Here’s a story you may have missed: Morrison and Co have announced the creation of new platform for investment in renewable energy power plants, with a particular focus on large-scale wind, solar PV and storage.
True story. It was announced here, just a few weeks ago.
It didn’t get a mention in Australian media because – sadly and predictably – it’s not the Australian prime minister, Scott Morrison, and his cohort in charge of the Australian government making such a move, it’s the New Zealand investment firm by the same name, albeit with an ampersand – Morrison & Co. And it’s about Europe rather than Australia.
But it does invite a question. As Australia emerges from its economic “hibernation” imposed by the Covid-19 pandemic, and the government looks to re-boot economic and investment activity, and deliver both short- and long-term benefits, what are the chances that the federal Coalition government will listen as closely and respectfully to climate scientists and energy experts as it has to its health professionals?
These are some of the topics we will be investigating in this week’s Stimulus Summit, an online webinar jointly hosted by RenewEconomy and the Smart Energy Council that will feature Queensland premier Annastacia Palaszczuk , four state energy ministers (both Liberal and Labor), and a cast of energy experts and analysts including Ross Garnaut, Anna Skarbek, Oliver Yates, Maria Atkinson and Simon Holmes à Court.
The prime minister, Scott Morrison, has often said that he is yet to see the evidence that lowering emissions at the pace needed to avert a climate crisis can be achieved in a way that doesn’t create an economic crisis too. He must either be blind, or cocooned by an advisory group made up of many former coal lobbyists. Or a bit of both.
The evidence has been in abundance, and available for years. It can be found in the works of the International Energy Agency, the UN, from the CSIRO, the networks lobby, the Australian Energy Market Operator, the big utilities and any number of private and public think tanks and universities, both here and overseas.
And this past week has delivered more evidence that directly addresses the two most critical questions asked about the clean energy transition. Do renewables really offer an avenue for a cheaper energy supply? And can the grid, and therefore the economy, cope with a supply of electricity that comes predominantly, if not entirely, from wind and solar?
The answer was unequivocal to both questions. Yes, they do, and yes, it can.
Bloomberg NEF got the ball rolling with its latest update pointing to the plunging cost of wind and solar, which is now the cheapest option for new generation for 85 per cent of the world’s power supply, and most obviously in Australia.
The global average cost of wind has plunged another 9 per cent in the last six months alone, and solar by 5 per cent (and 90 per cent in less than a decade). Battery storage costs are falling even faster.
“In Australia, renewables are by far the cheapest new source of bulk generation,” says the Sydney-based BNEF analyst Lara Panjkov.
The Australian Energy Market Operator then delivered the news that there is no technical reason why the grid can’t have a very high level of renewables in the main grid. It has already outlined, in its Integrated System Plan, a pathway to 90 per cent renewables by 2040, and last week it looked at what is needed to ensure that up to 75 per cent of the grid can be powered by wind and solar at any one time, by 2025.
“Australia already has the technical capability to safely operate a power system where three-quarters of our energy at times comes from wind and solar energy generation,” says AEMO chief executive Audrey Zibelman, whose responsibility it is to keep the lights on.
Zibelman agrees that wind and solar are clearly the lowest-cost way of providing electricity, but to harness that power source to its potential requires a change in market design and regulatory requirements.
This graph above shows the levels of wind and solar that can be easily accommodated now, and how much can be accommodated if the market rules and regulations are adjusted for the new technology. The “step change” scenario has a 100 per cent wind and solar on occasions by 2025. Just think, a decade ago many were arguing that 10 per cent wind and solar penetration was the limit.
Some experts now argue that Australian can go a lot quicker. And gain even more benefits. Ross Garnaut thinks 100 per cent renewables is achievable in the early 2030s, ClimateWorks’ Anna Skarbek says a rapid uptake of renewables 75 per cent annualised, not just instant by 2030) is key to also lower emissions in buildings and transport. Many major utilities think AEMO is too conservative on some of its technology costs.
