Will Australia’s energy market really kill wind and solar?

The Australian Energy Market Operator may well have been tasked by the government to paint a 100 per cent renewable energy scenario by 2030, but it seems clear that it does not believe it will get anywhere near that level over the next 25 years.

AEMO released two reports today – a statement of opportunities for the gas-fired power industry, and an assessment of transmission requirements out to 2037.

There are some interesting observations: no need for any baseload power for at least a decade, including gas-fired baseload; the likelihood that gas prices will rise to reflect international pricing and the possibility of gas supply shortfalls in numerous places by 2020; and the fact that required transmission investment has been cut in half, and the anticipated spend in energy generation too.

But below is the most striking graph, to my mind. It is in the transmission report and estimates energy generation by technology out to 2036. Even taking into account the carbon price, renewable energy targets and, presumably, emission reduction targets and the cost estimates provided by the Bureau of Resource Energy and Economics, Australia’s electricity market remains a world dominated by fossil fuels, and in particular coal. After an initial reduction in capacity of around 4,000MW out to 2015, black coal in, particular, doesn’t go anywhere.

Little, if any, wind is added after the renewable energy target ends in 2020, there is hardly any large-scale solar deployed over the next 25 years. It is a thoroughly depressing scenario. It is not likely to be realistic at all, but it is being used as the basis for investment decision by the market operators.