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Coalition renewables naysayers were wrong. So, so wrong

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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

Source: Green Energy Markets Power Project and Contracting Database

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

Sources: Capacity delivered under already announced initiatives based on Green Energy Markets’ Power Project and Contracting Database; 2030 capacity anticipated under the NEG to deliver the emissions target of 26% reduction in emissions compared to NEM emission levels in 2005 based on Frontier Economics modelling results contained within the Energy Security Board Advice Paper on The National Energy Guarantee, dated 20 November 2017.

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  

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  • GlennM

    Excuse my simple maths.
    If 33kGWh=23.5% then 41kGWh = 29%. Then of course the actual power consumption in front of the meter is going down, therefore it looks like heading to over 30% by 2020. Should the build keep going then 40% by 2025 ???

    • Peter Campbell

      Yes, and 50% by 2030 is quite doable, the target that Labor took to the last election, which Turnbull and the LNP said was completely irresponsible.

      • stucrmnx120fshwf

        Projections of the amount of renewable energy, are always, as a rule lower than what gets built, power prices are about to start going down, because renewable costs, are less than carbon dioxide emissions based power. Renewables cost per kWh, will be half that of CO2 based power, in 2023, 1/4 that of CO2, in 2028, if you halve the price of energy, generally consumption by industry quadruples. Bring it down to 1/4, consumption increases by 16 fold. So 50% becomes 1,000%, the last peak decade of industrial revolution the 1920’s, saw 10 times as many internal combustion vehicles. Actually it was 1915-25, but because of normal 5 year lagging economic indicators, it wasn’t until the 1920’s before the effect was obvious.

        This was coupled with an explosion of electricity, in fact we have the scale, millions of people now working in renewables, worth trillions, 45 years of the great stagnation, in the developed countries. Has blinded us to what the developing nations, have experienced, exponential growth, China installs half of the worlds renewable energy every year. Tony Seba is right, in Clean Disruption, renewables and electric vehicles, will rapidly disrupt the global economy. Just as the internal combustion engine and electricity did a century ago, I would argue that high rise agriculture, 3D printing, virtual reality, will compound and accelerate the effects. So much capital was generated in the 1920’s, that Clean water and sewerage works, were installed, in most developed world countries. This time, soot and smog, will be removed, and oxygen increased, from vertical farming, along with drastically reduced noise pollution stress.

        We forgot that refrigerated warehouses, ice boxes, canning, electric lighting, subways, elevators, changed peoples health, before then, it was normal, to get diarrhoea every month and die before 50. As they tore at the foundations of infectious diseases, we will tear at the foundations of cancerous diseases, less noise stress, particulate emissions, CO2, more oxygen. They went from Dickensian Victorian conditions to the modern era, in a decade, in quietening and freshening the air of the cities, the environment of the cities, will get a second modernisation, in a decade. Away from the industrial era, into the post industrial era.

  • Jonathan Prendergast

    I remember being at a lunch function in around 2009 at the Pullman on Park Melbourne where the head (I think chair, CEO or similar) of AGL at the time said it would be impossible to build a wind tower per week, which is what was needed to meet the RET.

    • Andrew Roydhouse

      Sounds like he was destined to get involved in the NBN with such expertise!

  • Joe

    The takeout is and has been for years….don’t believe anything the COALition says but believe what they actually DO in relation to RE and every other issue while we are at it. They are liars and masters of the art of lying.

  • MrMauricio

    “Tommy rot”is being generous-they were all hands on deck to stem the tide for their donors(also foolishly looking backwards!)

  • The Duke

    LIEberal, COALition or are they the LEMMINGS Party.
    Now they want to FRACK the whole country.

  • RobertO

    Hi All,
    This morning Telegraph has a column by Terry McCrann about “fanboy Ben Potter breathlessly informing us of 9691 MW of new wind and solar”. As per usual if the sun don’t shine and the wind don’t blow (Sh**) we see that the final statement is that if you have 13000 of wind capacity you can still get zero or close to zero electricity. He claims people are mathematically changed when he has completely missed the point of storage (any sort). He calls Josh (fiddleberg) and Ben, and all other clever people/idiots when he is one of the biggest idiots around (and quotes electricity as $20 -30 MW day in day out, which it may have been true but he’s living in the past or as he puts it the good old days. Our jurno leave a lot to be desired.

  • Ren Stimpy

    There needs to be an independent review into the competency of Frontier Economics and the reasons the government continues to choose them to do their modeling, usually to the exclusion of even a second opinion.