There’s something the energy minister said when they announced the early closure of Victoria’s second-biggest coal-fired power station last week that was less than complete.
Yallourn, in the Latrobe Valley, provides up to 20% of Victoria’s power. It has been operating for 47 years. Since late 2017 at least one of its four units has broken down 50 times. Its workforce doubles for three to four months most years to deal with the breakdowns. It pumps out 3% of Australia’s carbon emissions.
In what might have been a rhetorical flourish, Energy Minister Angus Taylor warned of “price spikes every night when the sun goes down”.
Then he drew attention to what had happened when two other coal-fired power stations closed down — Victoria’s Hazelwood and South Australia’s Northern (South Australia’s last-remaining coal-fired generator).
He said “wholesale prices skyrocketed by 85%”.
And there he finished, without going on to detail what really mattered. South Australia and Victoria now have the lowest wholesale power prices in the National Electricity Market — that’s right, the lowest.
Coal-fired plants close, then prices fall
Before Northern closed, South Australia had Australia’s highest price.
Five years after the closure of Northern in 2016, and four years after the closure of Hazelwood in 2017, South Australia and Victorian have wholesale prices one-third lower than those in NSW and two-fifths lower than those in Queensland.
Something happened after the closure (largely as a result of the closure) that forced prices down.
South Australia became a renewables powerhouse.
The Australian National University’s Hugh Saddler points out that renewable-sourced power — wind and grid solar — now accounts for 62% of power supplied to the South Australian grid, and at times for all of it.
Much of it is produced near Port Augusta, where the Northern and Playford coal-fired power stations used to be, because that’s where the transmission lines begin.
Being even cheaper than the power produced by the old brown-coal-fired power stations, there is at times so much it that it sends prices negative, meaning generators get paid to turn off in order to avoid putting more power into the system than users can take out.
It’s one of the reasons coal-fired plants are closing: they are hard to turn off. They are just as hard to turn on, and pretty hard to turn up.
Coal can’t respond quickly
There are times (when the wind doesn’t blow and there’s not much sun, such as last Friday in South Australia) when prices can get extraordinarily high.
But coal-fired plants, especially brown-coal-fired plants such as Victoria’s Hazelwood and Yallourn and Victoria’s two remaining big plants, Loy Yang A and B, are unable to quickly ramp up to take advantage of them.
Although “dispatchable” in the technical meaning of the term used by the minister, coal-fired stations can’t fill gaps quickly.
But coal can barely move. As with nuclear power, coal-fired power needs to be either on (in which case it can only slowly ramp up) or off, in which case turning it on from a standing start would be way too slow.
What was a feature is now a bug
That’s why coal-fired generators operate 24-7, to provide so-called base-load, because they can’t really do anything else.
Brown coal generators are the least dispatchable. Brown coal is about 60% water. To make it ignite and keep boiling off the water takes sustained ultra-high temperatures. Units at Yallourn have to keep burning coal at high output (however low or negative the prices) or turn off.
In the days when the other sources of power could be turned on and off at will, this wasn’t so much of a problem.
Hydro or gas could be turned on in the morning when we turned on our lights and heaters and factories got down to business, and coal-fired power could be slowly ramped up.
At night, when there was less demand for coal-fired power, some could be created by offering cheap off-peak water heating.
But those days are gone. Nationwide, wind and solar including rooftop solar supplies 20% of our needs. It turns on and off at will.
Wind often blows strongly at night. What was a feature of coal — its ability to provide steady power rather than fill gaps – has become a bug.
Gas and batteries can fill gaps coal can’t
It’s as if our power system has become a jigsaw with the immovable pieces provided by the wind and the sun. It’s our job to fill in the gaps.
To some extent, as the prime minister says, gas will be a transition fuel, able to fill gaps in a way that coal cannot. But gas has become expensive, and batteries are being installed everywhere.
Energy Australia plans to replace its Yallourn power station with Australia’s first four-hour utility-scale battery with a capacity of 350 megawatts, more than any battery operating in the world today. South Australia is planning an even bigger one, up to 900 megawatts.
Australia’s Future Fund and AGL Energy are investing $2.7 billion in wind farms in NSW and Queensland which will fill gaps in a different way — their output peaks at different times to wind farms in South Australia and Victoria.
