High levels of renewable penetration are technically feasible and consistent with maintaining energy security, according to the Clean Energy Finance Corporation (CEFC).
In its submission to chief scientist Alan Finkel’s Independent Review into the Future Security of the National Electricity Market, the CEFC took a swipe at the Federal Government by dismissing the future of coal in the nation’s future energy mix.
The CEFC said to minimise costs to consumers and maintain energy security, the country should be investing in renewables and energy storage.
“Over time, decarbonising the electricity system will involve decreasing the share of fossil-fuel generation and increasing the share of renewable energy,” the submission said.
“If ageing coal-fired generation capacity is withdrawn before new renewable energy capacity is available to meet the shortfall, prices are likely to be higher and more volatile.
“To facilitate a smooth transition to a high-renewables system and avoid price spikes, policies should support early investment in renewables to prepare in advance for coal capacity withdrawals.”
The submission noted that new fossil-fuel generation in Australia would be highly unlikely.
“Coal-fired generation tends to be relatively inflexible and not suited to a market with higher levels of renewable energy penetration and declines in daytime demand as a result of roof-top solar generation,” it said.
“While the range of cost estimates for new coal-fired generation capacity are broadly comparable with new renewable energy capacity (excluding any cost for carbon emissions), negative investor perceptions mean that new investment in coal-fired capacity would be unlikely to be financed by Australian or international capital markets.
“Investors perceive that new fossil-fuel generation capacity has carbon risk, which is the risk that a new asset would be stranded if a future government were to adopt tighter emissions constraints.
“Further, there is arguably no longer a social licence for new coal-fired power stations in Australia.”
The CEFC said it would also be challenging find long-term domestic gas supply agreements to support new investment in gas-fired generation.
In its submission, the CEFC said energy storage would play an important role in an electricity system with high renewables penetration.
“Australia’s electricity system is seeing significant new investment, with clean energy solutions entering the market at increasing scale and price competitiveness as we look to achieve an energy system that is secure, affordable and sustainable,” CEO Oliver Yates said.
“We are confident that Australia’s energy mix can incorporate higher levels of clean energy with strengthened transmission, better demand management systems and increased storage capacity, through a planned and coordinated approach.”