Future's not looking sunny

www.smh.com.au
March 6, 2010

THE results are in and, going by the official projections, it's not looking encouraging for the penetration of renewable energy into the Australian market over the next 20 years - particularly solar. Federal Energy Minister Martin Ferguson released the first Australian Energy Resource Assessment this week, a comprehensive compilation of our renewable and non-renewable energy resources.

Published by Geoscience Australia and the Australian Bureau of Agricultural Resource Economics (ABARE), it says that Australia could be a clean-energy superpower with a rich diversity of world-class solar, wind, geothermal and wave/tidal energy resources, as yet largely undeveloped. The assessment also includes projections, based on ABARE studies not yet released, of the potential uptake of renewable energy in electricity generation (which accounts for around half of Australia's total greenhouse gas emissions).

ABARE's projections assume a cut in overall emissions of 5 per cent by 2020 - as the government pledged to do under the Copenhagen Accord - and unspecified emissions reductions thereafter, consistent with earlier Treasury modelling. It also assumes the carbon pollution reduction scheme (CPRS) passes, our no-nuclear policy stays, and there is no significant adoption of carbon capture and storage technology over the next 20 years.

ABARE expects electricity demand would grow by half given continued growth in energy use, rising 1.8 per cent a year to 2030. The early emissions cuts would largely be achieved through a 20 per cent renewable energy target (RET). Once the renewable energy target is reached, ABARE expects the market share of renewable energy to drop back slightly, from 20 per cent to 19 per cent between 2020 and 2030. According to the report, the CPRS is fully replaced by the RET from 2020, but there would be a slight decline in the uptake of renewables as gas increases its market share.

So from now until 2030, it says, Australia's electricity generation will rise from 247TWh to 366TWh and will come less from coal (down from 77 per cent to 43 per cent), more from gas (up from 16 per cent to 37 per cent) and more from renewables (from 7 per cent to 19 per cent). Hydro is least likely to be taken up, according to ABARE, generating 3.5 per cent of our overall electricity in 2030. That's because forecast climate change means we're increasingly short of water. Wind could grow quickly as a sector, with a growth rate of 12 per cent a year, to provide 12 per cent of the country's power supply.

Geothermal, so far unproven in this country, could grow fastest at 18 per cent a year, going from next to nothing to 6TWh to account for 1.5 per cent of electricity production. That's faster and bigger than solar, which goes from 0.1TWh to just 4TWh - a growth rate of 17 per cent a year for 20 years but still representing just 1 per cent of total production in 2030. The government commissioned the non-profit US Electric Power Research Institute (EPRI) to model the cost-competitiveness of non-renewable and renewable energy technologies in Australia, with the help of WorleyParsons and an industry and government reference panel.

EPRI's data has not been published yet but the assessment includes the ''levellised cost'' of a range of technologies in 2015 and 2030. The levellised cost is the revenue, per unit of electricity generated, needed to break even over the life of a power station. The estimates did not include a carbon price and did not factor in transmission or network costs. CO2 emissions count those from electricity generation only - they don't factor in emissions from mining coal and gas uranium.

To some observers, the costs look high across the board at $70 per MWh and above - roughly double the prices we're used to. The upshot is that wind and geothermal - specifically, geothermal energy from hot sedimentary aquifers - jump straight to the top of the merit order. That's great. But nuclear power, gas and coal with carbon capture and storage (CCS), beat all forms of solar. The Australian Solar Energy Society was not invited to join the EPRI reference panel and chief executive John Grimes rejected the findings yesterday. ''There are some fundamental assumptions that we would question,'' he said. ''They're showing PV (photovoltaic) as being cheaper than concentrating solar thermal-trough technology, and it's just not the case.''

Grimes says the actual cost of solar thermal today is around $200 per MWh and, in the US, Google-backed developers are quoting $US120-180 per MWh ($A133). ''We're forecasting a cost reduction of at least 50 per cent over the period, which would put it in parity with non-renewable energy by 2030, if not below,'' he said. ''The sooner the government invests in solar thermal technology, the sooner the price will fall. The opportunity for Australia in large-scale, utility-sized, solar-thermal plants is not reflected in this report.''

Australian Greens deputy leader Christine Milne was also scathing. ''Nobody, with the possible exception of Martin Ferguson, takes ABARE's energy reports seriously any more, and this latest is no exception,'' Senator Milne said. "Anyone who thinks that renewables will decline in Australia between 2020 and 2030 is living in a parallel universe, or deliberately ignoring the clear evidence of a boom in these zero emissions technologies," she said.

paddy.manning@fairfaxmedia.com.au