New coal doesn’t stack up – just look at Queensland’s renewable energy numbers

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Renewable energy is a much better choice than coal fired generation, in terms of both costs and jobs.

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Existing and under-construction (solid) and planned (white) wind and solar farms in Queensland
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The Conversation

As the federal government aims to ink a deal with the states on the National Energy Guarantee in August, it appears still to be negotiating within its own ranks.

Federal energy minister Josh Frydenberg has reportedly told his partyroom colleagues that he would welcome a new coal-fired power plant, while his former colleague (and now Queensland Resources Council chief executive) Ian Macfarlane urged the governmentto consider offering industry incentives for so-called “clean coal”.

Last month, it emerged that One Nation had asked for a new coal-fired power plant in north Queensland in return for supporting the government’s business tax reforms.

Is all this pro-coal jockeying actually necessary for our energy or economic future? Our analysis suggests that renewable energy is a much better choice, in terms of both costs and jobs.

Renewables and jobs

Virtually all new generation being constructed in Australia is solar photovoltaics (PV) and wind energy. New-build coal power is estimated to cost A$70-90 per megawatt-hour, increasing to more than A$140 per MWh with carbon capture and storage.

Solar PV and wind are now cheaper than new-build coal power plants, even without carbon capture and storage.

Unsubsidised contracts for wind projects in Australia have recently been signed for less than A$55 per MWh, and PV electricity is being produced from very large-scale plants at A$30-50 per MWh around the world.

Worldwide, solar PV and wind generation now account for 60% of global net new power capacity, far exceeding the net rate of fossil fuel installation.

As the graph below shows, medium to large (at least 100 kilowatts) renewable energy projects have been growing strongly in Australia since 2017.

Before that, there was a slowdown due to the policy uncertainty around the Renewable Energy Target, but wind and large scale solar are now being installed at record rates and are expected to grow further.

Left axis/block colours: renewable energy employment by generation type in Australia; right axis/dotted lines: installed wind and large-scale solar generation capacity

As the graph also shows, this has been accompanied by a rapid increase in employment in the renewables sector, with roughly 4,000 people employed constructing and operating wind and solar farms in 2016-17.

In contrast, employment in biomass (largely sugar cane bagasse and ethanol) and hydro generation have been relatively static.

Although employment figures are higher during project construction than operation, high employment numbers will continue as long as the growth of renewable projects continues.

As the chart below shows, a total of 6,400MW of new wind and solar projects are set to be completed by 2020.

Renewable energy projects expected to be delivered before 2020

The Queensland question

Australia’s newest coal-fired power plant was opened at Kogan Creek, Queensland in 2007. Many of the political voices calling for new coal have suggested that this investment should be made in Queensland. But what’s the real picture of energy development in that state?

There has been no new coal for more than a decade, but developers are queuing up to build renewable energy projects. Powerlink, which owns and maintains Queensland’s electricity network, reported in May that it has received 150 applications and enquiries to connect to the grid, totalling 30,000MW of prospective new generation – almost all of it for renewables. Its statement added:

A total of more than A$4.2 billion worth of projects are currently either under construction or financially committed, offering a combined employment injection of more than 3,500 construction jobs across regional Queensland and more than 2,000MW of power.

As the map below shows, 80% of these projects are in areas outside South East Queensland, meaning that the growth in renewable energy is set to offer a significant boost to regional employment.

Existing and under-construction (solid) and planned (white) wind and solar farms in Queensland

Tropical North Queensland, in particular, has plenty of sunshine and relatively little seasonal variation in its climate. While not as windy as South Australia, it has the advantage that it is generally windier at night than during the day, meaning that wind and solar energy would complement one another well.

Renewable energy projects that incorporate both solar and wind in the same precinct operate for a greater fraction of the time, thus reducing the relative transmission costs.

This is improved still further by adding storage in the form of pumped hydro or batteries – as at the new renewables projects at Kidston and Kennedy.

Remember also that Queensland is linked to the other eastern states via the National Electricity Market (NEM).

It makes sense to build wind farms across a range of climate zones from far north Queensland to South Australia because – to put it simply – the wider the coverage, the more likely it is that it will be windy somewhere on the grid at any given time.

This principle is reflected in our work on 100% renewable electricity for Australia. We used five years of climate data to determine the optimal location for wind and solar plants, so as to reliably meet the NEM’s total electricity demand.

We found that the most cost-effective solution required building about 10 gigawatts (GW) of new wind and PV in far north Queensland, connected to the south with a high-voltage cable.

Jobs and growth

This kind of investment in northern Queensland has the potential to create thousands of jobs in the coming decades. An SKM report commissioned by the Clean Energy Council estimated that each 100MW of new renewable energy would create 96 direct local jobs, 285 state jobs, and 475 national jobs during the construction phase.

During operation those figures would be 9 local jobs, 14 state jobs and 32 national jobs per 100MW of generation.

Spreading 10GW of construction over 20 years at 500MW per year would therefore deliver 480 ongoing local construction jobs and 900 ongoing local operation jobs once all are built, and total national direct employment of 2,400 and 3,200 in construction and operations, respectively.

But the job opportunities would not stop there. New grid infrastructure will also be needed, for transmission line upgrades and investments in storage such as batteries or pumped hydro.

The new electricity infrastructure could also tempt energy-hungry industries to head north in search of cheaper operating costs.

