How serious is Queensland about its 50 per cent renewable energy target?

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“Crazy” new laws, along with delays to auctions and grid upgrades, is raising question about how serious the Queensland Labor government is about its 50% renewables target.

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Figure 2: 50MW Kidston Solar Project
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“Queensland is dead to us.”

That is the damming assessment of one frustrated executive from a major international solar plant developer. And here’s a grim fact: There is currently no installation of solar modules on large scale solar farms anywhere in the so-called Sunshine State.

That has come to a shuddering halt with the introduction of the Labor government’s new laws that allow only licensed electricians to handle, carry and mount the half million or more heavy modules needed for a good size solar project.

The decision, and the refusal of the government to compromise, has started to make the industry wonder exactly how serious the state Labor government is over its plans for a 50 per cent share of renewable energy for the state’s grid by 2030. The absurd new rules for the handling of solar modules, which is being challenged in the courts, is just one part of the equation.

A long-awaited auction of capacity – 400MW of wind or solar including storage – that the government had promised to fast-track in mid 2017, has remained stalled since former surgeon and resources minister Dr Anthony Lynham took over the energy portfolio from Mark Bailey later that year.

Lynham last week blamed the federal Coalition’s lack of policy for the delay, but the lack of policy didn’t stop the initial 100MW allocations made by Bailey that gave the state’s solar industry the kick-start it needed, and it hasn’t stopped governments in South Australia, Victoria, Western Australia, NSW and the ACT doing the same.

Plans for a major new transmission link and a “clean energy hub” for the north of the state have also gone quiet.

This new link was designed to unlock resources such as Big Kennedy (potentially 1GW of wind, solar and storage), and the Kidston solar and pumped hydro project proposed by Genex, along with a bunch of other projects, but Big Kennedy developer Windlab said earlier this year it was getting tired of the wait and uncertainty and would work on other projects.

Queensland is important for the renewable energy industry, because with the surprise re-election of the Morrison government the industry is depending on the states to come good on their respective renewable energy targets, their plans to boost renewables and replace ageing coal generators.

Queensland, though, is a tough one, because it has a relatively young fleet of coal generators, and strong institutional inertia that wants to maximise the earnings from these assets.

And there are now fears that the state Labor government has hit the panic button over Adani, in response to the surprise voter support for pro-coal LNP members in last Saturday’s federal poll.

Not only does this make the Adani coal mine more likely, it will also see immense pressure for a new coal-fired generator in the central or north Queensland region, despite the fact that it would make no economic or environmental sense at all. It is not yet clear that the sudden desire to green-light Adani is part of an overall retreat on climate and renewable energy policies, but the industry is worried.

Added to this, the renewable energy industry is facing numerous new hurdles that are making investments in solar plants in particular more risky, and therefor more costly for finance.

These include the significant downgrades in marginal loss factors, reducing the amount of money a generator received for its output, plus strict new connection and commissioning guidelines that are causing lengthy delays and major cost over-runs.

In some cases, such as the 65MW Rugby Run solar project owned by Adani Renewables, it appears to have brought the project to a complete stop. The 250,000 solar modules have still not been switched on, and the commissioning process has not even reached first base, some seven months after installation was complete.

“Queensland has almost dropped off the planet in terms of commitments and PPAs (power purchase agreements) over the past 12 months,” says Tristan Edis, senior analyst at Green Energy Markets.

“I suspect that’s partly because investors are expecting the solar that’s already committed plus rooftop will seriously erode wholesale prices in the middle of the day. Also, new rules about mandating electricians won’t help the situation.”

His assessment is shared by David Dixon, analyst at another research firm Rystad Energy. “The majority of the action is in New South Wales, Queensland has slowed,” he said in an emailed statement. “As you can imagine a lot of developers will be re-evaluating the impact of these new rules on the economics of their project(s).”

The 50 per cent renewable energy plan unveiled by the Queensland government in late 2016 – but never legislated, unlike Victoria – assumed nearly 14,000MW of installed capacity by 2030, with most of it coming from large scale solar plants, followed by rooftop solar and wind trailing behind (2,200MW).

The modelling assumed the state would reach near 5,000MW of total capacity by 2020, but would then need another 5,500MW of large scale capacity, plus a more than doubling of rooftop PV, over the next decade.

That modelling quickly proved to be wonky. It seriously underestimated large scale solar, which looks like being at least three times its assumptions, and overplayed wind. Rooftop solar is also growing faster than the modellers assumed, and sits at 2.52GW at the end of April, and could be 1GW ahead of the modelling forecasts by the end of 2020.

Dylan McConnell, from the Climate and Energy College, says there is around 2.1GW of large scale wind and solar completed or nearly complete, which is kind of what the modellers expected, with the share of wind and solar inverted.

Mcconnell says there is another 1GW committed, but not yet built, which means that at least another 4GW of large scale renewables will be needed. (Note, McConnell says there is a useful new addition to opennem.org.au, including lists of projects committed and under construction.

OpenNEM shows a share of just 9.5 per cent renewables in Queensland in the last 12 months, and Rystad’s Dixon provides this graph (below) that suggests the amount of renewables generation will have to more than double over the current completed and committed capacity expected for 2021 if it is to get to the 50 per cent share of last year’s 70 terawatt hours.

Where is this capacity going to come from? There is no shortage of projects in the pipeline, but the difficulty lies in getting them to financial close and construction.

Edis, from Green Energy Markets, says Queensland needs another 5,000MW to 6,000MW to reach the 50 per cent target, and at the moment are headed for a share of around 25 per cent.

“To ramp it up higher they have to implement a reverse auction or some kind of state-based RET (renewable energy target). The 50% target won’t be achieved without such a policy,” Edis says.

Is the state government still keen on that? Because the target is not legislated, it means that Labor can back-track, and it also allows any LNP government the opportunity to walk away completely.

One avenue to meet the target is the proposed new CleanCo, a third state-owned generator to hold then”clean” energy assets, including the little used Wivenhoe pumped hydro plant, the Swanbank gas generator, and a mandate to commission another 1,000MW of clean energy.

Headed by seasoned executives, including former ARENA boss Ivor Frischknecht and ex Infigen boss and Clean Energy Council chair Miles George, the new entity is not likely to be operating for at least another six months.

Lynham insisted last week, when speaking at the CEC-sponsored large solar conference, that the state “will achieve these targets, by taking Queensland on the journey, with lower electricity prices and stability in supply.”

But at the same time he said he “did not know how to land” the proposed auction if policy at federal level remained unclear, and now that the “political dinosaurs” as he called them are still in power, it is not clear when it will take place.

Some believe he is having a bet each way. The ill-explained go-slow on the RE400 auction, the extraordinary decision on electricians, and the lack of resources at the state-owned networks, which has been causing huge delays in modelling outcomes and decisions, has set tongues wagging.

Numerous references are made to the “culture” of the state owned utilities – both network and generating – and about how keen they are to embrace new technologies and watch their decades-old business models and favoured technologies be eroded.

When that love of technologies past is associated with similar views in the political arena, and a fear of the pro-coal Murdoch media, which has a virtual monopoly in the state, then Queensland’s 50 per cent target has a major problem – inertia. But not in the way many imagined.

At the very least, it seems that Queensland’s Labor government has quietly decided, that after an initial burst of activity, it is choosing a “ramp” rather than a linear line to the 50 per cent target. That means less now and more later. And now even the rooftop solar boom could be gutted – at least for systems of 100kW and more – because of the new union-inspired module handling law.

 

 

 

 

 

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