Now that at long last the RET debate is settled, what next for advocates of renewable energy?
Since the first worrying signs that the Coalition may not support the Renewable Energy Target’s 41,000 GWh target before the 2013 federal election, the defence of the RET has, quite understandably, consumed much of the time and resources of the renewable energy sector.
One of the costs of this political fight has been that much important analysis and public debate have been deferred, especially around the question of renewable energy targets for 2030 and beyond.
With the near-term crisis now settled it is time to reanalyse the cost and technical feasibility of achieving very high renewable energy penetration levels. Analytical work needs to be done now because the national conversation about increasing the RET for the years 2030 and beyond will inevitably start soon. The next election is never far off.
Perhaps the best way to achieve this would be to update and extend the 100% renewable energy study completed by the Australian Energy Market Operator (AEMO). This study was commissioned by the Gillard Government under pressure from the Greens as part of the Multi-Party Climate Change Committee (MPCCC) agreement. It was published in 2013, with most of the analysis completed in 2012.
AEMO was asked to conduct the study because one of their roles is to oversee the strategic development of the national electricity grid. Every year they publish a National Transmission Network Development Plan, providing a view of the efficient development of the network over a 20-year planning horizon. Similarly AEMO produces an annual Electricity Statement of Opportunities which provides an assessment of supply adequacy in the National Electricity Market over the next 10 years. Not surprisingly the MPCCC concluded that AEMO was well-placed to study the least-cost way of adding significant amounts of renewable energy capacity and any associated network infrastructure, and that they ought to be considering these questions.
While AEMO grumbled about the task, by most accounts they did an excellent job of modelling the technical feasibility. The results were very interesting. First they showed that it is technically possible for renewable energy sources to meet all of Australia’s demand in 2030 and 2050, with the same level of reliability as our current electricity system. They concluded that this could be achieved by relying on a mix of biomass energy, geothermal energy and solar-thermal with storage to meet demand during periods when output from cheaper variable sources (wind and PV) were inadequate. This pivotal finding helped counter the myth that renewable energy cannot be relied upon.
AEMO’s costing, however, was only half complete. Unfortunately they failed to compare forecast costs against any reference case (such as business-as-usual) and they also ignored several important costs and benefits. Others have written about this and concluded that, based on a range of studies, AEMO’s costing suggests that a 100 per cent renewable power sector may be cost competitive with a fossil fuel based sector by 2030.
That was three years ago. Since then renewable energy and especially energy storage prices have fallen faster than expected. In 2015 it is obvious that battery storage will have a pivotal role in our future electricity system. At the time, however, the AEMO report said “Given the chosen mix of generation from diverse sources across the NEM, investment in specific storage solutions such as batteries and compressed air did not emerge as being economic for large-scale deployment and were not included in the modelling.” [Emphasis added].
To help inform the next major national (or state based) conversation about future renewable energy policy it would be very helpful if AEMO was requested to update and extend their 2012 study, noting that this time they should:
- compare forecast costs against one or more reference scenarios (including a range of future greenhouse gas emission costs
- model a range of targets (say 50%, 75%, 95% and 100% scenarios by 2030 and 2050)
- factor in some of the main costs and benefits which were ignored in their first study (especially socio-economic benefits such as health, new industries and jobs)
- use updated cost data, including from the 2014 Australian Energy Technology Assessment
- publish the model to allow independent experts to make use of it (it is, after all owned by the taxpayer).
Such an update would help counter negative sentiment about renewable energy by demonstrating once again that it can be reliable and that the cost of achieving high renewable energy contribution levels are in fact similar, or perhaps better than business-as-usual projections. AEMO is the obvious organisation to do this because they are well-respected, conservative and this sort of long-term forecasting is one of their key roles.
Some will worry that this suggestion is not politically feasible, however, note that this is an initiative State Governments could drive. The National Electricity Act includes that “The MCE [the Ministerial Council on Energy] or a Minister of a participating jurisdiction may ask AEMO for information, a report or other services.” It is also worth noting that the first AEMO report forecast the need for significant investment in transmission infrastructure which would presumably increase the value of State-owned network assets. A point that may well pique the interest of certain State treasuries.
Oliver Woldring is a Senior Consultant at IT Power (Australia).
