Prospects for re­new­able en­ergy sources are ex­cit­ing, but high costs will re­strict their role to be­ing mi­nor­ity play­ers, writes Nigel Wil­son

The Weekend Australian - Review - - Clean Energy -

FOR­GET sign­ing the Ky­oto Pro­to­col, the Rudd La­bor Gov­ern­ment will have far more im­pact on the way ev­ery­day Aus­tralians re­spond to cli­mate change through its elec­tion prom­ise to set a manda­tory re­new­able en­ergy tar­get of 20 per cent by 2020.

The Ky­oto sym­bol­ism is im­por­tant in that it sig­nals to the rest of the world that Aus­tralia, which has a high per capita con­tri­bu­tion to global warm­ing, is pre­pared to play a ma­jor role in de­vel­op­ing global re­duc­tion strate­gies.

But the MRET is seen as a prac­ti­cal sign of what the Gov­ern­ment thinks can be done, and here it is be­gin­ning to emerge that the rhetoric is per­haps not ca­pa­ble of be­ing matched by re­al­ity.

What the Rudd MRET means is that within 12 years one- fifth of the elec­tric­ity used in Aus­tralia will have to come from sources such as tidal or wave, geo­ther­mal, so­lar, hy­dro or wind. None of th­ese sources is cur­rently eco­nom­i­cally vi­able, though wind is mak­ing an in­creas­ing and con­tro­ver­sial con­tri­bu­tion to the na­tion’s gen­er­at­ing ca­pa­bil­i­ties.

Ac­cord­ing to the Aus­tralian Green­house Of­fice, the num­ber of re­new­able projects around the coun­try ca­pa­ble of pro­duc­ing 3 megawatts or more is near­ing 600 — less than 4 per cent of na­tional gen­er­at­ing ca­pac­ity.

That is a small re­turn con­sid­er­ing that var­i­ous forms of as­sis­tance for re­new­ables have been in ex­is­tence for more than a decade.

In Oc­to­ber last year, when the 20 per cent MRET com­mit­ment was pub­lished as part of La­bor’s elec­tion cam­paign prom­ises, it was es­ti­mated the tar­get would in­crease a typ­i­cal fam­ily’s elec­tric­ity bill by around $ 40 a year be­cause gen­er­at­ing elec­tric­ity from re­new­able sources is more ex­pen­sive than ei­ther coal or nat­u­ral gas — which cur­rently make up most of the fuel used in power sta­tions.

But Rudd said the eco­nomic costs to the na­tion would be neg­li­gi­ble and the plan would sig­nif­i­cantly re­duce green­house gas emis­sions — by 325 mil­lion tonnes.

In fact, the eco­nomic costs to the coun­try will be huge.

Aus­tralia’s elec­tric­ity de­mand by 2020 is es­ti­mated to be 300,000 gi­gawatt hours. One fifth of that would be 60,000GWh in 2020. Of this, 15,000GWh will be hy­dro ( very lit­tle ad­di­tional hy­dro elec­tric­ity will be built). There will also be 9500GWh con­trib­uted by the Howard Gov­ern­ment’s MRET scheme.

That leaves 35,500 GWh to be sup­plied by re­new­ables.

The En­ergy Sup­ply As­so­ci­a­tion of Aus­tralia, rep­re­sent­ing the ma­jor gen­er­a­tors, private and gov­ern­ment- owned ( which pro­vide the bulk of the elec­tric­ity sup­plied through­out the na­tion), points out that on de­mand pro­jec­tions gen­er­at­ing ca­pac­ity will have to ex­pand by 9000MW by 2020 ( from around 50,000MW now) and up to 70,000MW by 2030. ( This is about twice the cur­rent to­tal gen­er­at­ing ca­pac­ity of West­ern Aus­tralia, for in­stance.)

It is a core part of ESAA’s es­ti­mate that the Aus­tralian elec­tric­ity sys­tem is fac­ing a cap­i­tal cost of around $ 130 bil­lion in gen­er­a­tion, trans­mis­sion and dis­tri­bu­tion in­vest­ment just to keep pace with na­tional eco­nomic growth over that pe­riod.

The 35,000GWh needed un­der Rudd’s MRET prom­ise, if sup­plied con­ven­tion­ally, is the equiv­a­lent of about 4000MW of ca­pac­ity, which on cur­rent ex­pec­ta­tions in the gen­er­at­ing in­dus­try would be fu­elled by gas.

In­dus­try an­a­lysts say 4000MW would re­quire 280 peta­joules of gas a year, or 2800PJ be­tween 2020 and 2030.

So, the an­a­lysts con­clude, meet­ing the 2020 MRET tar­get will cost the Aus­tralian gas in­dus­try $ 14 bil­lion in the decade af­ter the 20 per cent re­new­ables tar­get is man­dated based on a de­liv­ered gas cost of $ 5 a gi­ga­joule ($ 5000 a PJ), a con­ser­va­tive es­ti­mate con­sid­er­ing do­mes­tic gas prices are ris­ing sub­stan­tially.

As gas has only about half the car­bon con­tent of coal it has been pro­moted as the fuel to tran­si­tion Aus­tralia from de­pen­dence on coal, which cur­rently ac­counts for 70 per cent of elec­tric­ity gen­er­a­tion fuel across the coun­try.

On the ESAA fig­ures, of the 9000MW of new gen­er­at­ing ca­pac­ity re­quired by 2020, 6300MW would be fu­elled from coal if the 20 per cent MRET was not in force and there was no in­cen­tive be­cause of global warm­ing to find an al­ter­na­tive.

