Comments
Hi Bacchus.
This can only happen in Tasmania.
Perhaps the closure of the Power Plant has to do with another covert deal which will financially support the Pulp Mill.
Which we will probably be told “it’s ok - just what we need!”
John Day.
Posted by John Day on 20/09/06 at 10:32 AMI must point out that the Bell Bay power station would use about 1.4 million litres per DAY when operating both 120 MW units at full capacity.
Using your own figures, this would cost $616,000 per day or $107 per MWh generated. Given internal energy usage within the plant (about 5% of generation - typical of fossil fuel power stations) that rises to $112.50 per MWh sent out to the grid.
In contrast, based on Victorian bulk gas prices and assuming that Tasmanian prices would be similar (the pipeline being a sunk cost whether used or not), the marginal cost of gas-fired generation is about $27.50 per MWh (gross generation) or $29.00 on an energy sent out basis.
Non-fuel operating costs of perhaps $3 per MWh would need to be added to the above costs.
Bell Bay has run hard in recent years due to a combination of demand for electricity (averaging about 1227 MW and peaking at 1798 MW) exceeding firm hydro supply (1105 MW) and also due to below average rainfall.
Whether or not the saving amounts to $200 million I have not verified, but with fuel cost savings in the order of $440,00 per day it would be somewhere in that order.
At present, Bell Bay is runnin one machine at about 118 MW gross output as has been the case for some time now. Basslink imports are averaging more than double that and in recent days have sat almost constantly over 300 MW.
HOWEVER, $29 per MWh is totally uncompetitive against coal-fired generation with a marginal cost around $15 per MWh. That’s the problem. Gas is cheaper than oil but it never was going to be competitive against imports via Basslink except under limited circumstances (that is, when sufficient imports can not be obtained cheaply).
The one issue that I do have with the conversion of Bell Bay relates to technical performance. There is an observed reluctance (inability?) to run the units below 60 MW whereas very similar plant (eg Torrens Island A (Adelaide)) runs down to 30 MW practically every day. The larger 200 MW units at Torrens Island B run down to 20% of output quite satisfactorily (daily) and the 500 MW unit at Newport (Vic) can do likewise. So can most gas-fired steam turbine power stations.
As far as I can see, the economics look reasonable. There is a need for constant operation of one unit at Bell Bay and this was known 10 years ago. Given the limitations on maintaining adequate distribution of water between storages during Summer and the usual spill during Spring, this is necessarily achieved buy intermittent operation of both machines rather than constant operation of one machine.
At present fuel prices, oil would cost about $112 million per annum whereas gas would cost about $30 million. A saving of $82 million or roughly a 100% annual return on the investment in converting to gas. Obviously this was always going to come to an end once Basslink was commissioned since coal is absolutely cheaper than gas.
All things considered, to move forward it would make sense to look seriously at the economics of converting Bell Bay units 1 and 2 to coal-firing. Whilst maximum output would be reduced by around 40%, they could immediately revert to gas-firing when market conditions warrant doing so.
Also, there would be some efficiency and environmental benefits (reduced greenhouse gas emissions) from having that thermal generation in Tasmania (due to both reduced transmission losses and more importantly displacement of less efficient plant on the mainland - Bell Bay is technically NOT inefficient by any means).
Coal-firing would likely be politically difficult however (though there is no valid technical or scientific reason - it’s not as if there would be visible smoke (no need for that at all).
Given the long term global scarcity of gas and likely price rises, conversion to combined cycle operation using gas, whilst attractive in the short term, is unlikely to be viable beyond the next decade or so once Eastern Australia becomes reliant on more distant or imported gas sources and as the gas market globalises (just as oil did 40 years earlier).
Posted by Shaun Caris on 21/09/06 at 10:22 PMWell Shaun, between the artcle by Mr. Bacchus and your response, we seem to have opened a can of worms.
At 1.4 million lites a day, Bell Bay would need to run for 320 days to produce a bill of $200 M (without the differential). Those who are used to seeing Bell bay operate on an emergency basis for a few weeks a year will either say this is a load of baloney OR that something is seriously wrong with power egeneration in the state.
I note your observation that Hydro power supply is only able to produce 1105 MW supply when average and peak demand are 1227 ans 1798 MW respectively. What does this say about our ability to produce and sell on a 600MW cable to the national grid?
