The industry’s baseload, renewable and intermittent energy generators discuss their role in Australia’s future energy mix with Energy Source & Distribution.
In March the Australian Bureau of Agricultural and Resource Economics (ABARE) projected total primary energy consumption will grow 35 per cent from 2007-08 to 2029-30 (or 1.4 per cent a year). Gross electricity generation is projected to grow by nearly 50 per cent (or 1.8 per cent a year) from 247 terawatt hours in 2007-08 to 366 terawatt hours in 2029-30. While the suspension of the Federal Government’s emissions trading scheme until at least 2013 maintains a haze of uncertainty over the uptake of non-carbon emitting sources of power, the relative shares of non-renewables and renewables in electricity generation are still expected to change significantly.
The ABARE’S projections point to a shift to low emission technologies leading up to 2030. In 2007-08, non-renewables accounted for around 95 per cent of the primary energy consumed in Australia. While endowed with abundant, high quality and diverse energy resources, coal and oil will continue to supply the bulk of Australia’s energy needs, although their share in the energy mix is expected to decline. According to the ABARE, the longer-term role of coal is heavily dependent on technological developments related to carbon capture and storage. The use of gas (natural gas and coal seam gas) is expected to grow strongly by 3.4 per cent a year over the outlook period, with a share in electricity generation projected to increase from 19 per cent in 2007-08 to 37 per cent in 2029-30. With the potential to play a major role in the transition period until lower emission technologies become more viable, its cost competitiveness as a fuel for electricity generation will depend on gas prices.
The Australian Energy Resource Assessment, commissioned by the Australian Government Department of Resources, Energy and Tourism and performed by Geoscience Australia and ABARE, found that at present, renewable energy sources account for only modest proportions of Australia’s primary energy consumption (around 5 per cent) and electricity generation (7 per cent). Australian production of renewable energy has been dominated by bagasse, wood and wood waste, and hydroelectricity, which together accounted for 86 per cent of renewable energy production in 2007-08. Australia’s hydro electric power stations provide a combined installed capacity of 7.8 GW and 4.5 per cent of Australia’s total electricity, the largest contribution of any renewable energy. Wind energy, solar energy and biofuels accounted for the remainder of Australia’s renewable energy production.
According to the ABARE, the transition to a low carbon economy will require long-term structural adjustment in the Australian energy sector. The Energy Alliance (EA) has been exploring what actions need to be taken to develop and preserve the energy supply options necessary to provide an optimal energy mix for Australia in a carbon-constrained world. The EA hosted Energy State of the Nation 2010 in March, where participants discussed the transformation of the power sector and the challenge of integrating new technologies. Speaking at the event, CSIRO Energy Flagships director, Dr Alex Wonhas said Australia would see some of the potential technologies come to fruition in the next 10 years, but the major challenge will be managing intermittency, storage and aggregating demand side management. According to Dr Wonhas, standards will need to be optimised for people’s comfort levels, not to fit the engineer’s point of view.
“We need to combine what the scientists are doing with what the social scientists are doing with the economists,” he said.
According to the EA, the composition of electricity supply in Australia in the period to 2050 will be influenced by policy settings, the availability of water, the cost of different generation technologies and numerous other factors. Tax reform, policy integration, financing, technologies and realistic timing will all play a key role.
With no guaranteed silver bullet in sight for solving Australia’s future energy issues, Energy Source & Distribution approached energy industry executives, advocates and academics representing various sources of power to give their perspective on what role they will play in Australia’s future energy mix.
Capital investment needed for solar success
By John Grimes, Chief Executive Australian Solar Energy Society
Fifteen years ago, it was just a handful of people in Australia that had forked out substantial sums of money to install photovoltaic panels on their roofs. These ‘early adopters’ may have spent over $20,000 for a one kilowatt system producing on average and, depending on location, about four kilowatt-hours a day. In a truly low energy home where all the major electricity demands were minimised or eliminated (e.g using a gas-boosted solar hot water system to offset one of the big demands) such a PV system would power a fridge freezer and a bit more.
