Apart from the insane cost of propping up near bankrupt wind power outfits – like Infigen – with $ billions in subsidies in the form of the REC Tax/Subsidy – the wind industry gets to “free-ride” on the Australian electricity consumer in at least 2 ways.

The first is getting preferential distribution of the power wind farms manage to dispatch to the grid at crazy, random intervals – at no cost to wind power outfits.

Because the mandatory RET carries with it the threat of a $65 per MWh fine for retailers failing to satisfy the RET, wind power outfits have been able to “encourage” retailers into signing Power Purchase Agreements at rates ($90-120 per MWh) 3-4 times the cost of conventional power generation; under which the retailer receives a Renewable Energy Certificate. The retailer, therefore, avoids the $65 per MWh fine by purchasing a MW of wind power (as part of the PPA) and surrendering a REC as proof of purchase.

With ludicrously high and guaranteed rates under their PPAs, wind power generators are able to underbid all-comers in the dispatch market and – on those occasions when the wind is blowing (usually at night-time) – are happy to drive the dispatch price towards zero and even into negative territory – simply because they will continue to make money at the phenomenal rates guaranteed by their PPAs (see our post here).

The consequence of this Federally mandated market distortion, is that wind power takes precedence over all other forms of generation and – on every occasion when the wind is blowing – results in wind power jumping to the head of the queue.

This results in thermal gas and coal generators having to throttle back their generators; and ramping down output by disengaging turbines. However, boilers continue to run – gas and coal continue to burn – with the plant ready to re-engage the generator at a minute’s notice – ramping up output in order to take up the slack when the wind inevitably – but unpredictably – stops blowing (see our post here).

Forcing thermal plants to ramp output up and down means those plants run much less efficiently than they should – and leads to mountains of wasted coal and gas and, therefore, increased CO2 emissions (see thisEuropean paper here; this Irish paper here; this English paper here; and this Dutch study here).

Wind power outfits don’t bear any of the additional and unnecessary costs suffered by conventional generators in this regard.

And worse, network operators don’t charge wind power operators a cent for the privilege of getting their power into the system on a preferred basis; nor are they charged for the disruption and chaos their utterly unpredictable efforts cause grid managers and conventional generators. So far, so pointlessly costly.

The second way in which wind power gets a “free-ride” at power consumers’ expense is the cost of having other conventional generators supply power to “balance the grid”: which means ensuring that the “voltage”, “phase” and “frequency” of power within the entire grid is kept relatively stable and constant; within defined tolerances. For a brief outline of the fundamentals of grid balancing – see this link.

In a widely dispersed, distributed power generation network – like Australia’s Eastern Grid – this means having sufficient reserve capacity to increase generation output (and, therefore, input to the grid) on a second by second (or minute by minute) basis to maintain “frequency”. This is done largely with “spinning reserve” held by base-load gas and coal thermal plants – which can be added to the grid in seconds – and hydro generation, which can be called upon to start generating within minutes (see our post here).

Maintaining “voltage stability” and “phase” is done on a much faster time scale – a few cycles (ie Hz) or less. The extra power needed in this respect is already in the grid: it then becomes a matter of matching positive and negative voltage balances that simultaneously exist within the grid to maintain equilibrium throughout the grid as a whole. This is done – in simple terms – by grid managers “pushing” power around the grid using transformers, switching gear and circuit breakers.

In Australia, supplying the power used to maintain “voltage” and “phase” stability largely comes from hydro power. That power is not “sold” to retail customers, but is simply absorbed by the grid to keep it stable (ie to prevent blackouts, which would otherwise occur). In other words, a substantial volume of the power generated and dispatched to the grid is used up within it and never sees a kettle or a light globe. However, because it is critical to grid stability, generators supplying power for that purpose charge grid operators a premium price for it. The introduction of substantial – but wildly fluctuating – volumes of intermittent wind power has made the task of maintaining grid stability more difficult; and requires an even greater volume of conventional power to do so.

With 2,660 MW of installed (nameplate) wind power capacity connected to the Eastern Grid, the task of grid managers in trying to balance the grid has become a nightmare – the fluctuations in wind power output vary enormously, second by second, minute by minute and hour by hour – and bring with it a serious risk of widespread blackouts (see our post here).

On the opposite side of each and every one of those utterly unpredictable fluctuations in wind power output, there has to be an equal amount of power already within the grid to compensate. If not, the grid collapses. Despite necessitating the provision of a substantial volume of additional power from conventional sources (dispatched to the grid for no other purpose than balancing it) wind power outfits pay nothing towards that cost.

In respect of all of the above – where wind power outfits escape Scott free – power consumers are ultimately lumbered with the entire cost of providing preferential network distribution for wind power – as well as paying for the additional power generated (and essential) to maintain a balanced grid – through high and rising power bills.