Filling the gaps won’t be easy, and had we not gone down this road there might still have been a role for coal, but the further we go down it the less coal can help.
As cheap as coal-fired power is, it is being forced out of the system by sources of power that are cheaper and more dispatchable. We can’t turn back.
Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University
Renewable energy capacity in Australia is expected to double, or even triple, over the next 20 years. There is one oft-overlooked question in this transition: where will it all be built?
Many renewable energy technologies need extensive land area. Wind turbines, for instance, cannot be located too close together, or they won’t work efficiently.
Some land will be in urban areas. But in the transition to 100% renewable energy, land in the regions will also be needed. This presents big challenges, and opportunities, for the farming sector.
Two important factors lie at the heart of a smooth transition. First, we must recognise that building renewable energy infrastructure in rural landscapes is a complex social undertaking. And second, we must plan to ensure renewables are built where they’ll perform best.
Bringing renewables to the regions
My research has examined how much land future energy generation will require, and the best way to locate a 100% renewable electricity sector in Australia.
A National Farmers Federation paper released last week called for a greater policy focus on renewable energy in regional Australia. It said so-called renewable energy zones should “be at the centre of any regionalisation agenda” and that this would give the technology a competitive advantage.
Hosting renewable energy infrastructure gives farmers a second income stream. This can diversify a farming business and help it withstand periods of financial pressure such as drought. An influx of new infrastructure also boosts regional economies.
But successfully integrating renewables into the agricultural landscape is not without challenges.
A wicked problem
Renewable energy enjoys widespread public support. However its development can lead to social conflicts. For example, opposition to wind wind farms, often concentrated at the local level, can be motivated by concerns about:
- perceived health impacts
- changes to the landscape
- damage to wildlife
- loss of amenity
- reduced property values
- procedural fairness.
A proposed A$2 billion wind energy development on Tasmania’s King Island shows the difficulties involved in winning community support. The project was eventually scrapped in 2014, for economic reasons.
Research showed how despite the proponents TasWind using a “best practice” mode of community engagement, the proposal caused much social conflict. For example, the holding of a vote served to further polarise the community, and locals were concerned that the community consultation process was not impartial.
The local context was also significant: the recent closure of an abattoir, and associated job losses, had increased the community’s stress and sense of vulnerability. This led some to frame the new proposal as an attempt by a large corporation to capitalise on the island’s misfortune.
The King Island experience has all the hallmarks of a “wicked problem” – one that is highly complex and hard to resolve. Such problems are common in policy areas such as land-use planning and environmental protection.
Wicked problems typically involve competing perspectives and interests. Often, there is no single, correct solution that works for everyone. For example at King Island, the abattoir closure did not mean all locals considered the wind energy proposal to be the answer.
When seeking to address complex policy problems, such as building renewable energy in regional areas, the best approach involves:
- collaboration between all affected parties, including people beyond the property where the infrastructure will be located
- relationship-building between all those involved, to allow each to see the other’s perspective
- shared decision-making on whether the infrastructure will be built, and where.
Competition for land is intensifying around the world, especially as the population grows. High consumption levels in the West require ever-more land for resources such as food, and land degradation is rife.
To help alleviate this pressure, renewable energy developments may need to co-exist with other land uses, such as cattle grazing around wind turbines. And in many cases, renewable energy should not be built on the most productive cropping land.
Recipe for success
A successful energy transition will require strategic, long-term planning to determine where renewable generation is best located.
Our research indicates that while many places in Australia have renewable energy potential, some are far better than others. Wind energy is usually best located near the coast, solar farms in arid inland regions and rooftop solar power in densely-populated eastern Australia.
Traditionally, Australia’s electricity grid infrastructure, such as high-voltage transmission lines, has been located around coal-fired generators and large population centres. Locating renewables near this infrastructure might make it cheaper to connect to the grid. But those sites may not be particularly windy or sunny.
Australia’s electricity grid should be upgraded and expanded to ensure renewables generators are located where they can perform best. Such strategic planning is just what the National Farmers Federation is asking for. Improved connectivity will also help make electricity supplies more reliable, allowing electricity to be transferred between regions if needed.