In most cases, these systems were grid connected and the homeowners were compensated for any excess power generated by selling it to their local utility, usually at parity rates. As the Federal Government started to recognise that it could build a solar industry if it subsidised the up-front capital cost of PV systems, there was a strong uptake of the technology and an installer industry grew. By June 2009, these subsidy programs were so successful that they were curtailed.
The Federal Government had underestimated the market demand. Roof top PV panels are now becoming more visible in the suburbs and although surviving on uncertain grounds, an industry has been born. But this is not yet significant in the energy mix – the volume is too low. So how will solar technologies become part of the energy mix?
First, we have to divide the solar technologies into two functionally distinct segments – thermal and direct electric. Which will “win” is not the right question. Both will take their own place according to what the end use might be. We are experienced in the small scale of both approaches in flat panel PV and solar hot water systems. Our national telecommunications system has been powered by flat panel PV since the 1970s. Our homes have had solar hot water systems for longer. What we now see is the same “division” of solar technologies but on a much larger scale. The thermal technologies will fulfil a very different role than the PV – both will form part of the mix and eventually supplant to the use of fossil based energy systems. The total mix will of course encompass wind, geothermal, wave and biomass.
We can expect the growth of both to occur alongside the traditional energy generation systems. I expect that the industrial demand for steam for example, could be satisfied by technology developed originally in Australia by Dr David Mills and his colleagues at the University of Sydney. Dr Mills’ technology has changed, and some say revitalised the solar thermal industry.
He has used a very different way of solving an efficiency and costing challenge of taking the sun’s thermal heat and turning it into useable steam at the correct temperature for both coal fired power stations and other industries that require steam for processing such as bauxite refining. Dr Mills’ company AUSRA has removed many of the cost impediments of the large scale thermal “parabolic trough” technologies by using technology devised in the 1800s by Augustin Fresnel. Instead of using precision shaped troughs that need very carefully manufactured mirrors, he has made the reflective (cheaper) mirrors flat, which focus the heat at a fixed point above the system. The flat mirrors track the sun’s path. The plant output is steam at the correct temperature, matching the technical needs of coal-fired stations.
Like all new technologies, success needs significant investment. AUSRA was taken over recently by AREVA, a major French based player in the energy industry. The technology is modular, easy to build and can be expanded in short time frames. I am upbeat about this take over.
We must recognise that to full commercialise these new technological approaches require significant capital investment and here we might well see a success story for solar that could otherwise struggle. But this is not the only story in large-scale solar thermal technologies. At the Australian National University, a different way of capturing the sun’s potential saw the development of the ‘Big Dish’ – now a 500 m diameter structure. Again, it is a story of making the transition from laboratory to commercial reality. The big dish is now being commercialised by Wizard Power as a build and deliver turnkey concept to generate electricity.
A mining company, for example, might need power at a remote site, and often in a location like the Pilbara where solar radiation is at its best. Wizard will take the components of the dish system and erect on site a means of delivering power to the mining infrastructure. In these days of fuel cost and growing uncertainty of supply, the resource industry is looking to any means to secure continuity of service and power. Solar may well fit the bill.
The solar industry is proving its ability as suppliers of reliable power to one of our major industries – fulfilling our role. There is also the key issue of heat storage, and that too has reached full commercialisation. Using the parabolic through system, Abengoa has built a 280 MW plant with storage in Arizona. Large solar thermal does deliver power 24/7.
But how well are photovoltaic technologies fairing as big picture suppliers? The world has seen the installation of some very large flat panel ‘solar farms’, and this will no doubt continue. In Australia, we have had the installation of village-scale large tracking dish systems. These large dish systems concentrate the sunlight onto a photovoltaic cell system at the focal point. Looking like satellite dishes, these systems, designed by Solar Systems Pty Ltd, have been successfully deployed in the Northern Territory. Solar Systems had planned a much larger 154 MW heliostat plant in Mildura and now, following the acquisition of Solar Systems by Silex Ltd, that project looks like coming to fruition, although it will be staged rather than a total build, starting at a two megawatt pilot scale.
