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

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.

Heron 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 1/16^th 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