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Australia’s solar juggernaut is coming – quicker than anyone thinks

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It is perhaps not surprising that the fossil fuel industry has hit the panic button and is pushing hard for the Turnbull/Abbott Coalition government to dump the proposed clean energy target and replace it with something that might be called a coal energy target.

They can see what’s coming – and there is probably no better way to describe it than a solar juggernaut.

The fact that solar will become the dominant energy source appears to be under no doubt, even the International Energy Agency admits it. And the CSIRO and AEMO appear to be in agreement that even behind the meter solar will account for around half of all demand by the 2040s or 2050s.

But what if it happened a lot quicker than that? Australia’s grid prices have jumped again to absurdly high levels, and this has lit a fire under the rooftop solar market, which will be followed by a major push by corporate buyers into the large-scale market. The solar sector could boom in ways not previously imagined.

Huon Hoogesteger heads Smart Commercial Solar, a company specialising in rooftop solar for businesses that has experienced a doubling in demand in the last year or so, and a three-fold increase in the current year. He can’t see it slowing down.

At this week’s All-Energy Australia conference he was asked to speak about the implications of a continued solar boom in the Australian energy market, and what it means for incumbent fossil fuel generators, and others – particularly the storage industry. It was a fascinating insight.

First of all, it should be noted that Hoogesteger focused only on solar – so his observations take no account of the 4.5GW of wind energy already in the market, and the likely doubling of that capacity in coming years (particularly as it defies doubters and matches the falling cost of solar).

But just taking a look at solar itself; Hoogesteger took data from Ausgrid to imagine what 30GW of solar looks like on the National Electricity Market (the eastern states). You can see that in the graph at the top of the story.

It is only a representation, but it clearly shows that at noon, it will remove all demand – something that the market operator is expecting to happen in South Australia and Western Australian within a decade, if no other measures are taken.

Hoogesteger says most forecasts are based around a continued linear uptake of solar, that puts the country’s capacity at about 21GW in the mid 2030s.

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This is what 20GW of solar looks like on the grid (without added storage). Hoogesteger applies three categories to existing generation: dispatchable, which can switch easily; vulnerable generation, which suffers financial losses; and critical generation, at which point there are serious engineering problems.

Even at 20GW, this is creating issues, without storage. And it is a situation that is not so far away.

Base on his experience, with a near doubling of just rooftop installations, the massive investment in large-scale solar, and the technology’s falling costs, along with high grid prices, he says it could happen a lot quicker than that.

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This graph above shows business as usual, compared to scenarios where solar grows at 30 per cent more than anticipated (green line), 50 per cent more than anticipated (orange line), and a doubling of the growth rate (red line).

The latter takes Australia to a grid penetration of 20GW of solar – rooftop and large-scale before the end of 2021. That may seem highly optimistic. But the other two scenarios – hitting this level between 2023 and 2027 is entirely likely.

“We are heading towards a renewable future faster than anyone thought they were,” Hoogesteger says. “But we are not thinking far enough ahead. This scenario could be only a few years away, but there is no policy development towards this.

“There is no shortage of money and there is no shortage of technical skill to get a more integrated grid, but there is a lack of vision and a lack of foresight.
“Our industry will continue to grow all by itself. If we are not prepared to inject storage, we are going to have significant issues, starting in three years time.”

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And here is what that may look like. After 32GW of solar and some 105GWh of storage, the grid is balanced out, more or less managing both the critical levels for engineering and the viability-affected that might be hit by changing finances.

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Of course, having a lot more solar – some 55GW – and accompanying storage, changes the situation dramatically, and highlights how the business model for energy markets will have to change significantly.

“By that time we are basically down to just a few coal-fired power stations – batteries and other storage will do it the rest of the time,” he says. “It just underlines how storage has got the most significant role to play in the future grid … and how close we are to the closure of most coal-fired power stations.”
And, of course, there is no telling whether the black line at the bottom will remain black – it does not need to come from coal. For one, this series of graphs does not include wind or other renewable sources, and there appears to be more than enough pumped hydro on the horizon to provide sufficient storage.

  

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  • joono

    The two other factors that will drive the demise of the coal industry will be the emergence of the hydrogen economy and the price of bitcoin/crypto mining.
    Eventually the profitability of generating hydrogen, and also of mining crypto currencies will seal the fate of the grid and network operators. This will come because those profits will be much greater than any tariff or PPA can compete with.

