Five things we learned from… Clean Energy Week

The principal theme of the Clean Energy Week conference in Sydney was the protection of the Renewable Energy Target. At first blush, that was achieved, with each of the major parties declaring their support. But support for what, exactly? The question lingers as to whether that was the 41,000 gigawatt hours of renewable energy inscribed in the legislation, to add to the 15,000GWh of mostly hydro that was built previously, or a notional percentage that is being pushed for by some parties.

Climate Change Minister Greg Combet said it was the legislation he was defending, but despite numerous prompts he couldn’t bring himself to say the words “41,000.” Coalition energy spokesman Ian Macfarlane was more evasive, saying only 20 per cent – but he wouldn’t say 20 per cent of what.

For many at the conference, this left lingering concerns that the RET could yet be tampered with. The fixed target has already been reduced once to account for larger than expected deployment of rooftop solar. Could that happen again? Would the demand equation come into play?

Some wondered why the clean energy industry doesn’t take a leaf out of the mining and the high-emitting industries and push aggressively for an even higher target. That could serve two purposes: to develop a longer-term narrative about a clean energy future (after all, the move to decarbonisation does not stop in 2020), rather than being defensive about a policy which is being painted in many quarters as expensive and pointless; and to give them negotiating room to manoeuvre. Perhaps what the industry needs is a Mitch Hooke-type character, scaring the daylights out of Australians on the prospects for the country if it does not embrace wind and solar.

Blinded by the light

Conservatives, however,  find it impossible to imagine a scenario where coal does not dominate the country’s fuel mix. And if the RET review is creating some uncertainty, then the prospect of a Coalition government could create a veritable black hole.

When politicians are invited to speak to industry groups they usually make some attempt to humour their audience. At Clean Energy Week, however, NSW Energy Minister Chris Hartcher welcomed invitees to a reception in Sydney by reportedly telling them: “This is a coal state.” (Although some attendees also swore he conceded that coal would have to be phased out within 10-20 years). Key federal Coalition figures – both past and present – told an audience of several hundred wind and solar types that their wind and solar machines were not up to job of powering a modern economy such as Australia.

Macfarlane, for instance, suggested they should concentrate on alternative energy sources such as wave energy, and in the next moment highlighted the hypocrisy of his position by vowing to dismantle the very institution that could provide funds to encourage the deployment of such new technologies, the Clean Energy Finance Corp. Macfarlane said the CEFC was designed to use taxpayers money for projects that the private sector would not fund, and then spent much of his speech marveling at the Carnegie Wave Energy project off the coast of Fremantle, which is being financed by taxpayers money because the private sector would not fund it.

Perhaps Macfarlane and former Senator Nick Minchin should go out and get a quote for rooftop solar and do some calculations about how this might reduce their electricity bills. They will either be pleasantly surprised, or mortified. Either reaction could be a useful step forward.

Why The Greens are popular

If the attendees at Clean Energy Week were fully representative of the broader electorate, then The Greens would win in a landslide. While around 150 listened to Macfarlane’s admonition of their technology, and about double that were on hand to hear Climate Change Minister Greg Combet underline the importance of the carbon price and its associated measures such as the RET, the CEFC and ARENA, Senator Christine Milne attracted a genuinely enthusiastic crowd of more than 700.

It’s not surprising, because Milne is an enthusiastic proponent of their product. But what was interesting were the observations of the overseas developers, financiers and consultants. Far from representing ‘dangerous’ philosophies, as the NSW Right would like to describe them, outsiders note that Milne pretty much falls in step with the observations and policy ambitions of  the International Energy Agency, US Secretary Stephen Chu, and a bunch of European and Latin American countries, and some American states – even if her solar ambitions don’t quite match that of the Saudis.

Australia’s mainstream politicians don’t seem to get this – numerous polls underline the enthusiasm of Australians for renewables, and given the decline in manufacturing, and the peaking of the minerals boom, it is curious that they should be so off-hand about the development of a $20 billion industry, which they would chop in half if they had their way. Not all the money invested flows back into the hand of offshore manufacturers – more than half of the investment in renewables is “spent local.” But as AGL Energy’s Michael Fraser pointed out, sovereign risk is a tangible threat to the renewables industry in Australia, given that three of the key policy plans supporting the industry in Australia – the carbon price, the RET, and the CEFC – seem to be in danger, and tariff and regulatory changes could impede the deployment of rooftop solar.

How renewables could protect against gas expenses

While both the Coalition and the Labor parties express concern about the cost of renewables – minor though it is – it was interesting to note a new survey that illustrated how large-scale wind and solar may actually reduce electricity costs in the future. This was not about the merit order effect, real as though that may be, but the potential jump in electricity prices should Australia rely only on gas-fired generation as the replacement for coal. Energy consultants AECOM said relying on natural gas for domestic electricity production could see consumer electricity prices soar, even more than they already have, because of exposure to volatile international gas markets brought about by the massive investments in east-coast LNG export industry.

AECOM said the RET could deliver energy price security by quarantining domestic prices from international shocks such as Hurricane Katrina, oil price surges, or even extreme weather conditions in Australia which could restrict gas output. “Because these markets comprise long lived assets with long development timeframes, any exposure of consumers to high electricity prices would likely occur for an extended period of time until more competitive generation assets were developed and implemented,” co author Dr Jenny Riesz said. “By achieving the RET through developing wind and other renewable energy sources, Australia would essentially be investing in a diverse generation portfolio and reducing the risks associated with its gas market, such as international price influences.”

Better to be behind the meter than in front

While developers of wind farms and utility-scale solar have been forced to bide their time, the prospects are looking a lot better for technologies which go “behind the meter,” delivering electricity that competes with the retail price, rather than the wholesale price. It’s for this reason that it was the technologies located “behind the meter” that were looking a lot happier than those in front.

As Danny Kennedy, the Australian chief of US solar firm Sungevity noted, Australia is possibly the world’s most advanced residential market for rooftop solar PV. It overtook Germany in that particular category last year, and Yingli recently said it could be the world’s first mass-market for solar PV. It is for this reason that Sungevity is leading a charge of US-based and local plans to introduce solar leasing to Australia. When that takes off, it has the potential to change the rhetoric around. You never know, cheap solar and El Nino (and the return to extreme weather conditions) could have quite an impact on public opinion.

The other big themes were commercial solar and off-grid. The general agreement was that commercial solar was “the next big thing” in solar PV, but was not quite there – still more talk than action. (Truth be told, solar leasing is in that category too, but once it rolls out it is expected to quickly gather momentum). But off-grid is becoming increasingly attractive. State governments pay hundreds of millions in subsidies to support diesel-powered remote communities – and the cost of diesel is rising.