Prime Minister Malcolm Turnbull is out on the energy hustings and conservatives be warned: He’s wearing that leather jacket again.
On Monday, Turnbull took a helicopter tour of the Snowy Hydro, held a press conference and conducted some TV interviews. And, with his second meeting with electricity retailer CEOs scheduled for Wednesday, he was keen to be seen to be Doing Something on power prices.
These media events are not designed to announce anything new – the $8 million ARENA funding contribution to a $29 million feasibility study for Snowy Hydro 2 had already been disclosed – but to show that Turnbull is Looking to the Future.
And for Turnbull, the future is perhaps not that far away. In two weeks from today, Turnbull will have served as prime minister a day longer than his nemesis and predecessor, Tony Abbott.
Don’t discount the importance of this: with his ego sated, and his rival riled, it is tempting to think that Turnbull might turn his attention to his legacy, and begin to stare down the nonsense he has had to contrive to satisfy the hard right ideologues in the Coalition, and to finally move on from the Abbott-era climate and clean energy policies he inherited but dared not touch. If not now, when?
Central to this and the politics of energy is the concept of “baseload”. Turnbull and others have been throwing the term around like confetti, as thought it was central to the energy future. But it is important to note that baseload no longer means cheap energy, and nor does it mean reliable energy.
Turnbull, deep down, understands this, as he hinted in his comments on Monday: “We have no plans to build a new coal-fired generator,” he told the ABC.
And earlier: “It is very important you have the right plan going forward. So vitally important that we also get that information from (AEMO). We have to get a handle on the size of the problem we are facing in terms of dispatchable or baseload power.”
That last sentence is crucial. As we wrote earlier this year, Turnbull’s pursuit of a $2 billion Snowy Hydro 2 (it is likely to cost considerably more if it does go ahead) was an admission that the future did not lie in new “baseload” fossil fuel plants, but flexible and reliable “dispatchable” generation – which means supply that can be switched on when needed – in the form of storage like pumped hydro, solar thermal, batteries, or even demand management.
Turnbull’s biggest challenge, though, is not to in convincing the public, or winning over Labor or The Greens, but in dealing with those right-wing ideologues and the internal Ministry for No, led by Abbott.
Let’s be clear: No-one wants to invest in new baseload power. The major electricity companies have rejected it, and so has the lobby group that represents all the major fossil fuel generators. It makes no economic, or environmental sense.
And it is not needed. The CSIRO and Energy Networks Australia have said anything between 30 and 50 per cent penetration of wind and solar should be considered “trivial” to the operations of the grid – and that would include the 42 per cent renewable energy share contemplated by the Finkel Review.
Transgrid, the major grid operator, says a 100 per cent renewable energy share is both feasible and affordable, and wants to get on with it.
And numerous studies show that what Australia needs is reliable, dispatchable energy – and this will not come from new coal or gas baseload generation, but through any number of new and existing technologies such as pumped hydro, solar thermal, battery storage, not to mention the smart software and program that focus on managing demand, rather than just simply building new peaking power stations.
AGL has reinforced this point, saying that only renewables will provide the new “baseload” power, not coal.
“We don’t see anything baseload other than renewables.”
And this also needs a new management approach to the grid. The failures in South Australia last year and this year and the near misses in NSW and Victoria this summer were not about renewable energy, but the overall management of the grid.
It was also a failure of corporate culture. The price surge and the lack of security were mostly about the actions of the dominant incumbents: The biggest lesson was that Australia’s ageing grid needed updating, both in technology and the way it is managed.
What is needed – particularly as the existing coal generators exit over time – is a lot more wind and solar. There is about 30GW of approved wind and solar projects in the pipeline, just waiting for a long-term market signal. A fraction of these will get the green light thanks to the RET and some state-based targets.
As Ivor Frischknecht, the head of ARENA said when accompanying Turnbull on Monday: “The future really belongs to wind and solar, but we know they are not really available all the time. We need to think about how to store that energy when it’s available and cheap. That’s where pumped hydro comes in.”
Cheap wind and solar is what Michael Liebrich of Bloomberg New Energy Finance refers to as “base-cost” renewables, a prospect underlined by Martin Green, the renowned UNSW solar researcher, who predicts that solar costs will average in the $US20/MWh within a few years, cheaper than coal has ever been.
And that’s where other “balancing” technologies come in, including the Tesla big battery that the federal government derided, the smaller 30MW battery it is so enthusiastic about, and the solar thermal plant in Port Augusta.
South Australia, Victoria and Queensland all have tenders for storage or dispatchable renewables that will lay the groundwork for the transition to come.
And for pumped hydro, and the Snowy 2 proposal, there are still questions about whether it makes the grade.
It has an advertised capacity of 336,000MWh, but it will use half of this pumping water up hill, and to make money it will rely on a big arbitrage from when wholesale prices are cheap to when they are expensive. There may not be enough of such hours in the day to justify the experiment.
But what we are seeing is a shift from the narrow boundaries of “baseload” to the greener pastures of “dispatchability”. Some in the Coalition understand this.
The NSW energy minister Don Harwin has said it is time to move on from the old concepts of baseload power, even if the Queensland LNP are struggling with this concept and the federal Coalition is all over the place on the issue.
Back in June, Turnbull was equivocating: “It would be good to have a state of the art clean coal plant in Australia.” On Monday, he said there were no such plans.
Is it needed? No, of course not. Right now the biggest coal-fired generators are running at low capacity – Liddell was at 50 per cent this past year.
The key is whether they are available during the demand peaks, and in the heatwave this year they went missing. Heat-stroke affected coal and gas fired generators right across the grid.
That’s why the AEMO report – which will outline the need for “baseload”or dispatchable capacity – will be critical.
The future, though is clear. It is what chief scientist Alan Finkel calls Electricity 3.0, and he says is just a few decades in the future. Many think it will be quicker that that.
In a speech to Monash University on Monday night, Finkel described the future:
- We convert all electricity generation to zero-emission sources.
- We back up those sources with storage technologies we’ve scarcely begun to imagine.
- But it’s not enough. We need to double it. Triple it.
- We ramp up that cheap, reliable and clean electricity production.
- Then we run the world electric: electricity instead of petrol in cars, electricity instead of gas heating in homes.
And what do we need from our politicians to get there? According to Finkel, three things: Aspiration. Encouragement. Education.
These are concepts Turnbull showed – at least in the past – that he understands well. And from September 13, hubris satisfied, he will have his opportunity.
We wish him a Happy anniversary. But from that moment on, there will be no more excuses for not showing the courage of his convictions, if that is what they were.