Has AEMO downplayed speed of clean energy transition?

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A year ago, Finkel’s modelling was telling us we should keep coal generators operating longer. Now, AEMO is telling us its cheaper to close them and replace with renewables and storage. That’s a big step in 12 months, but AEMO could have gone further.

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We’ve come a long way in just one year.

Last June, modelling for the Finkel Review was telling Australians that allowing coal generators to continue well beyond their 50-year life offered the cheapest path to a transition to a low-carbon economy.

Clearly, the modellers had no sense of urgency. Their modelling suggested there was still an additional  decade or two of life in these old clunkers, which they must have somehow imagined could be held together with bandaids and stickytape.

Now we are told, by modelling conducted by the Australian Energy Market Operator, that the cheapest way will be to call a halt to coal generators when they get to the end of their technical life – 50 years, and only if they make it that far.

This was a significant point to be made by the institution that runs the grid and whose responsibility is to keep the lights on, now and into the future.

And in doing so it smashed two prevailing myths that continue to strangle political debate in Canberra: first that new coal is an economic proposition. It is certainly not, and AEMO says solar, wind and storage are patently cheaper.

The second myth is the idea that having a target of 50 per cent is “reckless,” as many in the Coalition – all the way down from Prime Minister Malcolm Turnbull and energy minister Josh Frydenberg, to the agit-prop in the Business Council of Australia – would have us believe.

But AEMO’s core scenario, based on current federal and state policies, is that a 46 per cent share of renewables will be the bare minimum by 2030, and more than 60 per cent is likely should a higher emissions reduction target –  say, a 45 per cent cut by 2030 – was introduced.

In RenewEconomy’s Energy Insiders Podcast this week, we asked AEMO chief executive  Audrey Zibelman if the grid would still be secure and stable at these level of renewables. “Absolutely,” she said.

That answered a question we were almost embarrassed to ask, but such is the level of debate in this country.

What we regret not asking Zibelman is what would the situation be if we needed to go faster. And we do need to go faster, because it is clear that climate change demands a more focused response.

And this leads us to the disappointing part of the AEMO document. For sure, it went further than the ACCC and Finkel reports, and the government’s energy white paper, because at at least it entertained an emissions target that was not enshrined by right-wing dogma.

But there are many who think it does not go far enough, including the farmers federation, the core constituency of the reactionary National Party.

In reality, the transition is likely to happen a lot quicker than what AEMO is modelling. That’s because the cost of installed capacity used by AEMO is drawn from an old report (early 2017) prepared by the CSIRO.

As the Australian PV Institute pointed out in its submission, solar is already about 25 per cent lower than modelled. Some say it is even lower than that.

This, of course, means that the transition is likely to be quicker, because the cost pressure on coal fired generation is likely to be more intense.

But now is probably not the best time for AEMO to scare the chooks. One step at a time for the ancient mariners in the Coalition.

AEMO is half owned by the government and half owned by the major incumbent utilities. The fact that it got this far to describe the transition in this much detail is a breakthrough enough.

That said, the developers of renewable energy would not be getting too excited over its forecasts – of 28GW of solar and 10GW of wind to be installed over the next 20 years. That’s just one big wind farm, or two medium ones, a year.

For the foreseeable future, they are effectively limited to the Victoria and Queensland renewable energy targets, the push by the corporate sector into the market – vividly highlighted by Bluescope signing on for a major solar deal – and the retirements of coal plant in NSW.

Indeed, it is one of the ironies that NSW – with no state-baed target, and the site with probably the highest dependence on coal generation in the world – will likely experience the most dramatic transformation.

That’s because all but one of its coal fired generators will reach the end of their technical life over the coming 15 years. After Liddell in 2022, Vales Point, Eraring and Bayswater will follow, leaving only Mt Piper.

This graph illustrates the change – that big chunk of black (coal) becomes a mere slither in 2040 and energy minister Don Harwin can afford to say that he is “technology neutral.”

He has already made pretty clear what he really thinks of the “base-load” coal mantra of his Coalition partners. It is a change that is pretty much unstoppable, unless by obstinacy and stupidity.

