‘Baseload’ and renewable energy generation: exposing the myths

Two large coal-fired plants proposed for Hunter Valley by overseas investor.

In recent months, anyone interested in renewable energy, electricity prices or the future of Australia’s energy grid will have come across the following term: baseload. It appears often in the context of coal-fired power stations, for example:

Federal Liberal MP Tony Abbott:
“The only way we can have reliable baseload power is through coal and gas, particularly coal.”

Minerals Council of Australia (MCA):
“The MCA has highlighted that generators which provided 66 per cent of low-cost baseload power in 2016 will retire between now and 2030.”

Federal Liberal MP Craig Kelly:
“In Australia we need to get at least one or two of these [coal-fired power stations] built to ensure there’s enough baseload power in the grid.”

Many of these reports have a sense of urgency, even panic. They suggest that without baseload power Australia is going to grind to a halt; that the loss of coal-fired power stations to renewable energy sources like solar, wind and hydro will damage electricity reliability and security.

baseload power myth
Coal-fired power stations used to run on a ‘baseload’ model of continuous operation.

But what exactly is ‘baseload’ power? Is it true that Australia needs to keep coal-fired power stations open to maintain it? Do we need it to keep the lights on?

Let’s take a look at this contentious issue, and draw on the knowledge of two of Australia’s energy experts.

The origins of baseload power

Firstly, it’s important to know that baseload power is the result of the way the electricity market used to work when coal-fired power stations were its mainstay and cheapest option. ‘Baseload’ did/does not refer to the maximum or even the average output of these power stations, but the minimum they could produce without having to be switched off. If they were cars, ‘baseload’ would be the idle speed, such as when you’re waiting at a traffic light.

Professor Anthony Vassallo holds the Delta Electricity Chair in Sustainable Energy Development at the University of Sydney. He says baseload is that small part of energy generation originally designed to be running continuously.

“When the electricity gird expansion took place from the fifties to the seventies, the big option in Australia was coal-fired power stations which are designed not to be turned off,” he explains.

“They were sized and scaled to meet the lowest point of power demand during the day and ran continuously throughout. The idea was that as the demand rose during the day you could increase the output from those generators, because they wouldn’t be operating at full capacity.”

If these baseload generators did reach full capacity then electricity grid operators brought in extra electricity generation from gas or hydro, or some other source that was more expensive.

Baseload ‘no longer suitable’

The problem was that there usually wasn’t enough load for these huge baseload generators at night, and no generating company wanted to turn them off because it cost too much money and energy to get them running again.

“The baseload, that is the lowest load on the generators, is met at 4 a.m.,” Vassallo continues. “At that time of the day the idea is that the cheap fuel generators, the coal-fired generators, would be ticking over, just meting that minimum demand.

“If the demand dropped even more, some of the big generators would have to turn off, which is very inefficient. So there were schemes like off-peak hot water to provide extra load and use the generator power that was available at that time of night.”

Vassallo says today’s electricity generation technology is so flexible it doesn’t need a ‘baseload’. There is no need to keep huge coal-fired stations ticking over 24/7.

“I don’t think it’s sensible to force this historic generation pyramid of baseload thinking onto the market and say, ‘Look, renewable energy can’t supply this baseload.’ I think the argument is more along the lines that the older design is no longer suitable for newer technologies.”

Transition won’t happen overnight, but it will happen

The fact is that on one point, the renewable sceptics are right. Energy Minister Josh Frydenberg commented recently that if Australia’s coal-fired and gas stations turned off overnight the electricity grid would fail.

This is true – but it’s not what supporters of renewable energy are saying. Renewable energy supporters say that because ‘baseload’ means nothing more than the minimum amount of energy needed to keep the electricity grid ticking over, it does not – in future – need to come from coal. And no one is suggesting coal-fired stations stop producing “overnight”.

baseload power
On a level playing field, solar wins over coal every time.

According to Vassallo, supporters of coal see baseload as the reliable old model, cheap and polluting, augmented by gas as demand goes up. “I think we need to transition to another model that accommodates all generation available into the electricity grid with smart technologies.”

Baseload generation ‘an anachronism’

CSIRO Energy Director Dr Glenn Platt agrees that baseload has a traditional definition, but that in the modern electricity system “it’s something of an anachronism”.

“We don’t actually need it,” he adds. “It’s entirely possible to operate electricity systems without baseload electricity generation. It’s technically challenging, but it’s certainly possible.”

The technical challenge is how to make sure that intermittent generators like solar and wind can supply the minimum energy required in the absence of coal-fired generators.

Platt says traditional retailers and network operators will have to change their business model to accommodate an energy grid that contains a mix of solar, wind, hydro, gas and, in the short-term, coal.

Renewables: the hard-nosed business solution

Meanwhile, Platt says coal is no longer the cheapest form of electricity generation. “Renewable energy no longer relies on green policies or incentives. The economics are black and white and that’s why we’re seeing so much growth. Business is putting its money into where it can make the most money.

“But that message isn’t as widespread as it could be. So some people think renewables are happening because the greenies are influencing things, whereas it’s actually happening because of hard-nosed business decisions. The other lack of information is around what we need to have a reliable electricity system.

“The reality is we can push renewable energy a lot further than we have. But having said that, there will be limits and when we reach those limits we will have to dramatically change the way we operate the electricity system.”

Connectivity is key to future network

The CSIRO is investigating how that new system could operate. Engineers and scientists are working on how to forecast the output of a large solar farm, for example, because the good thing about coal-fired electricity generation is its predictability. To operate an electricity system with large amounts of renewable energy you need ways to store it so that when the wind dies or the sun sets, the energy is still available from a battery or hydro storage system.

“We need to store energy and we can do that in large batteries that participate in energy markets, or we can store energy in tens of thousands of small batteries in people’s homes. They can participate in the same market,” Platt says.

This means there is room for large batteries like the Tesla battery in South Australia to contribute to the electricity grid when need. But equally, solar batteries like the Tesla Powerwall 2 in people’s homes could play a part. By connecting tens of thousands of residential batteries through a smart network, an energy retailer or distributor could use them as one large power source.

“People already do this with electric hot water systems,” Platt says. “In many homes the electric hot water system’s controlled by people in the electricity market who turns that hot water system on and off to be able to help get a stable power system and the homeowners aren’t aware of those changes. It could be exactly the same for home batteries.”

The ‘baseload’ of the future

Baseload power, then, is not something that only coal can supply, Indeed, it’s not really something coal should supply, given its impact on the environment and the cost of building new power stations.

In the future, ‘baseload’ will no longer be synonymous with coal. It will be a term people use to describe any sort of reliable power that meets our minimum needs.

Get a quick solar quote, or contact us today toll free on 1800 EMATTERS or email our friendly team for expert, obligation-free advice!

Other Energy Matters news services: