The man behind the world’s first hybrid project combining wind, solar and battery storage says Australia will become uncompetitive if it maintains an electricity grid based around coal and gas in 2030.
Roger Price, the CEO of Windlab, which is about to begin construction of the first stage of the Kennedy Energy Park in north Queensland, says renewables will beat even existing coal-fired generators in both cost and flexibility within the next few years, and could replace thermal generation if the policy settings allow it.
In a wide-ranging interview on RenewEconomy’s Energy Insiders podcast, Price says the industry is disappointed by the federal government’s proposed National Energy Guarantee, describing it as a “fourth choice” scheme that will create uncertainty and push up prices in the next 12-18 months.
“The industry is disappointed,” Price says. “We’ve been through this a number of times. It’s creating another period of short-term uncertainty … that we have to deal with. It doesn’t help investor confidence, and it doesn’t help short-term activity in the industry.”
Price, whose newly listed company has projects in Australia, north America and Africa, says there are enormous amounts of capital focused on renewable energy around the world, indicated by this week’s purchase of a $5 billion wind and solar portfolio by US and Asia investment giants.
“The world has decided – whether they be Chinese, European, or American investors – to shift to renewables,” Price says. “All Australia risks doing is passing up opportunity to attract that capital and the opportunity to transition the network to a clean future.
“A thermal-based network in 2030 will be fundamentally uncompetitive with the rest of the world.” The Coalition’s NEG envisages that two-thirds of Australia’s electricity supply will come from coal and gas in 2030.
Windlab this week reached financial close of the Kennedy project, and will begin construction within a few days of the 43MW of wind, 15MW of solar, and 4MWh of battery storage, using Tesla technology for the latter.
It’s a world first combination behind one single connection, Price says, but even more impressive is “Big Kennedy”, a 1200MW project featuring both wind and solar, and storage, which Price says could deliver much of the region’s “dispatchable” power needs when completed.
Here is a summary of the interview:
On renewables:
“Solar pricing will fall to $US20/MWh by 2030, and wind will not be far behind,” Price says. So renewables will be “fundamentally cost competitive, even with existing brown coal.”
Windlab began as a CSIRO research unit that specialised in finding good wind resources. Price says the capacity factors of the company’s new wind projects in Victoria – Coonooer Bridge and the nearly completed Kiata – were “well over” 45 per cent.
Kennedy first stage was 45 per cent and “Big Kennedy” would be between 45 and 50 per cent. “That is the expectation of the modern wind resource,” he said.
Price says “the cost of renewables has dropped to the point where our modeling suggests that we could build our own connection into Townsville, as long as Big Kennedy was more than 600MW.”
On ‘baseload’:
“A lot of people talk about ‘baseload’. What we really want is low-cost energy that is able to meet network demand. And that is what we are demonstrating with low-cost renewables.”
On the proposal for a new coal generator in north Queensland, which is supported by the conservative parties, Price said: “I’ve yet to find anyone who understands how the network operates who thinks that is the case (that we need a new coal generator). Even the Energy Security Council, a lobby group for fossil fuel generators, agrees.
“Queensland has the largest penetration of coal in the NEM (National Electricity Market),” and the newest fleet. “You can’t run a network on 90 per cent coal. It’s just not flexible enough. I don’t know what a new coal generator would do. It could be built, but might never operate.”
On the National Energy Guarantee:
Price is one of a growing number of people who were initially hopeful about the NEG, but who now see it as potentially erecting barriers to renewables, protecting coal, locking in dominance of incumbents, pushing up prices and failing to meet emissions targets.
Price said it not a policy, or even a plan. Just an idea to have one.
“It’s very frustrating,” Price says. “The way I think about the next couple of years is as follows; we will have another debate, more discussion, more finger pointing over the next 12 months, then a policy framework running into the 2019 election. Then, who knows?
“It’s difficult to see a federal government of either colour resolving this issue anytime soon.”
On Kennedy and “Big Kennedy”
Kennedy will be the first time anywhere in world that wind, solar and storage is put together behind one connection point. With more storage, say 15-18MWh – something that could be added as costs come down, “it would do a very good job of meeting demand on a network basis.”
It could also keep the lights on in nearby Hughenden and Julia Creek in the case of a network outage elsewhere.
“Big Kennedy” which will be 1200MW of wind, solar and storage, will likely be mostly wind, because of all the other solar projects being built in Queensland.
The cost will be low enough that with a minimum 600MW it could justify its own transmission line to Townsville, but it is hopeful that the Queensland government commits to a new line that will pick up other projects like Genex and Forsyth to bring in more grid resilience and more efficiency.
Indeed, he says that Kennedy could enable the government to cut the cost of the $600 million Consumer Service Obligation (which guarantees the same price for regional customers as Brisbane and the south-east corner) by 10 per cent – a saving of $60 million a year on that metric alone.
On storage and dispatchable power
Price says storage does not need to be co-located with wind and solar plants, and might be better placed near the point of demand, and is concerned that policies should reflect and allow that.
“We are building Kennedy as stand alone hybrid behind one connection point. You don’t need storage near the generation source. You may be better off putting it near the demand centres.
“That means that projects like Kennedy can be done in a virtual sense, with generation in one place and storage in another,” he says, adding it is important that rules and policies allow that to happen. “Most technical experts suggest it is best to put it close to demand rather than generation.”
The role of the states
Price says the uncertainty around the NEG and federal policy means that the renewable energy industry will continue to rely on state-based initiatives. “Those states which are progressive and looking at how to evolve networks over the next 10-15 years are the places where investment will continue.
“It is interesting in the ESB (Energy Security Board) letter (to the federal government), that maps out the National energy plan, it does talk about states putting in their own targets and goals.”
This could allow states to have their own mechanisms. In any case , if a number of states “get on with it, we will see by early next decade that those states have fundamentally benefited from it.”
On the future:
“There is little we can do (about the cost of) gas, but we can build renewables … and renewable energy is putting downward pressure on prices, and that is only going to continue.”
Price said “hopefully we can get through” the politics and the electioneering, “and get down, as one famous politicians likes to say, to economics and engineering. And then the answer will become self-evident.”
You can hear the full Energy Insiders Podcast episode with Windlab’s Roger Price below.
