Think small and kick out coal
If Australia is going to meet its targets on reducing emissions from its energy sector and keeping energy prices under control, it’s going to need some revolutionary thinking from somewhere. And it needs to come quick, because the decisions taken over the next couple of years on spending tens of billions of dollar in energy infrastructure is likely to lock Australia into a path from where it will be difficult to reverse. Are the policy makers listening?
A new report by the University of Technology’s Institute of Sustainable Futures released today throws up a serious challenge to the network operators who plan to spend $45 billion on network upgrades in the current five year period, and will likely do the same in the next.
The report, Think Small: The Australian Decentralised Energy Roadmap, says one third of this expenditure – $15 billion in the current period – could be avoided if Australia adopted decentralised energy technologies, such as efficient use of energy, peak load management and distributed generation, which means generating plants of 30MW or below, such as small wind farms, biomass plants, solar farms, rooftop PV, small hydro, fuel cells, cogeneration and trigeneration. The study, completed in collaboration with the CSIRO and four other universities, says these are the quickest and cheapest options to reducing emissions and meeting peak demand.
The lowest-cost deployment of decentralised energy could achieve more than $2.8 billion in annual savings in consumer energy costs, and cut carbon emissions by 4.5 per cent below business as usual. But it could be more ambitious: the study found that 7,000 MW of coal-fired generation capacity could be shut down by 2020 and replaced, primarily, with distributed energy, renewables and some peaking gas plants. Not only would this cut annual energy costs by 5 per cent below business as usual, it would reduce 2020 electricity sector emissions by 35.8 MtCO2e per annum – a 15.8 per cent emissions reduction compared to BAU – and at a net saving to consumers.
Australia, because of its reliance on centralised fossil fuel power, has one of the lowest percentages of distributed energy in the world – at 5.4 per cent of capacity compared to the global average of more than 11 per cent – and its energy efficiency is also poor, growing at 0.2 per cent compared to 1.2 to 1.4 per cent a year in the best economies. The draft energy white paper released this week draws attention to those issues, but it is still a document that is centred around the build out of large, centralised power stations as the cornerstone of the energy grid.
This graph below is informative, because it lays out the cost of the technologies proposed under the plan.
Solar PV is rated the most expensive of the technologies, and some may contest the estimated costs. But Chris Dunstan, one of the report's authors, says whatever its current cost, it is clearly falling rapidly and it will play a critical role – both on rooftops, and in industrial areas where it can pretty much match day-time air conditioning loads.
“Solar PV is expensive now, but it is extremely important. If we ignore what is going on with PV prices, and we invest in centralised infrastructure, by the time we get to grid parity with PV, installing PV in the grid will just save us the cost of coal, not the network infrastructure. Which means that PV may not be able to fulfill its potential.”
The report analyses some of the principal roadblocks in the way of distributed energy. These include split incentives, lack of information, cultural barriers (mostly the lack of an environmental objective in the NEM), as well as regulatory barriers, price structures and a “payback gap." It recommends regulatory reform, the creation of a “distribution fund," tariffs to support distributed generation, and a “target” of 3000MW of peak demand reduction below business as usual by 2017.
Indeed, the report says it is going to need some radical thinking from policy makers and other decision makers. Mostly, they need to get over the idea that bigger is always better, an idea that has taken hold since the centralised-supply approach based on fossil fuels became dominant during the 20th century.
“We sought to capitalise on economies of scale and move the adverse impacts of centralised energy supply further away from the communities that use that energy,” the report notes. “For decades, this strategy was very successful, raising the living standards of billions and (usually) reducing urban pollution. However, in recent decades, as the economic cost and environmental impact of the centralised strategy has become less acceptable, there has been growing interest in a new paradigm – one which combines the local, low impact principles of the past with the advanced technologies of today.”
Not that anyone is seeking to trash the networks. “We want them to have a conservative nature,” says Dunstan. The evolutionary approach is probably more likely to be successful. But we needs a sustained commitment to reform – but that requires a revolutionary change in the way we think about these issues, and in leadership from policy makers and decision makers.”
