That’s according to Ross Gittens, drawing from Ross Garnaut.
Garnaut says that since his second review in 2011 there have been four big changes in the cost of renewable energy relative to the cost of energy from coal or gas.
First, costs of renewables have fallen beyond expectations. His review assumed a few per cent a year. In fact, costs have fallen by about five-sixths since that time.
Second, there have been “transformational improvements” in battery storage technology at the level of the electricity grid.
Third, there’s been a dramatic reduction in the cost of borrowing money for capital works.
Fourth, there’s been a dramatic increase in the cost of gas – and thus gas-fired electricity.
A major part of the reason for gas prices is that with the development of coal seam gas in Queensland our domestic prices are now set at export parity level. Worse than that, three foreign companies have installed huge gas liquefaction plants in Gladstone. They aren’t getting enough gas to make a return on investment, so are at times are bidding gas prices well above export parity.
- Ten years ago Australia had the developed world’s cheapest natural gas – about a third of prices in the US. Today, our prices are about three times higher than in the US.
Not-so-old gas-fired plants are close to becoming stranded assets.
Battery costs are coming down; there is the possibility of pumped storage.
Nowhere in the developed world has solar and wind resources together so abundant, says Garnaut. We have a natural advantage.
- “Play our cards right, and Australia’s exceptionally rich endowment per person in renewable energy resources makes us a low-cost location for energy supply in a low-carbon world economy.
“That would make us the economically rational location within the developed world of a high proportion of energy-intensive processing and manufacturing activity.
“Play our cards right, and Australia is a superpower of the low-carbon world economy.”
In RenewEconomy today, another study from the ANU which:
- suggests that with most of Australia’s current fleet of coal generators due to retire before 2030, a mix of solar PV and wind energy, backed up by pumped hydro, will be the cheapest option for Australia, and this includes integration costs.
The report says that wind is currently about $64/MWh and solar $78/MWh, but the costs of both technologies are falling fast, with both expected to cost around $50/MWh when much of the needed capacity is built. With the cost of balancing, this results in a levellised cost of energy (LCOE) of around $75/MWh.
By contrast, the LCOE of coal is $80/MWh, and some estimates – such as those by Bloomberg New Energy Finance which adds in factors such as the cost of finance risk – put it much higher.
Blakers says his team did not need to dial that higher price of coal into the equation: “We don’t include a risk premium or carbon pricing or fuel price escalation or threat of premature closure because renewables doesn’t need any of this to compete,” he says.
There is no need for a price on carbon either.
25 thoughts on “Australia could be a renewable energy superpower”
If this is true, and as I’m told fossil fuels get way more subsidies than renewables is true then the only answer is a total moratorium on ALL energy subsides.
After a small to medium bump in prices ( constantly rising anyway ), a flood of investment would enter capitalising on the most cost effective product.
And boom time for the renewable sector.
Attach the cost savings of to paying off the Debt and watch the votes roll in.
Jumpy, we need to “play our cards right” and I’m not sure what that means exactly in Garnaut’s mind.
There is a consensus that new coal is not going to happen, except for some fossils, which include our current government, and Peter Beattie oddly enough.
There is growing evidence that gas is not necessary as a transition fuel and should be bypassed. Labor isn’t there yet, not sure about the Greens.
I think existing gas-fired plants can be used as a transition tool; would agree that we don’t need new ones built, and the investors may well decide that anyway.
Natural gas has lower CO2 emissions than coal; not zero, but lower.
As I see it, moving through transition should be on an ever-decreasing emissions path.
By the way, I’ll be interested to see how the adoption of rechargeable tools such as drills, hedge trimmers, small lawnmowers etc reduce the sales of two-stroke petroleum fuels over the next 2-3 years. Tradies? Farmers? DIY householders?
Every electric cordless battery I own gets charged at home every night. Not as cost effective for me or the boys as charging on site but if we could reduce that cost to less than zero, good.
Would you support a moratorium on energy subsidies if you were convinced that it would speed up the renewable/fossil ratio switch ?
Power subsidies are a diversion and a mindless removal of subsidies may lead to poor decisions. What is important is that we should be following a planned transition to renewables. This planning should include some control over what renewables and storage are installed where and when. Ditto the planned shut down of fossil power stations and the setting up of standby contracts to help this process without creating power shortages.
