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Australia wind and solar power overtake gas in September

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Remember when we used to talk about gas as the “transition fuel” to a low carbon energy future?

It was not much more than a decade ago that energy policy makers and their energy market modellers thought that we’d be building combined cycle gas turbines all over the place to hit our emission reduction targets.

Yeah wind and solar were nice, but they weren’t ready for the big league of displacing coal. They needed several more decades of maturing and R&D to build up scale and get down costs. Meanwhile we could depend on trusty gas, and there was plenty of it in coal seams around Queensland and NSW.

A few years ago most of us wised-up that gas was hard to come by and increasingly expensive. Although not Liberal Party MP Angus Taylor, who wanted to scrap the RET based on an assumption gas would cost $5 per gigajoule for the next few decades.

According to the ACCC gas contracts are now being offered at anywhere from $8 to $15 per gigajoule.  Meanwhile contracts for wind power are being signed at around $55 to $65 per megawatt-hour instead of the $120 that Angus Taylor had estimated.

Gas as the transition fuel was built on incorrect forecasts like this one from Angus Taylor

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Thankfully energy investors didn’t pay much attention to Angus Taylor’s forecasting abilities, and the Australian Parliament batted off his call to scrap the Renewable Energy Target.  Otherwise this current gas crisis would carry far bigger implications for power supplies.

Since 2013 we’ve made progress, albeit haltingly, adding more wind and solar generating capacity to the grid. In Green Energy Markets’ September Renewable Energy Index we find wind achieved its highest ever level of power production at just under 1600GWh. Meanwhile rooftop and ground-mount solar chimed in with another 770GWh.  Combined their generation outdid gas for the fourth month since January 2016.

If we expand our lens to consider bioenergy and hydro as well, then renewable energy made-up 21.9% of power supplies across the main grids of Australia’s states in September. –

 

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Source: Green Energy Markets Renewable Energy Index – September 2017

Of greater relevance is that once the 3,702 megawatts of wind and solar projects currently under construction become operational their generation can be expected to exceed that from gas throughout the year.  This should come as welcome news to big gas consumers that have been struggling to get their hands on reliable gas supplies.

Megawatts of renewable energy projects under construction at end of September 2017

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Source: Green Energy Markets Renewable Energy Index – September 2017

All up these projects are estimated in the Renewable Energy Index to support 12,702 of jobs years’ worth of construction activity.


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Source: Green Energy Markets Renewable Energy Index – September 2017

In addition to the projects under construction listed above we should also remember the supplies coming from rooftop solar installations. Small scale solar installations continue to track close to the historical highs of 2012, with 96.6 megawatts recorded in September STC creation.  The 14,931 systems installed are estimated to have involved enough work to support 4,819 full time jobs across installation, design and sales.

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Source: Green Energy Markets Renewable Energy Index – September 2017

In addition they can be expected to save the homes and businesses that installed them around $180 million off their electricity bills.

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Source: Green Energy Markets Renewable Energy Index – September 2017  

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  • Peter F

    This is why a CET, RET of whatever is pretty much irrelevant. If power prices stay where they are UK and German funds which are flat out to earn 3% at home can get an ROI of around 20-25% even without REC’s in Australia. If prices fall after 3-4 years they will have already covered a significant proportion of their capital and will be able to generate an adequate return at $40-50/MWhr for the rest of their operating life

  • George Darroch

    That 100MW/month will continue for quite some time. Even in Queensland most houses still lack solar, and the smaller systems put on roofs a few years ago will be upgraded over time. In NSW and VIC the opportunity is huge.

  • RobertO

    If the COALition supports the Coal (base load payment or Capacity payment for coal only) then prices will also need to stay high to support them. Who knows what stupid measures they will take to support coal (aside from the current support that they already get)

  • David Hurburgh

    Poor old RenewEconomy is so busy pushing its barrow , it fails to see what’s happening in the real world

    https://www.nytimes.com/2017/10/16/business/energy-environment/liquified-natural-gas-world-markets.html

    • Diego Fuentes

      Oh god I hope that busts the Australian LNG industry and we stop carving up vegetation and farms in Qld to get the stuff and the export terminals decay and return to nature!

    • Mike Westerman

      The US is certainly not “the real world”! If you look at terminal prices for gas then add on liquefication and shipping, you can see US shale gas is going to be 30% or so cheaper than Australian gas but demand is rising even as US production has plateaued as exploration has slowed. But that still makes CCGT more expensive than solar or wind so pushing gas to peaking and standby roles. The only way the US can slow down investment in wind and solar is by putting tariffs on RE or rules to require “dispatchability” such as Turnbull has done today.

    • Richard

      David, did you read the last paragraph! And this from a Shell senior executive.

      “In the near term, gas will replace coal, in the medium term it will
      partner with renewables,” said Maarten Wetselaar, director of integrated
      gas and new energies at Royal Dutch Shell, “and in the long term it
      will take care of those parts of energy demand that cannot be electrified,” such as ships and aircraft.”

      Looks like even the fossil fuel industry know where we are headed.

      • David Hurburgh

        And of course we know the US story – The country with the greatest drop in emissions thanks to fracked gas.
        BTW Shell are pissed off , since they missed out on the US gas boom, hence their appetite for OZ gas , where they have arguably overinvested in dubious QLD CSG/LNG ventures

        • Richard

          Nothing wrong with Gas as long as methane emmisions are measured and accounted for. That should ensure it has a shorter interim life as lower emmision fuel.

  • Diego Fuentes

    Wow lots of invested money and new jobs to be lost with the LNP’s transition back to coal!