There is a need for government investment in these projects and various mechanisms have worked overseas. Of note is the ‘Feed-in Tariff’ system, now operating in nearly 40 countries. This tariff enables the investment load to be spread wider than individual householders to businesses and premium prices are paid to the generators. Australia has some examples of such tariffs in the ACT and New South Wales but there is yet to be a national agreement about this.
Australia can really move forward if we can get a fully national system. Taking a piecemeal approach does not serve us well. We need a standardised system and not only will this ensure the smooth development of small scale roof top PV but also industrial scale – a 50,000 sq m logistics building is ideal in a climate where afternoon summer demand is highest. PV suits the load profile.
I am keen to also see the solar industry achieve stability by the institution of functional legislation that will not only provide for feed-in tariffs but also encouragement of the establishment of large-scale solar thermal plants by providing tax breaks and loan guaranteeing.
I can see a very strong future in Australia if we get the security of investment sorted out.
The Australian Solar Energy Society (AuSES) is dedicated to the promotion of solar and related R&D and the adoption of solar energy, compiling and disseminating information on solar and complementary technologies, education programs and lobbying.
Coal – the key component of Australia’s future energy needs
By Ralph Hillman, Executive Director Australian Coal Association
The Federal Government’s recently released Australian Energy Resource Assessment is a timely reminder of how important coal is, and will continue to be, in the Australian economy.
The AERA report projects a substantial rise in Australian coal production and exports as well as an important ongoing role for coal in the domestic electricity generation environment despite a fall in its market share.
Coal is Australia’s main export earner. Coal exports have risen from 233 Mt in 2005 to 260 Mt in 2009. The forecast level for 2030 is 450 Mt. This increased demand is needed overseas to run power stations and to make iron and steel and other industrial products. Our major export markets are Japan, South Korea, EU, Taiwan and India.
The coal industry accepts the science of climate change and the need to address emissions from coal-fired electricity generation. Consequently, the industry is investing a billion dollars in co-operation with government to drive development and demonstration of low emissions coal technologies including carbon capture and storage (CCS). This is being achieved through the COAL21 Fund; financially supported by a unique, voluntary levy on coal production.
The Commonwealth and State Governments are also providing substantial funding to the demonstration program to develop and demonstrate these technologies.
The importance of coal’s role in supporting the Australian lifestyle and the trade-exposed segments of the economy – delivering some of the cheapest electricity in the OECD for more than 30 years – is well known. Less appreciated is the fact that, on the AERA projections, coal-fired power will be delivering some 150 TWh of electricity in 2030 – out of an estimated 366 TWh total supply – compared with 197 TWh at present out of 257 TWh supply. Put another way, Australian businesses and households will be dependent on coal for 3000 TWh of supply over the next two decades.
Much of Australia’s coal-fired electricity supply will come from existing power stations, though the AERA report identifies 3064 MW of new coal-fired power stations under consideration at present for development in NSW, SA, WA, Victoria and Queensland. This does not include the two 2000 MW baseload plants that have been proposed by Delta Electricity and Macquarie Generation in NSW.
At the end of April the Minister for Climate Change and Energy Efficiency stated, “Obviously coal is a very important part of the Australian economy. It is also, regardless of what we do, going to be part of the energy mix of the world for the next 40 years. So what we have to do is find a technology that reduces emissions from coal. We have invested quite a lot of money in looking at clean coal technologies, carbon capture and storage, because this is one of the must-have technologies as the world moves forward.”
Thus, new technology is a key feature for coal utilisation going forward. This includes work on the amount of energy that can be generated per unit of coal, treatment of flue gases to reduce greenhouse gas emissions and, most importantly, investment in the development and demonstration of low emissions coal technologies. This latter area includes the cost-effective capture and secure storage of carbon dioxide from power stations, steel mills and other industrial activities.
The AERA report recognises that, “At this point CCS has not been demonstrated at the scale needed for power plants and, until the technology matures, implementation is likely to add significantly to electricity production costs.” That is why the G8; the 2010 Economic Report of the US President; Lord Stern; Professor Garnaut and the 21 nations plus the EU involved in the Carbon Sequestration Leadership Group all recognise the need for governments to invest in the development and demonstration of low emissions coal technologies.
