Kangaroo Is: 100% renewables cheaper than sticking with grid | RenewEconomy

Kangaroo Is: 100% renewables cheaper than sticking with grid

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Study shows going 100% renewable would be cheaper than staying connected to the main grid for Kangaroo Island. But the decision on what to do will be a significant national and international test case for other communities, network operators and regulators.

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Kangaroo Island, the iconic tourist attraction off the South Australian coast near Adelaide, would likely find it cheaper to go 100 per cent renewable, with its own resources, rather than stay connected to the main grid, according to a detailed study led by the Institute of Sustainable Futures.

The study, released on Thursday, shows that the direct and indirect costs of going it alone with the island’s wind, solar and biomass resources, along with battery storage, would be about the same as the cost of upgrading the link to the mainland and paying for fuel.

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But while that may be good news for the island, it is likely that the main electricity provider, SA Power Networks, will go for the main grid option, unless enough community support can be gathered to force its hand.

The report into the situation in Kangaroo Island highlights a fascinating but important conundrum facing many communities, and many power providers: should millions be spent upgrading or replacing ageing poles and wires, or in this case submarine cables? Or should they be spent in new technologies that offer independence, greater security of supply, clean energy, and local jobs?

Sounds like a no-brainer, but because of the regulatory structure governing the country’s network providers, it is not.

In Western Australia, the grid operator Western Power is facing similar issues. It knows that it would be cheaper to cut the links to some remote and regional centres and set up local renewables-based micro grids. But the regulator won’t allow it.

In South Australia, it’s not entirely clear that SAPN is as excited about the idea of cutting the link to Kangaroo Island, and to some extent it is a test of its willingness to change. It was, however, SAPN that asked if there were any alternatives to simply laying a new cable.

It has to be said that some in the local community are also cautious. But the mayor, Peter Clements, is interested, and wants to test the community response.

“Kangaroo Island has a wealth of wind, solar and biomass resources,” he says. “Developing a mini-grid to take advantage of these natural assets and produce reliable, affordable power is a win-win for the island’s residents and businesses.”

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A meeting will be held next week (September 22), where the findings of the report will be presented. The response will be crucial for what avenues are then pursued.

Chris Dunstan, one of the lead authors, says that Kangaroo Island is a proxy for similar decisions that are likely to be made in Australia, and it has international importance.

The scale of the project is significantly bigger than other high renewables projects undertaken on King Island or Lord Howe Island, and it would be one of the first places in the world where such a large community eventually is removed from the grid.

Dunstan and his team at the ISF in Sydney modelled 10 local electricity supply scenarios as alternative sources of power for Kangaroo Island.

“Replacing the 15km undersea cable is estimated to cost $77 million over a 25-year period, which includes $36 million for the cable and $37 million for the imported power,” Dunstan says.

“The most cost-effective alternative is a local supply of wind, solar photovoltaics and diesel generation, complemented by battery storage and demand management. This wind-solar-diesel hybrid solution could supply Kangaroo Island with 86 per cent renewable energy for only $10 million more than a new cable option.

“For a further $13 million, 100 per cent renewable power could be provided by upgrading diesel generation to cutting-edge biomass technology fuelled by unharvested local plantation forest.

“Both renewable energy supply options could actually cost Kangaroo Islanders less than the new cable over a 25-year period when indirect costs like savings in local network charges are included.”

(As an example, the central “balanced” renewables scenario includes an extra 6MW of solar power for the island, 8MW of wind, 5MW of biomass, and around 8MW of diesel, although this would be used sparingly and only produce around 62MWh a year, compared to 41,000MWh from the wind, solar and biomass resources).

Dunstan says it would make sense to use the current cable as long as it lasts. That would mean less diesel use and even offer the opportunity to export excess wind or solar power.

The problem with the whole proposal lies around the regulatory regime, which influences the investment decisions that networks make. While indirect costs are paid by Kangaroo Island customers, they are not required to be taken into account by SAPN in the key regulatory test on whether it can make such investments, known as RiT-D.

That means SAPN will likely have a greater financial incentive to lay a new cable and keep the island connected to the grid. And it may be that SAPN thinks that will be the simplest thing to do, rather than get involved in local grids and generation.

It’s because of that, Dunstan says, that the project will not go ahead unless there is significant support from the Kangaroo Island community, and unless a significant third party, such as the South Australian government, the Australian Energy Regulator and/or ARENA, steps in to reduce the barriers to SAPN adopting a more innovative non-network solution.

“Addressing such barriers in the context of Kangaroo Island would provide a powerful precedent for supporting local electricity solutions throughout Australia,” Dunstan says.

 The report found a bunch of other benefits from using a local and renewable energy supply. These included reduced emissions, more local jobs, better energy security (reduced exposure to a single point of network failure) and enhancing Kangaroo Island’s clean and green brand.

It could also provide a high profile and innovative large-scale Australian case study for high penetration renewable energy systems and smart mini-grid control.

“Adopting a local renewable power supply strategy in a popular, iconic location like Kangaroo Island is likely to attract much international attention,” the report says. “It is likely to be recognised as a leading demonstration project with potential to catalyse other major investment activity in this area.”

But the biggest challenge may not be technical – because the report says that solar and battery storage could be implemented soon enough, with wind and biomass within a few years (it would require more detailed planning and approvals).