Making renewables do-able
The economic and environmental benefits of renewable energy are well known. But without social acceptance by communities hosting the infrastructure, the clean energy transition will be slowed. There is more work to be done to ensure new renewables projects better respond to the needs of regional communities.
And to ensure Australia best fulfils its renewable energy potential, electricity grid technology must be upgraded and expanded. To date, such planning has not featured prominently enough in public conversation and government policy.
If Australia can overcome these two tricky problems, it will be well on the way to ensuring more reliable electricity, the best return on investment and a low-carbon energy sector.
Less than two decades ago, South Australia generated all its electricity from fossil fuels. Last year, renewables provided a whopping 60% of the state’s electricity supply. The remarkable progress came as national climate policy was gripped by paralysis – so how did it happen?
Our research set out to answer this question. We analysed policy documents and interviewed major actors in South Australia’s energy transition, to determine why it worked when so many others fail.
We found governments need enough political power to push through changes despite opposition from established fossil fuel interests. They must also watch the energy market closely to prevent and respond to major disruptions, such as a coal plant closing, and help displaced workers and their towns deal with the change.
South Australia shows how good public policy can enable dramatic emissions reduction, even in a privately owned electricity system. This provides important lessons for other governments in Australia and across the world.
Why is the energy transition so hard?
In decades past, fossil-fuel-dominated energy markets revolved around a few big, powerful players such as electricity generators and retailers. Overhauling such a system inevitably disrupts these incumbents and redistributes benefits, such as commercial returns, to newer entrants.
This can create powerful – and often vocal – losers, and lead to political problems for governments. The changes can also cause hardship for communities, which can be rallied to derail the transition.
The change is even harder in a privatised energy market, such as South Australia’s, where electricity generators and other players must stay profitable to survive. In the renewables shift, fossil fuel businesses can quickly become commercially unviable and close. This risks supply shortages, as well as price increases like those after Victoria’s Hazelwood coal plant closed in 2017.
The obstacles help explain why a wealthy nation such as Australia, with extremely high per capita emissions and cheap, plentiful renewable resources, has struggled to embrace its clean energy potential. Even frontrunners in environmental policy, such as Germany, have struggled to make the switch.
How South Australia did it
South Australia is a dry state – extremely vulnerable to climate change – with abundant wind and solar resources. These factors gave it the motivation and means to transition to renewables.
The South Australian Labor government, elected in 2002, adopted a target for 26% renewables generation by 2020. At the time, wind energy was already a competitive supplier of new generation capacity in Europe, creating an established wind farm industry looking to invest.
Some of South Australia’s best onshore wind potential was located near transmission lines running 300 kilometres from Port Augusta to Adelaide. This greatly reduced the cost of connecting new wind generators to the grid.
South Australia benefited greatly from the federal renewable energy target, established by the Howard government in 2001 and expanded under the Rudd government.
The scheme meant the South Australian government didn’t need to offer its own incentives to meet its renewables target – it just had to be more attractive to private investors than other states. This was a relatively easy task. Under the state Labor government, South Australia’s energy and environment policy was consistent and coordinated, in contrast to the weak and inconsistent policies federally, and in other states.
To attract renewable energy investors, the government made laws to help construct wind farms in rural zones away from towns and homes. New wind farms were regularly underwritten by state government supply contracts.
As the transition progressed, the state’s largest coal generator, at Port Augusta, was wound back and eventually closed. To help workers and the town adjust, the state government supported employment alternatives, including a A$6 million grant towards a solar-powered greenhouse employing 220 people.
The Labor government enjoyed a long incumbency, and the state was not heavily reliant on the export of fossil fuels. This helped give it the political leverage to push through change in the face of opposition from vested interests.
It’s not easy being green
South Australia’s transition was not without controversy. Between 2014 and 2018, the state’s consumer electricity prices rose sharply. While critics sought to blame the increasing renewables share, it was largely due to other factors. These include South Australia’s continued reliance on expensive gas-fired power and the closure of the Hazelwood coal-fired power station in neighbouring Victoria, which fed large amounts of power into South Australia.