Of the 9000MW in new gen­er­a­tion re­quired, around 5000MW will be re­new­able which brings us back to the orig­i­nal ques­tion: how much will be sup­plied by wind, or geo­ther­mal or other non- fos­sil fu­els?

It is ob­vi­ous that if wind power is to be an in­creas­ing part of the sup­ply equa­tion more wind power sta­tions must be in­stalled in Tas­ma­nia, Vic­to­ria and South Aus­tralia for the sim­ple rea­son that th­ese are the states con­nected by the Na­tional Elec­tric­ity Grid where the wind blows long­est.

Wind is gen­er­ally re­garded as only around 30 per cent ef­fi­cient — wind tur­bines don’t gen­er­ate when the wind doesn’t blow.

Mod­ern, com­bined- cy­cle gas tur­bines are sub­stan­tially more ef­fi­cient than this, mean­ing that their green­house gas con­tri­bu­tion is re­duced in terms of the vol­ume of elec­tric­ity they pro­duce com­pared with con­ven­tional steam gen­er­a­tors — though even th­ese have had greatly in­creased ef­fi­ciency in re­cent years.

The is­sue for wind power is that be­cause wind tur­bines can­not be guar­an­teed to sup­ply elec­tric­ity into the sys­tem at any time they must be backed up by other gen­er­a­tors, oth­er­wise the lights will go out.

So in­stead of re­mov­ing green­house gasemit­ting fos­sil- fuel power sta­tions for green­house- friendly wind, it is pos­si­ble that more fos­sil fuel sta­tions ( pre­sum­ably gas) will have to be built to pro­vide cover for wind power.

South Aus­tralia has the great­est pro­por­tion of wind tur­bines in its mix, but re­lies on im­port­ing fos­sil- fuel gen­er­ated sup­plies from other states when wind fails to de­liver.

But as the gen­er­at­ing sur­plus in other states is eroded by in­creas­ing de­mand, the ca­pa­bil­ity of the na­tional elec­tric­ity grid which de­liv­ers elec­tric­ity for the na­tional elec­tric­ity mar­ket falls.

ESSA es­ti­mates, for in­stance, that NSW alone needs 10,800GWh of new sup­ply by 2013. Very lit­tle of this will come from what is now gen­er­ally re­garded as clean en­ergy.

Re­new­ables other than wind power in Aus­tralia are in their in­fancy in terms of demon­strat­ing com­mer­cial vi­a­bil­ity.

Geo­ther­mal en­ergy, on which much hype has been lav­ished in re­cent years, has yet to demon­strate that it can make a large- scale dif­fer­ence. Geo­dy­nam­ics, with its Ha­banero wells in the far north of the Cooper Basin, which ap­pears to have the most ad­vanced project, is at least five years away from a com­mer­cial de­vel­op­ment and that is de­signed to de­velop a max­i­mum of 500MW.

Sim­i­larly with wave power, where projects such as CETO ( pro­moted by Perth- based Alan Burns’ Carnegie Re­sources) ap­pear to have real po­ten­tial but are still a long way from es­tab­lish­ing a com­mer­cial track record.

And so­lar power, where costs have been re­port­edly go­ing to go down for decades, ap­pears to have stum­bled on the re­al­i­sa­tion that the main host for pho­to­voltaics, glass, is fairly en­ergy in­ten­sive to pro­duce.

All th­ese mean that by 2020 the chance of re­new­ables sup­ply­ing one- fifth of Aus­tralia’s elec­tric­ity re­quire­ments is not great, even if all the known al­ter­na­tives to fos­sil fu­els were to be in the mix.

They have yet to demon­strate they are com­mer­cial, not with­stand­ing an enor­mous con­tri­bu­tion from tax­pay­ers in the form of re­search and de­vel­op­ment grants. With­out ma­jor changes to the elec­tric­ity mar­ket and changes to the way we price elec­tric­ity, re­new­ables will con­tinue to strug­gle.

Now it has to be said that La­bor has a plan to cut green­house gas emis­sions by 60 per cent of their 2000 level by 2050. Rudd said dur­ing the elec­tion cam­paign that this was nec­es­sary to pro­tect jobs into the fu­ture and was nec­es­sary also to pro­tect the en­vi­ron­ment.

On the ba­sis of sim­ple math­e­mat­ics and the ca­pa­bil­ity of the re­new­ables sec­tor to de­velop com­mer­cially quickly it will be a huge chal­lenge for Aus­tralia to meet the 2020 MRET tar­get.

It will be an even greater chal­lenge for the re­new­ables sec­tor to meet the 2050 emis­sions re­duc­tion pro­jec­tion which will re­quire the com­mer­cial­i­sa­tion of clean coal tech­nol­ogy and car­bon cap­ture and stor­age to be re­motely achiev­able. Th­ese tech­nolo­gies, which are again only just be­gin­ning to look ca­pa­ble of com­mer­cial de­vel­op­ment, will not make a se­ri­ous con­tri­bu­tion to the fed­eral Gov­ern­ment’s car­bon re­duc­tion plans by 2020 but they could by 2050.

It is not clear that the re­new­ables sec­tor can meet ei­ther tar­get with­out huge changes in the scale of their de­vel­op­ment ca­pa­bil­i­ties or through re­duc­ing the ex­ist­ing as well as fu­ture con­tri­bu­tion from fos­sil fu­els and the cur­rent elec­tric­ity gen­er­a­tion sec­tor.

That will have sig­nif­i­cantly more im­pact on house­hold elec­tric­ity bills than the $ 40 a year fore­cast when the 20 per cent MRET tar­get was an­nounced only six months ago.

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