Jumpy, to get support for an idea you need to demonstrate how your proposed energy transformation plan would work, not just pose a hypothetical notion. Then you have to demonstrate how and why the political will to make such a change would be generated.
Jumpy, of course I would “support a moratorium on energy subsidies if you were convinced that it would speed up the renewable/fossil ratio switch”.
The question is, as I think BilB is saying, what would convince me?
But John’s right, we need a plan, a plan that includes an orderly phase-out of dirty power.
Ambigulous, the biggie is transport, cars and public transport. As they electrify we will need more power, hopefully all genuinely clean.
Years ago, JohnD, when electricity retail rates were 13 cents per unit I demonstrated how a small levy on retail electricity rates would provide all of the funding to transition to renewables with minimum cost and disruption and without a carbon tax mechanism. Economists knew better and with the spectacular lack of vision of Rudd and then the destructive interference of Abbott we now all pay three times that levy extra for our electricity and we have barely begun the process of transitioning nationally (SA being the standout exception).
Ten years on and 80 billion dollars of transition opportunity lost to the actual reality of at least 200 billion dollars of profit reaping by energy operators from the economy is the outcome of that spectacular lack of strategic political foresight. Go Australia, great work.
That is why , against that total failure of rational thinking, I back distributed power generation and the down scaling of the national grid as being the eventual future for personal energy needs. Yet to feature in this equation is the transition to electric transportation, but it will come I believe in the form of longer electric range 12Kwhr PHEV’s with engines designed for running on E85.
From the ABC report of the ANU study:
Remember, this is just wind, sun and pumped storage.
Meanwhile the essential future technologies are being developed. One cornerstone of the off grid domestic property is the Liquid Piston Engine which will in the tiny water cooled 3kwhr power generation format running on natural gas from recycled cellulosic municipal waste (cardboard and packaging etc) will provide all of the energy required for non solar period power generation and with the heat from the engine providing hot water through those periods.
A likely bizarre outcome of Trump’s manic obsession with defence will be the accelerated development of this little technological gem.
Thanks for the great question Jumpy and encouraging to see everyone emphasising the relevance of planned transition for this important component which powers our nation, literally. Such a planned transition is no small thing to do, in fact highly complex, as there are many sides to it, with just about everyone being affected by it one way or another and most important there are some risks involved. Hence, to simply dump legacy fossil and then wait for disruptive renewables to go it’s merry way would be naive.
Malcolm Turnbull kind off tries to say the same in a round about way, while undignifyingly also trying not to upset the mining and coal lobby as well as the troglodyte voters supporting his government. But given Malcolm’s or should I say the Coalition party’s track record with the recent stuff up in trying to bring Centrelink into the 21st century, a much smaller digital transition, where the intent was ok but the follow through just pathetic. Or rather scary when you think that the agency is now leaking personal information to the press in an attempt to intimidate and shut up legitimate complaints. Then there is the ultimate f@ck up, the abysmal kneecapping of the NBN just to bad mouth Labor and get into government. And then in broader terms the dismantling of the csiro, the removal of R&D tax cuts which Howard brought in, the massive cuts to science, removal of its ministerial status. First they dumb down the nation, only for the Coalition to still fly that anti science populist denial of the massive risk that fossil fuel emissions pose, again just to stay in power. They are simply not a great position to achieve a soft landing in the energy transition stake.
To make my self clear, Turnbull and the present Government may have the technical ability for a soft landing but politically they have too much baggage to to come up with a decent policy nor do they have the record that they could actually implement it! The irony is Turnbull knows all this and now too affright to break the eggs to cook the omelet.
BTW If you google [electricity transition labor party] you get on top link a comprehensive Labor party document titled 50% RENEWABLE ENERGY BY 2030.
It mentions transition 13 times and I list the relevant parts below. Apologies for the lengthy extracts, but it shows the comprehensive case they are making and how important the take transition of the electricity sector.
“”One of the biggest changes impacting our economy will be climate change. This is driving the most profound restructuring of the world economy this century – the transition from fossil fuel based energy to renewable energy. This is not a theoretical issue – it is happening now and it is accelerating.
