On Wednesday morning Ben Potter’s article in the AFR Coalition fiddles as renewables remake grid told business leaders and politicians what is actually happening before their eyes.
Over at the Oz the headline was:
Abbott call: Pull out of Paris deal
- NATS DEMAND THREE COAL POWER STATIONS
So, what is going on? We’ll look at the Nats first, then Abbott, and finally, the real world. Things are coming to a crunch point which will determine how Malcolm Turnbull’s stewardship is seen by future generations.
The Nationals want coal
The Australian claims to have obtained a copy of a working document prepared by the Nationals comprising a two-page list of demands. Prominent is that “a minimum of three” coal-fired power stations be built. The Nats are proposing a $5 billion fund which would only be available to generators providing 24-hour ‘baseload’ power. To them that means coal, gas or hydro.
The fund would consist of two parts – a “grant” fund and an “equity” fund. The grant fund would be used to:
“Extend the life of existing plants or increase capacity, including emissions reduction improvements… and rapid capacity improvements such as installing new units at existing stations.”
Grants would not cover standard maintenance for existing plants.
The equity fund is aimed at delivering at least three new plants with a capacity of at least 1200 megawatts. They are looking at a government-owned corporation with the funding off-budget.
Queensland LNP member George Christensen has said he will not support anything that does not have an incentive to build ‘baseload power’. Qld LNP senator Barry O’Sullivan said he was a strong advocate of new clean coal-fired power generators.
Administratively the fund would sit within the infrastructure portfolio held by Nationals leader Michael McCormack.
Malcolm Farr calls them and backbench Liberals such as Craig Kelly, who chairs the government backbench environment and energy committee, “Coalsheviks” because they have an interest in a command economy they never thought of before.
Abbott bells the cat?
Believe it or not, Graham Lloyd, the environment editor of The Australian, wrote an opinion piece Abbott bells the cat: why are we still in climate pact?
Phillip Coorey says it was the week Abbott went from feared to isolated. Most Liberals and the Nationals want to stay clear of him and his possible leadership ambitions. They want to make the NEG work rather the blow the whole thing up. Still he may have a few rusted on supporters, such as Kevin Andrews and Eric Abetts.
Lloyd says Abbott believes that we should not follow policies that produce self-harm. He believes that with China and India unconstrained by Paris, and with the US out of it, we are likely to suffer economic harm through loss of markets and competitiveness for no good purpose. Abbott is reviving his position that climate science is “crap”.
He believes that storms are not more severe, droughts are not more prolonged, floods are not greater, and fires are not more intense than they were a century ago. According to Lloyd:
He rates degraded bushland and waterways, particulate pollution, water quality in the Third World, deforestation and urban overcrowding as higher-order priorities.
I think we can leave Tony Abbott where cartoonist David Rowe sees him:
Back in the real world
The real world Sophie Vorrath reports on the 2018 National Energy Outlook from Bloomberg New Energy Finance in an article Coal to be kaput in Australia by 2050, as renewables, batteries take over.
In fact, according to the NEO, renewables overtake fossil fuels as the major source of energy generation in Australia as early as 2031, before supplying 92 per cent of the total in 2050.
Renewables and storage make up 87 per cent of all new capacity additions to 2050, representing a $US138 billion ($A187 billion) investment opportunity.
By then, the report says, utility- and small-scale PV will have surged to 75GW, and wind to 48GW, while battery storage capacity will boom to at least 27GW in 2050 – the vast majority of which (23GW) will be installed by households and businesses behind-the-meter.
Gas capacity will need also to increase from 18GW today to 23GW in 2050, “to provide reliable supply in the rare periods when the wind is not blowing and the sun is not shining.”
In the AFR Ben Potter’s article on the BNEF report begins:
- Australian can regain its former position as a cheap energy superpower suitable for industries like aluminium smelting by embracing cheap wind and solar energy backed by battery, hydro storage and gas, a new report says.
“Renewables will become the backbone of the system and will provide reliable power for most of the time, and then batteries, pumped hydro and gas will be part of the equation to smooth out the variability of wind and solar energy and provide a backstop at times of low winds and prolonged cloud cover,” said Kobad Bhavnagri, head of Bloomberg New Energy Finance in Australia.
