Australia's great big energy challenge
The biggest weakness of the draft energy white paper released this morning by the federal government is not immediately obvious – it’s found on page 269 of the 291-page report. It reveals that the data used by the Department of Resources and Energy for its energy modelling is already out of date.
In a world that is preparing for a dramatic shift in energy sources, a transformation to renewables, smart grids and electric cars – scenarios not invented by green-spinning NGOs, but by the International Energy Agency and the world’s leading industrial groups – Australia’s energy bodies cling grimly to the belief that not much will change, that fossil fuel and its attendees (carbon capture and storage) will continue to dominate.
The white paper acknowledges the existence of the IEA and other international reports, but relies on modeling provided by the likes of Treasury, the Australian Energy Market Operator and its own Bureau of Resource and Energy Economics, which predicts that Australia will have between 20.5 per cent and 22.2 per cent of renewables by the year 2030, barely more than its 20 per cent target in 2020.
How does it get this so wrong? By relying on modeling that predicts technologies such as solar PV will fall to a cost of around $220/MWh by 2035. Little wonder, then, that it thinks that solar will account for just 1.3 per cent of generation by 2030. The IEA, however, notes that the cost of solar PV has already fallen to between $160-$230/MWh, and will fall to $50-$100 by 2035, when it expects solar to be producing one fifth of the world’s energy. China thinks solar PV will be as cheap as coal by 2021 and its growth will boom. Australia’s white paper predicts small-scale solar PV will cease to grow after 2030.
This is important, because the inability to get a grip on the rapidly changing price of technology and their developments has been at the core of some of the lousiest energy policy decisions in this country in recent years – notably the NSW solar feed-in tariff, and the structure of the solar multiplier by the federal government. Given that these cost declines are accelerating, and now reaching a point where they compete with other technologies, it seems that there is a huge risk of more blunders when planning for the future. Given that minister Martin Ferguson says that more than $200 billion will be spent in the next two decades on Australia’s energy needs, there is much at stake.
That’s the negative part of the white paper – so just ignore their forecasts. However, it's the assessment of the current state of the energy industry which is more interesting, and has the potential to change the nature of the energy debate in this country, which it clearly seeks to do: for the first time the government has put together a significant document that underlines some of the home truths about the energy industry that many in the sector try to hide and many in the media choose to ignore.
The most significant of these statements, particularly in the context of the current popular debate, is that the cost of cleaner energy will impose only “marginally” higher energy costs on consumers in the short to medium term. And, it says, the industry will create jobs, offer commercial opportunities for Australian researchers and support our export industries. As Ferguson repeated on several occasions, Australia will never compete in clean energy manufacturing, but it has the potential to be among the world leaders in developing new technology and exporting that knowledge and IP.
The second important point is that the cost of network upgrades are underpinning the rise in retail costs, particularly in meeting peak demand, and Ferguson made a point of emphasising the cost of Australia’s growing dependence on air conditioning. He noted that for each $1,500 air conditioner (2kW) that was installed, a cost of $7,000 is imposed on to the electricity system which has to be cross-subsidised by other users. This subsidy is at a scale far beyond anything that exists for renewables, yet it is rarely mentioned.
The white paper also recognises the growing importance of distributed generation – such as solar PV – that is located close to demand and will have an impact on the local grid management and require greater flexibility in the distribution network. And Ferguson says demand management, the ability to shave the tops off peak load, will be a critical component of future energy requirements.
Indeed, one of the big themes of this paper, and a welcome one, is the attempt to switch the focus from energy supply to energy demand. That will require much greater focus on energy efficiency, and customer education and engagement, particularly as network upgrades impose significantly higher costs, and consumers have greater exposure to rooftop solar, smart meters, and even electric vehicles.
The white paper talks of the “significant long-term transformation” that needs to occur in the way Australia produces and consumes energy. “This transformation will be a massive challenge,” it writes, and adds that this transformation could also be dramatic. Although it relies on forecasts a coal and gas based future, it canvasses the potential for significant changes to the way energy is produced and the fundamental building blocks of the grid. “We cannot predict with any certainty future cost reductions and technical breakthroughs, or even how the market may ultimately deploy technologies,” the paper says. But it emphasises that this uncertainty needs to be managed with a flexible approach
Included in this flexibility, Ferguson argues, is nuclear. He argues Australia should export uranium to other countries so that they can deploy nuclear if they have no alternative, and he suggests that Australia also needs to stand ready to deploy nuclear should renewable technologies fail to deliver. On this point, he is right, but it is essential that renewables be given the opportunity to prove their worth. Ferguson should not be tempted to pre-judge, or even prejudice that outcome.
