Category Archives: economics

solutions to current political dogma 2 – Iceland

Katrin Jacobsdottir, of the Left-Green Movement, Prime Minister of Iceland since December 2017

So there are problems with modern democracy, especially for those governmental systems that have congealed into a two-party race to be top dog for the next election cycle, with each new winning party tending to dismantle the policies of the previous government. There are also major problems of money in politics, especially in those nations, like the US, in which the rich-poor divide is problematic and worsening.

Of course these problems pale into insignificance as we witness the attempt to snuff out democracy altogether in Miyanmar. The democratic world watches this as if helpless, as if the matter shouldn’t be dealt with urgently and internationally. The only country that seems to want to do anything about the situation is China – to lend a hand with the butchery, in order to protect its business interests there. We need to strengthen international forces against those who ride roughshod over human rights in such a flagrant, corrupt and arrogant way.

After that venting of spleen I’ll return to the comfort of our lucky country and those like it. The fact is that these modern democracies and capitalist nations have a dynamism that traditional governing systems, laws and work practices are unable to keep up with, and the increasing concentration of wealth and power in the hands of financial elites is leaving behind a demoralised sector of society, formerly known as the working class. Traditional jobs are gone or transformed, leaving many feeling outcast, bewildered and defeated. But of course many of the young, or young-at-heart, in this sector have ideas and energy to spare, and are seeking a like-minded community.

The examples of participatory democracy and community action that follow have been introduced to me by Jess Scully in her book Glimpses of utopia: real ideas for a fairer world, and I will do my own research to follow up areas of interest and new developments.

  1. Iceland

As a person not well-versed in global finance, I always wondered how a failure of regulation in the US banking system led to a global financial crisis, where national governments felt obliged to bail out banks outside of the USA. The Reserve Bank of Australia (RBA) has an explainer on this, citing ‘linkages in the global financial system’, which I kind of guessed. But does the financial system have to be linked up in this way, and what if a particular government refused to bail out their nation’s banks?

The RBA mentions Iceland as one of many countries in which excessive lending, encouraged and facilitated by banks, was happening in the pre-GFC boom years. All of this was a result of lack of foresight (booms are always followed by busts), greed (the loans were sold on to investors as ‘mortgage-backed securities’ (MBS) which became increasingly opaque and complex) and corruption (due to lack of regulation, fraud in the form of overstating borrowers’ income and lying about the safety and value of MBS products). The international linkages included the facts that the housing boom was more or less worldwide, that US banks had an international presence, and that foreign banks were large-scale investors in MBS and other higher-return products.

So it’s likely that the major problem here was and is lack of regulation and independent oversight. I might go into the Australian situation in another post, but the situation of Iceland is unusual because the GFC led to a massive re-evaluation of its political and economic structure.

Iceland’s banks were deregulated in the early 2000s, and in the following years, its banking system went more than a bit crazy, creating paper billionnaires almost overnight. Clearly the dodgy deals were more flagrant than elsewhere, and when the crash came, many bank CEOs and some government officials were tried and jailed. But there was no bail-out. As Gudrun Johnsen, a member of the special commission set up to learn from the collapse, put it, ‘The banks were 10 times the GDP of Iceland; 20 times the state budget. They were too big to bail out’.

What did occur was a change of government, a rewriting of the Icelandic constitution, and an unprecedented period of financial and political reform, set off by the Pots and Pans Revolution. Much of this involved participatory democracy, including online crowdsourcing (in the case of creating a new constitution), the building of an online platform, Better Reykjavik, later rebranded as Better Neighbourhoods, and the encouraging of ideas and systems transcending political duopolies. All of this was quite unusual in Iceland, a nation not given to revolutionary activity, and it has only been partially successful. In 2013 a more conservative government was returned, but the political landscape has been altered, and political sensitivities have heightened. These comments from two analysts after the 2013 elections give a sense of the new situation:

While the grassroots movement that overthrew the government after the crash remains disillusioned and disappointed, its impact should not be under-estimated. One important development in its wake, and an important emerging theme for further research, is a series of experiments with direct democracy and social media. Soon after the crash, a crowd-sourcing company drew upon social media to prepare for a National Meeting (Þjóðfundur) of 1,000 participants for outlining a new constitution. While the end result of this work remains unclear, and much depends on the formal, indirect democracy of the Parliament, it seems safe to say that the public has been sensitized to new avenues for democracy and alerted to potential signs of corruption.

It may not seem like much, but the protests and what followed from them were something of a revelation for Icelanders – apparently the biggest show of public dissatisfaction with its leaders in a thousand years, together with positive, participatory action to improve the political and social situation there, using new technologies and social media. As we all know, social media is very much a double-edged sword, but it is here to stay (until something else comes up), and we can’t really afford to ignore it.

Next I will look at how Taiwan is dealing with its new democratic freedoms.

References

https://asia.nikkei.com/Spotlight/Myanmar-Coup/Myanmar-coup-Week-from-Feb.-20-to-March-18-UN-team-urges-whistleblowers-to-report-illegal-orders

https://asia.nikkei.com/Spotlight/Myanmar-Coup/Myanmar-crisis-drags-China-into-chaos-after-factories-torched

https://www.rba.gov.au/education/resources/explainers/the-global-financial-crisis.html

https://www.bbc.com/news/business-35485876

https://en.wikipedia.org/wiki/2009_Icelandic_financial_crisis_protests

Jess Scully, Glimpses of utopia: real ideas for a fairer world.

solutions to current political dogma 1: the problem

the tedium of it all

Back in 2012, Joe Hockey, later to become Australia’s Treasurer, delivered a controversial speech to the conservative think tank, the Institute for Economic Affairs, in London. The speech, titled ‘the End of the Age of Entitlement’, was delivered as the world was still suffering from the after-effects of the global financial crisis caused by the bail-out of rogue, aka deregulated, financial enterprises such as Lehman Brothers, Citibank and Bear Sterns, whose sub-prime mortgage lending practices had become exposed. The bail-out cost the US government hundreds of billions of dollars and affected financial markets worldwide.