Comments on this article
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Mathew Wright
Is now a moderator. I post an analysis of Beyond Zero's plans and my post is removed.
Mathew you have shown your true colours. You are afraid of any debate.
RE RE RE Go Gas REPLY Sokkha Dunstan
The cost of Coal Seam Gas firing gas co-generation is far higher if you start looking at the total lifecycle costs.
Including if you bring gas into cities, which means you are bringing pollution into cities when we've spent the last 100 years trying to get pollution out of the cities.
Also there is nothing distributed about gas co-generation and tri-generation units. They are part of a big ugly centralised oil and gas network. At the other end of the co-generation equation is a farm in the Liverpool Plains or Gunnedah with reduced production or worse contaminated land and water which is no longer arable.
By all means get decentralised power out there. Our upcoming Zero Carbon Australia buildings plan will show how we can get 25,000MW of Solar Photovoltaic on an upgraded electricity grid. This combined with smart meters and other demand reduction methods such as eliminated the domestic gas network, upgrading our buildig envelopes and using renewable ambient heat will give us the most secure energy supply that we could possibly have.
I have 15kW of Solar Photovoltaic with battery backup, I have Edson heat pump boosted evacuated tube solar hot water, I have 6 air conditioners for renewable heating. I am a big fan of decentralised power generation and probably have one of the highest amount of onsite renewable generation of any inner city domestic abode in Australia.
RE RE RE Go Gas REPLY Matthew Wright
Matthew,
The grid is a very expensive asset for delivering electricity from centralised power stations.
The report, Think Small: The Australian Decentralised Energy Roadmap, says that $15 billion of investments planned to upgrade the grid over the next 5 years is unnecessary if Australia adopts decentralised energy technologies ...which means generating plants of 30MW or below.
By 2020, the report says that domestic electricity consumers will be saving more than $2.8 billion a year off their electricity bills by adopting these decentralised energy technologies.
Perhaps it is time to re-evaluate the most economic ways to collect and use solar energy...
RE RE RE Go Gas REPLY Richard Simpson
The grid is a great asset for efficiently delivering electricity. That's why under the Zero Carbon Australia stationary energy plan scenario developed by BZE and University of Melbourne Energy Research Institute shows how central solar thermal w/molten salt storage power plants - some fitted with biomass pellet cofiring will reliabliity power your home heat pump booster for your solar system.
100% renewable grid is just waiting for a compotent government and all the grumpy old men to get out of the way.
It only seems strange now
In a world that's serious about climate change and energy security, it wouldn't seem strange to have all the heaviest energy users stop production when the renewable energy supply reduces.
It won't seem strange in the future when the price of energy goes through the roof and we start feeling even worse effects of climate change.
We do it for water, kind of, why not energy?
On decentralisation. It doesn't make any sense to decentralise fuel burners, not even renewable fuel burners. It does make perfect sense to decentralise clean energy like PV.
If you can call it decentralisation. If you think about an entire suburb with solar PV, as one massive clean energy power station perfectly integrated into the location of their dominant customer, with very little grid connection costs, then it doesn't seem so much like decentralisation.
We do still need a national grid to connect the spread out big solar thermal, solar PV and wind generators, for energy security, combined with rooftop PV. What we shouldn't need is all that money spent on upgrades of domestic distribution networks because of a peak air conditioner demand a few afternoons every year. Take all that money and spend it on smart meters, rooftop PV, and EV car chargers instead. The retailers should be doing this. I shouldn't even have to buy a rooftop PV. The retailer should be offering me the system for free as his most profitable means to supply me the energy I use.
Re.Re.Re Go Gas
It has now been cloudy and raining in SE QLD for 7days, what do I do now.
PV output is down 75% and I have had to use the booster on th Solar Hot Water.
There is no getting away from the Grid, even with storage?
Re: Re: Go gas!
Matthew,
The Decentralised Energy Roadmap is to save $2.8 billion a year from 2020 off electricity bills, and avoid an unnecessary investment of $15 billion every 5 years in grid infrastructure.
Your solar PV installation will not deliver these savings. On cloudy days and at night it will not deliver anything.