The biggest impediments are about the regulatory, governance and business model issues. The current measure of network spending only looks at poles and wires, and seldom looks at non-network options.

“Such local alternatives are usually only developed by non-network option proponents at their own cost and risk. To provide a more balanced approach, detailed analysis of non-network alternatives, such as those described in this study, should be the rule rather than the exception,” the report says.

And, it notes, if a local electricity supply option were to be adopted, and subsequently the existing cable from the mainland were to fail, then arrangements would need to be in place to ensure that the local electricity suppliers were not able to abuse their monopoly power to raise electricity prices unreasonably.

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  1. Peter Davies 4 years ago

    Curious as to the capital cost for the biomass power used. If you are looking at the stranded plantation blue gum resource then a cost of $2.2million/MWe of REAL installed base-load capacity is possible for projects >3MWe using Australian gasification technology coupled to the best German IC engine technology. If you want to include most of the organic waste stream from communities there is a modest additional cost of around $0.2m per MWe of capacity for feed stock pre-processing to make it suitable.

    • Analitik 4 years ago

      Couldn’t the gums just be used to fire boilers for powering steam turbines?

      • Coley 4 years ago

        Couldn’t the gums be left to absorb CO2? Very good article, but biomass? If it burns it ain’t RE.
        We have a ‘converted’ biomass PS on our doorstep and to be frank the gunge it hoys out is worse than when it was purely coal fired.
        Is LNG an alternative for KI, for purely emergency generation?

        • Analitik 4 years ago

          The blue gums were introduced in plantations and are viewed by the locals as a nuisance since they use up ground water and are a haven for feral pigs. They are not native flora and should be viewed as an energy resource since they are, in effect, a crop.

  2. JohnOz 4 years ago

    The analysis appears to be financial only and appears not to include economic ‘externalities’ such as damage from continued global warming, negative health effects from continued fossil fuel burning etc. Perhaps the most important element is that if the cable solution is preferred it will only delay the inevitable, not eliminate it: 100% low emissions renewable energy is the only long-term solution for electricity generation.

    Expenditure on any solution other than renewable energy will have significant opportunity cost in future when the renewable energy solution is implemented and the new cable becomes redundant!

  3. Steve Fuller 4 years ago

    The KI example points to our renewable energy future and the costs are borne not by KI residents alone or SAPN – all South Australians pay for KI’s network infrastructure with city dwellers cross subsidising these end of line communities.

    SAPN will be looking to their growth prospects and bottom line rather than our common future so our communities must stand up and speak up.

    All South Australians should be taking an interest in what happens on KI so that we get the best possible outcome in terms of electricity supply reliability, affordability and environmental outcomes.

    By going 100% RE KI could also become a pace setter for electric vehicles with Mitsubishi already showing interest which would further enhance KI as an international eco-tourism destination.

    Solar Citizens (Adelaide) and the RE Policy Group are making sure that our politicians are up to speed on this issue and welcome support from interested groups and individuals to help make this happen. Contact Steve [email protected]

  4. Neo Lib Yes 4 years ago

    As these projects are leading edge they are exciting and there are plenty of consultants with advice, however they also have a number of questions about who makes the decision and who wears the responsibility. When the decision is made to go off the grid, then who manages the infrastructure? Who performs the unregulated maintenance on the Island network, connections, disconnections etc? Do experts ferry over or will a local business be established? Who ultimately decides on the renewable mix? A community vote or an expert? What about growth? Will the proposed generation be enough with EV’s likely to become common in the next decade? How do they agree and pay for augmentation? Or possibly a bigger issue, if the wholesale grid price reduces and the community has built an off grid system at say $65 MWh, would consumers be happy to stay in the community scheme? Batteries and PV efficiency and costs will improve considerably in the next 25 years, will the Island have a white elephant, a stranded asset that the Community have invested in only to see it abandoned by home generation and self sufficiency? How do they recover on it then? Do you really want your local council or community group to be making $100 million 25 year investment decisions? Sure the Island needs to make a decision soon, however the community will have to live with it for a long time.

    • Kenshō 4 years ago

      Yes the network carries a significant risk running a new cable to an island with significant RE. I imagine the wind gets up a real speed across the ocean. Perhaps there’s a spot somewhere by the shore.

    • neroden 4 years ago

      Yes, of course I want my local council to be making decisions which amount to $33k for every person on the island. The alternative is letting the decisions be made by a large faraway corporation opposed to my best interests… who has the right to tax me by applying a private tax in the form of electricity rates. Really, what sounds better to you?

      • Neo Lib Yes 4 years ago

        The residents can use that large faraway corporation to install a new cable with no financial risk to themselves. What is more they can actually go and install their own solar plus battery and the power company will still sell them power at the uniform tariff rate, with no financial penalty to the residents. The alternative is that the council pays $150 m for their own system that the community has a vested interest. In the next 25 years solar and battery will probably make it economically feasible to mostly go off grid, whereas Kangaroo island residents will be stuck with a big white elephant that will either require every home pays or else it goes bust. Looks like a no brainer to me.

  5. Kenshō 4 years ago

    Be great to see the local Council administer some of their own RE. The mayor, Peter Clements sounds like he values community based approaches, so the community appears to have a leader gunning for them. I imagine the people appreciate nature as they live in a such a beautiful and special part of the world. Can’t see the mayor having difficulty getting overall support to enhance the attractiveness of the island to be an innovative RE mecca.

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