The GFC led the Rudd Labor government in Australia to institute a Keynesian stimulus package which averted a recession, and was praised by Nobel Prize-winning economist Joseph Stiglitz as one of the best-designed of any country (and was attacked relentlessly by the conservative opposition). Other countries chose to, or felt obliged to, follow a similar path, and so many government surpluses became deficits, and those in deficit saw those deficits balloon disturbingly.

Hockey’s speech mentioned the GFC in passing, without commenting on the dodgy banking practices, for which none of the major players were ever held to account. One would think that the term ‘entitlement’ might be applied to these wealthy rogue operators, but Hockey’s target was in fact the welfare system, though the term ‘welfare’ was nowhere mentioned in his speech. It was substituted everywhere by the term ‘entitlements’, a term we would usually associate, naturally enough, with the titled.

Hockey’s argument was that developed economies could no longer afford the generous welfare payments provided by governmental taxes, and that this was proven by increasing deficits in spite of what he would have described as punitive taxation systems in some countries. Unfortunately, Hockey’s speech was short on solutions, at a time of increasing automation and the closing of factories, the casualisation of the workforce and the gig economy, beyond referring to Hong Kong and its apparently supportive and self-sacrificing extended families, as if the developed nations are ever likely to revert to that spread-the-poverty-around model, if it ever really existed (I would recommend reading Rebecca Skloot’s excellent documentary work The immortal life of Henrietta Lacks as an account of the benefits and limitations of extended families in the context of African-American poverty and disadvantage). And of course, Hockey advocates good old hard work which, as well as being its own reward, will inevitably result in a climb up the greasy pole to monetary success. This would have been news to the slaves of the Greeks, Romans and Conquistadors of earlier times, the coal miners and chimney sweeps of Britain and the asbestos factory workers of Australia. Arbeit macht frei indeed.

I could go on about the problems inherent in Hockey’s speech, but I noticed that, in referring to the inevitable right-left swings that democratic elections have devolved into (though these political swings formed the backbone of Livy’s History of Rome, written nearly 2000 years ago), Hockey prefers the terms ‘socialist’ and ‘conservative’, thus, it seems, deliberately emphasising and revelling in the divide. As a person intent on finding solutions, I find this sowing of division unhelpful. The aim here is to recognise problems – of poverty, of energy, of well-being, of health, of the environment we inhabit, and so forth. And I’m not sure if endlessly ‘working’ is the solution, at least in the narrow sense of ‘work’ that Hockey was using.

In fact, considering all these problems we need to solve – and more problems will inevitably arise (life would be pretty boring without problems to solve) – work is not simply a solution, it’s another problem. What constitutes work? Cultivating your garden? Looking after your children? Beautifying your neighbourhood? Attending conferences? Encouraging your students? Having sex with your partner?

All these activities provide value to human social life – and we are the most socially constructed mammals on the planet – in a way that can’t be easily monetised. And it would be silly to do so.

Anyway, all of this is preliminary to looking at solutions to a human world in which so much work is providing entertainment and diversion to our fellow human beings – for what are dining out, attending arts festivals and soccer matches, watching netflix, shopping, searching for extra-terrestrial life, decorating the house, and so forth, but forms of adult play? To which whole industries and technologies are devoted. And I’m not denigrating play – far from it – it marks the difference between life and mere existence. Just ask our dog.

Finally, as a person brought up in a working-class environment (the town of Elizabeth in South Australia, created as a hub around the General Motors Holden factory and ancillary businesses in the late fifties), I experienced life there during the economic downturn of the mid-seventies, when unemployment became a major problem, leading to a palpable sense of demoralisation. Kids like myself, living in the chasm between school and work (of which there was precious little) hung out at shopping centres, smoking and selling dope and trying to act tough. Most of our parents were separated or about to be. The number of dilapidated and derelict homes multiplied almost before our eyes. I got and lost three or four factory jobs, making washing machines, mobile homes and iron tubing. I remember weeping quietly on the six o’clock bus on my way to one of these workplaces. How could I, with a mind the size of a planet, be reduced to this?

At other times, I got dole money, which I recall jumped from $7.50 to $21.50 per week when Whitlam’s labor government came in. Maybe I could use this windfall of filthy lucre to educate myself out of the bind I found myself in? The main point I’m making here is that, as part of a migrant family separated from the extended family 12,000 miles away, with no role models in business, academia or any of the more lucrative professions, and being generally introverted but profoundly anti-authoritarian, I hated ‘working for the man’ but felt I had boundless energy and capacity that I had little idea what to do with. What I lacked was a community of like-minded types. A community of two or three would do.

And that brings me to some of the ideas and practices described in Jess Scully’s Glimpses of utopia. More of that next time.

Reference

Brian Donaghy, Cents and Sensibility, 2014 (see appendix for Joe Hockey’s speech notes)

universal basic income 2: how to finance it





Imagine this highly unlikely scenario. The current conservative Australian government loses the 2022 federal election in a landslide, due to widespread financial corruption, inaction on addressing global warming – brought into relief by another devastating summer in 2020-21- and the rise of a young, charismatic leader of the leftist Labor opposition, who has managed to sell voters on an Aussie version of the Green New Deal, as well an ambitious Basic Income policy.

It’s okay to dream, but we have to get real. How do we make such a policy work?

I will rely on the ideas and calculations of finance journalist and author of A basic income for Australia, Brian Donaghy, for the following. First, based on the Australian Council of Social Services (ACOSS) campaign of March 2020 which advocated a rise in what’s now called Jobseeker to $755.70 per fortnight (of course, the Covid19 pandemic has caused the current government to raise the previous payment, with obvious reluctance, to a figure which is still well below the ACOSS recommendation), together with an increased rent assistance payment of $158 per fortnight, the Basic Income payment should be set at $913.70 per fortnight, for every adult. Children would be given a percentage, depending on age. The total cost of such a package would be about $526 billion per annum. Alternatively, the payment could be set at the aged pension rate, plus supplements – $944 fortnightly – totalling about $544 billion per annum. The OECD takes the poverty line to be about $1000 per fortnight, and Australia’s minimum wage for the 2019-20 year was around $1481 per fortnight.

