Coal is Over

July 7, 2014


Renew Economy:

Last week, for the first time in memory, the wholesale price of electricity in Queensland fell into negative territory – in the middle of the day.  For several days the price – normally around $40-$50 a megawatt hour – hovered in and around zero. Prices were deflated throughout the week.

There were several reasons for this. A restricted interconnector to NSW added to the volatile trading, as did uncertainty about the carbon price. But the overall softening of prices was primarily the result of the newest and one of the biggest power stations in the state – rooftop solar PV.

“Negative pricing” moves, as they are known, are not uncommon. But they are only supposed to happen at night, when most of the population is asleep, demand is down, and operators of coal fired generators are reluctant to switch off. So they are willing to pay others to pick up their output.

Negative pricing not supposed to happen in the middle of the day. Daytime prices are supposed to reflect higher demand, when people are awake, office building are in use, and factories are in production. It is supposed to be the time of day when fossil fuel generators used to make most of their money.

But that has now been turned on its head by the influx of rooftop solar. There is 1,100MW of it on more than 350,000 buildings in Queensland alone (3,400MW on 1.2 million building across the country), and  it is producing electricity just at the time that coal generators used to may hay (while the sun shines).

The impact has been so profound, and wholesale prices pushed down so low, that few coal generators in Australia made a profit last year.  Hardly any are making a profit this year. State owned generators such as Stanwell are specifically blaming rooftop solar.

Prime Minister Tony Abbott likes to say that Australia is a land of cheap energy. He’s half right. It doesn’t cost much to shovel a tonne of coal into a boiler and generate steam and put that into a turbine to generate electricity.

But the problem for Australian consumers (and voters) comes in the cost of delivery of those electrons –through the transmission and distribution networks, and from retail costs and taxes.

This is the cost which is driving households to take up rooftop solar, in such proportions that the level of rooftop solar is forecast by the government’s own modelers, and by private groups such as Bloomberg New Energy Finance, to rise six fold over the next decade – with households spending up to $30 billion on rooftop modueles.


Network operators in Quensland, realizing the pent up demand for rooftop solar, are now allowing customers to install as much as they want – on condition that they don’t export surplus electricity back to the grid.

Households and businesses have little incentive to export excess power anyway because they are getting paid little or any payment for it. Ergon Energy admits that this will likely encourage households to install battery storage.

The next step, of course, is for those households and businesses to disconnect entirely  from the grid. In remote and regional areas, that might make sense, because the cost of delivery is expensive and in states such as Queensland and WA is massively cross-subsidised by city consumers.

The truly scary prospect for coal generators, however, is that this equation will become economically viable in the big cities. Investment bank UBS says this could happen as early as 2018.

The CSIRO, in its Future Grid report, says that more than half of electricity by 2040 may be generated, and stored, by “prosumers” at the point of consumption. But they warn that unless the incumbent utilities can adapt their business models to embrace this change, then 40 per cent of consumers will quit the grid.

But even if the network operators and retailers do learn to adapt in the face of competition from telecommunication companies, data and software specialists like Google and Apple, and energy management experts, it is not clear how centralised, fossil-fuel generation can adapt. In an energy democracy, even free coal has no value.


Electricity use by (Australian) households is continuing to decline, and an overall lower demand for electricity is being driven by a decline in energy-heavy industry, increases in rooftop solar, and increases in energy efficiency.

Rooftop solar and energy efficiency gains are expected to make up an increasingly large proportion of total electricity usage, reducing consumption from electricity generators as shown in the red and brown segments in this chart:



Yale Environment 360:

As a report from Greenpeace East Asia in April noted: “China’s coal consumption has become the single most significant determinant for the future of the world’s climate.” According to Ajay Gambhir of the Grantham Institute for Climate Change at Imperial College London, if China continues on the same trajectory, it would double its coal burning again by 2030.

But it won’t, say analysts. China is changing. A decade ago growth in China’s coal consumption was 18 percent a year; now it is down to below 3 percent. Peak coal is imminent in China.

Nan Zhou and colleagues at the China Energy Group of the Lawrence Berkeley National Laboratory, say that with current trends and policies, the peak will likely occur in 2020. It could be sooner. Anthony Yuen at Citi Research, part of the CitiGroup, predicted last September in a report entitled The Unimaginable: Peak Coal in China, a “flattening or peaking” of the power sector’s use of coal before 2020.

