Australia’s electricity grid reached a 19 per cent share of renewable energy in the year to June 30, and with a host of new wind and solar capacity to be added in the next two years will meet its 2030 target for emissions in the electricity sector nine years early.
The latest analysis from The Australia Institute, in its regular energy market audit, is just the latest in a string of reports that highlight how ineffective the Coalition government’s emissions target are.
The TAI suggests that the NEG will inspire just a 4 per cent cut in emissions between 2020 and 2030, but in effect this will all be met in the first year or two because of the wave of current investment.
After that, the emissions component of the NEG will be all but useless, because it will already be met. That will make it a ready partner with the reliability obligation, because that will not be triggered – according to the Energy Security Board – because there is no impending reliability issue.
As an argument of progress over business as usual, the NEG looks fairly hopeless. Indeed, many argue that it is worse than nothing because of the potential barriers erected by its sheer complexity, and possibly by the push within the Coalition to build one, and possibly three, new coal-fired generators.
“On current policy settings, the 26% target will be achieved in 2021-22,” the report author Hugh Saddler says.
“It begs the question of ‘what next’? Are we really going to see no emissions reduction from the electricity sector for almost a decade? Unless we adopt more ambitious targets the renewable industry will enter another period of great uncertainty.”
Saddler, like so many others such as Green Energy Markets and Reputex, argues that the NEG could and “must” do much more. He notes that if Queensland meets its renewable energy target of 50 per cent by 2030, the country’s electricity sector emissions would have fallen 36 per cent by 2030.
The problem is that the Coalition government’s failure to aim for a higher target – because of unrest in the Coalition ranks – passes up an opportunity for cheap abatement in electricity, thanks to the plunging cost of wind and solar, and imposes unneccessary and heavy costs on other industries.
“In the absence of stronger emission reduction targets, the currently booming wind and solar generator construction industry is at risk of completely collapsing after 2021,” the report says. (Although RE would add that the corporate and state markets may take up some slack).
The TAI data shows that in the year to June 2018, total renewable generation supplied 15.7 per cent of National Electricity Market generation, and of this variable renewable generators (wind and solar) supplied 7.6 per cent.
The supply from the more than 7GW of rooftop solar on two million homes and businesses took the total renewable shoe of supply to 18.8 per cent.
The TAI report notes that some 584MW wind and 624MW of large-scale solar have been added to the grid so far in 2018 (and some 700MW of rooftop solar), and more is expected to be commissioned by the end of 2018.
This will further reduce emissions, and the wholesale market prices – which, apart from “gaming” by the big generators, have
“This surge in new capacity is the direct consequence of the renewable industry’s “escape” from two years of turmoil created in 2013 by the incoming Abbott government,” which led to the reduced …. renewable electricity generation target.
“The flow of new investment, released by the removal of most of the uncertainty which had crippled the industry, is now coming on line. It is this new renewable generation capacity which has driven the continuing fall in NEM emissions since the anniversary of the Hazelwood closure.”
In detail, the share of hydro was 8.0 per cent, well below the record level of 9.0% set in the year to December 2016, but the combined 7.6 per cent share of wind and solar generation was a record, as was the total generation of 14.2 TWh.
The stream of new wind and solar projects has seen generation reach record levels, in terms of both total annual quantity and shares of grid generation, in each successive month for the past six months, a pattern which seems likely to continue for months into the future.
Output from rooftop solar installations has also been growing steadily and in the last 12 months supplied 7.1 TWh, or 3.8 per cent of total supply. Saddler notes that the ACT, Victoria and Queensland governments to define their legislated or proposed renewable energy targets.
The ACT ha a legislated target of 100 per cent renewable supply by 2020. A year ago, its share was just under 30 per cent, but TAI has not calculated its current level, other than to say it is likely to be considerably higher, given the addition of the Sapphire, Coonooer Bridge and Hornsdale wind farms.
Victoria has legislated targets of 25 per cent by 2020 and 40 per cent by 2025 and as at June had an annual share of 18.3 per cent, although this could be higher with the inclusion of small renewable generators, such as landfill gas.
Queensland has a (non-legislated) target of 50 per cent renewable electricity by 2030, but its share in the latest year was just 6.5 per cent – almost all of it rooftop solar – but this should jump in the current year as a large number of utility-scale solar and wind farms connect to the grid and reach full production.
If all three targets are met, the TAI says, Australia will likely source 43 per cent of its electricity supply from renewables, including rooftop solar, by 2030 (see graph above).
It means that the emissions obligation under the NEG on current targets would never be binding. Even if the Victoria Labor government lost power in the state election later this year, and the Coalition dumped the state target as they promise to do, this would still lead to minimal construction under the NEG.
“Should … a new government cancel the VRET, the NEG may be called on to provide about 5 TWh of renewable electricity by 2030 to meet the target.
“This would require about 2,000 MW of new wind and/or solar capacity, additional to that delivered by the LRET, over the ten years between 2020 and 2030.
“To put this into context, the (Clean Energy Regulator’s) list of the wind and solar capacity which it expects to be commissioned over the next three years totals around 8,000 MW – that is, four times as much in less than one third of the time.
“A shift from building nearly 3,000 MW per year to building only 200 MW per year would represent a complete collapse of the currently booming renewable generation construction industry.”