So, how do we find, let’s say, $544 billion dollars a year to finance this scheme? According to Donaghy’s costings, savings on welfare payments and administration would bring the figure down to about $415 billion. Next, Donaghy looks at ‘individual tax offsets and deductions’, which he claims the government should scrap. I can’t pretend to understand this, but scrapping these perks would, he claims, bring the basic income cost down to $377 billion.

All of this should simplify the tax system, making tax evasion and avoidance more difficult, and increasing revenue to the ATO, though putting a dollar amount on this might be difficult. However, tax avoidance task-forces have been in operation for some years and have collected billions of dollars. Their job would be made easier by a a more simplified system.

Another factor which would increase tax revenue by a hard-to-calculate amount would be the increased spending power created by the basic income. Remember, its universality would provide lower and middle income earners with the opportunity to spend more on dining out, home improvements, internal tourism and the like. Australia’s corporate profits would increase, according to economic modelling, enough to bring the cost of the UBI down to about $282 billion, though Donaghy has chosen to be more conservative, lowering the cost to around $320 billion.

The UBI goes to everyone, so that for many taxpayers it would be additional income at the top marginal rate. Without going into detail, this would bring in further tax revenue, totalling almost $81.7 billion, and bringing the cost of the UBI down to somewhere around $240 billion – with nobody suffering since that extra tax would only be a percentage of the extra income provided to the wealthy.

One could go on tweaking the system and working out theoretical savings, such as a restructuring of the government subsidies paid to particular industries, often described as business or corporate welfare. Australia’s Productivity Commission estimated that government ‘budgetary assistance’ to corporations totalled approximately $12 billion in 2018-19. Arguments as to whether such assistance constitutes sound government investment will run the gamut, and will of course depend on how much potential each corporation has – prediction about the future being particularly tricky. However, as Donaghy points out, modern companies have become increasingly technocratic and international, tending to shed rather than increase workers, and if they need hands-on work, may be able to source it from developing countries with cheap labour rates. Government handouts end up mostly if not entirely at the top end of town. Our federal government apparently subsidises the fossil fuel industry to to the tune of $12 billion annually, always using the ‘jobs jobs jobs’ mantra, but these industries are shedding jobs and are not major employers.

Other ways of tweaking the system include taxing multinational tech companies such as Google, Apple and Facebook – always risky, as they tend to respond with ‘big money muscle’, threatening to limit services. the Goods and Services Tax can also be looked at. Many European nations impose a higher GST on luxury items. Even raising the basic rate by one percent will bring in an extra $7 billion. Since the UBI would lead to greater spending, much of the money raised would be recirculated through the system.

Again I should emphasise that this is a very rough guide, largely based on Brian Donaghy’s rough guide to funding a UBI. However, I’m not optimistic enough to believe that anything like a UBI will operate in Australia in the near future. Meanwhile, with the current jobs crisis and shutdowns caused by the pandemic, the Australian government is operating with an online compliance system for jobseekers which is near-criminal in its stress-inducing incomprehensibility, and touting an increase in jobseeker payments, which, as mentioned, will keep these payments far below any reasonably projected UBI. The current government’s support of those most damaged by the pandemic – for example, those, like myself, who work in the international student sector – has been as minimal as it feels it can get away with. Of course the current government has essentially prided itself on its ‘if it isn’t broken, don’t fix it’ lack of innovation, so we clearly need to look elsewhere. The 2022 election is one source of hope, but there are other options besides a UBI (and of course there also many options within UBI). In her recent (2020) book, Glimpses of Utopia , Jess Scully, arts entrepreneur, curator and Deputy Lord Mayor of Sydney, has promoted the idea of Universal Basic Services as a less ‘libertarian’ and more community-oriented approach to reducing disadvantage and improving inclusivity. I’ll explore this concept further next time.

References

Brian Donaghy, A basic income for Australia, 2020

Jess Scully, Glimpses of utopia, 2020

electric vehicles in Australia, a sad indictment

(this is reblogged from the new ussr illustrated, first published August 15 2017)

Toyota Prius

I must say, as a lay person with very little previous understanding of how batteries, photovoltaics or even electricity works, I’m finding the ‘Fully Charged’ and other online videos quite addictive, if incomprehensible in parts, though one thing that’s easy enough to comprehend is that transitional, disruptive technologies that dispense with fossil fuels are being taken up worldwide at an accelerating rate, and that Australia is falling way behind in this, especially at a governmental level, with South Australia being something of an exception. Of course the variation everywhere is enormous – for example, currently, 42% of all new cars sold today in Norway are fully electric – not just hybrids. This compares to about 2% in Britain, according to Fully Charged, and I’d suspect that the percentage is even lower in Oz.

There’s so much to find out about and write about in this field it’s hard to know where to start, so I’m going to limit myself in this post to electric cars and the situation in Australia.

First, as very much a lower middle class individual I want to know about cost, both upfront and ongoing. Now as you may be aware, Australia has basically given up on making its own cars, but we do have some imports worth considering, though we don’t get subsidies for buying them as they do in many other countries, nor do we have that much in the way of supportive infrastructure. Cars range in price from the Tesla Model X SUV, starting from $165,000 (forget it, I hate SUVs anyway), down to the Toyota Prius C and the Honda Jazz, both hybrids, starting at around $23,000. There’s also a ludicrously expensive BMW plug-in hybrid available, as well as the Nissan Leaf, the biggest selling electric car worldwide by a massive margin according to Fully Charged, but probably permanently outside of my price range at $51,000 or so.

