Five things we learned this week …

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Is NSW about to go really, really green? Plus: why the incumbents are blowing up about BREE’s energy cost analysis; why we get renewables projections so wrong; Australian PV forecasts are way out of whack; and costing the 100 per cent renewable plan.

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Who said that?

We are going to start this week’s Fiver with a quiz. We challenge you to identify who uttered the following quotes?  Christine Milne? Peter Garrett? The head of Beyond Zero Emissions? Alan Jones?

‘The (Bureau of Resource Economics) report that came out this week about the cost of solar and wind is exciting …. If we can get these technologies to the stage were they are cost competitive then not only the government but the whole community will engage with it.”

“Australia needs renewable energy …. We have to look at alternative sources for energy in this country”

“The whole idea of the carbon pricing system … is to gradually move away from coal. We accept that. Obviously we will be moving from coal over a period of years, but whether you do it over a period of 5, 10 or 30 years is a question that has to be debated in the community.”

If you picked any of the above, then you were wrong. It was, in fact, Chris Hartcher, the Energy Minister in the coalition government in NSW, speaking to reporters at the opening of the Algae.Tec harvesting system in Nowra on Thursday. (In case anyone thinks we’ve taken the quotes out of context, the Q&A is printed in full at the end of this article).

The comments highlight two things: Hartcher was clearly impacted by is recent private visit to Spain, where he saw “thousands of turbines” and “solar everywhere”. It also highlights just how much of a political game-changer the BREE forecasts are.

The real test of his acceptance of the importance of green energy will be in the NSW renewable energy plan, which is about to be released. Hartcher told journalists that the BREE forecasts – essentially that solar and wind would be the cheapest of all technologies by 2030, and of fossil fuels by 2020 – would be factored into the plan, which he said had been broadened out from just wind and solar, and would include geothermal and biomass opportunities.

The NSW government is sticking to its planning rules, which require wind turbines to be located 2kms from homes. But Hartcher  and his parliamentary secretary Rob Stokes said they supported the 20 per cent RET, and the state clearly thinks that it can attract a significant amount of investment, despite a relatively slow start. If nothing else, the backward thinking of the Baillieu (Victoria) and Newman (Queensland) governments provide an unexpected opportunity. (I said the last bit, not them).

Denying the undeniable

The BREE report, the Australia Energy Technology Assessment, has caused a bit of a stir, particularly on those who have claimed that fossil fuels will always be cheapest, and despite BREE’s conclusion that the energy systems will be radically transformed, refuse to acknowledge, or imagine, that the energy industry could possible change .

One well-known commentator who represents a certain line of thinking sought solace in Martin Ferguson’s characerisation of the findings with the words “could” and “some”, even if BREE had no such equivocations.

In dismissing the importance of the report, the commentator wrote: “If you had to bet $10,000 today on a carbon price being, say, $60 in 2030 or stone dead by 2014, where would you put your money?” We think the answer he wanted was the stone dead by 2014, but RenewEconomy does not yet attract sufficient advertising (hint, hint) to take up the bet.

But we do wonder how many bankers and other investors would make a billion, or a multi-billion dollar punt on there NOT being a carbon price by 2030, or even 2020. We think the freeze in investment in the last few years provides the answer. (Mind you, Friday’s announcement that the Victorian and Federal governments would invest $90 million into research for technologies that could assist the export of brown coal from Victoria – don’t want to waste 490 years of energy resources – does make one wonder).

The trouble with tipping

Just as we were reflecting on AETA’s cost projections, we were reminded just how much the cost and deployment of renewable energy have been so far out of whack, even by industry leaders. The excellent David Roberts from Grist published this piece, highlighting how renewable energy had been so wrong.

Among the most notable projections, this one from the International Energy Agency in 2000 stood out: that non-hydro renewable energy would comprise 3 per cent of global energy by 2020. It reached the target in 2008. Likewise, the IEA also predicted in 2000 that there would be 30 gigawatts of wind energy by 2010 (there were 200GW), and that China would have 2GW (it had 45GW). In 1996, the World Bank predicted 500MW of solar PV in China by 2020. The official government target was recently lifted to 50,000MW, but most private analysts (observing that China is likely to install at least 6GW in 2012 and is unlikely to slow down) suggest 100GW is a more realistic assumption.

How much rooftop PV in Australia?

Speaking of projections, we have written about the Australian Energy Market Operator’s groundbreaking research into solar PV. At RenewEconomy, we focused on the top end range of AEMO’s forecasts, which suggested that 18GW of solar PV could be installed by 2030.

