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Mid-level carbon price could deliver 100% renewables, undercut fossil fuels

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A carbon price of between $50 and $100 per tonne would make Australia’s coal- and gas-fired electricity less economical than renewable electricity, according to a new study out of the University of New South Wales.

A peer-reviewed paper being published by a research group at the UNSW has found that, by increasing the carbon price to a ‘medium’ level, all fossil-fuelled power stations in Australia’s National Electricity Market could be phased out and replaced economically and reliably with commercially available renewable energy technologies.

To reach their conclusions, UNSW researchers Ben Elliston, Iain MacGill and Mark Diesendorf performed thousands of computer simulations using hourly data on electricity demand and matched this with hourly input from solar and wind power for the year 2010.

The simulations compared the optimal economics of a 100 per cent renewable electricity system with that of a hypothetical new replacement conventional system based on the more efficient coal and gas-fired power stations than are in use today in Australia. The researchers used the conservative technology costs projected to 2030 by the Bureau of Resources and Energy Economics.

“We found that the minimum 2030 costs of the reliable renewable energy system were achieved with a large contribution from wind power: from 46 to 59 per cent of annual electricity generation”, said PhD candidate and lead author, Ben Elliston.

“Solar photovoltaic and concentrated solar thermal electricity with thermal storage were equal second in their contributions to annual electricity generation, typically 15-20 per cent each. Existing hydro and gas turbines burning biofuels made small but vital contributions by filling gaps in wind and solar generation.”

Associate Professor Mark Diesendorf said the comparison of the renewable system with the so-called ‘efficient’ system of coal and gas-fired power stations was made to get a feeling for the relative costs involved, but added that any such fossil-fuelled system was “completely unacceptable” in terms of greenhouse gas emissions – producing only 19 per cent less emissions than Australia’s existing fossil-fuelled system.

Subsidies to the Australian fossil fuel industry – believed to be of the order of $10 billion per year across the entire industry – were also ignored in the study’s costings.

“Despite the fact that most of the electricity generation in our scenarios comes from the fluctuating sources wind and solar PV, the least-cost renewable energy systems as a whole were just as reliable as conventional systems,” Dr Diesendorf said.

“There is no need for any inflexible base-load power stations. We can balance fluctuating renewable energy sources with flexible power stations, such as hydro, gas turbines and concentrated solar thermal power with thermal storage.”

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Source: UNSW

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  • http://Rusty2 Ron Barnes

    Great Read

  • Michael

    Why not suggest, or to lobby the government to set the price for carbon emission at $1000.00 a ton? In this way renewable energy will replace fossil fuels overnight. Let the government decide winners and losers rather than market forces work.?

    • Louise

      “Let the government decide winners and losers rather than market forces work.?”

      I would not want government to decide on winners and losers. That is the system we have right now and it comes at great cost to public health.

      I would rather have polluters to account for and pay for all externalities their dirty operations cause.

      They don’t pay for it now.

      They get away with not paying for the medical costs their un-ethical use of dirty fossil fuels cause to individual sufferers.

      They don’t pay the victims of lung deceases for the pain and sometimes early death they are causing with their pollution.

      They do not pay or only partially for the damage they do to real estate.

      As far as I am concerned all insidious subsidies to polluters should be stopped immediately.

      The current system is corrupt.

      There should be no more money spend on upgrading the electricity grid.
      It makes a lot more sense to make each house self powering.

      I know the fossil fuel lobbyists say it is not possible.
      Well, than I did the impossible. My house produces more electricity than it uses.

      It can be done.

      There is no valid reason to not make every building that consumes electricity, produce it own electricity.

      Instead of investing in the grid we should invest in battery technology. That makes sense. Upgrading the grid is short sighted and will result in massive stranded investments.

      The fossil fuel lobby can’t stop the continued decline in renewable technology costs.

      The current system steals from the public to give to some investors, which we do not need in the first place.

      Go 100% renewables by 2020!

  • http://www.bze.org.au Alastair Leith

    Good to see a refresh on the numbers. Confirms the Zero Carbon Australia Stationary Energy Plan with main discrepancy of SolarPV doing more in this scenario due to the fact that it’s install cost has dropped dramatically.

  • http://www.bze.org.au Alastair Leith

    I still see a role for a FiT targeted to specific renewable technologies to get them started down the cost curve the way solarPV has in last 20 years. Interesting that they think a Carbon Price can do this on it’s own. It assumes that most mythical of economic assumptions perhaps, the rational market — as opposed to what we have, vertically integrated fossil-fuel promoting Giant producer-retailers who will do everything to subvert a sane path avoiding climate catastrophes.

  • David Rossiter

    Interesting report.

    As Mark Diesendorf indicates the whole concept of base load was built around the inflexibility of many major power stations to meet demand variation. Hydro pumped storage was introduced to solve their problems.

    With renewables hydro pumped storage is still probably one of the best ‘battery’ options for storing energy. Was this option considered in the report? Where there are existing water storages and suitable topography daily pumped storage for renewables seems to make sense.

    Louise comments that the government picks winners and loosers at present.

    While it does in some areas, in other areas such as renewables and carbon under existing legislation the trading certificate component allows industry, commercial and domestic energy users and producers to pick the winners. That is the system we have right now for renewables and will have for carbon once we leave the fixed price period in 2015.

    I agree some of the additional subsidies that goverments have added to renewable energy over the years have seemed like picking winners but I think the wins they were looking for were political and relate to more vote capture than reducing emissions.

    • Ben Elliston

      David, we simulated all of the existing pumped storage hydro plants in the NEM (with the main one being Tumut 3) as well as the existing conventional hydro.

      • David Rossiter

        Did you postulate any new ones?

        • Ben Elliston

          No, for reasons explained in Section 4.1 of the paper.