What will incumbents do next? "I expect them to go broke" | RenewEconomy

What will incumbents do next? “I expect them to go broke”

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Garth Heron, who is now the head of Wind Power Development at Neon Australia, shares his blunt assessment of what incumbents will do next in their war against renewables in Adelaide.

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Asked what he expected incumbents to do next in their war against renewables, Garth Heron’s assessment was blunt: “I expect them to go broke.”

Heron, who has over a decade of international experience of creating renewable energy projects in India, China, Ecuador and Australia, is now the head of Wind Power Development at Neon Australia, a company building the Hornsdale wind farms in South Australia and the Bulgana wind and storage hub in Victoria.

hornsdale verticalHeron was speaking on Monday afternoon at an “Accelerating Entrepreneurship Adelaide” event organised by the University of Adelaide’s Enterpreneurship Commercialisation and Innovation Centre.

Having briefly explained how the actions of the Howard government in the mid-2000s had undermined the renewable energy industry in Australia, Heron turned to recent examples of how the energy landscape and possibilities are changing swiftly.

Using a graph from Reneweconomy that showed the power needs of various states and the means by which they get their power, he pointed out that South Australia –which has a low carbon signature thanks to its use of natural gas and wind –  is only 1/16th of total power generation.

If decarbonisation is to happen by 2030, the amount of renewable generation now in use in South Australia will need to be installed annually for the next 15 years.

He said that the industry is incredibly busy at the moment, and nobody is booking any holidays.

He pointed to the Crystal Brook Energy Park,and emphasised the mismatch between when the wind blew (predominantly at night) and when demand was highest (early evening).

With additional solar generation, and some storage, the facility could be expected to produce power at approximately $90MWh.

Heron believes that, with the price of natural gas high and with no reason to expect that it will fall, it will be possible to dip into gas’s market share.

He bemoaned the simplistic nature of political discourse on the reliability of conventional power stations, saying that once maintenance, fuel availability and shutting-down-if-it-is-too-hot are taken into account, they run at 93% capacity.

He did not mention gaming the market, with the owners of Pelican Point taking the station offline at crucial times. Read story here

The Bulgana Green Power Hub ,announced last week, was the next example given, with 30 hectares of greenhouses to be supplied by cheap wind and a large battery, creating 600 ongoing jobs.

During the Q and A, I referred to the front page story of today’s Australian newspaper: Coal plants cheaper than renewables bill, and asked him what – other than sustaining policy uncertainty – he expected the incumbents to do next.

Heron shot back that he expected them to go broke.

He argued, in terms that readers of Reneweconomy will be familiar with, that the Renewable Energy Target is irrelevant, and with a new gas or coal fired power station needing (at least) $120MWh to break even, then renewables, especially with dispatchable generation from a combination of technologies and storage, will win the battle.

He called on the state government to celebrate companies like Consolidated Power Projects, which he hoped would “go out and conquer the world.”

Marc Hudson is a PhD candidate at University of Manchester

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  1. DJR96 3 years ago

    And with the federal and some state governments pledging support for coal, the only way that can be done is by subsidising them. Which goes directly against all free market philosophies, the very ones they complain about going to renewables!

  2. phred01 3 years ago

    hope the CEO has millions invested in the Co

  3. Grpfast 3 years ago

    With the “incumbents” manipulating the market the only loser is Australia. In the mean time the Australian consumer is being taken for a ride.
    Of course the Australian government sits back and dithers. Not our problem! The miners are happy!

    • juxx0r 3 years ago

      I think you’ll find that the majority are not happy. They would much rather provide the copper, the zinc, the iron, the lithium, the gold, the aluminium, the silicon, the tantalum, the cobalt, the nickel, the boron, the silver, the tin, the lead than the silly coal. Time the minerals council had a good long hard look at themselves.

  4. john 3 years ago

    The incumbents do have a problem as they age the cost of repairs and maintenance goes up.
    They also have a secondary problem the cost of feed stock is not zero against Renewable Energy where the feed stock is zero.
    How do they compete against these fundamental aspects?
    Frankly I feel put as much Renewable Energy as possible into the national grid and reap the benefits of lower not huge high prices where 3 days deliver the profit for a whole year.

    Over time the outcome will be a lower cost of power now lets look at distributed power producers that will lower the 7% loss in power by transmission yet another lowering in cost to the end user.

    • Marc Hudson 3 years ago

      Hi John, yep, precisely. Heron was making those points too.

  5. Adam Lucas 3 years ago

    Nice article Marc. Forgive my ignorance, but can someone explain to me why the Renewable Energy Target is now irrelevant? Is it simply because the relative costs of new-build generation favour solar PV and wind? While this is clearly the case now in most parts of Australia, I wonder if we might not continue with the kind of folly recently displayed by Japan in building more coal-fired power stations to replace its nuclear fleet: in our case it would be building new coal-fired power stations to replace the old ones: something which Abbott and other troglodytes in the Coalition, the coal industry and mainstream media clearly favour. No one should under-estimate the power of stupid.

    • Marc Hudson 3 years ago

      Hi Adam,
      I personally think that policy still matters, and that the price of renewables may not stay so cheap (solar seems to be driven by overproduction/overcapacity in China, though I am no expert!). But there is a strand of (techno-optimistic) thought that says the RET was only needed when renewables were immature and more expensive, and that now they would win in a straight fight in the ‘market’… we will see…….

      • neroden 3 years ago

        Solar is subject to manufacturing economics; it just gets cheaper as more is produced.

        • Adam Lucas 3 years ago

          In a rational world that would mean solar wins out. I’m understandably a bit sceptical about reason and evidence driving policy at the moment!

  6. solarguy 3 years ago

    In this current market of ever increasing renewable investment, if I owned a coal mine, I would be putting the profits into solar, wind and storage. Then when my new portfolio reached a critical mass and coal became all but useless for making a profit, I would then be happy to let it wither on the vine if need be, feeling secure that the banks will lend on RE, but not coal.

    Resistance to the new order is simply futile, isn’t it, but these coal morons believe they can win.

    What’s the definition of insanity, fossil fools?

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