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@ Colin Gifford
2024-09-06 02:20:21Over the past week, the south-east corner of Australia experienced a battering from mother nature.
High winds and unseasonably hot winter days caused Australia's wind and solar network to run at near maximum capacity. However, this wasn’t necessarily beneficial.
Article from the Australian Financial ReviewGrid Operation 101
Energy is produced and consumed almost simultaneously. This real-time mechanism makes the energy grid one of the fastest and most responsive systems in existence.
When the grid operates at peak efficiency, everyone who needs power can access it, and anyone producing power can sell it. Energy must be generated and balanced continuously, regardless of the weather. It’s not good enough to produce abundance of energy when people don’t want it, just to fall short when they do.
Since solar and wind cannot consistently maintain a balance between supply and demand, coal remains the backbone of Australia's energy grid, providing reliable base-load power and being supplemented during peak times.
Too Much Energy?
Apart from the environmental benefits, the key advantage of renewable energy lies in its abundance. However, because we don’t control when the sun shines or the wind blows, this often results in a mismatch between supply and demand. At times, energy supply can sometimes double or even triple demand. Since it’s usually too expensive to shut down solar and wind farms, this leads to stranded or curtailed energy, and consequently wholesale electricity prices can drop into negative territory.
Instances of negative prices have risen since 2018.The rise of negative electricity prices across the eastern seaboard has closely correlated with the expansion of renewable infrastructure. Since 2017, Australia has been actively seeking solutions to absorb the excess supply and restore efficiency to the energy system.
Solution 1 - Batteries
This idea makes the most intuitive sense to the average person. If we can't immediately use the power generated by a roaring wind turbine to power a family home, why not store it until peak demand and then release that cheap energy back into the grid?
The answer is twofold, 1. The buildout of these projects are expensive, 2. Storage capacity is minimal.
The Victorian Government's Big Battery initiative has the ability to power 1m Victorian homes for only 30 minutes and was built to a tune of $160m.
I always love technological innovation and perhaps one day all Australian houses will be powered by sea of solar panels and batteries in the middle of desert however it's evident we at least need an interim solution.
Solution 2 - Bitcoin Mining
We’ve all heard the same FUD. Critics prey on readers' misunderstandings of how the grid operates, portraying a vision where miners supposedly divert power away from households and businesses to feed this energy hungry beast into what they call a "worthless internet currency" and drive prices up.
However, if we incorporate Bitcoin mining's energy usage into what we've learned about grid operations, we can see how it can actually bolster renewable energy for two reasons:
Runtime Flexibility - Mining is an operation with razor thin margins and is only profitable with cheap electricity. Since this only occurs when energy has low to no demand (stranded), miners are not competing with households and businesses.
Mobility - Bitcoin miners are highly mobile and are often built right next to the power source, reducing transmission losses and optimising energy use at the source.
However one might feel about the net zero goals, there is no denying we should always prioritise reliability over sheer abundance. It's time Australia utilises the power of bitcoin to help stabilise our renewable grid to push forth to a sustainable future.