the claim a capacity market only serves BAU

An unlikely scenario “Do you think we should run a high voltage line to 
Hawaii?” came from a talk that bidding practices for the Western Australia Electricity Capacity Market having lessons for what might happen in Texas USA. It happens they all have in common that they are isolated grid systems and not part of a national grid. If they were part of a National Grid then they could exchange excess capacity, peak loads and help with a transition to an energy spot market. The quote was from Dr Jeffery Doyle after posting his précis of a recent conference paper ‘A Cautionary Tale’ and reported through Greentech Media.

It is a serious matter that the claim a capacity market does not allow the effective operation of an opportunity to be set for demand response. This assumes demand response can only be reactionary to spot price pressures to be effective. However, at about 2007 it was proven the principles of demand management could be a good fit with the bidding practices of the capacity market, providing an advance intention to provide capacity as a virtual and apparent delivery.

What Dr Doyle exposed was that the problem of ‘business as usual’ is being supported by the bidding system. In practice that is a problem no matter where you provide a market (recently the outgoing CEO of Microsoft was quoted as saying they did not promote their capability to compete against their own Windows Operating System as they would have to destroy their infrastructure advantage in the market). If that is so, then courageous actions are needed to encourage innovation to meet the demand. An example of what could be done is changes to the conditions attached to the bidding requirements.

CO2Land org has noted the advances in waste to energy technologies and they can have sufficient volume available in time for the next bidding cycle – assuming a two year timeframe – they have the potential to create an industry that has multiple product streams with the developing technology. This innovation can be described as ‘batteries’. The key is that reliable and predictable supply can be managed to provide the volume needed. It can also be a multiple of aggregated provider units. 
All that is needed to make these ‘batteries’ available is the authority figures to be a courageous promoter and write into the bidding process that preference would be given to ‘new multi product’ generation. Why because cost of generation is then part of a mix of revenue potential and it encourages business opportunities to price in a way to be competitive with conventional supply for peak demand. Note: I did not claim total energy demand as that would be unrealistic.

That said, Peter Davies then offered after reading through Dr Doyle’s analysis that: “

“I was struck by the potential for increasing significant reduction of demand. Small scale efficient biomass energy plants are on the way.

In States like WA there is potential for around 1 gigawatt of “avoided power purchase” to insulate against price rises through wide scale adoption by 2020, or in WA’s case 25% of the existing market. This is base load regenerative power capacity.

What is most interesting here though is if grid connected they can act as load following systems for wind and industrial solar, negating the argument of the existing coal burners that they need to maintain capacity anyway for when these falter in their dispatch. To add insult to injury the same biomass systems can co-fire coal…so fuel supply limitations are not an issue, and being modular such plants can be expanded as required on quite short lead times. The high quality syngas produced can also be used as feed stock for other processes and products, increasing both plant flexibility and resilience to fluctuations in the electricity market (real or forced by monopoly generators).

Start throwing in advances in lower cost domestic solar energy storage coming out of China shortly and demand for fossil energy generation can only fall even further…anyone want to bet on getting a good return on investment in building a new conventional coal or NG power station?”

As we said: A serious matter – this cautionary tale.