Even business lobbyists say Australia can run on 50% renewables

Can Australia achieve 50 per cent renewable energy without compromising grid stability? That was the topic of a panel discussion at the ABB Customer World conference in Melbourne last week. And it’s a hot topic in Australia right now, particularly in political quarters.

For a large part, government thinking on the subject has been divided neatly down state and federal lines.

While Labor states and territories have set targets for 40, 50 and 75 per cent renewables – and some have already met them – the Turnbull government regularly decries those targets as reckless, and insists on keeping the nation on the slow train to just 36 per cent by 2030.

But for the host of the conference – who also used the occasion to launch its portfolio of more than 210 digital solutions, called ABB Ability – the answer is an unequivocal ‘yes’.

The Swiss-based company with 125 years’ experience in the power industry now directs a great deal of its expertise and manpower to help renewables tie into grids, and to work out how this will be done in various parts of the world.

“What we have seen… in the past few years is that the trend towards 50 per cent, even above 50 per cent utilisation of renewables … is a trend that is not going to go (away),” said Massimo Danieli, the global business unit manager of Power Grids and Grid Automation at ABB Group.

“I think that the target of 50 per cent is just the initial target, and there will be more and more to come,” he said.

Indeed, for the entire panel of experts who took part in the ABB discussion – including AusNet Services executive Alistair Parker; independent energy expert Chloe Munro and; Australian Industry Group policy advisor Tennant Reed – the answer to the above question was ‘yes’… but… not without the right policy.

Here’s what they said:

The policy guy

Tennant Reed, who is the principle national advisor on public policy for the Australian Industry Group, says there are three things we need to have in place to get Australia to 50 per cent renewables.

First, the technology needs to work and be cheap – “that’s well in hand,” he says. Second, the markets need to be receptive – and that’s going pretty well, too.

“There is a deep hunger among energy users for cheaper that what the market is serving up right now,” Reed told the conference.

“A lot of my members, who have been far from sold on big-picture energy transition stuff in past years, are going out and signing contracts, off-take agreements with big renewables projects, or installing their own generating capacity.”

As well they might. Brewing giant CUB is installing enough solar to match its total demand by the end of the year; vegetable grower Nectar Farms is going 100 per cent renewable on its new greenhouse (Australia’s biggest); zinc producer Sun Metals is using solar to underpin its regional Queensland expansion; and Sanjeev Gupta is turning to solar and storage to save and expand the Whyalla steelworks business. And many others are following.

The third thing you need is policy, says Reed, and that’s the missing piece.

“I want to make one thing very clear here: Policy at this point is not needed to make renewables competitive. They are competitive when we’re talking about choices of new-builds.”

The policy that we do need, he adds, can do two things: “it can bugger everything up, which is very much the role that it is serving at the moment; or it can govern the speed with which old assets close, and that will govern how much opportunity there is for new-build stuff.

“So when you have had a decade of back-and-forth at every election at the federal level and most of the states too, where the opposing sides represent total changes in energy policy, that’s a terrible environment for making decisions about assets that will last for many-multiple terms of government.

“We really need to break that cycle… Even though there are plenty of energy investments that on their fundamentals make sense, the specific nature of the energy policy that we wind up with, the climate policy that we wind up with, can make or break any of those investments. So we need an outcome.”

On the latest energy policy proposal, the Turnbull government’s National Energy Guarantee, Reed said that while it was currently “the only game in town,” there was still a lot of convincing to be done that it was the right outcome for all of the major stakeholders, including industry, business and consumers.

“I guess energy stake-holders are getting so flexible we might not even be able to stand up anymore,” he said. “We’ll just take anything, is the perception. But it’s not true.

“We need an outcome that works, and an outcome that is consistent with having competitive electricity markets that deliver what we need at an affordable price.”

The network guy

According to Alistair Parker, the executive general manager of regulated energy services at Victorian network operator, AusNet, there’s “a plethora of technical answers to the stability questions that we will face at 50 per cent renewables.”

“The capacity to manage that … is a technical problem, quite a complicated one, multidimensional, but ultimately, it will be possible to resolve it,” he told the conference.

But without stable and well defined policy settings, it could be a lot more complicated than it needs to be, and a lot more costly to consumers.

“I think the trick will be to resolve that at a price that our customers actually want to pay. And that we don’t force them to make some different decisions,” Parker said.

“We could rush out tomorrow and put in lots of fancy black boxes that would really help the stability … but if the reliability component of the National energy guarantee actually drives some of the more generation side to bring that forward, it would be a bit of a double up.

“So we’re going to have to work in lock-step, there, I think, to make sure we get the answers right.

“The technical questions, it strikes us, they’re complicated, but they’re doable. And you can definitely find those answers. It will be a matter of hard work and some investment.”

The independent expert

Chloe Munro, who was part of the panel of experts who advised Australia’s chief scientist, Alan Finkel, during his comprehensive review of Australia’a energy market, says the core of the Review’s findings was “encouraging governments to embrace this transition.”

But it was also about recognising that the NEM, which Munro herself had helped to “lovingly craft” more than 20 years ago, was no longer fit for purpose. And this needed strong government policy, and new market rules, built around whole-system thinking.

“AEMO has come up with a consultation on Integrated System Planning as a first step towards really taking a more coherent view of the way the electricity system needs to work into the future,” she said.

“It’s important that we acknowledge the new realities of demand. Compared to what we were thinking in the late 90s, there hasn’t been (increase demand).

“What is happening is demand is becoming peakier. And it will probably become more peakier and more volatile into the future.

“Managing that volatility, and the volatility that can also come from whether it’s the wind dropping or a large unit of a thermal generator dropping out unexpectedly, all of that is quite a challenge for the system operator.

“But more importantly, the economics of the system doesn’t actually reward the kind of resources that we need to manage the volatility.”

“So what we need are these flexible dispatchable resources. And I think the important thing is that flexibility and dispatchability won’t just come from generation,” she said.

“For me the big thing that really has been missing is really marshalling demand-side participation. There’s such huge opportunities to shift from always having supply following load, to actually managing load so to an extent, that can follow supply.

“And that’s really going to change the way that our electricity system operates into the future.”