I could only afford a bottom of the range hybrid vehicle, so how do hybrids work, and can you run your hybrid mostly on electricity? It seems that for this I would want a (more expensive) plug-in hybrid, as this passage from the Union of Concerned Scientists (USA) points out:

The most advanced hybrids have larger batteries and can recharge their batteries from an outlet, allowing them to drive extended distances on electricity before switching to [petrol] or diesel. Known as “plug-in hybrids,” these cars can offer much-improved environmental performance and increased fuel savings by substituting grid electricity for [petrol].

I could go on about the plug-ins but there’s not much point because there aren’t any available here within my price range. Really, only the Prius, the Honda Jazz and a Toyota Camry Hybrid (just discovered) are possibilities for me. Looking at reviews of the Prius, I find a number of people think it’s ugly but I don’t see it, and I’ve always considered myself a person of taste and discernment, like everyone else. They do tend to agree that it’s very fuel efficient, though lacking in oomph. Fuck oomph, I say. I’m the sort who drives cars reluctantly, and prefers a nice gentle cycle around the suburbs. Extremely fuel efficient, breezy and cheap. I’m indifferent to racing cars and all that shite.

Nissan Leaf

I note that the Prius  has regenerative braking – what the Fully Charged folks call ‘regen’. In fact this is a feature of all EVs and hybrids. I have no idea wtf it is, so I’ll explore it here. The Union of Concerned Scientists again:

Regenerative braking converts some of the energy lost during braking into usable electricity, stored in the batteries.

Regenerative braking” is another fuel-saving feature. Conventional cars rely entirely on friction brakes to slow down, dissipating the vehicle’s kinetic energy as heat. Regenerative braking allows some of that energy to be captured, turned into electricity, and stored in the batteries. This stored electricity can later be used to run the motor and accelerate the vehicle.

Of course, this doesn’t tell us how the energy is captured and stored, but more of that later. Regenerative braking doesn’t bring the car to a stop by itself, or lock the wheels, so it must be used in conjunction with frictional braking.  This requires drivers to be aware of both braking systems and how they’re combined – sometimes problematic in certain scenarios.

The V useful site How Stuff Works has a full-on post on regen, which I’ll inadequately summarise here. Regen (in cars) is actually celebrating its fiftieth birthday this year, having been first introduced in the Amitron, a car produced by American Motors in 1967. It never went into full-scale production. In conventional braking, the brake pads apply pressure to the brake rotors to the slow the vehicle down. That expends a lot of energy (imagine a large vehicle moving at high speed), not only between the pads and the rotor, but between the wheels and the road. However, regen is a different system altogether. When you hit the brake pedal of an EV (with hand or foot), this system puts the electric motor into reverse, slowing the wheels. By running backwards the motor acts somehow as a generator of electricity, which is then fed into the EV batteries. Here’s how HSW puts it:

One of the more interesting properties of an electric motor is that, when it’s run in one direction, it converts electrical energy into mechanical energy that can be used to perform work (such as turning the wheels of a car), but when the motor is run in the opposite direction, a properly designed motor becomes an electric generator, converting mechanical energy into electrical energy.

I still don’t get it. Anyway, apparently this type of braking system works best in city conditions where you’re stopping and going all the time. The whole system requires complex electronic circuitry which decides when to switch to reverse, and which of the two braking systems to use at any particular time. The best system does this automatically. In a review of a Smart Electric Drive car (I don’t know what that means – is ‘Smart’ a brand name? – is an electric drive different from an electric car??) on Fully Charged, the test driver described its radar-based regen, which connects with the GPS to anticipate, say, a long downhill part of the journey, and in consequence to adjust the regen for maximum efficiency. Ultimately, all this will be handled effectively in fully autonomous vehicles. Can’t wait to borrow one!

Smart Electric Drive, a cute two-seater

I’m still learning all this geeky stuff – never thought I’d be spending an arvo watching cars being test driven and  reviewed.  But these are EVs – don’t I sound the expert – and so the new technologies and their implications for the environment and our future make them much more interesting than the noise and gas-guzzling stink and the macho idiocy I’ve always associated with the infernal combustion engine.

What I have learned, apart from the importance of battery size (in kwh), people’s obsession with range and charge speed, and a little about charging devices, is that there’s real movement in Europe and Britain towards EVs, not to mention storage technology and microgrids and other clean energy developments, which makes me all the more frustrated to live in a country, so naturally endowed to take advantage of clean energy, whose federal government is asleep at the wheel on these matters, when it’s not being defensively scornful about all things renewable. Hopefully I’ll be able to report on positive local initiatives in this area in future, in spite of government inertia.

on the explosion of battery research – part two, a bitsy presentation

(this is reblogged from the new ussr illustrated, first published August 1 2017)

This EV battery managed to run for 1200 kilometres on a single charge at an average of around 51 mph

Ok, in order to make myself fractionally knowledgable about this sort of stuff I find myself watching videos made by motor-mouthed super-geeks who regularly do blokes-and-sheds experiments with wires and circuits and volt-makers and resistors and things that go spark in the night, and I feel I’m taking a peek at an alternative universe that I’m not sure whether to wish I was born into, but I’ll try anyway to report on it all without sounding too swamped or stupefied by the detail.

However, before I go on, I must say that, since my interest in this stuff stems ultimately from my interest in developing cleaner as well as more efficient energy, and replacing fossil fuel as a principal energy source, I want to voice my suspicions about the Australian federal government’s attitude towards clean and renewable energy. This morning I heard Scott Morrison, our nation’s Treasurer, repeating the same deliberately misleading comments made recently by Josh Frydenberg (the nation’s energy minister, for Christ’s sake) about the Tesla battery, which is designed to provide back-up power as part of a six-point SA government plan which the feds are well aware of but are unwilling to say anything positive about – or anything at all. Morrison, Frydenberg and that other trail-blazing intellectual, Barnaby Joyce, our Deputy Prime Minister, have all been totally derisory of the planned battery, and their pointlessly negative comments have thrown the spotlight on something I’ve not sufficiently noticed before. This government, since the election of just over a year ago, has not had anything positive to say about clean energy. In fact it has never said anything at all on the subject, by deliberate policy I suspect. We know that our PM isn’t as stupid on clean energy as his ministers, but he’s obviously constrained by his conservative colleagues. It’s as if, like those mythical ostriches, they’re hoping the whole world of renewables will go away if they pay no attention to it.