In the US, conventional generators and grid operators have just cottoned on to the manifest unfairness in having their customers pay for wind power’s “free lunch”.

Here’s the Denver Business Journal on one effort to make the freeloaders pay.

Xcel asks federal regulators to ensure wind power pays its own way
Denver Business Journal
Cathy Proctor
23 May 2014

As wind energy grows as a power source in Colorado, Xcel Energy Inc. is asking federal regulators for permission to change the way it charges other utilities that use Xcel’s transmission lines to move their wind-based power to their customers.

Xcel wants the utilities to pay for its costs associated with having supplies of reserve power ready to go in case the wind suddenly dies, said Terri Eaton, Xcel’s director of federal regulatory and compliance efforts.

Currently, those costs are paid by Xcel’s business and residential customers, Eaton said.

If the transmission lines customers can supply their own back-up power supplies, they wouldn’t be charged under the proposed rates, she said.

Readily available, back-up power supplies are critical to keep the transmission grid in balance and avoid blackouts that can occur when a big source of power suddenly disappears, Eaton said.

Under the proposal Xcel filed with the Federal Energy Regulatory Commission (FERC) on May 15, the new rates would bring in about $727,000 a year, according to the filing.

The new rates, if approved, would become effective Jan. 1, 2015.

“What we’re trying to do is to have the costs we’re now paying to integrate wind on our system allocated to all the parties who have wind on our system — as well as those who will add wind on our system in the future,” Eaton said.

While FERC has discussed the challenges with adding wind to the nation’s grid, Xcel’s filing is the first to ask for a special charge, or tariff, to pay for backup power supplies in case the wind suddenly dies, Eaton said.

“We’ve seen some dramatic wind fall-offs in really short periods of time,” Eaton said.

Xcel has already experienced such falls offs, when “several hundreds of megawatts of wind” drops dramatically — and swiftly — due to changes in the wind, she said.

“Sometimes the wind is just howling, and an hour later the wind has calmed — and it’s in those circumstances that we need to have reserves available to pick up the load,” Eaton said.

In such cases, backup power supplies typically come from natural gas-fueled power plants, she said.

If FERC approves the new charges, the rates only would be applicable to Xcel’s power lines in Colorado, she said.

Xcel worked hard with representatives of the wind industry to draft its proposed rates, said Michael Goggin, director of research for the American Wind Energy Association, an industry trade group.

“We plan on taking a close look at the filing to ensure that Xcel’s proposal is consistent with FERC precedent and cost allocation rules,” Goggin said.

“It’s important that all energy sources be treated fairly, particularly because ratepayers pick up the tab for the integration cost of accommodating the abrupt failures of conventional power plants,” he said.

Xcel’s Colorado transmission lines currently carry about 25 megawatts of wind power owned by other utilities, specifically the Platte River Power Authority and the Arkansas River Power Authority, Eaton said.

It’s not a big amount, but the total is expected to grow as other rural cooperatives and city-owned utilities add wind farms to their power portfolios and need to use Xcel’s transmission lines to move the power to their customers, Eaton said.

Xcel currently has about 2,200 megawatts of its own wind power moving across its transmission lines in Colorado, and expects to add about 450 megawatts of wind power by 2018.

Rural cooperatives must get 20 percent of their power supplies from renewable energy by 2020 under a controversial 2013 bill, Senate Bill 252, that Gov. John Hickenlooper signed into law in June 2013.

Under the proposal, the new rates would raise transmission costs for the Arkansas River Power Authority by $105,144 a year, while the Platte River Power Authority’s rates would rise an estimated $326,447 per year, according to Xcel.

Eaton stressed that the proposal doesn’t mean Xcel is hostile toward wind energy, or renewable power.

“This isn’t a money maker for the company,” Eaton said.

Lee Boughey, a spokesman for Tri-State Generation and Transmission Association, said the association doesn’t currently send the its wind power over Xcel’s transmission lines, but understands Xcel’s concerns.

Tri-State supplies power to 18 member electric cooperatives in Colorado, which are affected by the new renewable energy goal, in addition to serving customers in Nebraska, Wyoming and New Mexico.

“As more intermittent resources are added in the region, we understand the need to address the higher costs of integrating and balancing power,” Boughey said.

“It’s important that costs be addressed in a transparent fashion,” he added.
Denver Business Journal

The wind industry and its parasites are quick to trumpet anything that looks remotely like a “benefit” purportedly attached to wind power; but have, so far, avoided being called to account for the true and hidden costs of wind power generation – just like those detailed above.

STT is aware of several submissions to the RET Review Panel from Australia’s leading energy market economists that specifically address these issues.

The Panel has made it plain that they are principally concerned “with the cost impacts of renewable energy in the electricity sector” – so there’ll no place for the wind industry to hide this time around (see our post here).

Forcing power consumers to pay for the wind industry’s giant “free lunch” is just another reason why the mandatory RET simply has to be scrapped now.