After a second, smaller blackout six months later, the then federal treasurer Scott Morrison brought a lump of coal into parliament and argued South Australia’s renewables transition was:
…switching off jobs, switching off lights and switching off air conditioners and forcing Australian families to boil in the dark as a result of their Dark Ages policies.
In 2018, Labor lost office to a Liberal party highly critical of the renewables transition in opposition. But by then, the transition was well advanced. In our view, specific legislation would have been required to halt it.
The state Liberal government has now firmly embraced the renewables transition, setting a target for 100% renewable electricity by 2030. By 2050, the government says, renewables could generate 500% of the state’s energy needs, with the surplus exported nationally and internationally.
Leading the world
The South Australia experience shows a successful renewables transition requires that governments:
have enough political power to advance policies that disadvantage energy incumbents
monitor the energy market and respond proactively to disruptions
limit damage to displaced workers, businesses, consumers and communities.
It also highlights the importance of having transmission infrastructure near renewable resources before new generators are built.
As energy markets the world over grapple with making the clean energy transition, South Australia proves it can be done.
Michael McGreevy, Research Associate, Flinders University and Fran Baum, Matthew Flinders Distinguished Professor, Foundation Director, Southgate Institute for Health, Society & Equity, Flinders University
With the cost of energy generated from wind and solar now less than coal, the share of Australia’s electricity coming from renewables has reached 23%. The federal government projects the share will reach 50% by 2030.
It is at this point that integrating renewables into the energy system becomes more costly.
We can add wind and solar farms at little extra cost when their share is low and other sources – such as coal and gas generators now – can compensate for their variability. At a certain point, however, there comes a need to invest in supporting infrastructure to ensure supply from mostly renewable generation can meet demand.
But by 2030, even with these extra costs, adding new variable renewable generation (solar and wind) to as high as a 90% share of the grid will still be cheaper than non-renewable options, according to new estimates from the CSIRO and Australian Energy Market Operator.
Calculating energy costs
International research, including from the International Renewable Energy Agency, suggests solar and wind power are now the cheapest new sources of electricity in most parts of the world.
Our estimates, made for the third annual “GenCost” report (short for generation cost), confirm this is also now the case in Australia.
We compare the cost of new-build coal, gas, solar photovoltaics (both small and large scale), solar-thermal, wind and a number of speculative options (such as nuclear).
What we’ve been able to more accurately estimate in the new report is the cost of integrating more and more renewable energy into the energy system, as coal and gas generators are retired.
The two key extra integration costs are energy storage and more transmission lines.
For any system dominated by renewables, storing energy is essential.
Storage means renewable energy can be saved when it is overproducing relative to demand – for example, in the middle of the day for solar, or during extended windy conditions. Stored energy can then be used when renewables cannot meet demand – such as overcast days or at night for solar.
Among options being considered for large-scale investment in Australia are batteries and pumped hydro energy storage (using excess renewable power to pump water back up to dams to again drive hydroelectric turbines).
Pumped hydro sites can provide storage for hours or days. There are three schemes in Australia: Talbingo and Shoalhaven in New South Wales, and Wivenhoe near Brisbane.
Battery costs have been falling steadily and tend to be most competitive for storage electricity for less than eight hours. South Australia’s big battery (officially known as the Hornsdale Power Reserve) is the most obvious example.
The other key cost to integrate more renewable energy generation into the electricity grid is building more transmission lines. Right now those lines mostly run from coal and gas power stations near coal mines.
But this not where new large-scale renewable generation will be. Solar farms are best placed inland, where there is less cloud cover, and in the mid to northern regions of Australia. Wind farms are generally better located in elevated areas and in the southern regions. We’ll need to build new transmission links to these “renewable energy zones”.
Transmission links between the states in the National Electricity Market (Queensland, New South Wales, Australian Capital Territory, Victoria, Tasmania and South Australia) will need to be improved so they can better support each other if one or more are experiencing low renewable energy output.
Total integration costs
So how much extra will it cost for Australia to have a higher share (up to 90%) of electricity from wind and solar (variable renewable energy)? The following graph summarises our findings based on 2030 cost projections.
The cost of generating energy from wind and solar (shown in light blue) is about A$40 per megawatt-hour (MWh). This is is slightly below current average market prices.