    • nakedChimp

      hydrogen economy? – pipedream

      bitcoin/crypto mining? – pyramid scheme, electronic gold, worse than zero lower bound FIAT currencies

      • RobertO

        Hi, So this is all a con job?
        https://dxtn4vayafzin.cloudfront.net/nikolamotor/uploads/press_release/pdf/17/nikola_bosch_091917.pdf
        They have also teamed up with Ryder and Thompson (both are large companies in the states)
        https://dxtn4vayafzin.cloudfront.net/nikolamotor/uploads/press_release/pdf/11/Nikola_April17_Update.pdf
        For Australia maybe yes but USA?

        • nakedChimp

          Nope, that’s BOSCH taking the Nikola owners and investors for a spin that pays back some of the expenses BOSCH made couple of years back developing FC(EV) tech for the German car industry.

          Did you notice ANY car company from Germany to come out with FC(EV)s?
          What? They all bring out PHEV or BEVs next and sell ICE for as long as they are legal?
          Really?
          They had all that tech in the shop and it was working!
          But still no FC(EV)s?
          Not even one?

          In a sense, you have been conned, yes 😉

          • RobertO

            Hi, Fuel Cell (FC) are missing the Hydrogen (H2) fuel stations and there will not be many in the citys, Coal to FC is an 90% loss of energy, never viable, however PV is DC and DC to FC is only about a 30/40% and PV are dropping in costs. Small cars and city trucks will be battery only, however long distance semis and local big farms tractors will be FC and battery combo, as its better than biodiesel. Also FC trucks may be lighter hence more load capacity.

          • jeffhre

            Biodiesel is extreme low volume and H2 is extreme high expense, in an industry that uses massive amounts of liquid fuel and cents per KM separate winners from losers – is there another choice?

          • RobertO

            Hi Jeffre, H2 is coming down in costs (coal to H2 was never on, loss to make AC, loss to transmit, loss to convert to DC, then they become the same losses, and I believe they solved the leakage losses of steel tanks with carbon fibre tanks). But PV to H2 is a DC connection, with only compressor losses and a tiney connection losses, and the price tag for PV will continue to drop. Nikloa plan is 100 MW solar to run the H2 fuell station, and rent the semi including fuel costs for 1,000, 000 miles. They are planning on trials mid to late next year. If I have read correctly the current plan rental is about the same as a current semi with out fuel costs. Bosch tried FC about 5 or 6 years ago , but there were no H2 fuel station, and nobody wanted to go that way and there will be very few cars with FC

    • My_Oath

      The hydrogen economy faces a hurdle I have never seen one of its proponents address. Its capital cost to roll out.

      • Ren Stimpy

        Dude

    • Tom

      I don’t think there will ever be a hydrogen economy, but there might be a role for methanol.

      I’ve done a few sums on methanol. It looks like it can be manufactured from steam, CO2, and electricity for about 40% efficiency, ie, 2.5MWh of electricity pumped in will produce methanol with 1MWh of chemical energy.

      The tricky bit is collecting the CO2. Methanol can be made from Bio-Gasse quite easily, but you need a carbon feedstock (wood, coal, methane, agricultural by-product such as stubble), and then you’ve got to get rid of the ash after the C, H, and O have been gasified. CO2 can be extracted directly from the air, but at 0.04% composition this is tricky too. Otherwise there is “carbon capture” from power stations.

      At 40% efficiency, and assuming no capital costs for the processing infrastructure (obviously a false assumption, although it seems to be the assumption that the LNP attributes to the cost of coal fired energy), the numbers are as follows:

      At $50/MWh electricity costs, methanol is cost-competitive with liquid transport fuels (petrol and diesel).

      At $10/MWh electricity costs, methanol is cost-competitive as a substitute for methane run through aeroderivative turbines (gas turbines).

      At $15/MWh electricity costs, methanol converted to electricity via a fuel cell (around 90% efficient) is cost-competitive with methane being run through a CCGT (maximum 60% efficient) to generate electricity.

      At $20/MWh electricity costs, methanol converted to electricity via a fuel cell is cost-competitive with methane being run through an OCGT (around 40% efficiency) to generate electricity.