The peak will be followed by a long decline, according to BP’s most recent energy outlook, published in January, which suggests that between now and 2035, “coal’s contribution to growth [in China] diminishes rapidly,” with renewables being the biggest winner.



19 Responses to “Coal is Over”

  1. mirobaka Says:

    I don’t see this as a good thing at all.

    People leaving the grid is ridiculously inefficient, and we will end up with massive amounts of waste – oversupply of generation and storage capacity just to cope with the variability of energy supply from renewable sources.

    As the share of renewable sources increases, the grid has an incredibly important role to play – it helps smooth out the supply peaks and troughs, so that when the sun is down or covered by clouds you can get energy from wind, and distributed storage across the country. When one area has a shortfall of energy they can import it from another area where winds are high.

    The problem is that the current system of centralised power generation is not set up to deal with this situation, and we end up with people who buy their power subsidising people with rooftop PV, who still make use of the grid. While this sounds good for the migration to solar, it massively disadvantages poor people who can’t afford rooftop PV, that now have to pay more for their energy to cover the increased per-user cost of maintaining the grid.

    The solution is simple – the grid is critical shared infrastructure, it needs to be publicised; the government should purchase it and maintain it using our tax money. It would mean an increase in taxes (best implemented by a carbon price) but a decrease in electricity price, a solution which reduces the burden on the poor, makes the grid fairly paid for by all, and gives no incentives to disconnecting completely, meaning we can make the most of distributed generation and storage. Energy prices can then be dictated purely by the cost of generation, storage, on a supply and demand basis, while the method of moving energy around is free for all. So as the amount of renewables go up and the demand for storage increases, it becomes profitable to build energy storage.

    I’m sure that the people maintaining the electricity network would be happy to get it off their hands.

    Shame this will never happen, for some reason publicisation of assets is such an incredibly rare event that I don’t even know if that’s the right word for it, having never heard it before. For some reason even left wing commenters seem loathe to suggest bringing assets under government control, as there is always this magical idea that privatisation makes things cheaper. The idea of running critical infrastructure for the common good rather than for profit seems to be scary for some reason I don’t quite understand. However, it’s clear that the current system is unsustainable.

  2. Peter, I’m becoming increasingly flabbergasted that the solar cheerleaders (of which you are one) don’t see the problem with this scenario you’ve presented. Indeed, so many are apparently ecstatic by the prospect that the utilities are soon going to be bankrupt.

    As I’ve stated many times, I’m not a fan of coal. I too hope that someday we stop burning it, and the sooner the better. However, to make that happen, don’t you think it would be wise to first put in a system of electrical generation that makes burning coal unnecessary? You’ve already decided that solar and wind should be that system. Well fine, but currently the rapidly increasing number of homeowners with solar installations all like to boast that “we use the grid as our battery.” Except that it isn’t a battery, because outside of some hydro-power schemes, electric grids don’t have storage capabilities. The “storage” is often burning coal, and it gets burned 24 hours regardless of the noonday surge from solar panels. Coal plants don’t have an instant on/off switch, they require almost a whole day to go through an on/off cycle. They can’t stop burning coal for just a few hours a day at noon to accommodate the solar surge, so essentially this saves nothing in terms of CO2 emissions.

    But for the solar cheerleaders, it’s all a silly game of numbers. They are so proud that they can supply 75%, or 100%, or even 150% of electricity demand from solar panels for one hour a day at noontime. The rest of the time, of course, falling back on their “storage battery,” the coal-burning grid, which is being driven to bankruptcy by the glut of power at noontime when the utility would normally make its profits.

    OK, fine, let them go bankrupt – coal companies are not lovable. But then where is your “storage battery?” Yeah, I know, there are all kinds of great plans on Facebook and Twitter for hydrogen generators in the basement, or hooking up electric cars to solar panels and heating our homes at night with power supplied by the car’s cigarette lighter, or a supergrid connecting the Australian desert to New York to supply power when it’s nighttime in North America. Or whatever. But would it be too much to ask to actually get these things built and working BEFORE you destroy the existing grid? Or is the idea to just destroy the grid first, and then wait for the solution to magically appear?