It seems we can certainly write off their bottom end forecasts. Compare this graph below – it highlights that by 2020 AEMO’s “low growth” scenario suggests around 3GW of rooftop PV by 2020. Considering that by the end of 2012, the total of rooftop PV in Australia will be more than 2GW, that is likely to be a conservative outlook. Unless, of course, the incumbent utilities do succeed in killing the technology.

The graph below, courtesy of Nigel Morris, of consulting group Solar Business Services, show the difference between AEMO’s and their private forecasts.

How much will a green grid cost?

Given the technology cost forecasts released by AETA this week, it was interesting to discover that the terms of reference for the 100 per cent renewables scenario that AEMO will undertake were quietly released late last month by the Department of Climate Change and Energy Efficiency.

The Greens insisted on this research to ensure that Australia’s grid operators were making preparations for how such a scenario could be accommodated – they have been given two dates to work with – making the entire grid green by 2030, and by 2050.

The principal concerns are that AEMO has been asked to provide a costing of such a plan, but not a comparison with business as usual. Which means one big scary number. The IEA, for instance, recently suggested that decarbonising the world’s electricity grid by 2050 would cost around $136 trillion. That’s a very big number, but it’s compared to BAU costs of $100 trillion, and as IEA pointed out, it would result in savings (in reduced fuel costs) of more than $100 trillion.

The other concern is that AEMO’s costing will be based on AETA’s cost predictions for solar, wind, storage and any other renewable technology that they think will play a role by those dates. That will put some emphasis on the various technology providers – particularly around solar thermal – to punch wholes in its first run around the technologies – some of their predictions for the mid 2020 are already being beaten by practical experience now.

Hartcher’s quotes in full

“Australia needs renewable energy. We used to produce two thirds of our own oil, we now produce only 20 per cent and that’s falling. We have to look at alternative sources for energy in this country and renewables are definitely a way to go. It’s extraordinary that such a small country can develop a technology (he was talking about Algae.Tec) that the rest of the world is interested in.

On the NSW renewables plan:

“We have expanded it from the original plan focused heavily on solar and wind. We expanded to look at geothermal and biomass and whole range of renewable energy. It is a very comprehensive plan. “

On BREE’s energy technology cost forecasts:

‘The report that came out this week about the cost of solar and wind is exciting, because the problem we’ve had to grapple with is the cost of these systems compared to black coal fired generation, they were far more expensive. If we can get these technologies to the stage were they are cost competitive then not only the government but the whole community will engage with it, because it is what the community wants.”

Does that mean the death of coal?

“Eventually the whole idea of the carbon pricing system, whether you have a carbon tax or not, is to gradually move away from coal. We accept that. The argument we have had with the Federal Government is in the timing and cost implications of what they are doing. Obviously we will be moving from coal over a period of years, but whether you do it over a period of 5, 10 or 30 years is a question that has to be debated in the community, and the cost has to be taken into account.”

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4 Comments
  1. Warwick Johnston 7 years ago

    Be mindful that AEMO’s installation forecasts are for behind-the-meter, NEM connected only. This excludes solar farms and systems in WA/NT. Still, we’re certainly heading to exceed conservative forecasts.

  2. Chris Fraser 7 years ago

    The Minister should be praised for making these statements, but i am not sure if he is really suggesting the community debate how long before we give up coal. What if we did this and decided we wanted to walk away from coal next year ? No, we can’t ? Oh, why not ? Because of cheap coal available from Cobbora ?
    http://www.climatespectator.com.au/commentary/nsws-great-big-coal-subsidy-scandal
    This subsidy would seem to be locked in. Unlike minimum feed-in tarrifs which could be anything retailers want.

  3. Ken Fabian 7 years ago

    Hartcher having said these things is one thing; an O’Farrell government having policies that clearly encourage a shift to renewables is another. On current form I’m very dubious. I think Climate science denial is so entrenched in LNP thinking and the flow of coal royalties so alluring that far more effort will go towards furthering the ongoing future of coal (be it as solid coal or coal seam gas) than ever towards policies that are intended to prevent it. They are so buoyed by the electoral popularity of anti-carbon pricing, anti-environmentalist rhetoric that the most likely course is the Coalition using even more of it.

  4. Doug Payne 6 years ago

    One point we must consider. It’s ok and important to invest in coal technology. We can do more with coal then just burning. Heat is the lowest value product most likely. Lets make a buck getting smart with oil and coal and without releasing co2

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