The deferral of the Carbon Pollution Reduction Scheme provides an opportunity for the federal government and opposition to develop bipartisan agreement on a stable and sustainable greenhouse policy for Australia calibrated to an international agreement involving binding commitments to reduce global emissions.
That does not mean we should suspend action on reducing greenhouse gas emissions as climate change is real and the coal industry accepts the science. Rather, the difficulties of the Copenhagen negotiation highlight the need for accelerated investment in technologies that will deliver emission reductions at reasonable cost – including both low emissions fossil fuel and renewable technologies.
This will help address difficulties of reaching an international agreement as it lowers the cost of abatement. It will also be essential to bringing the major emitters – China, India and the US – into an international arrangement.
As the AERA study notes, large-scale demonstration plants with CO2 storage are expected to start operation in 2015, with the aim of having the technology commercially available by 2020. The core point is that a greatly-accelerated deployment pathway is required for CCS in order for it to contribute meaningfully to abatement in the next two decades.
Ralph Hillman is the executive director of the Australian Coal Association (ACA). The ACA is an industry body whose member companies are the black coal producers in Australia.
Bio energy promises limitless renewable biodiesel and food
By Peter Cassuben, Communications Director MBD Energy Limited
The good news for current and future generations is that the planet’s natural ability to convert atmospheric pollution into healthy recyclable biomass most probably holds the key to helping meet a significant part of the world’s medium to longer term energy and nutritional needs. For those wishing to see a tax on carbon-based energy such as coal in order to make non-carbon based energy solutions appear more affordable, this is probably not news they would wish to hear – let alone believe.
The fact that bio energy can deliver ample new low-cost energy – primarily in the form of second generation bio-diesel, bio-gas, and less costly nutrition for farm animals – is self-evident since the delivery technology is based on the exact same science behind our existing energy and food supplies. Does anyone out there not believe that photosynthesis works?
Virtually all our cheap energy and plastics come from either coal, oil or gas – all of which started life as biomass created long ago by plants absorbing sunlight and carbon dioxide before dying and returning to the earth as carbon which we mine to produce various forms of energy and industrial feedstock.
From a scientific perspective it follows that there’s nothing very radical, or technologically challenging therefore about artificially replicating this natural carbon cycle within a large scale industrial setting to produce virtually the same oil and gas – albeit a lot more quickly and cheaply than is possible via conventional terrestrial energy extraction methods.
Mention bio energy and the average person immediately thinks of farmers producing corn or some such crop as feedstock for the production of ethanol, or perhaps pig farmers distilling their farm effluent to produce biogas. Compared with mainstream commercial fuel production, such bio energy production volumes are low. Use of precious broad-acre farm lands for the production of transport fuel rather than food has given bio energy a somewhat mixed reputation in a world that already has too many mouths to feed.
A whole alphabet of innovative bio energy technologies and projects ranging from clever small-scale biomass recycling projects through to solutions offering significant energy supplies can be browsed via the Bioenergy Australia website, a government and industry forum that helps facilitate bio energy progress. It estimates that bio energy is responsible for about 10 per cent of the global total primary energy supply and by far the dominant renewable energy source – especially in the developing world.
The calibre of the bio energy technologies of today has matured well beyond earthy experimental ideology into a mainstream industry-backed set of established solutions that are providing the kind of financially and environmentally sustainable results that have proved so elusive with more complex and costly technologies.
Mature ‘second generation’ bio energy technologies promise potentially limitless cheap energy production without any of the capacity constraints and land-use conflict issues that have dogged many first generation bio energy programs.
By contrast, second generation bio energy offers directly improved efficiency and yield for mainstream agricultural production through ample and more secure new supplies of sustainable fertiliser and lower cost nutrition for farm animal production.
Importantly, large-scale second generation bio energy production – such as MBD Energy’s algal sequestration at three major Australian coal fired power stations – also promises to sequester very large amounts of climate sensitive carbon dioxide and other problem greenhouse gases. So much so, that a new term to describe such sustainable new bio energy technologies has been created: ‘Bio Carbon Capture and Storage’ or bio-CCS for short.