A Shorten Labor Government understands the fundamental importance of this transition and the massive opportunities that it brings. We will put a strong renewable energy sector at the centre of Australia’s response to the challenge of climate change. This will create jobs, drive investment and push down power bills for families and small businesses.
Every major economy is transitioning to renewable energy. Four of the world’s biggest economies have committed to add more renewable energy in the next 10 years than Australia’s entire electricity supply. China has announced that the quantum of zero emission generation capacity it intends to install by 2030 will be greater than all the coal-fired power plants that currently exist in China today and close to total current electricity generation capacity in the United States.
Labor wants to see that transition happen sooner.
Experience in this sector shows that technology is advancing rapidly, that the cost curves for renewable generation are declining at incredible rates and take up rates are increasing – all of which will support a faster transition. We’re seeing new advances in renewable energy come to the market every day at lower prices and we see renewable energy being used in things like electric cars.
Labor’s decision to set a goal that by 2030, 50 per cent of our electricity will be generated by renewable energy is based on expert advice. It is a challenging goal, but is very achievable with the right approach.
Setting a signal for transition
In setting a signal to 2030, we have outlined our vision for renewable energy and our electricity sector. We want to work with the industry and the community on how we achieve this national goal. Transitioning to renewables won’t make a smaller electricity industry – it will make it larger but the structure will evolve over time.
Smart Australian businesses are already transitioning to renewable energy – we will implement policies to encourage this. Our largest electricity companies like AGL and Origin are making more investments in renewables because they can see where the market is going.
Australians households are overwhelmingly embracing renewable energy. Last year, households in Australia installed a rooftop solar system, on average, every three minutes. There are now over 1.3 million Australian households with solar power on their roofs from less than 100, just 15 years ago.
Managing the transition
Australia’s electricity sector is experiencing enormous change driven by a range of global and domestic trends, including the age of Australia’s existing generators, the rise in domestic gas prices, the growth in distributed energy – especially rooftop solar – climate change and the need to progressively reduce the electricity sector’s carbon emissions and advances in renewable energy, storage and smart metering technology.
The Liberal Government has failed to develop a comprehensive strategy to modernise Australia’s electricity system. Instead, the renewable energy sector has been rocked by the Liberal Government’s reckless attacks and a hopelessly inadequate Energy White Paper.
A Shorten Labor Government will work with the industry, unions and other stakeholders to develop a plan for the orderly transition to renewables. Only Labor will look after the workers and communities affected by the modernisation of our electricity generating system.””
So when I google [electricity transition liberal party] I get on top link the Liberal party site with Turnbull Government taking strong new approach to clean and renewable energy innovation in Australia .
It mentions transition just once does not emphasise its importance, lacks a clear argument and is rather scant in details see relevant parts below.
“”The Clean Energy Innovation Fund will target projects such as large-scale solar with storage, off-shore energy, biofuels and smart grids.
Clean energy is central to the Government’s strategy to address climate change and meet our emissions reduction targets.
We are committed to supporting the development, demonstration and deployment of renewable technologies – which will help transition Australia’s energy sector to low emissions over the course of the century.””
To be fair I had a look at the second link High efficiency, low emissions coal power crucial to transition to clean energy: Frydenberg with the following body of text
“”In his first major speech of the year, Prime Minister Malcolm Turnbull has announced a shift of focus towards ‘clean’ coal, as part of efforts to stablise the nation’s electricity grid. Coal-fired power has long been a battleline in Australia’s effort to do its part to lower carbon emissions, with many calling for a moratorium on new coal mines in the inevitable evolution away from fossil fuel. AM spoke to Environment and energy minister Josh Frydenberg, who said countries throughout our region are building high efficiency, low emissions coal plants to help meet their Paris commitments.””
I wish Josh and Malcolm good luck in peddling their clean carbon crap. Specially now that it has a financial liability attached to it as outlined by APRA’s Geoff Summerhayes speech on Friday climate change risk at the Insurance Council of Australia conference on Friday. It’s the first time any of Australia’s financial authorities have so clearly addressed this topic (although many of their international peers have been doing so almost two years).
it’s not just about insurers (although reading The Australian’s report on the speech, you could be forgiving for getting that impression). Summerhayes clearly mentioned banks, asset managers and asset owners in his speech. In fact, he noted that while the “early focus” on climate risks tended to focus on catastrophe losses to insurers, there are now “a variety of other potential issues”.
