Last week it was quietly announced that the Australian Cleantech Competition would hitherto be known as the Australian Technologies Competititon. It was another subtle reminder of how the new Australian conservative government is going about the re-phrasing of Australia’s energy future. Anything that involves the words climate, clean energy, or cleantech are considered projects or institutions -non-grata.
In the public arena, it’s not just a rephrasing that’s taking place, but a concerted attack on renewables. For the second time in as many weeks, Prime Minister Tony Abbott has criticized renewable energy, its intermittency and its supposed costs – repeating the force-fed lines from his main business advisor, Maurice Newman, extremist blogs and some mainstream media, and encouraged by the fossil fuel incumbents, whose greatest fear is that their coal and gas-fired generation is being sidelined and rendered unprofitable by the growing capacity of wind and solar.
Abbott’s complaints fail on numerous counts. For a start, the renewable energy target is having little impact on retail prices. The Queensland Competition Authority notes in its latest finding that the large scale renewable target (the apparent subject of the new government’s attacks) will cost Queensland households $26 a year, or about 1.3 per cent of their bills – about half the rise in retail bills caused by soaring gas prices.
Wind and solar do not need new back-up power. South Australia has got to 31 per cent wind and solar without the need for any new equipment. That’s because most of the peaking plants that respond to changes in demand – and supply – already exist to cope when a whole bunch of people switch on air conditioners at the same time, or when coal or gas fired generation has unexpected shut-downs, such as when the Millmerran coal fired generator shut down last March, or the two major gas generators lost large amounts of capacity in South Australia. The difference with wind and solar is that at least their output is predictable.
Abbott’s outburst are cheered, and sometimes inspired from the sidelines, by elements of the mainstream media. The Australian took another bash at Germany last weekend, which it likes to cite as what happens to a country when it moves away from baseload – coal and nuclear – and towards renewables. The newspaper’s principal complaints were there were more coal plants, more emissions, and more costs.
Germany is the nightmare scenario for the fossil fuel industry because if the biggest manufacturing economy in Europe can wean itself off nuclear, coal and gas, then so can everyone else. Which is why its policies are attacked with such gusto.
What The Australian omits to tell its readers is that coal-fired generators coming on line now were planned and construction was begun well before Fukushima, and before the extent of the rapid growth in renewables was acknowledged. The net impact is a lot more coal projects are being abandoned. The country’s big three utilities – RWE, E.ON and Vattenfall, have made it clear they intend to build no new fossil fuel plants, because some of them are having to close new plants almost as quickly as they are opened.
Investment bank UBS, for instance, predicts that one third of Germany’s fossil fuel capacity will need to be closed by 2017 because it is no longer economic, and they are no longer needed. Germany industry has not been affected by the renewable energy rollout because it is only charged the wholesale price of electricity, plus a margin. Its costs have fallen substantially in recent years, not risen.
To try and illustrate its lament, The Australian sought to create drama by pointing to a period in early December when renewables contributed just 5 per cent of its generation needs on some days. I presume these charts reflect the issue.
Actually, it’s not the dips that are worrying the incumbent utilities, or the grid operators, it’s the big lumps of clean energy that are forcing their generators off line when they produce. Currently, Germany gets just less than 25 per cent of its electricity from renewables over a year, and this will rise to around 60 per cent by 2035 (the new government’s new target). As that happens, those gaps will disappear, the lumps will get bigger, and new storage solutions will mean there is even less need for fossil fuel or “baseload” generation. A similar scenario would take place in Australia, which is why the incumbents are so keen to neuter the renewable energy target so they can extend their revenues as far as possible.
The problem with the current debate in Australia is that much of this information will simply be ignored. The new government – like its noisy boosters and spokespeople – has shown itself to be un-interested in clean technology, even when it makes environmental, economic and financial sense.
Take the Clean Energy Finance Corporation as an example. It has now established that it will be able to do its job of investing up to $10 billion in low carbon technologies, while achieving up to half the government’s emissions reduction target, and return a surplus to the budget.
Too good to be true? Must be. Because even though Treasurer Joe Hockey accepted the CEFC’s numbers in his budget update just before Christmas, the government has given no indication it will abandon its attempts to scrap the CEFC.
As some industry insiders suggest, it’s about time the PM accepts that Australia has a “super-abundance” of wind and solar, just as it has of coal and gas. The only difference being is that wind and solar generation will be cheaper – as the government’s own economic advisor suggests – and cause a lot less pollution.
The renewable energy industry is currently fearing the worst. If, as The Australian suggests, the only two cabinet ministers supporting the renewable energy target are Industry minister Ian Macfarlane and environment minister Greg Hunt is true, then there is big trouble ahead.
Macfarlane, it should be remembered, was responsible for neutering John Howard’s MRET nearly a decade ago, but the new government is so extreme he is now considered a moderate. Hunt is said to have little within cabinet. The reality is, however, that there is more support than The Australian lets on. It may be less an observation of the Cabinet dynamics than a threat.
Of course, if the PM is serious about limiting electricity price rises, he’d focus on reigning in network charges which, according to every analysis, has been by far the leading cause of electricity price increases. Of course, this might not be so easy in NSW and Queensland, as this would mean less revenue for those State Governments as they own the networks. And more renewables mean less revenues for the generators – be they government owned or private.
RenewEconomy Free Daily Newsletter