    • greenman3610 Says:

      I’m a huge cheerleader for solar, but everywhere I go I tell people we had better get our regulatory act together, or some of our biggest corporate citizens are going to go belly up. I say that not in a cheerleading way, because I know what it means.
      there is a distinct chance that very serious disruptions could occur in electric service if we don’t figure out that we have to accommodate this unstoppable economic and technological shift.
      We can’t let our utilities go the way of typewriter makers and newspapers, we need their service and expertise to make this transition work.
      Tell me who else to yell at about this and I’ll do so.

      • How about yelling at yourself?

        In your public speaking, you talk about managing intermittency (precisely the issue Cy raised) by hand-waving about getting e.g. wind power from elsewhere or falling back to biogas.  I suspect that you simply don’t have the math chops to run the numbers and see just how far short those things will inevitably fall from current expectations.  It’s so easy to parody the results that I’m in the process of doing so.  I’m no comedian but showing the risibility of the Green position is like shooting fish in a barrel.

        Everyone needs to recognize and admit that intermittency is a HARD problem, and EXPENSIVE to solve.

        Everyone needs to recognize and admit that geographic dispersion and low power density are HARD problems and EXPENSIVE to solve.

        Everyone needs to admit that energy storage is not going to be a slam-dunk proposition, else we would have had an all-electric vehicle fleet from the get-go and the internal combustion engine would have been a rarity on the ground.

        If you don’t do these things, you raise expectations that will not be fulfilled.  When that happens, people will go back to burning coal no matter the consequences.

        You list James Hansen as one of your advisers.  There is a guy with math chops and no illusions.  Please, LISTEN TO HIS PRESCRIPTION FOR SOLUTIONS.

        • ubrew12 Says:

          Wow. Suddenly everybody has a problem with ‘creative destruction’. I guess what is OK for labor unions is not OK for electric monopolies. If renewables have a permanent intermittency problem it’ll play out. This is called ‘capitalism’. Personally, I see a short term problem looking at over a hundred solutions (some of which are mine and I’m not going to discuss them). Make it profitable for people to deal with the intermittency problem and wallah. or not. That’s the way the system works, if you really believe in that system.

          • “Wow. Suddenly everybody has a problem with ‘creative destruction’. I guess what is OK for labor unions is not OK for electric monopolies.”

            ubrew12, please don’t equate the audience here on CC with watchers of Fox News or Rush Limbaugh fans. If you want to address those people about climate change, you’ll find them over on WUWT.

          • Suddenly everybody has a problem with ‘creative destruction’.

            I have a problem with destructive destruction, like well-meaning idiots breaking things they don’t understand and people’s lives depend on.

            I guess what is OK for labor unions is not OK for electric monopolies.

            If you break a labor union, you don’t have substantial collateral damage in just about every business in its region and a rapidly-developing public safety and health crisis.  In blackouts, you do.

            If renewables have a permanent intermittency problem it’ll play out. This is called ‘capitalism’.

            But “renewables” (unreliables) are not subject to market discipline.  Wind is subsidized so it can sell at negative prices.  Utilities are mandated to purchase their output, sometimes with quotas.  “Net metering” pays the generator for the costs of maintaining the grid itself, transferring that to other customers.  Subsidies for individual consumers artificially bid down their costs and get them to install capacity that an all-in cost accounting would never build in the first place.

            Every which way you look, government promotion of renewables deliberately breaks the mechanisms that the market has to make generators behave harmoniously and keep the grid running.  For instance, are utilities allowed to drop the price they rebate to net-metering customers when the grid is well-supplied or over-supplied, or are they required to rebate at time-of-day rates based on scarcity that no longer exists?  What price signals exist to keep PV builders from pushing power onto the grid until it literally fails?

            Make it profitable for people to deal with the intermittency problem and wallah.

            Oh, that’s very simple:  require intermittent generators to either smooth their output and make it at least quasi-dispatchable, or pay someone else to do it.  That should come out of their subsidies or net metering rebates.  But you know they’d scream at any suggestion that they assume any of the costs they create!

          • ubrew12 Says:

            Engineer-Poet said: “government promotion of renewables deliberately breaks [market] … mechanisms” Oh, go ahead, and claim for me that this was never true of fossils. Or ANYTHING. Name an energy source that just appeared, magic-like, without decades of husbandry from the public sector. Nuclear? Fossils? pulleeze.

        • No matter what the mix will be between competing energy sources and storage, the transition from fossil fuels is far from being a slam dunk. DoE is apparently partial to NuScale. Thoughts?