These include the potential exposure of bank’s and insurers’ balance sheets to real estate impacted by climate change and to re-pricing (or even ‘stranding’) of carbon-intensive assets in other parts of their loan books. They also include exposure of asset owners and managers – an important consideration given the size of Australia’s superannuation sector and its heavy weighting towards carbon-intensive equities and a relatively resource-intensive domestic economy.
Importantly, Summerhayes addressed all key types of climate risk as identified by the Bank of England in late 2015. They are:
– physical risk around the effects of climate change;
– transition risk around the risks associated with shifting towards a zero net emissions economy- liabililty risk which can arise from either of the above risks and has particular importance to company directors, trustees, and insurers (but also can affect others).
(here comes the pointy bit, particularly to the just above mentioned)
So what can you expect to see from us (APRA)? Firstly, something you would already be aware of is a greater emphasis on stress testing for organisational and systemic resilience in the face of adverse shocks. It could be the case that, just as we would expect to see more sophisticated scenario-based analysis of climate risks at the firm level, we look at these risks as part of our system-wide stress testing.
You’re right, Brian.
I realised after posting that most of my hydrocarbon fuel use is for the car, not mower or other home tools. Bring on electric cars.
Jumpy, on cordless tools, do you mean recharging on site using solar PV, a portable set-up? Many businesses and householders could re-schedule power use, so that more of their solar power is used immediately, rather than stored or fed into grid at risible rates. Easier for retirees or people working at home, to run washing machines (e.g.) during sunny times instead of at dusk.
John, spot on. We need a plan, we need technical advice such as BilB provides here.
Ootz, I can see you had an active burst last night. I’ll have to get back and read it all more closely later.
I usually log off about midnight, and the last thing I did was to put up a new post APRA warns company directors about personal liability on climate change. You make valuable points here, but I think we should continue the discussion over there.
Good on you Ambigulous, you’re asking all the right questions and picking up on the real issues.
Here is the challenge. (not my figures, someone else’s and I rejected this roundly until I checked the figure to see that it was actually correct)…..
The real fossil fuel origin energy load per person is,……
7 kilowatts per person, 24 hours and 365 days per year.
Even a baby in a cradle is consuming the same 7 kilowatts per hour, every hour.
That energy consumption is the per capita share of Australia’s fossil fuel consumption. The important thing to appreciate here is that at least two thirds of that energy consumption, along with the subsequent CO2 release, is wasted as heat, so a transition to solar and renewables sourced, primarily electrical, economy reduces each person’s energy consumption by that two thirds to something more like 2.5 kilowatts per hours every hour.
So the electrical energy production challenge is for 525.6 billion kilowatt hours. But that includes aviation fuel and a range of other non electrical compatible energies so the figure is something less.
To produce that energy from wind alone would require some 12,000 of these
..optimally placed. Considering Australia already has over 2,000 turbines, albeit lower power units, it can be seen that such a renewable energy target is conceivable.
The requirement is for nothing like that many as distributed solar will deliver up to half of the total energy requirement in due course, and there are many other renewable energy sources.
Ootz, interesting work you’ve done there on the comparative energy policies. Labor gets marked down by the press, because their policy lacks detail and doesn’t mandate a legislated RET. We are not well-served by the ignorance of most of the media.
To be strictly fair to the LNP, they have asked Alan Finkel to come up with a new electricity plan, and formally their position is that the will review their climate policies this year. However, the sloganeering on behalf of the fossil-fuel industry seems to pre-empt a credible policy emerging.
Thanks Brian, in my first comment I just emphasised how important a smooth transition is for national electricity sector, as there is no question wether we will have a change or not. Also I demonstrated and argued why the current government is incapacitated to assure a smooth transition. Then with my second and third comment I just cut and pasted relevant section of the relevant public documents from each major party to highlight the lack of coherent policy directions by the government. I also had a look at the Finkel Preliminary Report , but did not comment for brevity reasons and restrictions of how many links I can post. Below relevant excerpts from the report:
““We now have a once-in-a-generation opportunity to reform the electricity sector to maximise its resilience in the face of rapid market changes.