Anyway, rather than be demoralised by these unfortunates, let’s explore the world of solutions.

As a tribute to those can-do, DIY geeky types I need to share a great video which proves you can run an electric vehicle on a single charge for well over 1000ks – theirs made it to 1200ks – 748 miles in that dear old US currency – averaging around 51 mph. It’s well worth a watch, though with all the interest there are no doubt other claimants to the record distance for a single charge. Anyway, you can’t help but admire these guys. Tesla, as the video shows, are still trying to make it to 1000ks, but that’s on a regular, commercial basis of course.

In this video, basically an interview with battery researcher and materials scientist Professor Peter Bruce at Oxford University, the subject was batteries as storage systems. These are the batteries you find in your smart phones and other devices, and in electric vehicles (EVs). They’ll also be important in the renewable energy future, for grid storage. You can pump electricity into these batteries and, through a chemical process that I’m still trying to get my head around, you can store it for later use. As Prof Bruce points out, the lithium-ion battery revolutionised the field by more or less doubling the energy density of batteries and making much recent portable electronics technology possible. This energy density feature is key – the Li-ion batteries can store more energy per unit mass and volume. Of course energy density isn’t the only variable they’re working on. Speed of charge, length of time (and/or amount of activity) between charging, number of discharge-recharge cycles per battery, safety and cost are all vitally important, but when we look at EVs and grid storage you’re looking at much larger scale batteries that can’t be simply upgraded or replaced every few months. So Bruce sees this as an advantage, in that recycling and re-using will be more of a feature of the new electrified age. Also, as very much a  scientist, Bruce is interested in how the rather sudden focus on battery storage reveals gaps in our knowledge which we didn’t really know we had – and this is how knowledge often progresses, when we find we have an urgent problem to solve and we need to look at the basics, the underlying mechanisms. For example, the key to Li-ion batteries is the lithium compound used, and whether you can get more lithium ions out of particular compounds, and/or get them to move more quickly between the electrodes to discharge and recharge the battery. This requires analysis and understanding at the fundamental, atomistic level. Also, current Li-ion batteries for portable devices generally use cobalt in the compound, which is too expensive for large-scale batteries. Iron, manganese and silicates are being looked at as cheaper alternatives. This is all new research – and he makes no mention of the work done by Goodenough, Braga et al.

In any case it’s fascinating how new problems lead to new solutions. The two most touted and developed forms of renewable energy – solar and wind – both have this major problem of intermittence. In the meantime, battery storage, for portable devices and EVs, has become a big thing, and now new developments are heating up the materials science field in an electrifying way, which will in turn hot up the EV and clean energy markets.

The video ended by neatly connecting with the geeky DIY video in showing how dumped, abandoned laptop batteries and other batteries had plenty of capacity left in them – more than 60% in many cases, which is more than useful for energy storage, so they were being harvested by PhD students for use in small-scale energy storage systems for developing countries. Great for LED lighting, which requires little power. The students were using an algorithm to get each battery in the system to discharge at different rates (since they all had different capacities or charge left in them) so they could get maximum capacity out of the system as a whole. I think I actually understood that!

Okay – something very exciting! The video mentioned above is the first I’ve seen of a British series called ‘Fully Charged’, all about batteries, EVs and renewable energy. I plan to watch the series for my education and for the thrill of it all. But imagine my surprise when I started watching this one, still part of the series, made here in Adelaide! I won’t go into the content of that video, which was about flow batteries which can store solar energy rather than transferring it to the grid. I need to bone up more on that technology before commenting, and it’s probably a bit pricey for the likes of me anyway. What was immediately interesting to me was how quickly he (Robert Llewellyn, the narrator/interviewer) cottoned on to our federal government’s extreme negativity regarding renewables. Glad to have that back-up! I note too, by the way, that Australia has no direct incentives to buy EVs, of which there are few in the country – again all due to our troglodyte government. It’s frankly embarrassing.

So, there’s so much happening with battery technology and its applications that I might need to take some time off to absorb all the videos and docos and blogs and podcasts and development plans and government directives and projects and whatnot that are coming out all the time from the usual and some quite unusual places, not to mention our own local South Australian activities and the naysayers buzzing around them. Then again I may be moved to charge forward and report on some half-digested new development or announcement tomorrow, who knows….

References

They’re all in the links above, and I highly recommend the British ‘Fully Charged’ videos produced by Robert Llewellyn and Johnny Smith, and the USA ‘jehugarcia’ videos, which, like the Brit ones but in a different way, are a lot of fun as well as educational.

 

the SA government’s six-point plan for energy security, in the face of a carping Federal government

(this is reblogged from the new ussr illustrated, first published July 16 2017)

South Australian Premier Jay Weatherill, right, with SA Energy Minister Tom Koutsantonis

The South Australian government has a plan for energy, which you can take a look at here. And if you’re too lazy to click through, I’ll summarise:

  1. Battery storage and renewable technology fund: Now touted as the world’s largest battery, this will be a storage facility for wind and solar energy, and if it works, it will surely be a major breakthrough, global in its implications. The financing of the battery (if we have to pay for it!) will come from a new renewable energy fund.
  2. New state-owned gas power plant: This will be a 250 MW capacity gas powered facility designed initially for emergency use, and treated as a future strategic asset when (and if) greater energy stability is achieved at the national level. In the interim the state government will (try to?) work with transmission and distribution companies to provide 200 MW of extra generation in times of peak demand.
  3. Local powers over the national market: The government will legislate for strong new state powers for its Energy Minister as a last-resort measure to enable action in South Australia’s best interests when in conflict with the national market. In addition, all new electricity-generation projects above 5 MW will be assessed as to their input into the state electricity system and its security.
  4. New generation for more competition: The SA Government will use its own electricity contract (for powering schools, hospitals and government services) to tender for more new power generators, increasing competition in the market and putting downward pressure on prices.
  5. South Australian gas incentives: Government incentives will be given for locally-sourced gas development (we have vast untapped resources in the Cooper Basin apparently) so that we can replace all that dirty brown coal from Victoria.
  6. Energy Security Target: This new target, modelled by Frontier Economics, will be designed to encourage new investments in cleaner energy, to increase competition and put downward pressure on prices. The SA government will continue to advocate for an Emissions Intensity Scheme (EIS), contra the Federal government. It’s expected that the Energy Security Target will morph into an EIS over time – depending largely on supportive national policy. Such a scheme is widely supported by industry and climate science.