A select group of these new bio-CCS technologies, algal biomass to oil, biomass to gas, soil carbon, forestry and ocean nourishment claim a collective potential capacity for cutting Australia’s overall greenhouse gas emissions of 600 million tonnes by a whopping 25 per cent within just one decade if mooted projects centred on south-east Queensland, Victoria’s Gippsland and the most heavily populated part of Western Australia go ahead. It’s claimed each of the projects would produce 80 million barrels of oil per annum, feedstock security of 5.5 million tonnes per annum, reduced coking coal emissions, biogas and fertiliser production as well as driving a 10 to 20 per cent increase in related farm productivity.
If the number crunching proves anywhere near accurate, these bio-CCS technologies look certain to pay their own way, many without a price on carbon, thanks to their prodigious production of valuable bio energy and food by-products. It’s led to a dawning realisation that may yet turn earlier thinking about how to meet the global challenge of rapid large-scale CO2 emissions reduction on its head.
Peter Cassuben is a former Federal Government Senior Ministerial Advisor and is MBD Energy Limited’s communications director.
Nuclear energy – a matter of great urgency
By Professor Leslie Kemeny, Australian Foundation Member, International Nuclear Energy Academy
Some 50 years ago Australia was set to become the first country south of the equator to introduce civilian nuclear power into its electricity generation and transmission network. In 1958, then Prime Minister Robert Menzies opened the research laboratories of the Australian Atomic Energy Commission (AAEC.) at Lucas Heights near Sydney. On Australia Day, in 1958, he ceremonially “started-up” the nation’s first research reactor HIFAR (High Flux Australian Reactor).
As early as 1962, the University of New South Wales had established an Institute for Nuclear Science in anticipation of Australia’s nuclear future and the need for well trained staff for the A.A.E.C and associated nuclear laboratories and regulatory and diplomatic staff in Canberra. In 1964 this institute became Australia’s first – and only – School of Nuclear Engineering. For 24 years this school trained hundreds of students from Australia and overseas for participation in the research development and commercial arms of the global industry.
By 1966 plans were progressing on the design and construction of the nation’s first nuclear power station to be sited at Jervis Bay, New South Wales with the object of providing power to Canberra and the Australian Capital Territory. At this stage there was a strong anticipation that, in Australia, domestic nuclear power would become a reality and that a nation which possessed immense uranium and thorium resources would quickly become one of the hubs of the global nuclear fuel cycle industry. Sadly by the mid-1980s this early vision for the new energy paradigm was rejected. Much to the bemusement of world energy experts and Australia’s uranium trading parties, Australia became a “nuclear denier.”
Opposition to nuclear energy in this country appears to be led by the hydro-carbon fuel lobby and mindless coercive utopian environmentalism. It is aided by poor education, media hype and the politics of fear and risk. Out of the world’s top 25 economies which attended the recent Copenhagen climate conference, Australia was the only nation without nuclear power or a firm commitment to a nuclear-policy.
At the present time, in May 2010 around the planet, 33 countries operate 447 nuclear power stations which generate around 16 per cent of the world’s electrical energy and avert around 2.6 billion tonnes of greenhouse gases. An Australia which may have a population of 36,000,000 by 2050 will have an energy demand in excess of 100GW(e). For the user of 10,000 kWh of electricity per annum, the “carbon footprint” from a 1GW(e) coal fired power station would be around 300 kilograms of uncontrolled radioactive flyash and nine tonnes of carbon dioxide. From a similarly sized nuclear power station ‘the waste’ is just half a test tube full of very valuable radioactive materials.
Australia’s population and industry will undoubtedly be in need of major desalination plants, hydrogen production facilities and dedicated energy sources for the manufacturing, metallurgical and agricultural industries. Only clean nuclear power will be able to supply these needs with generating costs at under $3 per megawatt hour and water production costs at under $2 per cubic metre. As well, nuclear fuel has an energy density some 20,000 greater than the hydrocarbons and sustainability around 9000 years.