      As you can see, methanol is only cost-competitive if electricity is really really cheap. This may well be the case in an over-built wind or solar plant when there is inadequate transmission (ie, transmission out of SA hence wind is curtailed), and energy would otherwise be wasted.

      • Mike Westerman

        Methanol is poisonous so hazardous to handle. I would think biodiesel fits the bill for the residual liquid fuels, say for aircraft. At present the feedstocks are competed for by the compositing industry for horticulture (waste kitchen oils, grease trap waste) or soaps and detergent (tallow from feathers and animal fat). During the recent high oil price period, biodiesel was economically competitive but at present prices it isn’t. Regulation on non-renewable fuels would of course drive the switch. It is obviously also going to be necessary to increase the use of fast ground transport like electric trains, as Japan and China have done, and Indonesia is starting to do.

        • Tom

          Poisonous – yes and no.

          Fugitive emissions or spills are much less hazardous than oil as they are metabolised by bacteria or algae (spills) or degraded into CO2 and H2O by light (vapour).

          Small amounts of ingested or absorbed methanol are harmless – humans even naturally produce methanol.

          Larger amounts (which aren’t all that large – 10mL swallowed could be enough) are a bit like cyanide (which is also harmless in very small quantities) – its metabolites (formic acid) inhibit the ability of cells to use oxygen, which initially suffocates the highly metabolic cells such as nerve cells.

          So yes, its more hazardous than petrol (which is still very harmful) if a kid drinks it or something like that, and this is a problem.

      • Michael Murray

        I think methanol will fuel SpaceXs new BFR rocket. Sydney – UK in 30 minutes.

      • Mark Roest

        Thank you for the calculations.
        You conclude after the first one, “2.5MWh of electricity pumped in will produce methanol with 1MWh of chemical energy.” If you then want to power a vehicle or equipment, you will get around 15% to 40% efficiency (maybe 20% if a relatively new car?); so 1MWh of chemical energy yields about 200kWh of motive power at the wheels of an ICE car. So overall, 2.5MWh of electricity yielded 200kWh at the wheel, or 1 out of every 12.5 units of electricity was delivered as traction on the road.
        With an efficient BEV, at least 90% of the electricity put into the car is delivered as traction on the road, or 9 out of every 10 units.
        With each new analysis, it becomes more clear that a high-performance battery-electric vehicle (or other work system) is the best course of action.

        • Tom

          Exactly. However, you can still store more energy per kilogram of methanol than you can store per kilogram of battery (even though 1L of petrol or diesel stores twice as much 1L of methanol, ie, a 120L methanol tank will get you as far as a 60L diesel tank).

          This makes methanol useful as a liquid fuel despite its inefficiencies of production and then of consumption.

          It might have more of a role running a small open cycle or combined cycle aeroderivative turbine (efficiencies approx 40% and 60% respectively) in edge of grid locations or remote locations that are not serviced by a large bore gas pipeline.

          Also, imagine if farm machinery could run off methanol, and a farmer’s on-farm solar array could produce methanol on a small scale during summer and winter (outside of planting and harvesting times), filling up the farmer’s methanol tanks so that there is heaps of fuel when the high demand times come around?

          • Mark Roest

            I like your farm use case! It takes advantage of the low cost of tanks for long term storage.
            60% in an aeroderivative turbine is interesting for aircraft use, but the flexibility, light weight and superior efficiency of smaller electric motors really shines with the new multi-propeller designs that create superior lift by (probably) creating a merged sheet of airflow, nearly laminar, over the surface of the wing. Whatever the explanation is, the fact is that the leading edge of the industry is excited by the results of 12 or 16 propellers along the length of a wing, and the potential to get off liquid fuels and their upstream costs and impacts, as well as their noise, pollution, and carbon emissions in use.
            So the question would be, how do the weight, efficiency and cost of a row of aeroderivative turbines compare to a row of electric motors, driving propellers or ducted fans?

          • JonathanMaddox

            Tom suggested combined cycle for 60%. I’m not sure anyone’s going to bother with a 60%-efficient combined cycle generator any smaller than several hundred megawatts, nor for short duty cycles, you would want to keep such a thermal beast “fired up” for days at a time (even while ramping power output up and down as required).