          • The unit size of NuScale is small for my taste, but the simplicity of the primary coolant system driven entirely by convection may pay back in lower parts count and O&M.  Having a unit that is walk-away safe and self-cools indefinitely without intervention eliminates most accident scenarios.

            NuScale isn’t the only concept that does this.  S-PRISM and TransAtomic both have this trait, bu they are radically different from NuScale and from each other.

    • uknowispeaksense Says:

      The generators in Australia have had ample time to switch from fossil fuels to renewables. In 2010, Melbourne University released what should have been a watershed study called the ZCA2020 plan. It was the result of many years of research and economic modelling that demonstrated that it was entirely feasible to switch to 100% renewable energy (including baseload) within a decade in Australia. The only thing missing in this country was political will. Political will when it comes to renewable energy is entirely absent due to political donations from fossil fuel miners and the generators themselves. This favour is returned in the form of massive subsidies. Renewables don’t get a look in.

      Fast forward to now. One has to wonder how long it will be before governments get tired of subsidising unprofitable companies and instead take notice how much cheaper renewable energy is in the mid to long term and shift their focus there regardless of the donations they receive? I’m pretty sure that when the lights start going out at night time, no government will be willing to not invest in a renewables future especially since the costs involved, the prospect of high employment in infrastructure development and the desire to not become a 2nd world country will be attractive and a vote winner.

      In the meantime we have this…

    • rayduray Says:


      Marvelous comment. Thanks for articulating my concerns so elegantly. 🙂

    • ppp251 Says:

      You’ve overblown storage problem. We don’t have to wait for storage, we can already get to 20-30% of wind and solar right away.

      You’re also underestimating GHG emissions reductions. There is factual evidence from Spain and Portugal that wind power reduces emissions from coal on nearly 1:1 basis (per kwh) for low wind penetrations. You have to get to 50% wind penetration to get 80% reduction of emissions (per kwh), which is still hugely significant. And we’re nowhere near 50% penetration.

      And last but not the least, you’re underestimating storage advances in recent years. There are numerous start-ups and companies working on this. Many have already demonstrated feasibility of their ideas with small scale demonstrations, and are working on full scale pilot projects.

      Even further, Aquion has already started to sell its product, which is environmentally friendly scalable battery which costs about the same as lead batteries (and lasts twice as much). So much about “storage does not exist and never will”.

    • Maybe I’m too optimistic, but necessity is the mother of invention. So this disruptive technology is going to force the hand of many players. Is that bad? I don’t think so. In fact, I think it’s totally human nature to sit on your hands until you’re forced to react. So it’s time to react. And get the grid updated.

      The problem I have, actually, is that who on Earth did NOT see this coming, decades ago? Why did everyone sit on their hands and do nothing for so long, including government, and corporations, in fact, the very corporations who might go belly up as a result of sitting on their hands for all this time? They could have had their hands in the cookie jar too.

  3. […] Renew Economy: Last week, for the first time in memory, the wholesale price of electricity in Queensland fell into negative territory – in the middle of the day. For several days the price – norma…  […]

  4. […] Renew Economy: Last week, for the first time in memory, the wholesale price of electricity in Queensland fell into negative territory – in the middle of the day. For several days the price – norma…  […]

  5. adelady Says:

    While this sounds good for the migration to solar, it massively disadvantages poor people who can’t afford rooftop PV, that now have to pay more for their energy to cover the increased per-user cost of maintaining the grid.

    So get the accountants to work and make sure that every premises that is connected to the grid is charged for that connection separately from the actual use of the power gained.

    This is how phone bills, water, sewerage, gas and power – all routine services, government and otherwise – are charged for where I live. And they have been for decades. I understand that several American states also organise power and other services this way.

    Once the money’s been sorted so that distribution is properly paid for by everyone who is connected, the “problem” that only ever existed because of sloppy accounting or management practices simply vanishes into the neverwhere it always belonged in.

    The issue of non-solar PV users not “paying their way” never arises because the accounts stipulate how much of each payment is for grid/availability and how much is for power used.

    • mirobaka Says:

      That’s an OK solution but I still think it incentivises people who can afford it to disconnect from the grid, increasing the costs and decreasing the utility for everyone else.

      Our taxes pay for our roads, railways, and other important pieces of infrastructure. Why shouldn’t they pay for our electricity distribution network?

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