One political party with a strong regional focus, Katter’s Australia Party, understands this. Bob Katter’s seat of Kennedy contains two large renewable energy projects. In late 2017, he and the federal shadow infrastructure minister Anthony Albanese took a tour of renewables projects across far north Queensland’s “triangle of power”.

Katter, never one to hold back, asked “how could any government conceive of the stupidity like another baseload coal-fired power station in North Queensland?”

Judging by the numbers, it’s a very good question.

Source: The Conversation. Reproduced with permission.

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5 Comments
  1. Peter F 1 year ago

    I looked at the 2015 generation report you linked to, it is very thorough however I suspect its coal O&M prices are very optimistic at $10/MWh -$15-20 is more likely. Its fuel costs are now a bit over half today’s price and while hard to find, its assumptions about coal capacity factors seem to be quite optimistic. Finally because permitting and design are quite expensive and take 2-n years and then from signing of contracts to full scale operation takes 5-7 years the non contract costs + construction finance add 15-25% to the overnight cost of the coal plant,

    When all these factors are taken into account a new coal plant would have to achieve about $130/MWh at 65% Capacity factor to provide an acceptable ROE. In a high renewable grid, with highly variable demand like most of Australia that would be very difficult to achieve. Coal grids from India to China, Germany and the US range between 47% and 57% CF and all are static or declining so long term it is very hard to see a coal plant averaging more than 55% in Australia. That forces costs up to almost $200/MWh at current coal prices, perhaps $150 using cheap coal. And this is over its whole life.
    If wind and solar are running at $55 now what will they be like in seven to ten years when the proposed new coal plant comes on line. More and more people will follow Sun Metals example and use power to heat/ice and a few batteries so the coal plant might get 20-30% utilisation not 65%

    • MaxG 1 year ago

      Well, like he said: “how could any government conceive of the stupidity like another baseload coal-fired power station…?”

  2. Malcolm M 1 year ago

    North Queensland would have to be the least profitable places in the NEM to build a new coal-fired power station, because of low prices for its electricity output. Prices in North Queensland are 10% below the Queensland market because of the general north-to-south movement of electricity leads to a 10% loss in transmission. Another 10% is lost through transmission to NSW, again through the general north-to-south flow of electricity. So a power station in the Hunter Valley of NSW would tend to get a price about 20% higher than in North Queensland.

    But does the Hunter want another coal-fired power station? Looking at Google Earth images there has been a large area of the valley that has been dug out for coal, leaving huge voids. And in 20 years what will it be like ? It has already caused a 30% decline in land values. Not a sustainable industry.

  3. Albery Moray 1 year ago

    I think the main concern in not the dollars per MWh. The concern is the availability of the MW when needed. It is true that a lot of wind and solar farms are being built and that’s great, but without a fairly large amount of storage we’d still need something that provides MW when needed. Some quick sums show that we currently have about 7.5 GW of hydro and a recent peak demand of nearly 32 GW. So we need something like 25 GW (or more, for fault tolerance) of storage if we want to be able to meet peak demand on a still night. Apart from Snowy 2.0 and a handful of small pumped storage and battery projects I can’t see how we get to the amount of storage we will need.

    PS: I have noticed that the spatial diversity of wind farms is slowly improving since White Rock and Sapphire started generating. Maybe Mt Emerald will provide more spatial diversity but It still looks like we’d need storage systems that can provide around 25 GW for the worst-case continental-scale lulls in wind.

    PPS: Regarding low wholesale electricity spot prices in Queensland, they may largely be due to the Palaszczuk government telling their (state owned) generators to drop their prices. If you look at the data over the past year or three, QLD spot prices fell just after the generators were told to be nice.

    • David Heath 1 year ago

      Clearly we need a big battery (or a whole lot of them) to store energy when the sun don’t shine or the wind don’t blow. However, the more we distribute wind generation around the country the less likely it is that it’s blowing on none of the turbines. In fact, can anyone demonstrate a time where there was no wind anywhere in Australia?

      For solar, of course the sun isn’t shining 24 hours a day… and it’s often cloudy… so we need to store the energy when we do collect it.

      Australia isn’t blessed with a lot of tall hills where we can install dams for hydro. But we do have one useful system – Snowy Hydro. The Federal Govt plan to extend this is admirable. We can use solar to power massive pumps to push water up-hill during the day and run the water back through the turbines whenever we’re short of power. Some nay-sayer recently complained that such a system was (perhaps) only 66% efficient. Well, in response to that, I’d say that doing nothing was 0% efficient.

      Of course there are other ways to store energy – Tesla’s big battery in South Australia is a good (albeit rather expensive) option – it was interesting to hear that the system was responding so quickly to issues (cutting in within a quarter of a second and back out 2 or three seconds later) that they weren’t getting paid as the governing systems only worked in 6 second blocks!

      Possibly the most efficient storage will be molten salt positioned beside solar, with a mid-sized Tesla battery to cope with rapid response.

      Finally, let’s consider home roof-top solar (and hopefully factory, warehouse and office-building roof-top as well). As well as capturing solar energy for use as electricity – whether within the building or pushed into the grid – there’s a second advantage. Particularly in summer, the panels are capturing and redistributing energy that would otherwise have entered the building, thus if the solar array is used to power air conditioning, it will work doubly as well.

      Sorry for the long ramble… hope I’ve offered some food for thought…

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