            And nobody would ever put a steam topping cycle on the back end of an aeroplane’s propulsion engine.

            Electrolytic hydrogen, as well as carbon-bearing things synthesised from it like power-to-gas methane, methanol and heavier liquid fuels using F-T or Mobil processes, are potentially useful for seasonal energy storage (where the capital cost of sufficient battery storage is prohibitive) and for weight- or volume- sensitive storage applications such as long-haul transcontinental flights (where the weight of sufficient battery storage is prohibitive).

  • George Michaelson

    Could you take a stab at approximating the effect of wind on this? Feels hugely incomplete without it.

    • Mike Dill

      Ten or twenty GW of wind will definitely crash that ‘critical generation’.

  • RobertO

    Hi All, The more the Coal, Gas, and Hydro game the market the more solar on house holds we will see. I was thinking 7 to 15 years before this happen but in the last 6 months I am beginning to change my mind. I believe that we will do this by the end of 2023. There will be more wind, more solar farms (and lots of houses, somewhere in the 45/55%)and a lot more storage in batteries, with pump hyrdo following in 2024 and 2025. It will also be an unplanned change over with the federal gov doing everything they can to slow it down, and people voting with there hip pockets.

    • Ren Stimpy

      more wind, more solar farms for the goddamn simple reason is they are getting cheaper…. much, much cheaper

  • Peter G

    The cycle cost of behind the meter battery storage will impose a de-facto time of use price premium for solar homes and businesses so I think the demand profile in the graphics is unreasonable.
    The current demand profile (represented in the graphs) exists in a world without any nuanced price signal – this must change.
    The demand profile predictions of only a few years ago have proved wrong, wrong, wrong – for simmilar reasons I recon that the afternoon peak shown above will dissolve into off peak daytime usage by behind the meter pro-sumers.

    • Mike Dill

      The second and third graphs show that result, as the storage skims off the ‘low value’ solar power to use later. With wind adding even more price suppression, gas and coal will probably be shutting down due to low prices AND low demand.

  • Chris Drongers

    I understand there is about 50GW of generation capacity on the NEM. The charts show a peak daily demand of 25GW. Is the peak actually this low or was a low demand day used to make the contributions of renewables look proportionally greater?

    • Peter F

      Annual peak demand is around 35GW but typical peak is 25-27 GW and at the moment there is 41GW of gas coal and hydro. However energy efficiency and rooftop solar are gradually reducing peak demand.

  • Peter F

    Giles I am sure the overall thrust of the article is correct, With about 4GW of large scale renewables committed by the end of 2019 and another 3GW of rooftop solar that is twice the annual output of Liddell, so my feeling is that Liddell won’t actually last till 2022. If Snowy and Southern Hydro chose to upgrade their gas plants to Combined Cycle and add wind to stretch the hydro capacity then the transition might happen even faster.
    however these graphs are a nice illustration but without including hydro, wind and solar thermal it is a bit of a stretch to suggest we need 100GWhr of storage. The hydro system can supply 110 GWhr over 14 hours and 20GW of wind even operating at 10% CF can supply another 40 even if curtailed for 4 hours around noon. Of course if wind is running about 40% then in 20 hours it will provide about 160GWhr so almost zero hydro is used.
    Throw in 2 GW of solar thermal running at 40% CF and 2GW of
    biomass/waste to energy landfill etc also operating at 40% is another
    40GWhr.
    Thus I think despatchable renewables are more important than storage in achieving a reliable low cost grid

    • BushAxe

      How do renewables become dispatchable without storage?

      • Peter F

        Dispatchable renewables are hydro, solar thermal with storage, landfill gas, biomass, geothermal. Instead of running these plants all the time you save them until the times where wind and solar are low. If they have fast response like hydro and landfill gas you can even pair them with combined cycle gas plants. The combined cycle gas uses 40% less gas than OC and runs in “baseload” mode and the hydro, landfill gas solar thermal becomes the peaker. This is how Tasmania worked their gas plants while rebuilding their hydro storage

        • jeffhre

          Add demand management, and virtual storage with software tying together the growing level of behind the meter DG battery storage.

  • Mark Roest

    What is the levelized cost of hydro?
    By late 2020 I see the levelized cost for the best batteries being 1 cent per kWh.