It’s an ambitious plan perhaps but it’s definitely a plan, and definitely actionable. The battery storage part is of course generating a lot of energy already, both positive and negative, as pioneering projects tend to do. I’m very much looking forward to December’s unveiling. Interestingly, in this article from April this year, SA Premier Jay Weatherill claimed 90 expressions of interest had been received for building the battery. Looks like they never stood a chance against the mighty Musk. In the same article, Weatherill announced that the expression of interest process had closed for the building of SA’s gas power plant, point two of the six-point plan. Thirty-one companies from around the world have vied for the project, apparently. And as to point three, the new powers legislation was expected to pass through parliament on April 26. Weatherill issued a press release on the legislation in late March. Thanks to parliamentary tracking, I’ve found that the bill – called the Bill to Amend the Emergency Management (Electricity Supply Emergencies) Act – was passed into law by the SA Governor on May 9.

Meanwhile, two regional projects, one in the Riverland and another in the north of SA, are well underway. A private company called Lyon Group is building a $1 billion battery and solar farm at Morgan, and another smaller facility, named Kingfisher, in the north. In this March 30 article by Chris Harmsen, a spokesperson for Lyon Group said the Riverland project, Australia’s largest solar farm, was 100% equity financed (I don’t know what that means – I’ll read this later) and would be under construction within months. It will provide 300MW of storage capacity. The 120 MW Kingfisher project will begin construction in September next year. Then there’s AGL’s 210MW gas-fired power station on Torrens Island, mentioned previously. It’s worth noting that AGL’s Managing Director Andy Vesey spoke of the positive investment climate created by the SA government’s energy plans.

So I think it’s fair to say that in SA we’re putting a lot of energy into energy. Meanwhile, the Federal Energy minister, Josh Frydenberg, never speaks positively about SA’s plans. Presumably this is because SA’s government is on the other side of the political divide. You can’t say anything positive about your political enemies because they might stop being your enemies, and then what would you do? The identity crisis would be intolerable.

I’ve written about macho adversarial systems in politics, law and industrial relations before. Frydenberg, as the Federal Minister, must be well aware of SA’s six-point plan (found with a couple of mouse-clicks), and of the plans and schemes of all the other state governments, otherwise he’d be massively derelict in his duty. Yet he’s pretty well entirely dismissive of the Tesla-Neoen deal, and describes the other SA initiatives, pathetically, as ‘an admission of failure’. It seems almost a rule with the current Feds that you don’t mention renewable, clean energy positively and you don’t mention the SA government’s initiatives in the energy field except negatively. Take for example Frydenberg’s reaction to recent news that the Feds are consulting with the car industry on reducing fuel emissions. He brought up the ‘carbon tax’ debacle (a reference to the former Gillard government’s 2012 carbon pricing scheme, repealed by the Abbott government in 2014), declaring that there would never be another one, as if the attempt to reduce vehicle emissions – carbon emissions – had nothing to do with carbon and its reduction, which was what the carbon pricing scheme was all about. This is the artificiality of adversarial systems – where two parties pretend to be further apart than they really are, so that they can engage in the apparently congenial activity of trading insults and holier-than-thou tirades. It’s so depressing. Frydenberg was at pains to point out that the government’s interest in reducing fuel emissions was purely to benefit family economies. It would’ve taken nothing but a bit of honesty and integrity to also say that reduced emissions would be environmentally beneficial. But this apparently would be a step too far.

In my next post I hope to get my head around battery storage technology, and lithium-ion batteries.

References/links

https://ussromantics.com/2017/07/14/whats-weatherills-plan-for-south-australia-and-why-do-we-have-the-highest-power-prices-in-the-world-oh-and-i-should-mention-elon-musk-here-might-get-me-more-hits/

https://ussromantics.com/2011/06/25/adversarial-approaches-do-we-need-them-or-do-we-need-to-get-over-them/

http://ourenergyplan.sa.gov.au/

http://www.abc.net.au/news/2017-04-13/sa-gas-fire-power-station-gains-international-interest/8442578

https://www.premier.sa.gov.au/index.php/jay-weatherill-news-releases/7263-new-legislation-puts-power-back-in-south-australians-hands

http://www.abc.net.au/news/2017-04-13/sa-gas-fire-power-station-gains-international-interest/8442578

https://www.parliament.sa.gov.au/Legislation/BillsMotions/SALT/Pages/default.aspx?SaltPageTypeId=2&SaltRecordTypeId=0&SaltRecordId=4096&SaltBillSection=0

http://www.abc.net.au/news/2017-03-30/new-solar-project-announced-for-sa-riverland/8400952

http://www.investopedia.com/terms/e/equityfinancing.asp

https://en.wikipedia.org/wiki/Carbon_pricing_in_Australia

 

What’s Weatherill’s plan for South Australia, and why do we have the highest power prices in the world? Oh, and I should mention Elon Musk here – might get me more hits

(this is reblogged from the new ussr illustrated, first published July 14 2017)

just a superhero pic to rope people in

I’ve written a few pieces on our electricity system here in SA, but I don’t really feel any wiser about it. Still, I’ll keep having a go.

