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Are solar and wind cheaper than coal? Yes and no...

You'll hear fairly often, that solar and wind powered electricity are now cheaper than electricity powered by coal. Is this really true? Yes, but only if you compare them using what's know as the Levelised Cost Of Electricity (LCOE). I'll argue here that the LCOE is not an appropriate way to compare these things, since, as we've seen , they don't do the same job. Comparing their costs is like comparing the cost of a bicycle with that of a car and saying the bicycle is cheaper. First of all, what is the Levelised Cost Of Electricity? When you build a power plant, just like anything else, it has a finite lifetime. Over that lifetime, there are a range of costs to pay: first you have to pay for the land, planning and permitting, engineering and so on. Then you have to pay for construction and commissioning. When you operate the plant you have to pay for wages, insurance, fuel, shareholder dividends and taxes. Finally at the end of life you have to pay for decommissioni

Turning supply up and down, in a wholesale market

Last time, we saw how instantaneous electricity supply power has to match instantaneous demand, in order to keep the electricity grid functioning within safe limits. Demand is mostly determined by individual consumers turning things on or off, with the exception of relatively few large industrial users who are able to turn demand down when instructed (in exchange for a cheaper rate). The wholesale market Supply is matched to demand by the Australian Energy Market Operator (AEMO) every 5 minutes, but how do they do this?  Because we live in a world where free and open markets are believed to deliver the most efficient outcomes, they do it using a market. Every 5 minutes, the market operator conducts an auction. Each registered generator bids an amount of electricity and a price - the minimum price they are prepared to be paid - to supply electricity to the market for the next 5 minutes. The market operator then ranks the bids from cheapest to most expensive, and proceeds down the list u

Balancing electricity supply and demand

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We're used to using electricity without giving it much thought. Flip the switch and it's there. There's quite a lot going on behind the scenes though, and it's important to understand some of this because of what it entails for how we generate electricity, the effects that has on the grid, and the prices that we pay. The physics of the situation limits what we can and can't do, and also has significant effects on the electricity market. We talked about the difference between energy, power and electricity in a previous post , where we learned that electricity is a way transferring energy, and power is the rate the energy is transferred. There are a few things to know about the electricity that comes out of your wall socket via the electricity grid, or the "poles and wires" that connect electricity generators and consumers.  The first thing is the voltage, which is like the pressure of electricity. Voltage causes electric current to flow, with increases in v

Heat isn't temperature

I probably need to get this out of the way, too. These words are often used interchangeably in everyday communication, but they are quite different from each other in the energy world. Heat is a form of energy, similar to kinetic energy. Temperature is something more like the concentration of the heat. Kinetic energy is the "energy of motion" that all moving objects have. The faster a given object is moving, the more kinetic energy it has. When you stop a car by using the brakes, all of the kinetic energy gets converted to heat in the brake discs, in a controlled way. Doubling the speed actually increases kinetic energy by a factor of four, which is why it takes so much longer to bring a car to a stop from a higher speed. In a car crash, the kinetic energy gets converted to heat in an uncontrolled way, causing destruction of bodies and bodywork in the process.  Kinetic energy depends on mass, as well as speed. A heavier car has more kinetic energy than a lighter one, travell

Energy isn't power, isn't electricity

Words can hinder understanding just as easily as fostering it. To be clear, in this blog I'm not talking about the same energy as new-age spiritualists, or the same power as political scientists. I'm talking about the concepts from the physical sciences. Electricity is a way (not the only way) of moving energy around. Power is the rate at which energy is moved around. But what is energy, exactly? The wikipedia page calls it a quantitative property, which is accurate, and super important, but not particularly enlightening (no pun intended). You could just as accurately describe energy as an accounting trick. Not in the sense of any sort of deception, but as in, something that's really clever. Let's have a look at the accounting trick, how it works, and why it's important. The first thing to recognise is that energy can have lots of different forms, and can change between one form and another. This happens naturally all the time - light energy from the sun is absor

What this blog is for

Energy is essential to life. It's no exaggeration to say that that much of life is a continual struggle for enough energy to survive, and to reproduce - whether that's a plant competing with others for sun, an animal trying to eat enough without being eaten, or a share investor trying to make more money than the other guy (money is really just a claim on goods and services that are made possible with energy). We have largely forgotten this, as fossil energy sources seemed abundant for much of the 20th Century. Energy seemed not to be a limiting factor at all. Probably as a result, the general level of energy literacy in the news media has fallen to a pretty low level - usually plagued with misunderstandings, misrepresentations and outright errors. The academic research literature is only a little better. It's often hyper-specialised, focusing on technical details that are often not that important when you step back and look at the broader context. The purpose of academic re