Consider that overseas in Barcelona, the European Union’s electricity industry executives recently held a major conference on the “De-Carbonising Europe Trading Scheme”. Of the delegates, 49 per cent chose nuclear power as the key technology to lower carbon emissions, 24 per cent chose carbon capture and sequestration (CCS) and 6 per cent chose ‘renewable’. And the CCS advocates recognised that this technology still does not exist and must not be mandated for new or existing plants. For energy security and lowest cost emission trading the Rudd government should follow the European example.
The World Business Council for Sustainable Development states that as global emissions will be mandated to more than halve by 2050, nuclear technology is a global imperative. And, for the risk conscious Australian psyche it delivers a special message – “The safety record of nuclear energy is better than any other major industrial technology in OECD countries”. As well, it cites the remarkable performance of nuclear power in the US in 2008. In that year America’s 104 nuclear power stations established a high average factor of 91.8 per cent and produced a massive 807 billion kilowatt hours of energy at a record low cost of 1.68 cents per kilowatt hour. Is it any wonder that there are now applications and planning procedures for some 12 additional nuclear power stations in that country?
The Japanese Ministry of Economy, Trade and Industry (METI) published its ‘Cool Earth 50’ program in March 2008. It is a detailed roadmap of energy related technologies that will halve the level of global greenhouse gas emissions by 2050. METI has prioritised advanced nuclear power for this project. It proposes the deployment of an extra 1500 GW9(e) of nuclear power world-wide to avert the production of some 10 billion tonnes of CO2 per annum.
The introduction of nuclear power and a nuclear industry into Australia is now a matter of great urgency. From the point of view of global warming, it would be desirable to have our first five nuclear power stations operating by 2020 and to have at least 25GW(e) of nuclear plant by 2050. Without such a provision there will be little hope of meeting our stated emission reduction targets. Adopting such an energy policy would transform the token political gesture of ratifying the Kyoto Protocol to the practical and ethical high ground of a real contribution to the global climate change problem. It would undoubtedly be highly commended by the United Nations at the Mexico climate conference in December 2010.
Professor Leslie Kemeny is the Australian Foundation Member of the International Nuclear Energy Academy. He is a Visiting Senior Academic Research Fellow and an internationally acknowledged consulting nuclear scientist and engineer.
Gas is the future
By Warring Neilsen, Chairman Gas Alliance
Gas is the only fuel positioned today and over the next 20 years to deliver low-cost energy solutions in a carbon constrained environment. It is a proven low-carbon option that can be used for power generation, residential and even transport needs at an economical price.
With a carbon price through the CPRS now delayed until 2013, this potential needs to be harnessed now. Even without a carbon price, gas technology can competitively reduce our greenhouse gas emissions. It is the best-fit cost competitive lower-carbon fuel as Australia builds the renewable infrastructure and power generation facilities that will power our future.
The ongoing lack of a carbon price has made capital markets wary of investing in renewable energy because there is no certainty on the investment return.
For exactly the same reason, the capital markets are nervous about reinvesting in coal-fired power generators. Without a carbon price, money markets cannot measure the potential negative impact on the current crop of generators when such a price is introduced.
While investment in this sector stagnates, Australia’s demand for electricity continues to grow. Gas offers a way through this paralysis. It is a proven, lower-emission alternative that offers a cost competitive solution compared to coal generation. Gas-powered generation facilities can also be built faster than any other similar facility.
Effective Federal Government policy which encourages capital markets to invest in gas-powered electricity generation could rapidly reduce Australia’s emissions while still meeting our baseload requirements. Importantly, such a policy does not require the intervention of a CPRS to be effective and economically sustainable.
Gas also offers key emissions abatement advantages at a domestic level, especially in hot water systems. Unfortunately, at the moment, the majority of hot water systems being installed under the Federal Rebate Scheme and Renewable Energy Certificates are in the main encouraging the installation of electrically-powered heat-pump systems or electric-boosted solar. Once traditional electric water hot systems have been phased out in 2012, the continuation of relying on electricity, be it at a more efficient level, will fail to deliver the greenhouse reductions and lower cost options to consumers. Gas-powered hot water systems linked to solar technology are superior in both areas.