    • Peter G

      That would seem very cheap Mark, who do you see doing this. For domestic systems Finn at Solar Quotes puts the best Li battery today at 30c, I have seen some Lead Acid permutations around 20c excluding inverter cost, but I would be interested so hear of even cheaper permutations.

      • Mike Dill

        I also do not see batteries going that low. Hydro might be in that range in TAS.
        If we assume that the PW2 is 32c/kWh (per solarquotes.com.au), and that battery life might double, then getting down to 16c seems possible by 2020 or so, including inverters. Other chemistries might drop that another 60% by 2025.

        • Mark Roest

          Have you noticed that Tesla assigns a much lower cost to batteries that go into its cars, compared to the stationary batteries? Have you compared the quote from solarquotes with what they are getting for the 120MWh project? Was it something like $430 per kWh capacity? Are they doing a duty cycle that wears the batteries out faster? They are getting really good cycle life out of their car batteries, due to the controls they put into the battery management system, as well as the temperature control they exercise over the hardware.

          • Ren Stimpy

            Spit it out Mark. Tell us all what the fuck you are on about or shut the fuck up and let us get on with progress. Shit or get off the pot!

          • Mark Roest

            I just told Mike Westerman and Peter G exactly and concisely what we are about. Perhaps you did not bother reading those replies. Regarding my reply to Mike Dill, I am pointing out that other battery companies charge very large amounts for stationary batteries, and don’t charge that much for vehicle batteries, with the obvious, to me at least, implication that they could also charge less for stationary batteries.
            Now as for you, you can jolly well get polite or get out of the room.

          • Ren Stimpy

            I would love to see battery prices come down at the rate you have predicted. Right now in this very moment I’m leaving it up to you to make it happen. Battery Man.

          • Ren Stimpy

            Sorry I can be a bit surly sometimes. Though you should understand the cynicism of people who over the years have read a hundred clean tech blog articles about supposedly massive ‘breakthroughs’ in battery technology but then the hype fades away and they’re never heard from again. I don’t believe any of it any more until there’s a price tag.

          • Mark Roest

            I do understand, and accept. I have the privilege and the benefit of working with a pioneer for 4 years and knowing him for 6, and knowing much of the 20-year history of research and design that led to the point at which we started the battery company. It is very much living in an alternate reality, working day after day to steer it to a place at which it meets and merges with the reality of the world at large.
            As a foundation for that, I get to see why there are so many failures, and so much incrementalism, in the development path of the lithium battery. In essence, there is a relatively narrow path, with lots of pitfalls on each side, on which lithium can emerge from the massive de-rating from its theoretical potential. With saline base, most of the pitfalls disappear, and the theoretical potential is actually fairly close to that of lithium. With ceramic semiconductors, the weaknesses of historical saline batteries can be overcome, though that, too, involves narrow paths.

          • Ren Stimpy

            Great! Can you give us the estimated date when your technology will be on the market?

          • Mark Roest

            From the lab (alpha or beta): 6 to 12 months from now
            From the Pilot Plant: 18 to 30 months from now (likely 18-24)
            From the first Full Production Plant: 12 to 18 months after the Pilot Plant

          • solarguy

            LOL, You certainly have a way with words Ren!

          • Ren Stimpy

            It’s a cost not a benefit more often than not.

          • solarguy

            Can you elaborate on that a bit further please.

          • Ren Stimpy

            Put simply my big mouth gets me into more trouble than it’s worth.

          • solarguy

            Ah, you too. Anyway I thought the comment was funny. Looks like we both have a sense of humour.

      • nakedChimp

        He’s involved with something in that space (to answer your question).
        I have no other information or involvement.

      • Mark Roest

        Hello Peter, sorry for the delay.
        Before I respond, here is a link to another article about the threat of market manipulation of cobalt, a lithium battery ingredient:
        https://seekingalpha.com/article/4113417-minimize-teslas-cobalt-supply-chain-risk
        So now I am in a saline-based electrolyte, ceramic semiconductor electrode battery technology startup. After over 20 years of analytical and design work, and 4 years designing experiments during which over 6,000 test cells were hand-fabricated, we probably have a year to go before we order construction of a pilot production plant.
        Since our nonflammable, nontoxic materials’ average cost is about a dollar a pound, and they are all widely available commodities, we don’t face global market manipulation threats in our supply chain. We plan to adapt mature production technologies to our needs; they cost much less than the equipment for producing lithium batteries.

