The federal Coalition is proposing to try and “level the playing field” between cheap renewables and fossil fuel generation by forcing wind and solar plants to match each megawatt of capacity with one megawatt hour of storage.
In an attempt to placate the far-right party room rebels arguing against a clean energy target, energy minister Josh Frydenberg, according to media reports, has said he proposed to level the playing field by forcing all new wind and solar plants to build storage equivalent to 25 per cent of their capacity and four hours of storage.
For a 100MW wind or solar farm, that equates to 100MWh of storage, effectively matching each megawatt of capacity with a megawatt hour of storage.
This graph was presented by Frydenberg to Coalition backbenchers as part of a slide package obtained by Fairfax Media. The 25 per cent capacity and four hours of storage is cited in small print at the bottom left. (Apologies for the quality).
It puts the average cost of wind and solar without storage at around $92-$92/MWh, and $107-$108/MWh with storage.
The idea that all new wind and solar farm was raised in the Finkel Review as part of the proposed “Generator Obligation”, but few details have been released in the Finkel Review.
It had been thought that the level of storage would be decided by the Australian Energy Market Operator, in line with the local grid’s needs, but it now appears that the Coalition is considering a blanket obligation to appease the defenders of the coal industry.
Many late scale wind and solar farms are contemplating storage additions, such as batteries or pumped hydro, but the idea that it should be mandatory for each new wind and solar farm is seen as overkill, particularly in states which have very little wind and solar to date, and will add to consumer coss.
It is a scenario that suggests that conservatives are obsessed with turning wind and solar into “baseload” plants, when most in the industry suggest that the concept of “baseload” is now redundant, and the new focus should be on dispatchability at peak times.
The CSIRO has suggested that any level of wind and solar below 40 per cent should be considered “trivial” for the grid, and most states are well below that level. NSW, for instance, has less than 10 per cent wind and solar, Queensland has virtually none, although more than 1,700MW of large scale wind and solar is under construction.
Analysts also say a better idea is to use the market rather than regulatory intervention, such as a “dispatchability” market contemplated by BNEF’s Michael Liebriech.
They also note that coal and gas plants are not required to write contracts or provide back-up when they have capacity unavailable. Many coal and gas plants failed unexpectedly in the recent heat waves in South Australia, NSW and Queensland.
The Coalition leadership, however, is desperate to find a way to appease its conservative members. Relaxing the carbon intensity benchmarks will likely make renewables even more attractive, so the only option is to find ways to penalise renewables.
Nationals MP Andrew Broad has spoken of the need for “more brown coal generators” to be built, because he says it will be cheap.
The Finkel review said that wind and solar, paired with storage, was cheaper than gas and as cheap or cheaper than black or brown coal, even without taking into account their emissions and environmental impacts.