A higher share of renewable energy adds storage costs (in black) and transmission costs (grey and dark blue). These integration costs increase from A$4/MWh to A$20/MWh as the variable renewable energy share increases from 50% to 90%.
At 90% renewable energy, the total cost is A$63/MWh. But that’s still cheaper than the cost of new coal and gas-fired electricity generation, which is in the range of A$70 to A$90/MWh (under ideal assumptions of low fuel pricing and no climate policy risk).
The 2020-21 GenCost report is now in the formal consultation period with stakeholders including industry, government, regulators and academia. The final report is due to be published in March 2021.
Like so much of what I have done as Australia’s Chief Scientist, the electricity market review of 2017 was unexpected.
I was driving home after delivering a speech late one night in October 2016 when then federal energy minister Josh Frydenberg called and asked if I would chair a review of the National Electricity Market.
The urgent need had arisen as a consequence of the South Australian power blackout and ongoing concerns about the evolution of the electricity market. The call was brief; the task was huge.
This was new territory for me. While I have a PhD in electrical engineering, I had no specific interest in power systems. I had previously taken a business interest in green technologies. I had started a green lifestyle magazine, I had invested early in green technology stocks (and lost a small fortune), been involved in an electric car charging company, and I drove an electric car. I was an engineer but my work was in micro-electronics, at the scale of brain synapses. Large-scale power engineering had been my least favourite subject.
Now, it is close to my favourite. Work on low-emissions technologies has occupied a significant portion of my five-year term as Chief Scientist, which finishes at the end of this month.
Energy is a complex, vitally important topic, on which everyone has an opinion. The physics of human-induced global warming is irrefutable and a fast reduction in greenhouse gas emissions is urgent. Last summer’s bushfires were a grim reminder.
The Finkel Review at a glance
People often ask me whether climate policy is destined to destroy political leaders in Australia. Call me an optimist, but what I have seen is progress. When my proposed Clean Energy Target met its maker in October 2017, I was disappointed, but I was honestly excited the Australian, state and territory governments agreed to 49 out of 50 recommendations of our review.
Many of these recommendations ensured the electricity system would retain its operating strength as ever more solar and wind generation was added, and others ensured better planning processes for long-distance interconnectors and renewable energy zones. The public narrative that climate progress is moribund overlooks this ongoing work.
In early 2018, as I began to better understand the full potential of hydrogen in a low-emission future, I informally briefed Frydenberg, who responded by asking me to prepare a formal briefing paper for him and his state and territory counterparts. With support from government, industry, research and public interest colleagues, it developed last year into the National Hydrogen Strategy, which explored fully the state of hydrogen technology internationally and its potential for Australia.
The next step came this year with the Low Emissions Technology Statement, which articulates a solid pathway to tackle some of the pressing and difficult challenges en route to a clean economy. This was developed by Frydenberg’s successor, Angus Taylor, supported by advice from a panel I chaired.
When I was appointed Australia’s Chief Scientist in 2015, my predecessor Ian Chubb took me for a drink at Canberra’s Monster Bar. He had a prepared brief for me and we flicked through it. But Ian didn’t offer prescriptive advice, given the reality that the specifics of the role are defined by each chief scientist in line with requests from the government of the day.
I came to the role with a plan no more detailed than to work hard, do things well, be opportunistic, and always say yes – despite the device that sits on my desk and barks “no” whenever you hit the red button, a gift from my staff keen to see a more measured response to the many calls on my time.
I am most proud of my initiatives in STEM (science, technology, engineering and maths) education. These include the Australian Informed Choices project that ensures school students are given wise advice about core subjects that will set them in good stead for their careers; the STARPortal one-stop shop for information on extracurricular science activities for children; a report to the national education ministers on how businesses and schools can work together to provide context to science education; and the Storytime Pledge that acknowledges the fundamental importance of literacy by asking scientists to take a pledge to read to children.
But many of the high-profile tasks have arrived unexpectedly – the energy and low-emissions technology work, helping CSIRO with its report on climate and disaster resilience, and my work this year to help secure ICU ventilators and most recently, to review testing, contact tracing and outbreak management in the coronavirus pandemic.
