Going green costs a lot of green

NB Power Pulp and Paper Subsidies lower electricity rates for six New Brunswick mills using firm power benchmarks and interruptible discounts, while government mandates, utility debt, ratepayer impacts, and competitiveness pressures shape provincial energy policy.

Key Points

Provincial mandates that buy down firm electricity rates for six mills to a national average, despite NB Power's debt.

✅ Mandated buy-down to match national firm electricity rates

✅ Ignores large non-firm interruptible power discounts

✅ Raises equity concerns amid NB Power debt and rate pressure

An effort to fix NB Power's struggling finances that is supposed to involve a look at "all options" will not include a review of the policy that requires the utility to subsidize electricity prices for six New Brunswick pulp and paper mills, according to the Department of Natural Resources and Energy Development.

The program is meant "to enable New Brunswick's pulp and paper companies have access to competitive priced electricity,"  said the department's communications officer Nick Brown in an email Monday 

"Keeping our large industries competitive with other Canadian jurisdictions, amid Nova Scotia rate hike opposition debates elsewhere, is important," he wrote, knocking down the idea the subsidy program might be scrutinized for shortcomings like other NB Power expenses.

Figures released last week show NB Power paid out $9.7 million in rate subsidies to the mills under the program in the fiscal year ended in March 2021, even though the utility was losing $4 million for the year and falling deeper into debt, amid separate concerns about old meter issues affecting households.

Subsidies went to three mills owned by J.D. Irving Ltd. including two in Saint John and one in Lake Utopia, two owned by the AV group in Nackawic and Atholville and the Twin Rivers pulp mill in Edmundston.

The New Brunswick government has made NB Power subsidize pulp and paper mills like Twin Rivers Paper Company since 2012, and is requiring the program to continue despite financial problems at the utility. (CBC)
It was NB Power's second year in a row of financial losses, while it is supposed to pay down $500 million of its $4.9 billion debt load in the next five years to prepare for the refurbishment of the Mactaquac dam, a burden comparable to customers in Newfoundland paying for Muskrat Falls elsewhere under separate policies, under a directive issued by the province

NB Power president Keith Cronkhite said he was "very disappointed" with debt increasing last year instead of  falling and senior vice president and chief financial officer Darren Murphy said everything would be under the microscope this year to turn the utility's finances around.  

"We need to do better," said Murphy on Thursday

"We need to step back and make sure we're considering all options, including approaches like Newfoundland's ratepayer shield agreement on megaproject overruns, to achieve that objective because the objective is quickly closing in on us."

However, reviewing the subsidy program for the six pulp and paper mills is apparently off limits.

The subsidy program requires NB Power to buy down the cost of "firm" electricity bought by pulp and paper mills to a national average that is calculated by the Department of Natural Resources and Energy Development.

Last year the province declared the price mills in New Brunswick pay to be an average of  7.536 cents per kilowatt hour (kwh).  It is higher than rates in five other provinces that have mills, which the province points to as justification for the subsidies, even as Nova Scotia's 14% rate hike approval highlights broader upward pressure, although the true significance of that difference is not entirely clear.

In British Columbia, the large forest products company Paper Excellence operates five pulp and paper mills which are charged 17.2 per cent less for firm electricity than the six mills in New Brunswick.

The Paper Excellence Paper Mill in Port Alberni, B.C. pays lower electricity prices than mills in New Brunswick, a benefit largely offset by higher property taxes. It's a factor New Brunswick does not count in calculating subsidies NB Power must pay. (Paper Excellence)
However, local property taxes on the five BC mills are a combined $7.8 million higher than the six New Brunswick plants, negating much of that difference.

The province's subsidy formula does not account for differences like that or for the fact New Brunswick mills buy a high percentage of their electricity at cheap non-firm prices.

Not counting the subsidies, NB Power already sells high volumes of what it calls interruptible and surplus power to industry at deep discounts on the understanding it can be cut off and redeployed elsewhere on short notice when needed.