        Put it together, and we expect to price batteries from the pilot production plant at $180/kWh declining to $120/kWh capacity over time. With the full production plants, we expect to be able to undercut all competitors, starting at $100/kWh.
        We see evidence in our modeling and in test results that we are likely to be able to hit 5,000 cycles in the pilot plant, and 10,000 cycles in the full production plants. If you divide $100.00 by 10,000, you get a simple levelized cost (not including interest) of $0.01 per kWh.
        We might be as high as $0.06, or even higher, per kWh with hand-made prototypes, after we do some more design projects.
        Would anyone be interested in helping us take this around 3rd base and drive it to the home plate?

        • TweedCAN

          What is the energy density and cycle depth in this system? The compact design and low weight of lithium gives it an edge in most applications. Will these ceramic/saline batteries be comparable for the residential market or the vehicle market?

          • Mark Roest

            We had one cell that we estimated at 700 Wh/kg. We expect to be repeatably in the 500 to 900 Wh/kg range within weeks to months. For now, let’s just say we expect at least 80% depth of discharge without significantly reducing cycle life.

        • Bill Mastrippolito

          If you can make them at $180/kwh, I’d be really keen to get a few kwh at that price.

          • Mark Roest

            The $180/kWh is for Pilot Plant production; at this point we’re doing them by hand, and have one more phase of basic development to go, then a phase of integration, before finalizing the production plant design. The cells are designed for high amperage, and the series vs parallel layout is flexible.
            Would you like to support making it happen as quickly as possible?

          • Mike Westerman

            Mark – at that price point I’d be interested to trial a 10kWh pilot in the real world, if you were up to that and could provide some more details. Where are you based?

          • Mark Roest

            Mike and Bill, I’m based in Northern California, and the inventor is in Iowa.
            We’re still solving problems and getting ready for the first independent validation tests. Once that’s done and several more patents are filed and a funding round is in place, we could talk to you both, and others, about demonstration projects. We’ve thought about crowd-funding as a path.

            Timing guesses:
            From the lab (alpha or beta): 6 to 12 months from now, likely to start at US$250/kWh.
            From the Pilot Plant: 18 to 30 months from now (likely 18-24); likely to start at US$180/kWh and decline in stages.

          • Mike Westerman

            Great. You’ll find me on LinkedIn. Keep in touch.

          • Mark Roest

            Hello Mike, the difficulty is, I found 8 Mike Westermans on LinkedIn! Which one are you? I’m Mark Roest, on LinkedIn also.

          • Mike Westerman

            Ha ha,didn’t realise we were so popular! I’ve found you on LinkedIn and sent a connection invite. Cheers

          • Bill Mastrippolito

            Mark, Feel free to contact me via facebook messages. I’m keen to find out more and keen to be an early customer.
            https://www.facebook.com/bill.mastrippolito

    • Mike Westerman

      PHES is between 4-9c/kWh. I don’t believe batteries will be anywhere near 1c/kWh by 2020. We are already seeing the price being held up by strong demand from applications where users can afford a higher price, and I would expect that to continue for at least the next 5-10y.

      • Mark Roest

        Hello Mike, I infer an interesting question from yours; should we take advantage of supply and demand to raise our prices opportunistically, or should we wow our customers by blowing past the competition, the way the Tesla does as a car, or the way they did getting batteries installed and lights turned on within 24 hours of signing the big battery project deal?
        Perhaps we should, especially “where users can afford a higher price,” and offer discounts to survivors of hurricanes and fires, as well as to under-served communities, and financing to any who need it. What are your thoughts?
        Regarding timing, if we get the financial support we hope to get, we should be commissioning the pilot plant by 4Q19, and the first full production plant by 2020 or 2021. Note the statements in the reply to Peter G. above.

        • Ren Stimpy

          Should we blah blah seeing as ‘we’ don’t have a product for market yet????