“That is the way that Australia can once again become a cheap energy superpower and industries like aluminium smelting will relocate onshore.”
Bloomberg New Energy Finance (BNEF) released its New Energy Outlook (NEO) 2018, predicting that wind, solar power and batteries will get cheaper, eclipsing coal power as a source of generation in Australia by 2035 and virtually eliminating it from the energy mix by 2050.
That was followed by a photo of Sanjeev Gupta and what he is up to.
Potter has been warning of climate risk in companies and financing, and the uninvestability of coal. For example:
Business and industry have been told.
A report by Green Energy Markets tells How Australia will get to 33% renewable electricity by 2020. For starters, in May renewables contributed 19.9 per cent of the electricity generated for the National Electricity Market (NEM) plus WA:
Actually, the latest National Electricity Audit from The Australia Institute, just out, shows renewables in the half year to June reaching nearly 19 per cent in the NEM, according to Potter. See also RenewEconomy.
Green Energy Markets found 5,542MW of renewables under construction:
Queensland currently leads the country in terms of large-scale installations, with more than 2GW under construction, followed by Victoria, which has around 1.75GW under construction.
NSW can only muster less than half Victoria’s tally.
They found that Australia will end up with 33 per cent renewables by 2020, will likely get to 40 per cent by 2030, and has enough in the pipeline to reach 85 per cent:
In the article linked at the head of the post Potter posts this table from Green Markets showing solar, wind and biofuel projects connected since January, under construction, committed or expected to be contracted under state auctions totalling 9 GW worth $16.4 billion, according to Tristan Edis from Green Energy Markets:
The same article tells us residential and small business rooftop solar installations combined in the half year totalled about 1.275GW, almost matching last year’s full-year record haul of 1.29GW. Customers are increasingly taking electricity generation into their own hands.
Prices have also fallen, remembering that generation forms roughly 25% of household bills:
Funny that, when we are using ever more renewables.
I’ll just mention that the Queensland price spike in Q1 was found not due to gaming the system, in an investigation by the Australian Energy Regulator.
Frydenberg and Turnbull are claiming credit for the reduction in prices, citing their jawboning of the gas industry and retailers.
Jawboning retailers probably does not affect the wholesale electricity price. As to gas, I suspect the main factor is that we are using less of it as cheap renewable energy increasingly supplies the market.
Finally, there was, I thought, a stunning and noteworthy article by Giles Parkinson The changing shape of wind and solar in Australia’s grid.
Firstly, a number of projects under development are setting themselves up to become ‘baseload renewable energy projects’ by using wind, solar and some form of storage, so that they have completely instantaneous capacity to supply electricity as needed 24/7. Two such are Kennedy Energy Park and the Kidston project, both in North Queensland under the noses of some of the most rusted on ‘Coalsheviks’.
Secondly, there is a market for:
- the offering of “firming contracts” to those looking to source a significant amount of their supply from wind and solar, but wary of wholesale price risks when the sun don’t shine and the wind don’t blow.
These include “proxy revenue swaps” currently being marketed by Macquarie Capital.
The bottom line is that a significant manufacturing facility such as packaging giant Orora can strike a long-term power purchasing agreement which protects them from supply failure and price spikes.
It may be the first to use “proxy revenue swaps”, but this PPA:
- is just the latest in a spate of major corporate deals that have connected big industrial energy users like Sun Metals, the Laverton steel works, Telstra and miners and manufacturing groups in South Australia to wind and solar.
Some, like CUB, Mars Australia, and the University of Queensland, are going the whole hog and sourcing 100 per cent of their demand with renewables – often at stunningly low prices.
PPAs are struck directly with the generators, leaving out the retailers.
With all this going so swimmingly without a signed and sealed NEG there may be one brutal moment of political opportunity to head renewables off at the pass. That moment is now, although if you just looked at what was happening on the ground you would think the present momentum unstoppable.
Malcolm Turnbull once said he would not lead a party that wasn’t as committed to action on global warming as he was. His legacy to future generations is soon to be decided.
And we can only hope that Labor politicians don’t become complicit.