Actual interruptions in service are rare.  Last year there were none, but NB Power sold 837 million kilowatt hours of the discounted power to industry at an average price of 4.9 cents per kwh.   

NB Power does not disclose how much of the $22 million or more in savings went to the six mills, but the price was 35 per cent below NB Power's posted rate for the plants and rivaled firm prices big mills receive anywhere in Canada, including Quebec.

Asked why the subsidy program ignores large amounts of discounted interruptible power used by New Brunswick mills in making comparisons between provinces, Brown said regulations governing the program require a comparison of firm prices only.

"The New Brunswick average rate is based on NB Power's published large industrial rate for firm energy, as required by the Electricity from Renewable Resources regulation," he wrote.

The subsidy program itself was imposed on NB Power by the province in 2012 to aid companies suffering after years of poor markets for forest products following the 2008 financial collapse and recession.  

Providing subsidies has cost NB Power $100 million so far and has continued even as markets for pulp products improved significantly and NB Power's own finances worsened.

Report warned against subsidies
NB Power has never directly criticized the program, but in a matter currently in front the of the New Brunswick Energy and Utilities Board looking at how NB Power might restructure its rates, including proposals such as seasonal rates that could prompt backlash, an independent consultant hired by the utility suggested rate subsidies to large export oriented manufacturing facilities, like pulp and paper mills, is generally a poor idea.

"We do not recommend offering subsidies to exporters," says the report by Christensen Associates Energy Consulting of Madison, Wis.

"There are two serious economic problems with subsidizing exports. The first is that the benefits may be less than the costs. The second problem is that subsidies tend to last forever, even if the circumstances that initially justified the subsidies have disappeared."

The Christensen report did not directly assess the merits of the current subsidy for pulp and paper mills but it addressed the issue because it said in the design of new rates "one NB Power business customer has raised the possibility that their electricity-intensive business ought to be granted subsidies because of the potential to generate extra benefits for the Province through increases in their exports"

That, said Christensen, rarely benefits the public.

"The direct costs of the subsidies are the subsidies themselves, a part of which ends up in the pockets of out-of-province consumers of the exported goods," said the report.  

"But there are also indirect costs due to the fact that the subsidies are financed through higher electricity prices, which means that other electricity customers have less money to spend on services provided by local businesses, thus putting a drag on the local economy."

The province does not agree.

Asked whether it has any studies or cost-benefit reviews that show the subsidy program is a net benefit to New Brunswick, the department cited none but maintained it is an important initiative, even as elsewhere governments have offered electricity bill credit relief to ratepayers.

"The program was designed to give large industrial businesses the ability to compete on a level energy field," wrote Brown.
 

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Hourly Electricity Emissions Tracking maps grid balancing areas, embodied emissions, and imports/exports, revealing carbon intensity shifts across PJM, ERCOT, and California ISO, and clarifying renewable energy versus coal impacts on health and climate.

Key Points

An hourly method tracing generation, flows, and embodied emissions to quantify carbon intensity across US balancing areas.

✅ Hourly traces of imports/exports and generation mix

✅ Consumption-based carbon intensity by balancing area

✅ Policy insights for renewables, coal, health costs

In the United States, electricity generation accounts for nearly 30% of our carbon emissions. Some states have responded to that by setting aggressive renewable energy standards; others are hoping to see coal propped up even as its economics get worse. Complicating matters further is the fact that many regional grids are integrated, and as America goes electric the stakes grow, meaning power generated in one location may be exported and used in a different state entirely.

Tracking these electricity exports is critical for understanding how to lower our national carbon emissions. In addition, power from a dirty source like coal has health and environment impacts where it's produced, and the costs of these aren't always paid by the parties using the electricity. Unfortunately, getting reliable figures on how electricity is produced and where it's used is challenging, even for consumers trying to find where their electricity comes from in the first place, leaving some of the best estimates with a time resolution of only a month.