The incoming Chief Scientist, Cathy Foley, will no doubt find, as I did, the job brings big surprises and unexpected turns. I expect she will also find government more receptive than ever to taking advice from experts in health, the physical sciences and the social sciences.
That doesn’t mean gratuitous advice. The advice we offer as scientists must be relevant and considered. Much of my advice has been in the form of deep-dive reviews, such as the report on national research facilities that was funded in the 2018 budget. But this year, amid the pandemic, we began something quite different: the Rapid Research Information Forum, which gives fast, succinct advice to government on very specific questions. This has been a highly effective way to synthesise the most recent research results with a very quick turnaround.
Nor does advice mean criticism. The Chief Scientist’s job is not to be the chief scientific critic of government policy. It is to advise ministers with the best that science has to offer. In turn, their job is to weigh that advice alongside inputs from other sectors and interests.
For me, working with the government has delivered results. Ministers have been receptive, have never told me what to say, and have agreed to the vast majority of my work being made public. In the energy sphere, we’ve made incredible progress. I am delighted to be staying on in an advisory role on low-emissions technologies.
When Frydenberg called late that evening in 2016, I had no idea where to begin to assess the state of the electricity market. And I had no idea that three years later we would be taking the first steps towards a clean hydrogen economy.
Now I am confident we will achieve the dramatic reduction in emissions that is necessary. Because of the immensity of the energy, industrial, agricultural and building systems, it will be slow and enormously difficult in a technical sense, politics aside.
Anyone who believes otherwise has not looked in detail at the production process for steel and aluminium. Converting these industries to green production is a mammoth task. But the political will is there. Industry is on the job, as is the scientific community, and the work has started.
The beginning of my term coincided with one of the most momentous scientific breakthroughs in a century: the detection of gravitational waves, literally ripples in the fabric of spacetime. This confirmed a prediction made by Einstein 100 years ago and was the final piece in the puzzle of his Theory of General Relativity.
As I finish my term, the contribution of Australian scientists to that discovery has just been recognised in the Prime Minister’s Prizes for Science. As chair of the Prizes selection committee, this was a nice bookend for me. More importantly, it’s a reminder we are playing the long game.
Several Australian states are going it alone on the the energy transition. The policies adopted by New South Wales, Victoria, Queensland and others represent major departures from the existing national approach, and run counter to the neoliberal principles underpinning the current system.
Most notably, the NSW Coalition government announced its electricity infrastructure roadmap. The government says by 2030, the policy will enable A$32 billion in private sector investment, and bring 12 gigawatts of new renewable energy capacity online. This is roughly equivalent to the amount of large-scale wind and solar installed in the National Electricity Market to date.
The states were forced to act on renewables after the federal government effectively vacated the policy space. The NSW law has been widely hailed as a victory for the clean energy transition, but also represents a return to the centrally planned system of decades past. In fact, it may well signal the breakup of the National Electricity Market as we know it today.
This presents risks and challenges which, if not managed carefully, may result in white elephants and higher electricity bills for consumers.
A very brief history of the National Electricity Market
Before the 1990s, electricity supply was fundamentally understood as a state responsibility. State-owned companies were tasked with generating, distributing and supplying electricity.
But in the 1990s, things changed, for several reasons. First, the cost of electricity supply was rising at a concerning rate. Second, neoliberalism began to dominate economic reform in Australia and internationally. Governments saw their jobs less as providing services (such as electricity), and more as promoting markets and competition to make systems, such as electricity supply, more efficient.
Also in the 1990s, two key inquiries – the Productivity Commission’s report into energy generation and distribution, and the Hilmer inquiry into national competition policy – identified issues in the electricity industry. These included wasteful overinvestment, largely driven by the political imperatives of keeping the lights on at all costs, and creating jobs in specific locations and electorates.
A new, reformed system, the National Electricity Market, began operating in 1998. It included all states and territories except Western Australia and the Northern Territory. In this new system, market logic – rather than central planners and bureaucrats – would decide the the location, timing and type of new energy generation investment. Private firms would supply electricity to consumers using price signals and contract markets to guide decisions.
