

          “…a recent entrant turning out to be a pile of pony and trap….”

          What recent entrant is that? And is that Cockney rhyming slang?

    • Ronald Brakels

      The graph is the average over a year. That’s why wind output looks so flat. Since South Australia is far ahead of its neighbor in renewables, the surplus will be exported to Victoria where it would displace their fossil fuel use, although there definitely would be times when our current transmission capacity would be exceeded. But Victoria would also be building up its distributed solar capacity and hopefully won’t be too far behind. So, yeah, we’ll either end up storing it, or curtailing it. Or a bit of both.

  • GCO

    Yep. Another take on “baseload myth” with a short nice video courtesy of RMI => http://cleantechnica.com/2014/08/08/rmi-blows-lid-baseload-power-myth-video/

    • MtnMark

      Nice video. Thanks!

  • Karl the brewer

    Woohooo 🙂 It’s all starting to happen very quickly indeed.

    Meanwhile at the AGM of Peabody Energy……

  • J.H.

    I would assume that this would be true for the nature gas (methane) utilities as well. Fracking is one of my biggest fears, with the injection of contaminated fluids that (THEY) claim does not harm the ground waters not to mention the earth quakes.

    • jeffhre

      If wind and solar continue to fall down the prices curves fast enough – we will have clean water available to drink.

      • J.H.

        I hope your right

  • eveee

    Thanks, Giles. Now we know the truth. “Baseload power” is a marketing term. Get this from what Giles said. If Chinas coal is running 50% capacity factor, why build new coal? Because they are trying to meet seasonal and daily demand with coal, a crazy idea. What Mr. Liu Zhenya hints is that the load variation is better met by flexible resources that can better handle variation. Solar is well equipped to handle daily loads. And China has large hydro resources. Wind is also capable of curtailment. Those are all more flexible than mythical, inflexible, “base load” power.

    • Frank

      Baseload power plants have one big advantage. It’s easy to understand, like a rotary phone. Thing is, when you have a smartphone, you don’t actually need one.

      • eveee

        True. But its more like easy to misunderstand. They are simplistic, misleading, myths that are false. An easy to understand notion that is wrong.

        • Frank

          Historically, baseload plants were capital intensive to build, but were able to operate at a relatively low cost. Now we have wind and solar, that are capital intensive, and operate at an even much lower cost. So wind and solar are the logical successor to baseload plants. 6% down, 66 to go.

          • eveee

            I will toast to that.

  • Shiggity

    Just keep telling people about the network effect.

    Renewable energy scales better and better the more networked our power grid becomes.

    Intermittancy is nothing but an interconnection problem. That problem is being solved / has been solved. As long as the energy has someplace to go / it was generated fuel free, it can still be economical even if it’s traveling incredibly long distances. The opposite is true of fossil fuel plants, they get crushed by fuel input economics if they have to transport the electricity too far.

  • Martin

    You know what is even sadder: In BC, Canada, BC Hydro, with about 90 hydro capacity, is using that same argument, wind and solar need back up power, in the of putting through the site C Dam at a cost of $ 9 billion (CAD). That even tough their own data show dropping demand and our prices will keep going up with twice as much debt after.
    Guess BC can not build about 900 MW of capacity in one year, like Ontario, Canada did in 2015 at a much lower cost.
    But then our premier. Christy Clark, stated last year in April “other jurisdictions around the world should meet or exceed BC’s action on climate change”.
    Reality is: as per data from our federal government out of 10 provinces, in reducing emissions since 2005, BC ranks # 7!
    If you are # 7 out of ten are you a leader???

    • Martin

      The site C dam will have a capacity of 900 MW.

      • Aku Ankka

        Is that for pumped hydro, or conventional hydro? Pumped hydro would actually make lots of sense and does work very well with renewables (or pretty much anything, come to think of that), and may well be a good investment considering it’s much more cost efficient than existing alternatives.

        • Martin

          It is conventional hydro and BC’s landmass is only 5 % for agri and that project will flood 350 square km of it (about 250 -300 square miles?)

          • neroden

            Ugh. Well, they can do what Quebec does and sell the power south to the USA, right?

            Except I suspect the transmission lines aren’t there.

          • Aku Ankka

            1 square mile is about 2.5 km2, so it’d be about 140 square miles.

  • newnodm
    • MtnMark

      This is a great read. Thanks for the link!

  • Zorba

    Loved that anecdote about the guest speaker

    • jeffhre

      LOL, Daniel Yergin and Bjorn Lomberg meet in a bar…

  • Ivor O’Connor

    Nice article to link to.

    • egriff5514

      Yes. going to drive anti-renewables people mad. They hate it when you tell them ‘baseload is dead’.

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