Now, three Stanford researchers—Jacques A. de Chalendar, John Taggart, and Sally M. Benson—have greatly improved on that standard, and they have managed to track power generation and use on an hourly basis. The researchers found that, of the 66 grid balancing areas within the United States, only three have carbon emissions equivalent to our national average, and they have found that imports and exports of electricity have both seasonal and daily changes. de Chalendar et al. discovered that the net results can be substantial, with imported electricity increasing California's emissions/power by 20%.

Hour by hour
To figure out the US energy trading landscape, the researchers obtained 2016 data for grid features called balancing areas. The continental US has 66 of these, providing much better spatial resolution on the data than the larger grid subdivisions. This doesn't cover everything—several balancing areas in Canada and Mexico are tied in to the US grid—and some of these balancing areas are much larger than others. The PJM grid, serving Pennsylvania, New Jersey, and Maryland, for example, is more than twice as large as Texas' ERCOT, in a state that produces and consumes the most electricity in the US.

Despite these limitations, it's possible to get hourly figures on how much electricity was generated, what was used to produce it, and whether it was used locally or exported to another balancing area. Information on the generating sources allowed the researchers to attach an emissions figure to each unit of electricity produced. Coal, for example, produces double the emissions of natural gas, which in turn produces more than an order of magnitude more carbon dioxide than the manufacturing of solar, wind, or hydro facilities. These figures were turned into what the authors call "embodied emissions" that can be traced to where they're eventually used.

Similar figures were also generated for sulfur dioxide and nitrogen oxides. Released by the burning of fossil fuels, these can both influence the global climate and produce local health problems.

Huge variation
The results were striking. "The consumption-based carbon intensity of electricity varies by almost an order of magnitude across the different regions in the US electricity system," the authors conclude. The low is the Bonneville Power grid region, which is largely supplied by hydropower; it has typical emissions below 100kg of carbon dioxide per megawatt-hour. The highest emissions come in the Ohio Valley Electric region, where emissions clear 900kg/MW-hr. Only three regional grids match the overall grid emissions intensity, although that includes the very large PJM (where capacity auction payouts recently fell), ERCOT, and Southern Co balancing areas.

Most of the low-emissions power that's exported comes from the Pacific Northwest's abundant hydropower, while the Rocky Mountains area exports electricity with the highest associated emissions. That leads to some striking asymmetries. Local generation in the hydro-rich Idaho Power Company has embodied emissions of only 71kg/MW-hr, while its imports, coming primarily from Rocky Mountain states, have a carbon content of 625kg/MW-hr.

The reliance on hydropower also makes the asymmetry seasonal. Local generation is highest in the spring as snow melts, but imports become a larger source outside this time of year. As solar and wind can also have pronounced seasonal shifts, similar changes will likely be seen as these become larger contributors to many of these regional grids. Similar things occur daily, as both demand and solar production (and, to a lesser extent, wind) have distinct daily profiles.

The Golden State
California's CISO provides another instructive case. Imports represent less than 30% of its total electric use in 2016, yet California electricity imports provided 40% of its embodied emissions. Some of these, however, come internally from California, provided by the Los Angeles Department of Water and Power. The state itself, however, has only had limited tracking of imported emissions, lumping many of its sources as "other," and has been exporting its energy policies to Western states in ways that shape regional markets.

Overall, the 2016 inventory provides a narrow picture of the US grid, as plenty of trends are rapidly changing our country's emissions profile, including the rise of renewables and the widespread adoption of efficiency measures and other utility trends in 2017 that continue to evolve. The method developed here can, however, allow for annual updates, providing us with a much better picture of trends. That could be quite valuable to track things like how the rapid rise in solar power is altering the daily production of clean power.

More significantly, it provides a basis for more informed policymaking. States that wish to promote low-emissions power can use the information here to either alter the source of their imports or to encourage the sites where they're produced to adopt more renewable power. And those states that are exporting electricity produced primarily through fossil fuels could ensure that the locations where the power is used pay a price that includes the health costs of its production.

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Hydrogen Energy Transition advances renewable energy integration via electrolysis, carbon capture and storage, and gas hybrids to decarbonize industry, steel, and transport, enable grid storage, replace ammonia feedstocks, and export clean power across continents.