“The goal is to ensure we have a secure electricity supply, at an affordable price for all Australian consumers, while meeting our international obligations to lower emissions.”
Dr Finkel said the first two months of the Review had highlighted the speed of change and the complexity of the NEM, the longest geographically connected power system in the world supplying 80 per cent of the nation’s electricity
“We are feeling the force of a global shift away from traditional electricity generation technologies to greater reliance on solar and wind generated electricity, which have very different characteristics,” Dr Finkel said.
Residential consumers are helping to drive the transformation as they look to take charge of their energy use and bring down their bills. Australia leads the world in solar rooftop penetration per capita, with more than 1.5 million systems installed. More than 1 million home battery storage systems are projected over the next 20 years.
“It is clear from our early consultations that investors are less confident today than they were in the past. There are solutions to the challenges we face and we will have to change the way we operate,” Dr Finkel said.
Some key observations identified in the Preliminary Report include:
-The security and reliability of our electricity supply is less assured than in the past
-The rate of technological change is unprecedented and consumer expectations are shifting rapidly
-Household energy bills rose on average almost 50 per cent (inflation adjusted) in the six years to 2014
-Inadequate supply and the high cost of natural gas are contributing to electricity price rises
-There is broad enthusiasm for a coordinated national approach to energy and emissions reduction policies.””
You really have to look at the details of each of those key observations to make sense of it. For example with the price increases you have to look at comparative increases in other countries, just as I keep saying we should look at where other electricity markets are at and look at their experience. I still have to post a comment I started to prepare on situation of pumped storage in Europe which provides an interesting insight into the overall state of the European electricity marked. Here an interesting teaser which will give you an idea about the scale of pumped hydro and the dynamics of European electricity marked. Cavernous Swiss power plant undermined by renewable energy
Thanks BilB at 11.23am
I do love an overarching estimate that puts national requirements into context.
Your point about heat loss is well made.
1. Better to burn gas directly under a saucepan, than to burn the gas in a power plant and transmit electrical energy to an electric stove element under the saucepan; latter has heat loss up the power plant chimney, not 100% conversion of combustion energy to electrical, transmission losses between power station and home.
2. Burn coal to generate electrical power; many heat
losses in the power plant, not just due to poor insulation or hot gases going up the chimney – rather the fundamental thermodynamic law governing extraction of energy from a Carnot cycle?
How do ordinary reverse-cycle air conditioners compare to the noisy refrigerative machines of the 1960s, as far as efficiency goes? I appreciate that home insulation and design for passive solar heating of buildings has improved. (That matters to us Victorians, shivering in our hovels, yearning to be free…)
So, how energy efficient are rooftop PV, wind turbines gigantic or small, and solar hot water systems? Are their efficiencies improving?
Renewables by their nature are not releasing chemical energy into the environment (unlike the quick release of ancient solar energy stored as chemical energy, when burning fossil fuels).
So while more efficient devices are valuable, your big point about two thirds of the energy seems not affected, so long as their operation, maintenance and manufacture are all powered by renewables?
I hope that’s more or less OK.
Ootz, I haven’t looked at Finkel yet, so I was interested in the extracts. Can’t do everything at once, and I think I’m getting slower!
I was interested in this from the Swiss pumped storage link:
Cheap solar in the middle of the day seems to be killing them, but then there is this:
Not sure grid-scale batteries are still experimental, but as renewables penetration increases, as it must, standby power will be needed and has to be paid for.
Keep in mind that:
1. The running costs of renewables such as solar PV and wind are negligible. Helps the economics of any energy storage system.
2. In general, pumped storage will need the grid to move power to and from the dam.
3. Pumped storage economics will be a lot more attractive if existing dams are used. (For example, the snowy system is already providing pumped storage.)
There may be potential for doing something by building a high dam somehwere close to a source of water such as Lake manchester/Whyvanhoe.
John, I’ve just checked, and Wivenhoe already has one pumped storage station – a 500 MW plant owned by CS Energy, a government-owned corporation.
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