Where does the electricity from the Glen Innes wind farms go?

I have heard this discussion quite a number of times, and recently my mother was shaking her head because of what she thought was the craziness associated with the Wind farms sending their electricity to other places instead of Glen Innes. At the time I didn’t correct her, because it is not easy to explain how it all really works. But I am going to have a go at explaining it here.

The real answer is the electricity from the Glen Innes wind farms does come to Glen Innes and many other towns, however to story is not quite that simple; in fact the electricity from the wind farms will come to Glen Innes before it goes to any other town.

 

I know what you are thinking.. If the electricity is coming to Glen Innes why hasn’t our bills gotten cheaper? And why do other people tell you the electricity is not coming to Glen Innes?

To understand both of these questions I need to explain the basic physics of electricity, and how the buying and selling of electricity works.

The physics of electricity

Electricity is a lot like water, it will always follow the path of least resistance. You can think of the transmission lines you see everywhere as water pipes. Because there is less pipe work for the wind farm electricity to travel through to get to Glen Innes, the resistance is much less; which means the electricity will come to Glen Innes before it goes anywhere else.

The analogy I have used is not perfect, and there are things that can be done to reroute the electricity when needed, but as a general rule the wind farm electricity will end up in Glen Innes before anywhere else…the reason for this is the basic laws of physics.

So, if the electricity does come to Glen Innes, why don’t our electricity bills reflect this?

Introducing the National Electricity Market (the NEM)

The NEM was created 1998, and is an arrangement between Queensland, New South Wales, Australian Capital Territory, Victoria, and South Australia to buy and sell electricity to each other. It is called a pooled Market. Anybody generating electricity generates it into the pool, and anybody buying electricity buys from the pool. The diagram below shows how this works.

The Glen Innes wind farms are large generators so they will sell their electricity into the pool.

The retail electricity companies buy the electricity from the pool and sell that electricity with a significant mark up to people like you and I.

If you are a very large consumer of electricity you can buy electricity directly from the pool as well, but you have to be a very large consumer.

The NEM is very sophisticated, but it is not a physical thing. The NEM is a bunch of rules and procedures that dictate how everybody is to behave. The NEM exists so that electricity can be bought and sold in a market place.

Again I have described the NEM in a very simplistic way, and in reality most renewable based electricity generators(including the Glen Innes Wind Farms) sell their electricity through a Power Purchase Agreement (PPA), however all of these PPA’s rely on the electricity pool to execute their financial transactions.

To Wrap Up

The physical movement of electricity through the transmission lines is dictated by the laws of physics, and those laws dictate the electricity from the Glen Innes Wind Farms will most likely be consumed in Glen Innes.

The actual buying and selling of electricity is done through the NEM, which is completely different to the physical movement of electricity. The Glen Innes Wind Farms will be selling their electricity to businesses and electricity retailers outside of Glen Innes.

So… the physical electricity is coming to Glen Innes, however the NEM ignores that fact and allows the Wind Farm electricity to be purchase by businesses outside of Glen Innes; which is what is happening.

It is really hard to comprehend, but this is how it works.