A possible interpretation is that water levels are so horrendously low in the state that Bell Bay has been cranked into action at public expense (whilst industry demand has remained uncapped). In addition to this it also prompts the question as to how in hell the state can pump 600MW across Basslink when local demand is exceeding generation. Even in average demand dropped by 50% over the night shift, this will not provide the required 600MW (on a constants daily/annual basis) tp pump across Basslink.
Perhaps you can shed some light on this Shaun?
Posted by Super Model on 22/09/06 at 10:08 PMContinued…
So, in a technical sense there is nothing particularly funny going on. Just operating the power stations but at different times driven by national (Qld, NSW/ACT, Vic, Tas, SA) combined demand rather than Tasmanian demand alone. That means a Summer peak in the afternoon rather than a Winter peak in the morning and evening.
The one potential problem is that Basslink imports overnight in Summer will displace generation from the major storages (offsetting the increased release of water in Winter to meet the national evening Winter peaks - smaller than Summer peaks but still a seasonal peak). Under a scenario of very low rainfall, Hydro would have to restrict the exports somewhat (by offering higher prices). Not a major problem but a point worth noting.
As for Bell Bay, historically it came down to inflows versus outflows over time. If outflows were higher and storages declined then a point is reached where firing up Bell Bay is necessary to conserve the remaining water. That it has been necessary in recent times (and Bell Bay ran solidly for months both in 2005 and 2006) is simply a function of less coming in than is going out. The alternative would have been to ration supplies.
With Basslink, operation of Bell Bay comes down to whether or not it can compete in a national market UNLESS Tasmania needs so much non-hydro supply (demand growth, drought or equipment breakdown) that Basslink can’t supply it all. In that case Bell Bay must run or consumption must be reduced.
Realistically, gas is a pretty expensive means of power generation so Bell Bay isn’t likely to run very often. It makes sense to import all the power that is available below the production cost of Bell Bay (given that storages are only a third full and haven’t been full for nearly 30 years). The exception being when inflows to small storages are high - a case of use it or lose it.
Doing this, Basslink should lead to enough net imports to close the gap between Tasmanian demand and supply. Hence Bell Bay is not needed.
However, if mainland prices rise then Bell Bay might become a cheaper option. If prices rise then exporting more, importing less and running Bell Bay to make up the difference would be profitable. It all depends on the market.
In very rough terms, Bell Bay costs twice as much as coal-fired power. The cost of Bell Bay is similar to wholesale (major industrial and that supplied to Aurora for sale to small business and households) power. So it’s not a “loser” finaicially but importing via Basslink is cheaper (given that the cost of Basslink is fixed no matter how it is used).
For reference, a litre of oil will generate a bit over 4 kilowatt hours if burned at Bell Bay. Since Bell Bay produces 240,000 KW, that’s in the order of 60,000 litres per hour or 1.44 million litres (1250 tonnes) per day or over 10 million litres a week.
Low sulphur oil contains slightly less energy per litre so the consumption would be a bit higher. It is also considerably more expensive (but less polluting).To compete with coal, the oil would need to cost about 6 cents per litre. 12 cents a litre to compete with gas. The actual oil price is around 50 cents a litre which makes it far too expensive unless there really is no alternative.
Bottom line is that (1) consumption significantly exceeds that which can be supplied by hydro-electric generation alone (2) storages are low thus precluding drawdown to meet that demand and (3) coal is far cheaper than gas, hence the limited role for Bell Bay (4) due to the above, Bell Bay has run for months on end in recent years thus using quite a lot of gas. Without Basslink imports, it would have run constantly virtually all year in 2006 so far as it did for much of 2005 until the Spring rains arrived.
As for whether anything is “wrong” with power generation in Tasmania, it comes down to how you look at it. If the objective is self-sufficiency then there was a VERY strong case for building another major power scheme to come on-line 5 or so years ago. Realistically, that would have been either a coal-fired plant or importing Venezuelan Orimulsion (a cheap liquid fuel) and burning that at Bell Bay (possibly in a new power station as well as the existing one) as everything else (including wind) was either uneconomic (wind is only economic now with massive subsidies which amount to half the total production cost) or politically impossible (a major new hydro scheme) during the 1990s when decisions needed to be made.Importing gas and/or electricity was the easiest option politically and it’s cheap enough at the moment (in that the cost of the new supply is not higher than either major industrial or Aurora’s wholesale supply rates). Whether or not importing is the best option long term is another matter…
Posted by Shaun Caris on 07/10/06 at 12:32 AMSomething funny happened there. I meant to post this part BEFORE the above, hence the “continued…”
Any hydro system has a range of possible “ratings” depending on what assumptions you make. The key assumption being how reliable you want the supply to be.