Decentralised gas generators can be very clean. The energy supply can be developed so that it removes carbon dioxide from the atmosphere. No solar PV installation can do this.
For instance, forest plantations absorb carbon dioxide. Timber produced from harvesting can permanently sequester some of this CO2.
Wood waste can be gasified with solar thermal energy. Solar energy collected by the forest, and by the solar thermal gasifier, is stored in the producer gas and may be converted to electricity any time of the day or night.
Coal Revenue
I agree that we need decentralised power for consumers but unfortunately our treasury is addicted to the revenue from coal, which receives something like $2billion per month from the industry.
The report, Think Small: rooftop PV, - PV elec cars
all new EV's - like Ford's new one - should have flexi PV film (like the dyesol system?) stuck to the roof (hood & bonnet) so they can trickle recharge the battery whilst sitting in the car park under the blazing aussie sun .
the PV panel & tinted windows would act as insulation , reducing the internal ambient on the way home.
now this would be truly "Australian Decentralised Energy" - and reduce the demand from the grid - more food for thought !
RE: Go gas!
Ceramic Fuel cells is ridiculous at 40K to burn a fossil fuel.
For 40K I could install 20kW of solar photovoltaic - 100% renewable energy producing 30kWh of clean renewable electricity per year.
I can drive heat pumps for space and water heating and be a considerable net exporter to the grid.
Gas grids are very leaky and course a huge amount of global warming due to the fact that they are leaking methane. In South Australia for instance the domestic gas network loses more than 8% of the gross volume of gas going through it. This is shocking and makes ceramic fuel cells a very dirty generation option.
Reply: Resource corporations want cheap centralized power
Ben,
To answer "The 'trade exposed energy intensive' resources industries, in particular bauxite and metal smelting are the ones promulgating the myth and exerting the pressure for fossil base load power and the centralized networks that go with it."
solar
I can rent out the front paddock for an advertising billboard, or wind turbines, so why can't I rent out the roof of the shearing shed for solar panels? And why can't we put solar panels (where possible) on large government buildings (hospitals, schools, police stations etc)? Apart from some energy-intensive industries such as steel, why can't the rest of us think smaller? This doesn't have to be that hard ...
Kick out coal
An interesting article and some great comments too! Thanks.
I suppose one of the big questions in government is differentiating between the legitimate provision of infrastructure on the one hand and pandering to the needs of special interests on the other.
It was interesting to see that when Rio and BHP wanted to share their rail assets in the west, governments saw this as cartel-like behaviour. If we sold power from the grid to all-comers at the same rates, I presume that aluminum smelting would stop or, if there was a profit in it, the smelter would generate some of its own and continue that way. If the grid were not looked on as a public asset, then it would would be hard to tell a smelter who happened to generate surplus power who they could sell it to.
I suspect that if we made everyone pay the domestic rate, large users would leave the grid in order to maintain their supply at predictable rates. They would make decisions as to how to generate their power based on costs pertaining in the market, including the cost of carbon emissions.
This all makes climate modelling sound like child's play to me!
Resource corporations want cheap centralized power
The 'trade exposed energy intensive' resources industries, in particular bauxite and metal smelting are the ones promulgating the myth and exerting the pressure for fossil base load power and the centralized networks that go with it. In WA Residential and commercial together use less than both the mining and manufacturing sectors, who are hooked on cheap fossil energy at less than 6c/ kWh.
These coorporations (>50% foreign owned and including some of the world's biggest e.g. BHP, XStrata, Rio and Alcan) have, through thier huge power over Government and media, obtained 65-95% exemption from the carbon price so they can still get this cheap fossil power power and centralized networks at our expense. We pay for the networks and we pay more of for carbon to compensate them. In other words we will pay for them to maintain their 20- 35% profits margins, when they could still make adequate profit and pay the carbon price if Govt had the guts to make them.
Until this is exposed and their carbon price exemptions cease we will continue to get development of centralized networks, even though this is the unsustainable 'dinosaur' way to go.
Decentralised power?