Comments on this article
Indeed, one of the big themes
Indeed, one of the big themes of this paper, and a welcome one, is the attempt to switch the focus from energy supply to energy demand. That will require much greater focus on energy efficiency, and customer education and engagement, particularly as network upgrades impose significantly higher costs, and consumers have greater exposure to rooftop solar, smart meters, and even electric vehicles. synchronize directory
Abolish all regulation
Abolish all regulation, and just create a price signal.
A recirculating (revenue neutral) fossil carbon consumption tax would do just fine; each year, increase the rate of this carbon tax, and cut other taxes to match the increased carbon tax revenue. Continue doing this until you've achieved the required decrease in fossil fuel use (BTW, that's 100% decrease).
Phase other taxes back in as and when further increases to the fossil carbon consumption tax rate aren't sufficient to maintain tax revenue.
This way, the market decides which non-fossil fuel technologies are adopted, where and when. That fact that the white paper still sees a place for fossil fuels in Australia's future tells us that the white paper authors aren't quite up to speed with the climate science.
Laurie Clark
I travel to Melbourne every month, last time I remember is that the insolation there is pretty average.By the way, it has now been 7 days with cloud and rain in Brisbane.
Regards
Peak Demand
What you say is true for QLD, but if you look at the VIC graph for the same period, it shows a very close match between peak demand and strongest sunlight hours. It seems to be very climate dependent - I am guessing that in QLD people keep their air conditioning on well into the late evening, whereas here in VIC we typically turn it down or off in late afternoon, as the sun goes down and the temperature drops significantly.
Peak Demand Storage
Redlfow batteries are not "giant" yet. They are 5kW units put together as a 48 unit system for large applications. larger units are being developed, but for the time being these operate efficiently for large scale solar collection and for load levelling.
Peak Demand Storage
Redlfow batteries are not "giant". yet They are 5kW units put together as a 48 unit system for large applications. larger units are being developed, but for the time being these operate efficiently for large scale solar collection and for load levelling.
Redflow
Thanks, have read about them.Two other vanadium flow batteries companies doing same technology(Australian) have come and gone. One installation is on King Island to supplement the wind power. Have not heard of current stautus.
Peak Demand Storage Solution
Richard, Australia already has a company, called RedFlow, that is building giant batteries that can be scaled up to megawatt storage systems for peak demand.
http://www.redflow.com.au/apps_utilities_M120
A Future Backup Supply
At sometime in the future there will be the prospect of a business to recondition electric car batteries and install them as part of a distributed supply system at residential premises.
Solar cells on the roof and a bank of reconditioned electric car batteries would make most households near independant of the mains and on a sufficiently large enough scale could make the country self sufficient.
Peak demand
The solar PV will pay for itself by cashing in on the excessive prices that obtain during the peak summer days.
Other means of generation may be needed in the hours when the PV cannot contribute.
So we could get to the situation where power is plentiful and therefore cheap when people want aircon. I don't have a problem with that. Power after dark may be more expensive.
By creaming off the lucrative peak daylight hours the PV makes running coal fired generators less economic. I assume that this will be an incentive to a base load generator to make sure that there is some PV in the mix. But since any Tom, Dick or Harriet can generate power via PV I imagine this will make coal fired power more expensive, which is what we want.
Mathew Wright
You sprout opinion and hearsay. I ask you for a reference and you disappear once again.Says something?
"Mathew Wright says,"Photoovoltaic is cost negative to install. The savings in the wholesale electricity market by introducing this low cost energy source at the time of highest prices. (prices of $12.50 per kilowatt hour when you are paying $0.25 at the meter) are greater than the cost of funding a FiT.
This is fact. The University of Melbourne Energy Research Institute have done a paper on this which shows this is the case."
Can I have the link please?Is it a fact? How do we know?
I await once again.
What We Need
It seems that what we really need (for most of Australia, at least) is just an airconditioner rated at 12 or 24 volts supplied with its stand-alone PV panels, and with NO grid connection. Options could be a simple thermal storage unit (ice freezer), or a battery, to extend and smooth operation. If supplied in wall or window format, this could be a low cost DIY project. If a house has been airconditioned throughout the daylight hours, operation beyond sundown is not really necessary.
Using Solar Energy 24 hours a day
Suppose -
A pine plantation and a sugar cane crop store solar energy while they are growing.
After harvesting, timber and sugar are separated leaving considerable "waste" mass with embodied solar energy.