On the basis of a 2% annual probability of supply failure (ie rationing) the rating is 1105 MW assuming that Bell Bay is available as backup. Without Bell Bay (or and equivalent) that rating is 1065 MW.
On the other hand, if you accepted a 50% chance of failure (hardly practical, but anyway) then the rating can be pushed all the way to 1167 MW without Bell Bay and about 1365 with Bell Bay. Bt there would be shortges literally 50% of the time in order to get that high average production.
It’s a bit like saying you can drive much faster but you’re far more likely to crash if you do. It’s sensible to use a rating that keeps rationing to a minimum and that is where the 1105 MW comes from.
That’s AVERAGE power output. Also highly relevant is PEAK power output.
Power demand varies between about 900 and 1800 MW in Tasmania. Given that major industry has a constant load of over 700 MW, you can see just how great the variation in domestic and (even worse) small business demand really is. 200 to 1100 MW which costs a small fortune to supply due to that variation (hence why off-peak supply is cheaper).
Also there is a need to balance supply from different catchments.
Smaller storage (eg Pieman and Mersey-Forth schemes as well as Lower Derwent and Trevallyn) have very limited ability to store water.
Consequently, the generating capcacity is sized to use the full flow of the river during Winter (otherwise it would be spilled). Whilst it can still run to maximum output during Summer, doing so continually would rapidly deplete storages well before the rains arrived.
On the other side are the major storages (eg Great Lake, Lake Gordon, with the Upper Derwent being a substantial storage also).
The associated power stations are basically run when either peak power demand (driven by small business and domestic use) exceeds the capacity of the smaller stations OR when inflows to the smaller storages are less than that required to meet daily energy needs.
So, small storages are run constantly when it’s raining while the major storages are used only during times of high demand. Reverse that order when it’s dry.
Effectively, water is “transferred” between storages, over time, by adjusting the outflow. Water doesn’t physically move between, say, Lake Gordon and Lake Mackintosh but by adjusting the output of the power stations the same effect can be achieved as long as at least some rain does fall.
It works pretty well in practice although with the construction of the King and Henty-Anthony schemes (small storages) there is now insufficient capacity in the power stations drawing on the major storages to keep the system balanced during dry periods. This can (and has) lead to the depletion of the small storages whilst the major storages are still at reasonable levels.
Solutions are either adding more generating capacity to Gordon or Poatina power stations (expensive), running Bell Bay during Autumn (cheaper and what has been done to date) or accepting low output in Autumn (import via Basslink).
To get an output above 1105 MW is pretty easy. That figure is only an average sustainable output but, due to the need (to balance water flows) for duplication of generating capacity between small and large storages the total generating capacity (hydro) is 2260 MW.
Since Tasmanian load is around 1100 - 1200 MW when mainland demand peaks, it is simply a matter of running most of the power stations during the afternoon in Summer. Exactly what happens now in Winter (when Tasmanian demand peaks at 1800 MW) but at a different time.
Since the power stations are in different catchments, this does NOT produce a “surge” in water flows in any given river beyond that which would otherwise occur. Without Basslink, all the power stations from time to time reach full output (small schemes when it’s raining, major storages when it’s dry). The only change is the timing - doing it in Summer instead of Winter in the case of the smaller storages.
In order to have enough water, Hydro will need to maintain higher water levels (by reducing output) in Spring - Summer in the smaller storages. No problem there but it does mean more chance of spill in the event of high rainfall in Summer (which does happen from time to time).
Given the small size of the storages in question, one wet period is enough to cause spill. For example, there has been spill at Cethana and Devils Gate power stations in recent days - they have small storages - even though the whole system is only a third full. This has always been the case although with Basslink there is an opportunity to export that power overnight (but at a pretty low price) when high inflows occur and spill LESS water by doing so.
Posted by Shaun Caris on 07/10/06 at 11:26 AM