Key Points

Scaling clean hydrogen with renewables and CCS to cut emissions in power and industry, and enable clean transport.

✅ Electrolysis and CCS provide low-emission hydrogen at scale.

✅ Balances renewables with storage and flexible gas assets.

✅ Decarbonizes steel, ammonia, heavy transport, and exports.

I want you to imagine a highway exclusively devoted to delivering the world’s energy. Each lane is restricted to trucks that carry one of the world’s seven large-scale sources of primary energy: coal, oil, natural gas, nuclear, hydro, solar and wind.

Our current energy security comes at a price, as Europe's power crisis shows, the carbon dioxide emissions from the trucks in the three busiest lanes: the ones for coal, oil and natural gas.

We can’t just put up roadblocks overnight to stop these trucks; they are carrying the overwhelming majority of the world’s energy supply.

But what if we expand clean electricity production carried by the trucks in the solar and wind lanes — three or four times over — into an economically efficient clean energy future?

Think electric cars instead of petrol cars. Think electric factories instead of oil-burning factories. Cleaner and cheaper to run. A technology-driven orderly transition. Problems wrought by technology, solved by technology.

Read more: How to transition from coal: 4 lessons for Australia from around the world

Make no mistake, this will be the biggest engineering challenge ever undertaken. The energy system is huge, and even with an internationally committed and focused effort the transition will take many decades.

It will also require respectful planning and retraining to ensure affected individuals and communities, who have fuelled our energy progress for generations, are supported throughout the transition.

As Tony, a worker from a Gippsland coal-fired power station, noted from the audience on this week’s Q+A program:

The workforce is highly innovative, we are up for the challenge, we will adapt to whatever is put in front of us and we have proven that in the past.

This is a reminder that if governments, industry, communities and individuals share a vision, a positive transition can be achieved.

The stunning technology advances I have witnessed in the past ten years, such as the UK's green industrial revolution shaping the next waves of reactors, make me optimistic.

Renewable energy is booming worldwide, and is now being delivered at a markedly lower cost than ever before.

In Australia, the cost of producing electricity from wind and solar is now around A$50 per megawatt-hour.

Even when the variability is firmed with grid-scale storage solutions, the price of solar and wind electricity is lower than existing gas-fired electricity generation and similar to new-build coal-fired electricity generation.

This has resulted in substantial solar and wind electricity uptake in Australia and, most importantly, projections of a 33% cut in emissions in the electricity sector by 2030, when compared to 2005 levels.

And this pricing trend will only continue, with a recent United Nations report noting that, in the last decade alone, the cost of solar electricity fell by 80%, and is set to drop even further.

So we’re on our way. We can do this. Time and again we have demonstrated that no challenge to humanity is beyond humanity.

Ultimately, we will need to complement solar and wind with a range of technologies such as high levels of storage, including gravity energy storage approaches, long-distance transmission, and much better efficiency in the way we use energy.

But while these technologies are being scaled up, we need an energy companion today that can react rapidly to changes in solar and wind output. An energy companion that is itself relatively low in emissions, and that only operates when needed.

In the short term, as Prime Minister Scott Morrison and energy minister Angus Taylor have previously stated, natural gas will play that critical role.

In fact, natural gas is already making it possible for nations to transition to a reliable, and relatively low-emissions, electricity supply.

Look at Britain, where coal-fired electricity generation has plummeted from 75% in 1990 to just 2% in 2019.

Driving this has been an increase in solar, wind, and hydro electricity, up from 2% to 27%. At the same time, and this is key to the delivery of a reliable electricity supply, electricity from natural gas increased from virtually zero in 1990 to more than 38% in 2019.

I am aware that building new natural gas generators may be seen as problematic, but for now let’s assume that with solar, wind and natural gas, we will achieve a reliable, low-emissions electricity supply.

Is this enough? Not really.

We still need a high-density source of transportable fuel for long-distance, heavy-duty trucks.

We still need an alternative chemical feedstock to make the ammonia used to produce fertilisers.