Concentrated solar thermal energy can then be added to the "waste" mass, converting it to synthesis gas.
ALL of the energy in this synthesis gas is RENEWABLE SOLAR ENERGY. It can be used to generate electricity 24 hours a day, on demand.
Robert Campbell
Had a look at the site. It is a commercial enterprise that needs subsidies to compete.I agree that if we could have storage at a real price it would make sense.
I have been following NAS batteries for some time, however the cost seems a problem. Japan has installed about 270mw in backup at this stage.
Please everyone, assess your sources, here is a good place to start.
http://www.lib.berkeley.edu/TeachingLib/Guides/Internet/Evaluate.html
Peak Demand
Submitted by Paul Tikotin on Tue, 2011-12-13 17:43.
"I think the point is that solar will deal with that part of the peak brought about by the summertime use of aircon.
That alone will obviate the need for some investment in other forms of generation. "
You may deal with a few hours of peak demand, however peak demand goes through to 8 to 10 pm.Basic accounting, you need to supply demand from another source. Whether it works for 1 hour or 5, it still costs the same. This is simple 101.Therefore if everyone is happy to pay for PV, (sorry the taxpayer subsidising same)then they have to be happy to pay for the capital invested for the backup.
Solar Can Help Peak Demand
Richard, I am pushing my own barrow, but please look at the
following link www.griddemand.com.au. It hasn't found many detractors yet. I am looking for some (so that I may deal with any issues, besides political ones)
Elephant exits room
Bernard,
I agree with your observations. Adding two words makes them more precise -
To get rid of the fossil burners, we need one of two things to happen:
1) ...
2) Build a form of [renewable] generation that doesn't depend on the weather.
...and I think the #1 priority has to be to stop burning ...[non-renewable] gas.
The addition of "non-renewable" in the second statement makes solving the problem in the first statement a lot easier.
Peak demand
I think the point is that solar will deal with that part of the peak brought about by the summertime use of aircon.
That alone will obviate the need for some investment in other forms of generation. As discussed in previous issues of Climate Spectator, the loss of revenue to coal generators by losing the massive tariffs obtainable in those hours will institute a major shift in the economics of power generation away from coal and towards solar.
What this article highlights
Good points Mr Winch.
The sooner those bureaucrats in Canberra evaporate in the coming heat wave and stop imposing their expensive decisions on us the better.
I suggest dismantling that expensive government monopoly euphemistically called "defense forces". When did they last ask us where to send the army? As we know, the government is incapable of running a crook raffle, much less an army. It should be privatized (the army that is, not the government...although...). The massive savings could be invested in the windmill industry giving the man in the street something to tilt at out in the open air rather than in pubs.
Or, we could correct the models and attempt to run the place rationally. If the model grossly overestimates the cost of solar, what will happen in reality; more solar or less? Geez that's just too hard.
Peak Demand
ie information regarding the fact that solar cells negate peak demand is deceptive, sorry.
Peak Demand
I keep hearing about Solar Cells being useful in relation to peak demand.
http://www.aemo.com.au/data/GRAPH_30QLD1.html
It would apear that peak demand rises from 6.am and only declines after 8pm. How do Solar Cells help between 4pm and 8pm? You then need to invest in plant that works during those hours.
Go further and look at the excel speadsheets regarding long term data.
This information forthcoming is highly deceptive.
Now if the network operaters were thinking
If the cost of marginal network augmentation is really $7,000.
Kind of makes sense for the network provider to give away an installed 2.5 kW system with every 2kw air-con doesn't it. It may not offset all the demand at the peak but the load demand for the other hours of operation also has value.
If not now, at least by the end of next year.
Damn, forgot that they get paid based on how much stuff they build.
Mathew Wright
Mathew Wright says,"Photoovoltaic is cost negative to install. The savings in the wholesale electricity market by introducing this low cost energy source at the time of highest prices. (prices of $12.50 per kilowatt hour when you are paying $0.25 at the meter) are greater than the cost of funding a FiT.
This is fact. The University of Melbourne Energy Research Institute have done a paper on this which shows this is the case."
Can I have the link please?
Just one severly underrated linkage
The one severly underrated linkage is that of peak energy demand due to air conditioning, and availability of electricity through solar panels.
Obviously storage will be the ultimate game-changer, but for now it will really be distributed generation, and this simply cannot be achieved with massive coal-fired power stations. Currently the closest "remedy" for the situation are gas turbines, that can very quickly adjust the output to the demand.