As Labor’s Mark Butler notes, AEMO’s 46 per cent renewable share should now be the starting point for government policy.

The NEG, on the other hand, is predicated around a share nearly 10 per centre points lower than that, which if it eventuates, would result in prices 20 per cent higher than they would be otherwise, a new report from Reputex points out.

“This report is a significant blow to the Turnbull Government and their baseless anti-renewables fear campaign,” Butler says.

“Not only does it confirms that Labor’s 50 per cent 2030 renewable energy target is achievable and responsible, but it also confirms it will deliver cleaner and cheaper power, with more jobs and investment.”

Even the National Farmers Federation is calling the Coalition’s 26 per cent emissions reduction target for the electricity sector by 2030 weak and unfair.

Most analysis say it will be met soon after 2020, thanks to the renewable energy target and corporate buyers that now include Bluescope, who having railed against renewable and carbon schemes for years, is now clearly alive to the benefits (cheap solar).

Imagine, then, the sort of report that Zibelman’s team at AEMO could have produced if Australia was governed by a party that accepted the world was not flat, that climate science is to be respected, that cheap renewables offer all sorts of economic opportunities.

It might look something like what Bloomberg New Energy Finance recently produced in its New Energy Outlook.

BloombergNEF is finely attuned to the falling cost of renewables. “Every time I look up from my screen, the cost has fallen again,” said analyst Leonard Quong when presenting the Australian version of the report recently.

Some of its core assumptions are remarkably similar to AEMO’s – 45-50 per cent renewables by 2030, nearly half of all demand supplied by distributed solar and storage by 2040/2050 (see, the democratisation of energy), and 50 per cent of the car fleet fully electric by the late 2030s.

By 2050, BloombergNEF says coal is long gone, and the share of renewables ins 92 per cent. Consumers emerge as the most potent force in the energy market, thanks to the enormous capacity of solar and storage they have installed behind the meter – and that includes households and business.

“The most significant (impact of rooftop solar) is … pushing coal out of the system,” BloombergNEF’s Kobad Bhavnagri says.

“You can forget about the carbon price, you can forget about the NEG (National Energy Guarantee), what will push coal out of system is rooftop solar PV.”

That’s one thing that is clear. The transition is inevitable, only the pace of it is under question if politicians and vested interests seek to erect road blocks in the form of a National Energy Guarantee, an abolition of rooftop solar support, or the power and inertia of the incumbents.

Basically, all we need to do is get out of the way, and let the investors and grid operators get on with their work.

 

 

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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36 Comments
  1. D. John Hunwick 5 months ago

    I am at a loss to understand why there is report after report pointing the way ahead – based on the need to take URGENT action on CO2 emissions and still nothing happens. Perhaps the report writers could get up from their computers and spend a week waving placards, or calling on the citizenry to join them in street protests outside the offices of federal members urging them to make changes -or get voted out!

    • Hettie 5 months ago

      Nothing happens because Right Wing Nut Jobs cling far more fiercely to their refusal to accept scientific evidence or economic reality, than they do to the religion they all claim to follow, but the core precepts of which- respect for Human Rights, honesty and compassion,- they so strenuously ignore.
      Give me good, honest atheists any day.
      We respect the evidence and care for the environment because that’s the rightthing to do, not from fear of hellfire.
      If those bastards succeed in blocking renewables, they will burn in hell, but it will be here on earth, and they will take us all with them.

      • Joe 5 months ago

        Hi Hetttie, see my post above in reply do D.

        • Hettie 5 months ago

          Thanks.

    • Joe 5 months ago

      We did have the marches and protests in the support of ‘Science’ earlier this year which may just be the start of something bigger to come. ‘National Science Week’ is coming up in August (11-19 Aug ) so I am sure there will be more to be heard in the area of Climate Change and citizen actions / participations.

      • Hettie 5 months ago

        Such actions need media coverage to enhance their impact, but do they get it? Not while Rancid Rupert is in charge.