Government policy that encourages the installation of gas-boosted solar hot water systems will result in less emissions and lower utility bills into the future and will give the consumer the option to boost or simply rely on solar.
Gaseous fuels are already proving their value as a major transport fuel option. A significant number of buses already run on compressed natural gas. Over 700,000 passenger and light commercial vehicles run on liquefied petroleum gas (LPG) through an existing network of 3200 service stations.
Wesfarmers and BOC have invested heavily in infrastructure to enable long haul transport operations to be fuelled by liquefied natural gas (LNG). LNG currently powers nine dedicated trucks and over 200 dual fuel vehicles operating in Victoria and Western Australia with more to come online soon.
At every level, gas is a proven energy source that has low emissions. In addition, current gas reserves give Australia a supply that will last for at least the next 250 years securing our energy future and reducing the need to rely on imported crude oil and additional refined fuels such as diesel and petrol.
Gas also has the advantage of significant national reach. Australia’s gas grid system already extends 25,000 km across the country with a further 81,000 km of low pressure networks serving four million households and businesses. Another seven million LPG cylinders service an estimated one million consumers outside of the grid. Gas is simply available to everyone anywhere in Australia today.
Even with the CPRS delayed until 2013, gas can play a key role in the transition to a low-emissions future now. However, it requires policies to be put in place to encourage investment in the energy sector that can benefit from our natural reserves of gas. With gas as an energy source and a thoughtful policy approach, Australia can start on the path to a low emissions future today.
Mr Hillman was Ambassador for the Environment and chief negotiator for Australia on the Kyoto Protocol from 1998 to 2002. He was appointed as executive director of the Australian Coal Association in August 2007. He was Ambassador and Permanent Representative to the OECD from 1995 to 1998.
The future of wind energy in Australia
By Miles George, Infigen Energy Managing Director
Electricity generation has entered a new era – not just in Australia but globally. As a result, global investment in renewable energy generation from sources such as wind energy is accelerating and our electricity generation market faces a major transformation.
The benefits of wind energy have been recognised on a global basis, with wind energy now a mainstream source of electricity supply and playing the predominant role in the generation of emission free renewable energy. Wind energy is widely accepted as the most cost-competitive large-scale renewable energy technology.
Notwithstanding the global financial crisis, statistics recently released by the Global Wind Energy Council show the industry expanding by 31.7 per cent in 2009, bringing global total installed capacity to 158.5 GW. Furthermore, wind energy dominated new electricity generation installations in both the US and EU, with 40 per cent of new build generation represented by wind energy in 2009.
Australia has some of the world’s best wind resources, although wind energy’s current share of total electricity generation is only 2 per cent as outlined in a recent ABARE publication. The passage of the expanded Renewable Energy Target (RET) legislation in August 2009 was intended to ensure that 20 per cent of Australia’s electricity comes from renewable sources by 2020. This expanded target represented a four-fold increase from the previous scheme that was introduced in 2001.
More recently, domestic scale renewable energy and hot water heating technologies that benefit from multiple additional federal and state incentives outside the RET scheme have displaced utility scale generation and placed downward pressure on Renewable Energy Certificate (REC) prices. Accordingly, without the proposed LRET changes announced on 26 February, 2010, the local industry is at risk of stalling and Australia’s nascent renewable energy industry is under a serious threat. With the delay of the Carbon Pollution Reduction Scheme, the urgency for the amended RET legislation to be passed is now even more crucial.
The proposed RET changes will greatly improve the prospect of achieving the national interest objective of having 20 per cent of Australia’s electricity sourced from renewable energy by 2020. These changes are certainly welcomed by the wind energy industry. Besides dramatically increasing the generation of clean, renewable energy, it is important to note that the expanded RET scheme is expected to create tens of thousands of jobs – primarily in regional areas.
According to industry sources, over 8000 MW of additional installed wind energy capacity is likely to be required in order to meet the Federal Government’s Large-scale Renewable Energy Target (LRET) over the next 10 years. Therefore, the future of the wind energy industry in Australia is potentially very bright.
