After the announcement on Monday of the results of the second round of auctions in the ACT’s Big Solar program, RenewEconomy caught up with the architect of the scheme, environment and sustainable development minister Simon Corbell.
Here is an edited transcript of the interview in which Corbell discusses the results of the solar auction; plans for another 650MW of renewable energy by 2020; how to balance the costs; and how to counter the vested interests whose arguments against renewables are based on “fear and ignorance.”
Our story on the interview can be found here.
RenewEconomy: Are you happy with the result of this auction?
Simon Corbell: This is a great outcome for Canberra electricity consumers. We got large-scale solar at a very affordable price. And the auction process really demonstrates that having a competitive process drives the cost down.
We have got a big Chinese company Zhenfa willing to bid a very competitive price into the market, and the other bidder holding at the same cost as the Royalla project from FRV. So, a very good outcome – large scale solar at an affordable price.
RE: Could this reverse-style auction be adopted by other governments in Australia – federal or state?
SC: Well, I am going to continue to push them to consider it. What we have demonstrated is a low risk mechanism that delivers a competitive tension among parties to get a good outcome. We will see three large-scale solar farms up and operating here in the next two years. That’s a very significant outcome for a city of our size. What it does demonstrate is that other governments need to think again about some of the complex, lengthy and costly subsidy programs they have been running and consider a more flexible alternative.
RE: Has there been any interest so far?
SC: The main interest we have seen has been from organizations such as ARENA. They have been interested to see how they could adapt a process like ours to their own mechanisms. And who knows, someone said this morning Direct Action proposes a use of reverse auction, so who knows.
RE: Has Greg hunt been to your office to seek your advice?
SC: I haven’t seen any approaches from them.
RE: You want 90% renewables by 2020, you’ve still got a bit of work to do.
SC: We do. We anticipate around 690MW of renewable energy generation between now and 2020. We will now review the auction process, that will be completed at the end of the year, and then I will make an announcement on how we will use the reverse auction, or other mechanisms, to drive that 690MW target. We expect further solar, wind, and some waste to energy technologies as part of that mix.
RE: You currently have an auction system for up to 210MW.
SC: The current legislation is 210MW. But I intend to amend that legislation to go up to nearly 700MW, to allow us to facilitate that 90% renewables target.
RE: So the next round will be beyond solar, will there be banding for technologies.
SC: We are yet to determine how that will be done. We will be looking at wind and solar in the surrounding region as well as the ACT.
RE: Any thoughts about storage?
SC: Storage will be an option that we will be looking at closely. That is emerging. We can use a feed in tariff to bring forward of a large-scale storage solution, we are very interested in that, but this is yet to be determined.
RE: What about the cost of this. You have said that this is turning out to be less than half the cost you anticipated it to be. But is there a point where the consumers no longer by the green idea if there are added costs as you aim for 700MW …
SC: It’s yet to be decided if we use feed in tariff for the whole 700MW, it may not be. Our approach is that this is a progressive realization of the target, and at each stage we will assess the cost, and take that on a project by project basis. The analysis highlights that the realization of the action plan, including energy efficiency measures, shifting public transport usage, the net saving for households is about $30 a year in 2020.
We know what the overall cost and saving is, that is why we pursuing other things, measures that save costs as well as those that add costs. We have an energy efficiency law which is equivalent to the Victoria or South Australian energy efficiency improvement schemes, which save about 750,000 tonnes over three years and save households about $300 a year off their electricity bill. We have to take the complete picture when assessing the cost and benefit of achieving the target.
RE: You are a politician , and a student of politics presumably, how do you explain the general push-back against renewables that seems to prevail in the Australian political arena.
SC: Fear and ignorance, I would say.
RE: Driven by whom?
SC: Driven by vested interests who don’t want to change the energy system operates. Vested interests who are not interested in facilitating or being part of the shift to renewables, in terms of some generation interests, some network and distribution interests. But aided and abetted by politicians who are not prepared to imagine the different future. We need more people to imagine and demonstrate that a different future is possible and it is affordable.
RE: Is that an ideological thing, or is that a generation thing?
SC: I think it is human nature. People won’t support something they can’t imagine or see. That’s why this process is so important. Show them what it can do, show them how it works, and people realize what is possible.
Update: One question we forgot to ask during interview, but we asked via email later was: Does the recent fall in anticipated wholesale electricity prices change the metrics for the cost of the scheme?
A reply came this morning: If wholesale electricity prices fall, then the pass-through cost to ACT electricity consumers will increase because the ACT’s electricity distributor pays the solar generator the difference between the agreed feed-in tariff price and the wholesale price (this cost is passed on by the distributor to all Territory electricity consumers). However, this cost increase will be offset by the decrease in retail electricity prices that the fall in wholesale electricity prices should induce.