Australia is the most urbanised developed country in the world, a very good reason why we have very centralised power generation.
And given the incredibly high NIMBYism dispalyed by our citizens it is very hard to imagine any sort of decentralised power supply having an easy approvals time.
We love our lights to come on whenever we want and have all those evil power generators out of sight and hence out of mind.
PV offsetting aircon
In industrial areas PV can work very well to offset peak demand generated by aircon. But the peak demand domestically, and in total, is around 5pm in summer. People come home from work and put the aircon on max.
With smart metering, there should be sufficient incentive for pre-cooling. E.g. user with aircon and PV on variable rate net metering would arrange the aircon to come on from 2pm to 4pm powered by their own PV. They could sell the little bit of output after 4pm at peak rates to the grid while enjoying a nice cool house.
Go gas!
Agree. But we should be burning gas using ceramic fuel cells. Pity this government is so fixated with pandering to the Greens ridiculous demands that they ignore valid solutions to reducing co2. It's always been easier for this government to label those people with alternatives that are more effective and better priced as sceptics than it is to actually do something about it.
Low Cost of Biomass
This is a really useful report by the UTS. I noted especially the cost of Biomass versus Coal in the chart reproduced here. This is quite timely given the Greens are involved in a ferocious campaign right now to have burning of residue from Native Forest timber activity banned as a source of renewable fuel.
I believe this is a colossal mistake. They are motivated by an ideological hatred of any form of timber logging. It has nothing to do with reducing carbon emissions. All over Australia huge quantities of timber residues are burn't for reasons of disposal releasing emissions for no net benefit. This is nuts in an energy constrained world. Most of this happens in regional centres where distances from centralised generation and subsequent transmission losses are high. It's a no brainer to use these residues for power generation, heating etc and the UTS paper illustrates why Biomass and other small scale distributed generation capabilities have a lot to offer. Mitch
Unsustainable prices.
The present low prices for solar PV are due to a worldwide downturn in demand for that product. It has been a severe problem for PV manufacturers, with many concerns going out of business. You cannot project fabulous low costs for solar PV power based on the firesale prices suppliers are presently being forced to sell at.
Think small- like the fridge.
Fully agree with you Giles- decentralise. Which is where the nuclear battery comes in - a plant , the size of a fridge powerinf 20,000 homes withno CO2 emissions using our resources. Sounds like it ticks all the boxes.
Cost-effective low-carbon alternatives
I always remember this quote from David Roberts of Grist, back in 2009:
"Cost-effective low-carbon alternatives are plentiful. Many remain unexploited not because they can't compete in a free market, but because there isn't one. A variety of market barriers, market failures, and behavioral failures plague the energy sector: monopolies, oligarchs, myopic accounting, misaligned incentives, perverse regulation, information bottlenecks, immature business models, cultural inertia, plain old bad habits. Underutilization of cost-effective clean alternatives is especially true in efficiency."
Solar reverses aircon costs
Above we have solar "can pretty much match day-time air conditioning loads."
And from:
http://www.climatespectator.com.au/commentary/energy-white-paper-highlights-package
We have:
" A 2kW (aircon) unit therefore adds $7,000 to the (network) cost."
Doesn't follow that installing PV to some degree offsets the cost increment of aircon. So if an aircon unit adds $7,000 in cost then doesn't a neighbour installing say a 3kW solar unit take off $7,000 in network cost by neutralising the effect of the aircon?
Where solar performance is good (lots of sunshine) then we can expect aircon demand will be high so the solar electricity won't travel very far on the network to find the aircon load.
One thing is odd about the article above. Planned large solar thermal plants in the US are being switched to PV. That US market action directly contradicts the above article's notion that PV is more expensive than solar thermal. PV is a *lot* less expensive than it used to be, even a year ago. Panels now retail below $1/Wp and inverters and other BOS costs are a lot cheaper as well.
It seems that the falling PV costs continually surprise the analysts. It certainly has had ORER baffled for years now given their consistent failure to estimate installation rates. Being behind the curve makes it hard for them to properly advise government and this has led to nasty economically sub-optimal policy shocks.