Beyond that, if (or when) we get to mainstream usage of electric cars, coupled with smart meters, we can finaly get the most out of cars: transportation while they are moving, energy storage when they are not.
Here's some facts...
- The solar industry will top 800 MW in 2011. At November 772 MW was installed. The represents 100% growth over prior year (2010 = 385 MW) with one month to go in the calendar year.
- By my estimates this represents an industry worth $3.36 billion (at $4,000/ per KW installed). At 10% That's quite some GST revenue!
- The average size system is now 2.5 KW versus 1 KW in 2008 and 1.5 KW in 2009. Government incentives represent approximately 40% of system cost versus 67% in 2008/2009.
- More than 300,000 households have added solar over the past two years. i.e. Hundreds of thousands of Australians are contributing their own money towards energy capacity in Australia
- Prices for solar are stable despite a 40% reduction in government rebates over the past 12 months. This indicates just how quickly prices are falling internationally and reinforces the point in this article that bureaucrats are unlikely to keep pace with the changes.
Provided residential solar continues to match this profile the industry is reducing peak demand, reducing wholesale electricity prices, encouraging energy efficiency and providing jobs and taxes.
The baseload question continues to rage and will continue to do so. In the interim I think the commentary in the mainstream media fails to acknowledge the contribution of the industry to Australian business right now.
Follow the money
We can argue all we like about what works and what doesn't.
However, it wont change the fact that the weight of investment funds is being directed towards renewables.
Even our mate Warren Buffett is jumping on the train.
5 min video about Gemasolar, the world's first 24/7 CSP+ plant
Gemasolar, near Seville, the world's first concentrated solar thermal plus molten salt storage (CSP+) plant to generate electricity 24 hours per day went online in July. You can see a five minute video explaining how the plant works at www.youtube.com/watch?v=7q9enAe7zjQ. Last month, Torresol Energy (joint venture between Sener and Masdar who built Gemasolar) and Sener won four of the eight awards at the fifth annual CSP Today International Concentrated Solar Thermal Power Summit. The awards were for "Commercialised Technology Innovation 2011" (Torresol), "Most Effective Project Development 2011" (Torresol), "Engineering Firm 2011" (Sener) and "Increased Dispatchability Solution 2011" (Sener). Presumably all these awards would indicate the plant is performing very well. There seems to be no reason that this technology cannot be scaled up massively in our sun-drenched country to supply a major part of our energy needs and a massive scale-up means a big drop down the cost curve.
Ferguson's Comment
Giles, I’m not sure the cost of renewable energy generating sources like PV is the key issue for the DRET draft white paper. I think Ferguson’s comment about nuclear might give a clue to the confidence level within the department about renewable energy generation being able to deliver the services needed. Included in this is the need for energy storage technology – frequently mentioned in the report.
No one seriously argues that renewable energy generation cannot power the country with adequate storage facilities. The key factor might not be the cost per MWh of PV but the additional cost of that storage to maintain grid integrity. What I hear Ferguson saying is if nuclear is a cheaper solution than RE plus storage then we should consider it.
I’m pleased to see you agree with that logic.
What this article high lights REPLY Peter Grinch
Solar Photovoltaic saves money. The Merit Order Effect means that using a Feed-in-Tariff to introduce PV into the grid actually suppresses the huge price spikes we see during air conditioner peaks. In fact Solar Photovoltaic (rooftop solar) correlates with 85% of the spikes) saving all electricity consumers on their electricity bills.
There is little in the way of integration issues. Germany currently has 22,000MW of photovoltaic and they are going fine. In the south of Germany 1000s of Megawatts are being backfed from the distribution grids towards the north of the country. Germany has 1 million grid connected solar systems.
We only have 1,280MW of capacity installed, and if we had the same per capita Photovoltaic as Germany we'd already have 6,000MW.
The 2012 Feed-in-Tariff in Germany for rooftop solar is 31.5centsAUD down more than half of what it was when it started back in the year 2000.
allbeen tried and found wanting John
Tidalscheme in WA failedon environmentalgrounds.
pumped storages - there isn't any possible in Australia as there is nohigh mountains - Greenies would opposeany wide scale clearing of forests.
I think John,that energy business people arethinking allof the angles all of the time, and plenty of small business people also. The problem with the so called visionaries is that they want the vision, but are clueless about what they dream.
The Bradfield Scheme and others litter the countryside, and they all have been looked at one time or another, and all fail for the same reason - they suck up resources (money, effort) for no net benefit - usually the way of the visionary who doesn't like to address such trifling matters.