Renewable energy targets are likely to represent a minor contributor to rising electricity prices in Australia. As noted by the Minister for Climate Change and Water in an interview on 26 February, 2010, the increased electricity costs associated with the amendments to RET will cost the average household around $3 to $4 a year. It has also been estimated by the Australian Energy Regulator that network costs account for approximately 50 per cent of a typical electricity bill. Any increase in the electricity price associated with RET should be small compared to the impact of rising capital costs and network expenditure as well as rising fuel costs for coal and gas fired generation.
The original objective of the RET legislation and the proposed LRET component of the amended scheme have bipartisan political support and also strong industry support. The RET amendments should be passed immediately to provide the investment certainty required to meet the nation’s renewable energy target objectives. Once legislated, the proposed RET amendments will drive substantial new investments in regional areas, as well as significant new job creation and economic activity.
Miles George is the managing director of Infigen Energy, having previously been the chief executive officer since 2007. Mr George has over 15 years’ experience in the infrastructure and energy sectors, and in particular renewable energy development and investment.
‘Power Park’ thinking
By Fiona Wain, CEO Environment Business Australia
Environment Business Australia’s ‘New markets, new industries, new jobs’ approach is bringing together technologies, financiers and project developers to demonstrate that tackling environmental, economic and food and fuel security issues together offers unprecedented commercial opportunity as the ‘next great technology era’ is developed.
In spite of optimistic reports saying the ‘global financial crisis’ is over, the market is still not acting to curtail layers of cost or to maximise all the potential layers of benefit. Without direct signals from governments the market will not be the champion of long-term strengths and it will not avoid cumulative vulnerabilities.
Governments will ‘spend’ anyway – utilities, infrastructure, energy, water, R&D, industry development, etc., and they have an obligation to the taxpayer to make sure public purse investment, procurement and management funds are spent with vision and foresight. It’s worth remembering that no national electricity market has developed without government intervention and the clean energy market will require initial investment of capital, intellect and regulatory overhaul.
Environment Business Australia believes that Australia could become a regional hub for minerals processing and manufacturing with mega-clean energy parks fuelled by solar thermal, geothermal, marine, and wind energy. These parks would also provide clean baseload electricity via a HVDC grid with super smart connectors that would offer the additional potential of exporting surplus electricity to Asia.
How realistic is it to think that Australia could harness sufficient renewable energy to power most of its economy by 2040? Or even 2030? Visions of being a clean energy superpower exporting low emission energy (either directly or via goods and services) may be big but we are not the first in line. The Desertec Industrial Initiative is planning a similar approach harnessing solar thermal energy from the Sahara to provide electricity to Europe.
I doubt that Africa’s solar supply is better than Australia’s – indeed there is a strong argument that ours is superior because the flatter terrain of our sun-drenched desert areas makes grid connection easier.
But we have other advantages as well – vast geothermal energy reservoirs and our extensive coastline. Marine energy is still a ‘sleeper’ in the minds of many in the energy sector but Australia has what may well turn out to be the world’s best resource and we are already commercialising some of the world’s leading wave energy technologies.
But Australia’s real strength could lie in co-locating solar thermal/geothermal energy or solar/marine energy ‘mega’ projects to value-add to our resources prior to export.
Aggregating a number of smaller supplies of solar and wind energy, combined with co-gen and tri-gen projects could make cities energy self-sufficient while also producing urban supplies of potable water with clean energy desalination projects.
And providing a ‘carbon bridge’ is the potential to use CO2 emissions from large point source emitters as feedstock for biofuels. Using algae to synthesise CO2 means biofuel production doesn’t compete with the food chain or deplete soil mineral/nutrient levels. Indeed, other biosequestration approaches can also help to re-build soil carbon levels while drawing surfeit carbon from the atmosphere.
This is not rocket science – it is an opportunity to improve local, regional and global environmental resilience, wealth and security.
Environment Business Australia is a business think tank and advocacy group promoting commercial solutions to environmental challenges.