But the biggest failure of Australia’s energy market in the last six years has been the glacial pace of market and regulatory reform, and infrastructure investment. And you can blame that on the lack of federal government leadership.
Morrison and Co, the Australian political mob, like to boast that Australia has installed more wind and solar than any other country on a per capita basis over the last couple of years. The bitter irony is that they have spent much of the last six years trying to stop that very thing from happening, and now there is no short, medium, or long-term vision, to focus the minds of the regulatory bodies who have been so slow to move.
The situation has so enraged and frustrated state ministers that they have gone their own way. Victoria and NSW have announced they are by-passing the federal regulatory framework because it is too slow to keep pace with their renewable energy targets.
Nearly every state has emissions and renewable energy targets far more ambitious than the federal government, and the two states with the most ambition – Tasmania (200 per cent renewables by 2040) and South Australia (net 100 per cent renewables by 2030) – are both conservative governments.
Which shows that this is not simply an ideological issue, unless there is the coal lobby involved. And it is no coincidence that these two states, along with the ACT (already at 100 per cent equivalent renewable supply in 2020) are three jurisdictions that have no coal industry.
Alas, there is no indication – yet – that the Morrison government is about to change its tune. In fact, all the signs are pointing the other way. “I like to think of the other side of Covid-19 as being a gas-fired recovery,” energy minister Angus Taylor, a determined anti-wind campaigner before and after he came into parliament, told the Murdoch media’s Daily Telegraph last week.
Resources minister Keith Pitt says that coal and gas are the key to Australia’s economic recovery, and Neville Power, the so-called Post Covid business co-ordination Tsar appointed by Morrison, is on the same page, saying he sees natural gas as the solution for a clean and cheap energy future for Australia.
And Taylor couldn’t help himself last week when he leapt on the AEMO report to highlight what he suggested were the overwhelming complexities of having more wind and solar, a prospect he has been fighting since before he entered parliament and has continued well into his tenure as the country’s energy minister.
The answer, he seemed to suggest, was more gas. And to try and deflect attention from the obvious solutions at hand – wind, solar, storage, and new market designs and regulatory changes – Taylor has been pushing a “technology roadmap”, pretending that the solutions for reducing emissions are not readily available.
New technologies may be needed for complicated areas such as agriculture and manufacturing (steel, for example), but in the main grid, the solutions are already here.
New data last week pointed to the fact that wind and solar had helped slash Australia’s electricity emissions by 20 per cent over the last few years. AEMO says a near 90 per cent reduction in emissions is possible by 2040. Analysts Reputex say not only that, but it will deliver lower prices and a reliable grid
The Morrison government appears to be convinced that the world will continue to want an expanded menu of fossil fuels – coal and gas. But the signs indicate otherwise, particularly after Covid-19. The conservative International Energy Agency notes that renewables have been the most resilient energy sector player as prices and investment in gas and coal crash. Even Shell says it could accelerate the transition to clean energy.
“Demand for fossil fuels is falling across the board for coal, oil and natural gas. At the same time, we’re seeing a major shift towards low-carbon sources of electricity including wind, solar PV, hydropower and nuclear,” the IEA said.
“Low-carbon technologies are now set to extend their lead as the largest source of global electricity generation, reaching 40% of the power mix in 2020.”
On Monday, Taylor made one important step forward by announcing the creation of a new $300 million fund to be managed by the Clean Energy Finance Corporation to pursue renewable hydrogen, one of the valid technologies that needs support, and which has the potential of replacing Australia’s fossil fuel experts.
But the Morrison government can still barely bring itself to mention the words “wind” and “solar”, or even electric vehicles. Perhaps out of fear of being shouted down by the ultra-conservative commentators on talkback radio and in the Murdoch media.
Imagine, though, if they had the same attitude to the Covid-19 pandemic, and held the same disregard for the health experts. The outcome would be appalling. The US and Brazil show us just how bad.