We still need a means to carry clean energy from one continent to another.

Enter the hero: hydrogen.

Hydrogen could fill the gaps in our energy needs. Julian Smith/AAP Image
Hydrogen is abundant. In fact, it’s the most abundant element in the Universe. The only problem is that there is nowhere on Earth that you can drill a well and find hydrogen gas.

Don’t panic. Fortunately, hydrogen is bound up in other substances. One we all know: water, the H in H₂O.

We have two viable ways to extract hydrogen, with near-zero emissions.

First, we can split water in a process called electrolysis, using renewable electricity or heat and power from nuclear beyond electricity options.

Second, we can use coal and natural gas to split the water, and capture and permanently bury the carbon dioxide emitted along the way.

I know some may be sceptical, because carbon capture and permanent storage has not been commercially viable in the electricity generation industry.

But the process for hydrogen production is significantly more cost-effective, for two crucial reasons.

First, since carbon dioxide is left behind as a residual part of the hydrogen production process, there is no additional step, and little added cost, for its extraction.

And second, because the process operates at much higher pressure, the extraction of the carbon dioxide is more energy-efficient and it is easier to store.

Returning to the electrolysis production route, we must also recognise that if hydrogen is produced exclusively from solar and wind electricity, we will exacerbate the load on the renewable lanes of our energy highway.

Think for a moment of the vast amounts of steel, aluminium and concrete needed to support, build and service solar and wind structures. And the copper and rare earth metals needed for the wires and motors. And the lithium, nickel, cobalt, manganese and other battery materials needed to stabilise the system.

It would be prudent, therefore, to safeguard against any potential resource limitations with another energy source.

Well, by producing hydrogen from natural gas or coal, using carbon capture and permanent storage, we can add back two more lanes to our energy highway, ensuring we have four primary energy sources to meet the needs of the future: solar, wind, hydrogen from natural gas, and hydrogen from coal.

Read more: 145 years after Jules Verne dreamed up a hydrogen future, it has arrived

Furthermore, once extracted, hydrogen provides unique solutions to the remaining challenges we face in our future electric planet.

First, in the transport sector, Australia’s largest end-user of energy.

Because hydrogen fuel carries much more energy than the equivalent weight of batteries, it provides a viable, longer-range alternative for powering long-haul buses, B-double trucks, trains that travel from mines in central Australia to coastal ports, and ships that carry passengers and goods around the world.

Second, in industry, where hydrogen can help solve some of the largest emissions challenges.

Take steel manufacturing. In today’s world, the use of coal in steel manufacturing is responsible for a staggering 7% of carbon dioxide emissions.

Persisting with this form of steel production will result in this percentage growing frustratingly higher as we make progress decarbonising other sectors of the economy.

Fortunately, clean hydrogen can not only provide the energy that is needed to heat the blast furnaces, it can also replace the carbon in coal used to reduce iron oxide to the pure iron from which steel is made. And with hydrogen as the reducing agent the only byproduct is water vapour.

This would have a revolutionary impact on cutting global emissions.

Third, hydrogen can store energy, as with power-to-gas in pipelines solutions not only for a rainy day, but also to ship sunshine from our shores, where it is abundant, to countries where it is needed.

Let me illustrate this point. In December last year, I was privileged to witness the launch of the world’s first liquefied hydrogen carrier ship in Japan.

As the vessel slipped into the water I saw it not only as the launch of the first ship of its type to ever be built, but as the launch of a new era in which clean energy will be routinely transported between the continents. Shipping sunshine.

And, finally, because hydrogen operates in a similar way to natural gas, our natural gas generators can be reconfigured in the future as hydrogen-ready power plants that run on hydrogen — neatly turning a potential legacy into an added bonus.

Hydrogen-powered economy
We truly are at the dawn of a new, thriving industry.

There’s a nearly A$2 trillion global market for hydrogen come 2050, assuming that we can drive the price of producing hydrogen to substantially lower than A$2 per kilogram.

In Australia, we’ve got the available land, the natural resources, the technology smarts, the global networks, and the industry expertise.