      • Ren Stimpy 5 months ago

        Oh thank f**k, Science Week will save us!

  2. GlennM 5 months ago

    They possibly have downplayed it a bit..but that is good strategy for three reasons.

    Firstly it does move the goal posts in some peoples minds and gives evidence for others to use.

    Secondly their report is only a report it is actually not what happens in 2-5 or 10 years the actuality will be better all of us here know that.

    Thirdly Audrey keeps her job, also a good thing for the climate

    • charles frogg 5 months ago

      Ms Audrey Zibelman might be starting to look over her shoulder at what happened to Enron and their CEO Kenneth Lay who escaped a 32 year prison sentence by dying. Some one or several people will have to pay the ultimate price for failing to look after the public interest while being paid millions to do so. When all the lights go out on the East coast and rolling blackouts are part of the power supply system the stupidity of thinking you can run Australia on wind and sunshine will become apparent.

      • GlennM 5 months ago

        Hi Charles,
        I think like Donald in Helsinki you misspoke….the name you meant was “Anthony Abbott”

        Glenn

        • Hettie 5 months ago

          Good one, Glenn. The froggy croaks, but says nothing that makes sense

      • Ren Stimpy 5 months ago

        Wind, sunshine and energy storage, Sunshine.

        (You forgot the energy storage.)

  3. Ian Porter 5 months ago

    Politicians should take note that their voter base is more important than the vested interest groups that force them to skew reality and ignore what is best practice. It’s clear they don’t grasp the fact that the physics of RE technologies will be contributory to the end of the dominance of those coal burning assets they are so desperately trying to shore up. The democratic leveller of rooftop PV in the hands of voting consumers will not only deliver the economic benefits to users, but will topple those aforementioned assets and the politicians will go with them.

    • Patrick Comerford 5 months ago

      Ian the voter base of the coalition you could say around 35-40% of the voting citizenry, doesn’t give a rats about any of this stuff. We all know or have contact with them. Poorly informed selfish snobbish only out for themselves mostly ignorant people, they are the rusted on coalition voter and as Trump is demonstrating perfectly you can lie deceive insult their intelligence and be an out and out nasty individual ( just like Dutton) and they will still put a cross next to the conservative candidate. So it’s optimism in the extreme to expect any backlash from this segment of the population to effect needed change. Unfortunately for Australia it’s the swinging voter who holds the reigns and God help us.

      • Hettie 5 months ago

        Patrick, those swinging voters, who hold the *reins*, are the ones who think about their votes. Some may be entirely short term selfish, but many are not. Trust them.
        And votes with a cross next to one name, not numbers next to all, are informal, which goes some way to disenfranchising the deeply stupid.

        • Jo 5 months ago

          I do not trust them. They provided us with this government.

          • Hettie 5 months ago

            A great many who voted for Abbott in 2013 must have voted against Trumbull in 2016. They went from a thumping majority to a single seat margin, and less than half the votes. Things are so much worse now, I can’t see another Coalition government . And the longer they hang on before calling time, the more they will be punished.

  4. Ian 5 months ago

    What are the forces driving renewables uptake? The commonly acknowledged ones are residential solar, commercial rooftop, business PPA’s, state targets, national targets, reducing cost of solar and wind. Key personalities, like Zibelman. Aging coal assets, gas prices. Less obvious is investment appetite, growing alignment of non-coalition parties on the pro renewables sentiment, and increasing isolation of the coalition on its negative stance to renewables. Increasing public and business awareness and support for renewables, growing confidence in the percentage renewables that can be achieved. Reducing cost of storage.

    All these are powerful forces but the FF inertia is massive. As the utility scale solar projects come on-line , these will out compete coal , and themselves for the consumer’s lunch either driving more storage or driving more PPA’s. Unless storage becomes very cost effective, we may see the crowded midday become a negative force on further renewables deployment. Right now our renewables targets have given a decent enough incentive for solar uptake but the time has come when these need to be modified. The limiting factor for solar uptake is storage, why not include storage in the LGC equation?