          • Mark Roest

            Are you qualified to criticize? Do you have a product ready for market that solves the problems discussed the article? Have you developed a theory, then implemented it, and created a new class of semiconductors in the process? Do you remember that Hewlett and Packard started with great training, research, and intelligence, and invented the semiconductor, and did not have a product for market until the end of that process? And if you were in that league, or even near enough to it to understand what it is, you would not criticize people doing good work on the path, through multiple breakthroughs, toward a game-changing product that is fully ready for the market.

        • Mike Westerman

          I would image Mark that financiers would demand quite a premium on their investment due to your lack of track record, so that may hold your costs up for a bit till they exit. Good luck.

    • Tom

      Really difficult question. It depends on the dams and the annual energy. Some dams in some spots would be cheap to build and produce lots of energy, others would be the opposite.

      Gordon Below Franklin was supposed to cost about $400 million in the early ’80s, that’s about $1.5 billion in today’s dollars. It was supposed to produce about 1600GWh pa, so rough numbers, that’s $1 million per GWh per year (assuming zero marginal costs, which is wrong), or $1,000 per MWh per year.

      If you amortised this over 20 years that’s $50/MWh, if you called it 40 years it’s $25/MWh. These numbers are without taking into account interest or opportunity cost of money (income that would have been received if your cash was invested in something else).

      Pumped hydro is a completely different beast – they don’t produce new energy at all – in fact they consume energy. So their profits (if any) come from trading – their marginal costs of production are the costs of energy purchases multiplied by their inefficiency (or divided by their efficiency), and their profits (if any) are the revenue from their energy re-generated minus their marginal costs.

      LCOE is much harder to apply to pumped hydro as they don’t produce any new energy. The amount of energy they produce depends on what fraction of the time they choose to pump and hence what fraction of the time they choose to regenerate. The greater fraction of the time they pump, the higher their average marginal cost of production will be as they will be pumping less selectively at low-cost times. One can talk about LCOE of energy regenerated, but it’s really a different statistic.

      • Mark Roest

        I tried to figure out the momentary capacity by dividing 1,600,000,000 kWh by 8760 hours per year, got about 182,648 kW, assuming it runs 24/7 at full throttle. Divided $1,500,000,000 by 182,648 kW and got around $8,212 per kW rated.
        But if they only run it 12 hours a day full production equivalent, that would mean $4,106 per kW, or $4 per Watt — 4 times solar cost.
        It might be more useful to find out the total capacity that can safely be drained — like the depth of discharge in a battery; translate that into kWh or MWh. Divide $1.5 billion by that number to get the cost per kWh or MWh of capacity.

        Taking 40 years and $25/MWh, it’s $0.025 per kWh levelized cost when you want it, but not where you want it. You need a transmission line to get it where you need it, and if a bush fire crosses its path, you’re out of luck for a while.

        • Tom

          You’ve overcomplicated it.

          Projected power capacity of GBF was 350MW, long-term average output was 180MW = 1600GWh pa. Hence an implied capacity factor of about 50%.

          They could have proposed 700MW of power, but there still would have only been 1600GWh pa.

          Forget about power – annual energy is what LCOE is calculated from.

          And also – very true about Tassie’s transmission vulnerabilities. It’s always been a potential issue, but they are built well and maintained well, so it’s rarely been an actual issue.

  • Carl Raymond S

    There is growth in the rate at which the factories which make the machines which make solar panels are expanding. Extrapolate that!
    I believe we will hit the red line, then go steeper.

  • Will Brown

    this is horsehit from the solar industry whu h wont survive without subsities from the taxpayer , its a drop in the bucket to what is really needed . We need more coal fired power stations , the modern ones are clean , no pollution , only some carbon coming out the stacks.

    • Ren Stimpy

      Coal fired power stations require huge government assistance to be built and then 30-40 years to begin making a profit, if ever. Coal fired power stations belong to the old centralised and government-funded model of power generation, comrade. If a small renewable energy subsidy can break up your preferred communist-style centralised model into a much more distributed* model, then I reckon it cant be a bad thing, comrade.

      * Geographically distributed to lower network cost because generation is closer to the load, and ownership-distributed to improve competition among generators.

    • My_Oath

      If there is only ‘some’ carbon coming out the stack, they aren’t ‘no pollution’ are they.

    • Michael Murray

      Can you post a link to one of the modern “no pollution” coal plants. I want to invest quickly before anyone else does.

