Back in January this year our Energy and Environment Minister Josh Frydenberg crowed via twitter that Australia now appeared set to install enough renewable energy to meet the 2020 Renewable Energy Target, in spite of the doubts expressed by some.
Now, based on the March edition of the Green Energy Markets’ Renewable Energy Index, Australia won’t just manage to meet the current 33,000GWh target, it will likely pass 41,000 GWh.
This just happens to be the original target for large-scale Renewable Energy Target before it was cut back to 33,000GWh by the Abbott Government.
RET-eligible renewable energy generation in 2020 by source
This got me reminiscing about some of other people, beyond Judith Sloan (and not Giles Parkinson or Angela Macdonald Smith), that have made confident declarations that the renewable energy industry faced serious, immediate limitations in terms of both the scale of energy it could deliver and its cost.
One of the naysayers Minister Frydenberg should have included in his tweet was Trevor St Baker, the founder of Australia’s fourth biggest electricity retailer ERM and a man who has recently made a name for himself as the champion of buying up coal power stations others want to get rid of.
Not much more than a year ago St Baker told the Australian Financial Review,
“There is no way we are going to make the 33,000 target. It’s impossible to get there. That’s what the argument should have been about all the time, it should have been 20,000 [gigawatt hours]. That’s all you can reasonably expect to be built.”
At the time he uttered these words Green Energy Markets’ project database already recorded 27,000GWh of renewable energy projects either in place or contracted, by the way.
In this same article in the AFR Brendan Pearson, the head of the Minerals Council at the time and who has been recently working for Finance Minister Mathias Cormann, chimed in with,
“Perhaps the most sensible and rational option is to grandfather the [RET] scheme for existing projects as well as those projects not yet completed but underway…But there is no point persisting with a scheme which just continues to raise the cost for energy users without delivering any environmental benefit.”
Another person Frydenberg should have included in his tweet was his predecessor – former Energy Minister Ian Macfarlane, and maybe Matthew Warren, the current head of the electricity industry lobby group the Australian Energy Council (if we can trust what Macfarlane says).
In an interview with ABC Radio’s AM program soon after the Coalition had strong armed Labor into agreeing to cut the LRET from 41,000GWh to 33,000GWh, Macfarlane said of the cut-back target that it was,
“an outcome which will give the industry an enormous challenge. It is a very ambitious target and if you talk to people in the industry – and I met yesterday with Matthew Warren …. Matthew’s view is that it is almost impossible to build this many wind towers in the time that they have available.”
Macfarlane was then subsequently pressed by interviewer Michael Brissenden on his past statements:
MICHAEL BRISSENDEN: …last month you said 32,000 was the top limit that we can move to and still be confident that the renewable energy scheme is sustainable, if we go higher there’s a risk the scheme will default. Does that risk not exist anymore?
IAN MACFARLANE: Well that risk certainly does exist and that was the whole point, having the regulator keep a good watch on what was happening in terms of the scheme.
So we have our concerns about the ability of the industry to build in five years what has taken 15 to build already. …The challenge is there for the industry, we hope they achieve it, but everyone needs to get very busy, because the best wind sites are gone, the alternative technologies aren’t competitive at this stage and there’s going to be a lot of pressure on the wind industry to not only build the towers but get the off-take agreements in an oversupplied electricity market.
Interestingly, while Ian Macfarlane seemed so confident we’d run out of good wind sites, wind farms are being contracted and built at power prices far lower than those in the past.
And the pipeline of wind development projects that are yet to be contracted stands at over 13,000MW and growing (not including CWP’s giant Pilbara project that is intended to export electricity to Indonesia).
Also, in spite Macfarlane thinking that alternative technologies to wind weren’t competitive, 43 per cent of the large-scale capacity built or contracted since 2016 has been technologies other than wind.
Lastly former Environment Minister and now Health Minister Greg Hunt also merits a mention.
Around the same time as Macfarlane’s interview, in response to ABC radio’s Marius Benson pointing out that the cut in the LRET was equivalent to cutting $6 billion in investment, Greg Hunt said:
“It’s a ridiculous proposition and the reason why is because the whole discussion over the last year has been about the fact that the notional target of what’s known as 41,000 gigawatt hours, simply wasn’t going to be able to be built. …It [the revised 33,000GWh target] is still a very significant target of 23.5%. There will be a very large volume of investment under it. It’s pretty close to the maximum of what we think can be built and achieved within that time.
Now sure that was all in the past. In the end Greg Hunt played an important part in generating confidence that the RET scheme would stick and we’ve seen a flood of investment since that time.
Yet unfortunately this poorly researched, backward-looking thinking about what’s achievable continues to this very day in the 2030 emissions target the government is proposing for the National Energy Guarantee.
Green Energy Markets has tallied up all the megawatts of renewables (excluding pumped hydro) that are likely to come on stream in the NEM since 2017 based on projects operational or in train as well as the capacity which will be supported through tendering processes already underway.
The chart below illustrates that at 9,691 megawatts, it already exceeds the amount of wind and solar capacity Frontier Economics estimated would be required to achieve the 2030 emissions target under the National Energy Guarantee.
Post 2016 NEM large scale renewable energy capacity based on already announced project commitments and contracts/tenders compared to 2030 NEG forecast
This suggestion by the government that its emissions target is somehow the most ambitious target we can responsibly achieve is obviously complete tommy rot.
Tristan Edis is Director – Analysis & Advisory with Green Energy Markets. Green Energy Markets assists clients make informed investment, trading and policy decisions in the areas of clean energy and carbon abatement. Follow on Twitter: @TristanEdis