And we now have the commitment, with the National Hydrogen Strategy unanimously adopted at a meeting by the Commonwealth, state and territory governments late last year.

Indeed, as I reflect upon my term as Chief Scientist, in this my last year, chairing the development of this strategy has been one of my proudest achievements.

The full results will not be seen overnight, but it has sown the seeds, and if we continue to tend to them, they will grow into a whole new realm of practical applications and unimagined possibilities.

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EU Electricity Price Limits are proposed by the European Commission to curb contagion from gas prices, bolster energy security, stabilize the power market, and manage inflation via LNG imports, gas storage, and reduced demand.

Key Points

Temporary power-price caps to curb gas contagion, shield consumers, and bolster EU energy security.

✅ Limits decouple electricity from volatile gas benchmarks

✅ Short-term LNG imports and storage to enhance supply security

✅ Market design reforms and demand reduction to tame prices

The European Union should consider emergency measures in the coming weeks that could include price cap strategies on electricity prices, European Commission President Ursula von der Leyen told leaders at an EU summit in Versailles.

The reference to the possible measures was contained in a slide deck Ms. von der Leyen used to discuss efforts to curb the EU’s reliance on Russian energy imports, which last year accounted for about 40% of its natural-gas consumption. The slides were posted to Ms. von der Leyen’s Twitter account.

Russia’s invasion of Ukraine has highlighted the vulnerability of Europe’s energy supplies to severe supply disruptions and raised fears that imports could be cut off by Moscow or because of damage to pipelines that run across Ukraine. It has also driven energy prices up sharply, contributing to worries about inflation and economic growth.

Earlier this week, the European Commission, the EU’s executive arm, published the outline of a plan that it said could cut imports of Russian natural gas by two-thirds this year and end the need for those imports entirely before 2030, aligning with calls to ditch fossil fuels in Europe. In the short-term, the plan relies largely on storing natural gas ahead of next winter’s heating season, reducing consumption and boosting imports of liquefied natural gas from other producers.

The Commission acknowledged in its report that high energy prices are rippling through the economy, even as European gas prices have fallen back toward pre-war levels, raising manufacturing costs for energy-intensive businesses and putting pressure on low-income households. It said it would consult “as a matter of urgency” and propose options for dealing with high prices.

The slide deck used by Ms. von der Leyen on Thursday said the Commission plans by the end of March to present emergency options “to limit the contagion effect of gas prices in electricity prices, including temporary price limits, even though rolling back electricity prices can be complex under current market rules.” It also intends this month to set up a task force to prepare for next winter and a proposal for a gas storage policy.

By mid-May, the Commission will set out options to revamp the electricity market and issue a proposal for phasing out EU dependency on Russian fossil fuels by 2027, according to the slides.

French President Emmanuel Macron said Thursday that Europe needs to protect its citizens and companies from the increase in energy prices, adding that some countries, including France, have already taken some national measures.

“If this lasts, we will need to have a more long-lasting European mechanism,” he said. “We will give a mandate to the Commission so that by the end of the month we can get all the necessary legislation ready.”

The problem with price limits is that they reduce the incentive for people and businesses to consume less, said Daniel Gros, distinguished fellow at the Centre for European Policy Studies, a Brussels think tank. He said low-income families and perhaps some businesses will need help dealing with high prices, but that should come as a lump-sum payment that isn’t tied to how much energy they are consuming.

“The key will be to let the price signal work,” Mr. Gros said in a paper published this week, which argued that high energy prices could result in lower demand in Europe and Asia, reducing the need for Russian natural gas. “Energy must be expensive so that people save energy,” he said.

Ms. von der Leyen’s slides suggest the EU hopes to replace 60 billion cubic meters of Russian gas with alternative suppliers, including suppliers of liquefied natural gas, by the end of this year. Another 27 billion cubic meters could be replaced through a combination of hydrogen and EU production of biomethane, according to the slide deck.