    • Hettie 5 months ago

      Ian, the obvious solution to the midday glut (and sometimes overnight windblown glut) is PHES closely associated with the wind and solar plants, and a little battery to automate the switching between grid feed and pump feed and back, but also squirt a few megawatts into the grid to cover the time lapse between RE slow down and hydro turbine production.
      A four pillared system, that gives 24/7 power with no curtailment and no shortfall.

      The life of the uglies gives the time needed to get the PHES built and commissioned, long before Snowy, the aptly named white elephant gets its howdah on.

      If, as hoped and promised, the ACT is able to veto NEG, government has little option but to accept ISP as the only possible roadmap, and get the hell out of the way. Then watch investment in PHES take off. And Coalers, even gas peakers, go bust.

      Leaving taxpayers to clean up the mine sites and get sites, of course, but it was ever thus, and will also provide employment for displaced mine and gen workers.

      • Hettie 5 months ago

        I realise that instead of answering you, Ian, I’ve gone off on a frolic of my own. Who’da thunk! Me!
        You will understand that I have very limited sympathy for any loss of income the Coalers face because of midday oversupply. If they can’t throttle down that’s their lookout. Not so solar and wind. These good guys need and deserve the support of rapid investment in PHES situated to use their excess clean power, and save it for the dark and/or still hours.

    • Wallace 5 months ago

      Don’t forget that we’re on the cusp of the transition from ICEVs to EVs. Places like Australia that are very sunshine rich may need to install a lot of charge outlets in workplace and school parking lots. Anywhere that people park for long periods during the day.

      Offer a better rate to charge if the driver allows the utility to control the actual time of charing. (Just set an acceptable minimum at leave time.)

      The the grid can absorb a lot more solar without storage.

      • Hettie 5 months ago

        Well said.

  5. phillyc 5 months ago

    Thin edge of the wedge. Very smart play by AEMO. Shows the way without necessarily upsetting the overlords. We need Audrey as long as we can keep her.

    • Hettie 5 months ago

      Absolutely right. Bye bye NEG.

      • Joe 5 months ago

        All we need is for ACT’s Minister Shane to stay the course and vote at COAG…No NEG….and then it is truly Bye Bye NEG.

        • Hettie 5 months ago

          GetUp is doing an ” Email your energy minister” campaign to get us to edge them to vote against NEG.
          let them know how much we hate it. Unfortunately no share button, but the website will have it for sure.

          getup.org.au

          Go for it, everyone. Tell them what you really think of NEG.
          tell them this is a vote decider for the next State election. Qld, urge them to support Shane Rattenberg.
          Big and NSW, don’t hold back!

          • Hettie 5 months ago

            Rat’s!
            That campaign is not on the website yet, but it won’t be long. In the meantime, join up and donate, and they will send you an email about this for sure.
            A million members and rising. Far bigger membership than any political party.

          • Hettie 5 months ago

            This is the email I sent to the NSW MINISTER.

            Minister, please, please,
            DO NOT SUPPORT THE NEG!
            It was written by the coal lobby, for the coal lobby, in absolute disregard for anyone’s interests but their own.

            This country should be a world leader on renewable energy (RE), but instead we are at the very back of the pack.
            RE is already putting downward pressure on power prices, by reducing the opportunity for gas peakers to push spot prices up to the market cap. To get power prices down for those who are doing it tough, we need to get 5 minute settlement periods far sooner than AEMC proposes. 3 months would give them ample time.
            But the planet has no time to spare. We need to get to zero emissions asap. That means 100% renewable power, and rapid adoption of EVs. State Governments can lead there, by making all new government vehicles evs from today, waiving registration, allowing use of transit lanes, all sorts of ways.
            But the best things to do are
            1. Join with the ACT to block NEG.
            2. offer state investment in the small scale, distributed pumped hydro storage that will make renewables cover 24/7.
            Let the Coalers go bust, and setup programs for the displaced workers to remediate the abandoned mines, retrain to work in renewables, just look after them.
            That’s enough from me.
            Just Kill the NEG.
            ITS NOT WORTH THE PAPER ITS WRITTEN ON.