We’ve become briefly famous because billionaire geek hero Elon Musk has promised to build a ginormous battery here. After we had our major blackout last September (for which we were again briefly famous), Musk tweeted or otherwise communicated that his Tesla company might be able to solve SA’s power problems. This brought on a few local geek-gasms, but we quickly forgot (or I did), not realising that our good government was working quietly behind the scenes to get Musk to commit to something real. In March this year, Musk was asked to submit a tender for the 100MW capacity battery, which is expected to be operational by the summer. He has recently won the tender, and has committed to constructing the battery in 100 days, at a cost of $50 million. If he’s unsuccessful within the time limit, we’ll get it for free.

There are many many South Australians who are very skeptical of this project, and the federal government is saying that the comparatively small capacity of the battery system will have minimal impact on the state’s ‘self-imposed’ problems. And yet – I’d be the first to say that I’m quite illiterate about this stuff, but if SA Premier Jay Weatherill’s claim is true that ‘battery storage is the future of our national energy market’, and if Musk’s company can build this facility quickly, then it’s surely possible that many batteries could be built like the one envisaged by Musk, each one bigger and cheaper than the last. Or have I just entered cloud cuckoo land? Isn’t that how technology tends to work?

In any case, the battery storage facility is designed to bring greater stability to the state’s power network, not to replace the system, so the comparisons made by Federal Energy Minister Josh Frydenberg are misleading, probably deliberately so. Frydenberg well knows, for example, that SA’s government has been working on other solutions too, effectively seeking to becoming independent of the eastern states in respect of its power system. In March, at the same time as he presented plans for Australia’s largest battery, Weatherill announced that a taxpayer-funded 250MW gas-fired power plant would be built. More recently, AGL, the State’s largest power producer and retailer, has announced  plans to build a 210MW gas-fired generator on Torrens Island, upgrading its already-existing system. AGL’s plan is to use reciprocating engines, which executive general manager Doug Jackson has identified as best suited to the SA market because of their ‘flexible efficient and cost-effective synchronous generation capability’. I heartily agree. It’s noteworthy that the AGL plan was co-presented by its managing director Andy Vesey and the SA Premier. They were at pains to point out that the government plans and the AGL plan were not in competition. So it does seem that the state government has made significant strides in ensuring our energy security, in spite of much carping from the Feds as well as local critics – check out some of the very nasty naysaying in the comments section of local journalist Nick Harmsen’s articles on the subject (much of it about the use of lithium ion batteries, which I might blog about later).

It’s also interesting that Harmsen himself, in an article written four months ago, cast serious doubt on the Tesla project going ahead, because, as far as he knew, tenders were already closed on the battery storage or ‘dispatchable renewables’ plan, and there were already a number of viable options on the table. So either the Tesla offer, when it came (and maybe it got in under the deadline unbeknown to Harmsen), was way more impressive than others, or the Tesla-Musk brand has bedazzled Weatherill and his cronies. It’s probably a combo of the two. Whatever, this news is something of a blow to local rivals. What is fascinating, though is how much energetic rivalry, or competition, there actually is in the storage and dispatchables field, in spite of the general negativity of the Federal government. It seems our centrist PM Malcolm Turnbull is at odds with his own government about this.

So enough about the Tesla-Neoen deal, and associated issues, which are mounting too fast for me to keep up with right now. I want to focus on pricing for the rest of this piece, because I have no understanding of why SA is now paying the world’s highest domestic electricity prices, as the media keeps telling us.

According to this Sydney Morning Herald article from nearly two years ago, which of course I can’t vouch for, Australia’s electricity bills are made up of three components: wholesale and retail prices, based on supply and demand (39% of cost); the cost of poles and wires (53%); and the cost of environmental policies (8%). The trio can be simplified as market, network and environmental costs. Market and network costs vary from state to state. The biggest cost, the poles and wires, is borne by all Australian consumers (at least all on the grid), as a result of a massive $45 billion upgrade between 2009 and 2014, due to expectations of a continuing rise in demand. Instead there’s been a fall, partly due to domestic solar but in large measure because of much tighter and more environmental building standards nationwide as part of the building boom. The SMH article concludes, a little unexpectedly, that the continuing rise in prices can only be due to retail price hikes, at least in the eastern states, because supply is steady and network costs, though high, are also steady.

A more recent article (December 2016) argues that a rising wholesale price, due to the closure of coal-fired power stations in SA and Victoria and higher gas prices, is largely responsible. Retail prices are higher now than when the carbon tax was in place in 2013.

This even recenter article from late March announces an inquiry by the Australian Competition and Consumer Commission (ACCC) into retail pricing of electricity, which unfortunately won’t be completed till June 30 2018, given its comprehensive nature. It also contains this telling titbit:

A report from the Grattan Institute released earlier in March found a decade of competition in the market had failed to deliver better deals for customers, with profit margins on electricity bills much higher than for many other industries.

However, another article published in March, and focusing on SA’s power prices in particular (it’s written by former SA essential services commissioner Richard Blandy), takes an opposing view:

Retailing costs are unlikely to be a source of rapidly rising electricity prices because they represent a small proportion of final prices to consumers and there is a high level of competition in this part of the electricity supply chain. Energy Watch shows that there are seven electricity retailers selling electricity to small businesses, and 12 electricity retailers selling electricity to households. Therefore, price rises at the retail level are likely to be cost-based.

Blandy’s article, which looks at transmission and distribution pricing, load shedding and the very complex issue of wholesale pricing and the National Energy Market (NEM), needs at least another blog post to do justice to. I’m thinking that I’ll have to read and write a lot more to make sense of it all.

Finally, the most recentest article of only a couple of weeks ago quotes Bruce Mountain, director of Carbon and Energy Markets, as saying that it’s not about renewables (SA isn’t much above the other states re pricing), it’s about weak government control over retailers (could there be collusion?). Meanwhile, politicians obfuscate, argue and try to score points about a costly energy system that’s failing Australian consumers.