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Offshore Wind Cost Competitiveness is rising as larger turbines boost megawatt output, cut LCOE, and trim maintenance and installation time, enabling projects in New England to rival natural gas pricing while scaling reliably.

Key Points

It describes how larger offshore turbines lower LCOE and O&M, making U.S. projects price competitive with natural gas.

✅ Larger turbines boost MW output and reduce LCOE.

✅ Lower O&M and faster installation cut lifecycle costs.

✅ Competes with gas in New England bids, per BNEF.

Massive offshore wind turbines keep getting bigger, as projects like the biggest UK offshore wind farm come online, and that’s helping make the power cheaper — to the point where developers say new projects in U.S. waters can compete with natural gas.

The price “is going to be a real eye-opener,” said Bryan Martin, chairman of Deepwater Wind LLC, which won an auction in May to build a 400-megawatt wind farm southeast of Rhode Island.

Deepwater built the only U.S. offshore wind farm, a 30-megawatt project that was completed south of Block Island in 2016. The company’s bid was selected by Rhode Island the same day that Massachusetts picked Vineyard Wind to build an 800-megawatt wind farm in the same area, while international investors such as Japanese utilities in UK projects signal growing confidence.

#google#

Bigger turbines that make more electricity have cut the cost per megawatt by about half, a trend aided by higher-than-expected wind potential in many markets, said Tom Harries, a wind analyst at Bloomberg New Energy Finance. That also reduces maintenance expenses and installation time. All of this is helping offshore wind vie with conventional power plants.

“You could not build a thermal gas plant in New England for the price of the wind bids in Massachusetts and Rhode Island,” Martin said Friday at the U.S. Offshore Wind Conference in Boston. “It’s very cost-effective for consumers.”

The Massachusetts project could be about $100 to $120 a megawatt hour, according to a February estimate from Harries, though recent UK price spikes during low wind highlight volatility. The actual prices there and in Rhode Island weren’t disclosed.

For comparison, a new U.S. combine-cycle gas turbine ranges from $40 to $60 a megawatt-hour, and a new coal plant is $67 to $113, according to BNEF data.

A new power plant in land-constrained New England would probably be higher than that, and during winter peaks the region has seen record oil-fired generation in New England that underscores reliability concerns. More importantly, gas plants get a significant portion of their revenue from being able to guarantee that power is always available, something wind farms can’t do, said William Nelson, a New York-based analyst with BNEF. Looking only at the price at which offshore turbines can deliver electricity is a “narrow mindset,” he said.

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Australia Electricity Supply Shortfall highlights AEMO's warning of reduced reserves as coal retirements outpace capacity, risking load shedding. Calls for 1GW strategic reserves and investment in renewables, storage, and dispatchable power in Victoria.

Key Points

It is AEMO's forecast of reduced reserves, higher outage risk, and a need for 1GW strategic backup capacity.

✅ Coal retirements outpacing firm, dispatchable capacity

✅ AEMO urges 1GW strategic reserves in Victoria and South Australia

✅ Investment needed: renewables, storage, grid and reliability services

Australia’s electricity operator has warned of threats to electricity supply including a shortfall in generation and reduced power reserves on the horizon.

The Australian Energy Market Operator (AEMO) has called for further investment in the country’s energy portfolio as retiring coal plants are replaced by intermittent renewables poised to eclipse coal, leaving the grid with less back-up capacity.

AEMO has said this increases the chances of supply interruption and load shedding.

It added the federal government should target 1GW of strategic reserves in the states most at risk – Victoria and South Australia, even as the Prime Minister has ruled out taxpayer-funded power plants in the current energy battle.

CEO of the Clean Energy Council, Kane Thornton, said the shortfall in generation, reflected in a short supply of electricity, was due a decade of indecisiveness and debate leading to a “policy vacuum”.

He added: “The AEMO report revealed that the new projects added to the system under the renewable energy target will help to improve reliability over the next few years.

“We need to accept that the energy system is in transition, with lessons from dispatchable power shortages in Europe, and long term policy is now essential to ensure private investment in the most efficient new energy technology and solutions.”

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