The Christmas holiday period produced a series of important reports on cleantech in Australia, including how government authorities got it completely wrong on solar, the anti-wind Coalition, how EVs could save the grid, and Tony Abbott’s Gingrich connection. Here’s a summary of what you may have missed.
The cost of solar (part 1)
In what must go down as one of the most churlish documents ever produced by a statutory authority, the Productivity Commission responded to criticism from solar energy groups about the way it values solar. In an often strident, 14 page document, the PC vigorously defended its analysis and made a point by point rebuttal of many of the solar industry’s claims.
Its conclusion? Despite the rhetoric, it conceded the solar groups were mostly right, and the commission slashed its estimates for the abatement cost of solar policies to nearer $100/tonne from its original estimate of as high as $1,000 a tonne. Its range was reduced to between $177/t and $497/t from a range of $431/t to $1,043/t. Also intriguing was its claim that while more than 10,000 jobs had been created in the solar industry, these were likely to have come at the cost of jobs elsewhere in the energy sector and the broader economy. We asked the PC to explain this assertion last week, but we didn’t hear back.
The cost of solar (part 2)
The cost of solar has also arisen as a major issue in the draft energy White Paper released by the Federal Government just before Christmas. The white paper put a very modest estimate on the deployment of solar by 2050, suggesting that it might at most account for 3 per cent of the nation’s energy, and that solar PV would simply not be deployed when the renewable energy target expired in 2030 – at which stage solar would account for a mere 1 per cent of energy production
Bloomberg New Energy Finance issued a detailed analysis just before Christmas suggesting the White Paper had gotten its estimates of solar costs horribly wrong. It said it the White Paper overestimated the base capital costs of both solar PV and wind by more than 150 per cent and 50 per cent respectively, took a conservative view of future solar costs, a rosy view of geothermal, and its estimates of the capital cost of utility scale solar are more than three times the cost achieved elsewhere in the world in 2011.
“Overestimating current and future capital costs is likely to have produced an unrealistically conservative levelised cost of energy (LCOE)1 for PV, which explains why the White Paper concludes that solar technologies will account for only 1% of electricity supply in 2030,” BNEF wrote. It says the paper suggest an LCOE for solar PV of $195-$420/MWh in 2030 in real term – but BNEF expects Australia to achieve this by 2014-15, and for the cost to decline to $145-$217/MWh in real terms by 2020. “In this case it is likely that PV will contribute significantly more to the national power supply than the White Paper forecasts.”
The good news is that the White Paper was just a draft. Plenty of time to get it right.
Is it now seems official: is wind energy is now a partisan technology, given the enthusiasm of the NSW conservative government and the SA conservative opposition to fall in behind the Victorian conservative government’s crackdown on wind farm developments. The NSW government, in a draft decision, has proposed to adopt Victorian 2km setback rule, despite the Senate inquiry concluding such arbitrary rules are pointless.
The NSW position, however, includes some subtleties, and proposes some mechanisms to unlock a deadlock if a resident objects to a wind farm development – it’s just that wind energy developers and renewable energy groups are yet to decide whether this is for the better or worse. Much will depend on the detail. “I haven’t decided whether this is a step forward or a step backward,” said one executive. “We really don’t know what to make of it.”
It has dawned on the energy market that electric vehicles are a real and present attraction for consumers, and their anticipated uptake in coming years is going to have a significant impact on the energy industry. The Australian Energy Market Commission has taken a major step towards planning for this by issuing an issues paper on how the EV should be incorporated into the grid.
Its initial conclusions were fairly basic and obvious – one that if people decided to charge their EVs during peak times, then peak prices would rise due to the extra load. Conversely, it noted that encouraging consumers to charge at other times (in the middle of the night, for instance) could actually lower costs. Which is why software algorithms that allow EV network operators to control charging times are such an important part of the business models of Better Place and the like.
The AEMC report (which should be a must read for EV nerds) estimates uncontrolled charging could add 740MW to peak demand by 2020, and much to costs. But time of use, smart meters, or controlled charging would add between zero and just 20MW. At least that is under one scenario painted by AECOM. Conversely, the introduction of EVs under controlled charging could actually benefit the network, because it increases load factors at night time, spreads the fixed cost of the network over a larger consumer base and pushes down average network tariffs. “When passed through, (it) could result in reductions in retail prices,” it wrote. And, it noted, EVs could act as a storage to respond to peak demand. What are we waiting for?
Meanwhile, in other countries …
Amid all the wailing and gnashing of teeth in many Anglo countries about the cost of carbon abatement and clean energy, the European Union remains steadfast in its belief that’s investing in the future is a lot cheaper than business as usual. First of all there was EU Energy Commissioner saying that completely decarboning the energy grid by 2050 would be no more expensive than BAU, based on the declining cost of renewable technologies and efficiency measures, and the rising cost of the fossil alternatives. Then the EU produced a study concluding that lifting its abatement target to 30 per cent below 1990 would be cheaper than 20 per cent because, well, they were just about at 20 per cent and not raising the target would simply result in investments that would be made quickly redundant when a decision was finally made to lift the target.
In China, the government is also getting serious – revealing more details about its pilot emissions trading scheme, canvassing a flat carbon tax on certain industries, and also announcing that it would impose emission caps on certain provinces and cities, including the powerhouse economy of Guangdong, and the key commercial hubs of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen, in preparation for the ETS.
Yet in the US, the Republican race for the right to challenge President Obama later this year continues without Jon Huntsman, the only one of the eight candidates who maintained his acceptance of anthropogenic climate change, and the need to do something about it. Interestingly, Huntsman was most recently US ambassador to China, so maybe had an insight into what the Chinese are up to.
The remaining four candidates flatly reject the idea that there is a problem, although this does seem to be a Tea-Party induced back-flip for the two leading candidates, Mitt Romney and Newt Gingrich. The latter, the combative former House Speaker, has even been in the news for reportedly dumping a chapter on climate change in his biography, because the influential shock-jock Rush Limbaugh didn’t buy it. Amazing. It’s as if Tony Abbott had decided to change his climate change policy on the say-so of local shock jock Alan Jones … What? Oh.