I’ll be concentrating a lot on this multifaceted topic – energy sources, storage, batteries, pricing, markets, investment and the like, in the near future. It exercises me and I want to educate myself further about it. Next, I’ll make an effort to find out more about, and analyse, the South Australian government’s six-point plan for our energy future.

References and more reading for masochists

http://www.abc.net.au/news/2017-03-10/tesla-boss-elon-musk-pledges-to-fix-sas-electricity-woes/8344084

http://www.adelaidenow.com.au/business/sa-government-announces-who-will-build-100mw-giant-battery-as-part-of-its-energy-security-plan/news-story/9f83072547f41f4f5556477942168dd9

http://www.smh.com.au/business/sunday-explainer-why-is-electricity-so-expensive-20150925-gjvdrj.html

http://www.skynews.com.au/business/business/market/2017/03/27/accc-to-find-out-why-power-prices-are-so-high.html

http://www.adelaidenow.com.au/news/south-australia/south-australia-will-have-highest-power-prices-in-the-world-after-july-1-increases/news-story/876f9f6cefce23c62395085c6fe0fd9f

http://indaily.com.au/news/business/analysis/2017/03/07/why-sas-power-prices-are-so-high-and-the-huge-risks-of-potential-fixes/

http://www.theaustralian.com.au/opinion/columnists/graham-richardson/jay-weatherill-must-come-clean-on-elon-musks-battery-deal/news-story/f471b33ebdf140a71b41e0b0bea7894f

http://www.news.com.au/technology/environment/climate-change/why-higher-electricity-prices-are-inevitable/news-story/042712e35c08bf798ed993d13ee573ea

is wind power prohibitively expensive? apparently not

(this is reblogged from the new ussr illustrated, first published July 3 2017)

that’s a bloody big blade

Recently I heard retiring WA liberal senator Chris Back being interviewed, mainly on funding for Catholic schools, on ABC’s breakfast program. He was threatening to cross the floor on the Gonski package, but while he was at it he took a swipe at wind power, claiming it was heavily subsidised and not cost effective. Unfortunately I’ve not been able to find the whole interview online, to get his exact words, but as someone interested in renewables, and living in a state where wind power is prominent, I want to look more carefully at this issue.

On googling the question I’ve immediately been hit by link after link arguing that wind power is just too expensive. Is this a right-wing conspiracy? What are the facts? As I went deeper into the links – the second and third pages – I did become suspicious, as attacks on wind power spread to solar power and renewable energy in general. It seems there’s either a genuine backlash or there’s some manipulating going on. In any case it seems very difficult to get reliable, unbiased data one way or another on the cost-effectiveness of this energy source.

Of course, as with solar, I’m always hearing that wind power is getting cheaper. Thoughts off the top of my head: a standard wind farm of I don’t know how many units would be up-front quite expensive, though standardised, ready-tested designs will have brought per unit price down over the years. Maintenance costs, though, would be relatively cheap. And maybe with improved future design they could generate power at higher wind speeds than they do now. They seem to be good for servicing small towns and country regions. How they work with electricity grids is largely a mystery to me. There’s a problem with connecting them to other energy sources, and they’re not reliable enough (because the wind’s not reliable enough) to provide base-load power. I don’t know if there’s any chance of somehow storing excess energy generated. All of these issues would affect cost.

I also wonder, considering all the naysayers, why hard-headed governments, such as the Chinese, are so committed to this form of energy. Also, why has the government of Denmark, a pioneering nation in wind power, backed away from this resource recently, or has it? It’s so hard to find reliable sources on the true economics of wind power. Clearly, subsidies muddy the water, but this is true for all energy sources. It’s probably quixotic to talk about the ‘real cost’ of any of them.

Whatever the cost, businesses around the world are investing big-time in wind and other forms of renewable energy. In the US, after the bumbling boy-king’s highly telegraphed withdrawal from the Paris agreement, some 900 businesses and investors, including many of the country’s largest firms, signed a pledge to the UN that there were still ‘in’. The biggest multinational companies are not only jumping on the bandwagon, they’re fighting to drive it, creating in the process an unstoppable global renewable energy network.

The Economist, an American mag, had this to say in an article only recently:

In America the cost of procuring wind energy directly is almost as cheap as contracting to build a combined-cycle gas power plant, especially when subsidies are included…. In developing countries, such as India and parts of Latin America and the Middle East, unsubsidised prices at solar and wind auctions have fallen to record lows.

Australia’s current government, virtually under siege from its conservative faction, is having a hard time coming to terms with these developments, as Chris Back’s dismissive comments reveal, but the direction in which things are going vis-à-vis energy supply is clear enough. Now it’s very much a matter of gearing our electricity market to face these changes, as soon as possible. Without government support this is unlikely to happen, but our current government is more weakened by factionalism than ever.

Australia is 17th in the world for wind power, with a number of new wind farms becoming operational in the last year or so. South Australia’s push towards wind power in regional areas is well known, and the ACT is also developing wind power in its push towards 100% renewable energy by 2020. Australia’s Clean Energy Councilprovides this gloss on the wind energy sector which I hope is true:

Technological advances in the sector mean that wind turbines are now larger, more efficient and make use of intelligent technology. Rotor diameters and hub heights have increased to capture more energy per turbine. The maturing technology means that fewer turbines will be needed to produce the same energy, and wind farms will have increasingly sophisticated adaptive capability.

The US Department of Energy website has a factsheet – ‘top 10 things you didn’t know about wind power’, and its second fact is bluntly stated:

2. Wind energy is affordable. Wind prices for power contracts signed in 2015 and levelized wind prices (the price the utility pays to buy power from a wind farm) are as low as 2 cents per kilowatt-hour in some areas of the country. These rock-bottom prices are recorded by the Energy Department’s annual Wind Technologies Market Report.

As The Economist points out, in the article linked to above, Trump’s ignorant attitude to renewables and climate science will barely affect the US business world’s embrace of clean energy technology. I’m not sure how it works, but it seems that the US electricity system is less centralised than ours, so its states are less hampered by the dumbfuckery of its national leaders. If only….