  6. Wallace 5 months ago

    Very important sentence –

    “Basically, all we need to do is get out of the way, and let the investors and grid operators get on with their work.”

    As we reach the point where renewable energy and battery powered vehicles become cheaper than using fossil fuels then we will be able to dodge extreme climate change.

    Economics alone may not move things at optimal speed but they will make the transition possible. Trying to force people to pay significantly more for RE and EVs probably would not work until too late. Until we had already baked in too much change to tolerate. But people will support paying less.

    Now what we, as individuals, can do is to tell others about the money that they can save as we quit fossil fuels. Include the health care savings. Health problems caused by coal smoke and exhaust fumes will be important to some. Get people to vote for candidates that support renewable energy.

  7. hydrophilia 5 months ago

    “It is a change that is pretty much unstoppable, unless by obstinacy and stupidity.”
    Never underestimate obstinacy and stupidity.

  8. heinbloed 5 months ago

    Full speed energy transition in Flanders !

    (BIG NEWS from small FLANDERS)

    Flanders (Belgium) has just banned the sale of oil boilers from 2021, new builds
    are not allowed to connect to the gas grid and their heating must run
    on RE-energy,district heating or heat pump:

    https://www.vrt.be/vrtnws/en/2018/07/21/flemish-government-reaches-agreement-after-20-hours-of-talks/

    Note
    that the linked VRT article errs on the term “oil tank”, not the oil
    tanks but the “oil boilers” are banned.Propably a translation error.

    See also

    https://www.vrt.be/vrtnws/nl/2018/07/21/einde-verkoop-stookolieketels-vanaf-2021/

    http://www.standaard.be/cnt/dmf20180721_03625728

    https://www.fluxenergie.nl/vlaanderen-neemt-afscheid-van-stookolie-en-start-uitstap-uit-aardgas/

    NOW THE CARS:

    – All busses in Flanders’ citys must be zero emission by 2025 !! –

    – All cars must be low emission by 2030, at least half of all cars must be zero emission by then –

    – Similar regulations are for trucks and delivery vans –

    All cities in Flanders are called by the government to introduce more environment zones (zero emission trafic zones).

    Victory 🙂

    Watch out for more on the issue in the English press, the gouvernment of Flanders had a press conference only this morning.

    And say good by to big oil: “That was it!”

    (This comment was also posted @ cleantechnica)

  9. Peter F 5 months ago

    As GlennM and Charles Frogg have said below, they certainly have understated the transition, but for sensible reasons. Both being conservative in the technical sense and politically astute in not enraging the radical obstructionists. How those people to the right in the LNP can honestly call themselves Conservatives, I don’t know.

    For most of this month renewables have been supplying between 19 & 25% of grid supplied energy on the NEM, not including rooftop solar. Right now at noon on a weekday when solar is quite poor renewables are supplying 27% of grid demand
    By this time next year there will be at least 1.7 GW of new large scale solar and 1.3 GW of new wind which in the same weather conditions will supply an average of 5% of demand assuming that all the rooftop solar just balances any demand growth due to population increase. i.e. in some months next year we will reach 26-28% renewables for the whole month.

    By June 2020 when Stockyard Creek, both Tasmanian plants, Murra Murra stage 1 have joined in, we will be reliably exceeding 30% renewables for extended periods if not the whole year and people will still be making wind and solar PPA’s because they are cheaper than market priced coal, even in old plants and the vendors can offer fixed prices for 10-15 years which no FF plant can. Until we are down to the last 5 coal plants coal, gas and hydro can easily balance the grid.

    The introduction of Higher Marginal loss factors will end up making the total cost of renewables lower because it will encourage say wind farms in Gippsland vs the Wimmera, these will not only have lower losses because of better transmission links and shorter distances to market, but because they will be 3-8 hours out of phase with the western Victorian wind farms they will significantly reduce the duration and therefore cost of storage and transmission upgrades. All those benefits will lower the cost of a renewable powered grid.

    • Hettie 5 months ago

      Distribution rules, OK!!

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