    • Ken Fabian

      Accepting the science on climate means accepting that the biggest subsidy isn’t to solar it is the continuing amnesty fossil fuels enjoy on externalised costs. The likelihood that amnesty will cease is a part of the calculations energy companies are making, but even with that de-facto ‘subsidy’ in place and the possibility the overt subsidies to solar and wind will be wound back the electricity industry heavyweights are finding that renewables with storage are economically viable and new coal is not.

      Renaming a coal plant ‘low emissions’ or ‘clean’ does not make it low emissions or clean.

      • Michael Murray

        Ah but it sows confusion. “Low tar” worked for awhile as well.

        • JonathanMaddox

          But the tar is the best bit *cough*.

    • mick

      i think you will find that regardless of lnp propping up flogged out plants or unwanted unviable new ones consumers will be able to tap into providers who wont use fossil fuels,it will be more than ethiical choice as costs for re are plummeting subsidised or not my 2 cents

  • RobertO

    Hi Will, This is a numbers game, to go coal requires tax payers money because no bank will bank roll either new coal mine or new coal power . The greenies will try to stop any attempt in the enviromental courts, and we have a change in governements possible in the states and federal (who known what will be the results). Solar farms and wind farms are selling their power with the LGC attached (see http://reneweconomy.com.au/origin-stuns-industry-with-record-low-price-for-530mw-wind-farm-70946/ ) and http://reneweconomy.com.au/frv-reaches-financial-close-100mw-lilyvale-solar-farm-72950/). In simple terms some farms are including the LGC as part of the contract for power supplied over 10 or more years. STC will finish in 2030 so any solar under 100 KW get a smaller rebate annually until 2030
    Carbon capture will not work. Nuclear will not work in Australia (10 to 15 years and too expensive) HELE are a lie, increase the energy slightly but 55% to 57% of the energy is still going up the chimney and then add and additional costs for removing polution from the stack.

  • George Darroch

    We’re currently at about 90MW capacity installs per month. With a rush of commercial, we could be at a lot more than that rather quickly.

  • Jolly Roger

    Where we are now reminds me of reading the computer articles in the Green Guide in The Age in the 90’s. Just a niche product few people understood back then but many were keen to learn as they could see the tide coming in. Look where we are now, just 20 years later ! Computers, tablets and smart phones everywhere. But the energy market characteristics are a bit different, as the more 20 year expected lifetime installations that occur the more the remaining market shrinks so companies fastest off the block have the best chance of making the most money. So a built in incentive for a big bell curve of activity.

  • Rod

    SA is a good indicator of how this is happening now. Sunny Sunday, wind and fossils meeting 900MW ish demand then as they say in the song, “here comes the sun” When our large scale solar comes on line, this will be even more pronounced and eat into the morning and evening peaks. The inverted bell curve is expected demand, dropping to less than 600MW
    https://uploads.disquscdn.com/images/aae2f980f1a13e8ddb6e44d28698f78d5bfadb12219796dc92810a6d21c62994.jpg

    • Tom

      You’ve got to love the 11pm demand and price spike. Old-fashioned demand management gone wrong in the new world.

      • Rod

        Yes, and I am genuinely surprised someone isn’t making an issue of it.
        I would like to know in dollar terms what it is costing the consumer.
        Hopefully solar diverters and heat pump hot water will sort it naturally.

  • Richard

    It is very difficult for government to manage the transition because the technology is moving too fast and the cost coming down too quickly. It is better to leave it to the market.
    However the government keeping it’s finger on coal fired power plants is wise. Simply because, left to the market, uncontrolled and unplanned closures of plants may crash the grid. Uneconomic coal plants may need government support in the short term wile renewable and storage infrastructure scales up.

    I believe the Turnbull governments approach is to leave it the market but ensuring there is enough “base load” in the system to cover the transition. Sounds like “base load” won’t be needed for long on the above prognosis.

  • RobertO

    Hi Richard, Finkle recommended 36 months notice to close coal power stations. COALition told AGL to come up with a plan at 39 months notice. They are interfering in company matters. I believe that they will dump Finkle shortly and we will have more knee jerk reactions from the COALition, not a sane plan of even where they think we as a nation are going or likely to go. All should be required to give 36 months notice. All notification beyond 36 months are treated as intentions only and not the formal notice of 36 months