Key to this new system was a set of highly prescriptive rules, and a process to develop them. This culminated in the Australian Energy Market Agreement and the establishment of three national energy market institutions we have today:
- Australian Energy Market Commission (AEMC), which develops the rules
- Australian Energy Regulator (AER), which enforces the rules
- Australian Energy Market Operator (AEMO), which operates the market and is supposed to follow the rules.
This market structure, and strict separation of powers and functions, was partly to isolate policy and investments from the political whims of the day.
The NSW government legislation is the latest, and perhaps most significant, in a string of policies to reject the old national market approach. Grattan Institute energy director Tony Wood described it as “the most extreme intervention we have seen to date, and moves even more closely to a centrally planned energy system and away from a market approach, than anything else I have seen to date”.
NSW is not alone here. In Victoria, the Andrews government is building the Southern Hemisphere’s biggest battery at Geelong, under a new law that sits outside the national framework. And government this month also announced a A$550 million budget plan to create six renewable energy hubs, and also bring another 600 megawatts of renewable energy generation online.
Such interventions are not limited to the states. The federal government is building the Snowy 2.0 pumped hydro scheme. It has threatened to build a 1,000MW gas generator, and has established a scheme to underwrite energy investments. And the Energy Security Board has the power to make rules outside the regular process, which it used most recently to tighten the standards around energy reliability.
The breakdown can largely be sheeted home to one factor: a lack of climate policy at a national level. This has left the states with little option than to manage the energy transition, and climate action, on their own.
The NSW policy will undoubtedly affect projects already in the pipeline. Following the announcement, both AGL and Energy Australia put the brakes on battery and gas projects in the state.
And the Australian Energy Council, which represents major electricity retailers, expressed “concern about its impact on the functioning of an increasingly interconnected National Electricity Market and the complexity it will certainly add to investment decisions”.
Energy market 2.0?
It’s hard to argue against a democratically elected state government pursuing what is within its constitutional remit – particularly given the federal failure on climate policy. But existing institutions and frameworks are not equipped to govern that kind of system.
So if the states do continue to go it alone, we need a new national accord which clarifies the roles and responsibilities of each government. That would ensure we don’t repeat mistakes of the past, and in particular excessive over investment for which consumers foot the bill.
Biomethane technology is no longer on the backburner in Australia after an announcement this week that gas from Sydney’s Malabar wastewater plant will be used to power up to 24,000 homes.
Biomethane, also known as renewable natural gas, is produced when bacteria break down organic material such as human waste.
The demonstration project is the first of its kind in Australia. But many may soon follow: New South Wales’ gas pipelines are reportedly close to more than 30,000 terajoules (TJs) of potential biogas, enough to supply 1.4 million homes.
Critics say the project will do little to dent Australia’s greenhouse emissions. But if deployed at scale, gas captured from wastewater can help decarbonise our gas grid and bolster energy supplies. The trial represents the chance to demonstrate an internationally proven technology on Australian soil.
What’s the project all about?
Biomethane is a clean form of biogas. Biogas is about 60% methane and 40% carbon dioxide (CO₂) and other contaminants. Turning biogas into biomethane requires technology that scrubs out the contaminants – a process called upgrading.
The resulting biomethane is 98% methane. While methane produces CO₂ when burned at the point of use, biomethane is considered “zero emissions” – it does not add to greenhouse gas emissions. This is because:
it captures methane produced from anaerobic digestion, in which microorganisms break down organic material. This methane would otherwise have been released to the atmosphere
it is used in place of fossil fuels, displacing those CO₂ emissions.
Biomethane can also produce negative emissions if the CO₂ produced from upgrading it is used in other processes, such as industry and manufacturing.
Biomethane is indistinguishable from natural gas, so can be used in existing gas infrastructure.
The Malabar project, in southeast Sydney, is a joint venture between gas infrastructure giant Jemena and utility company Sydney Water. The A$13.8 million trial is partly funded by the federal government’s Australian Renewable Energy Agency (ARENA).
Sydney Water, which runs the Malabar wastewater plant, will install gas-purifying equipment at the site. Biogas produced from sewage sludge will be cleaned and upgraded – removing contaminants such as CO₂ – then injected into Jemena’s gas pipelines.
Sydney Water will initially supply 95TJ of biomethane a year from early 2022, equivalent to the gas demand of about 13,300 homes. Production is expected to scale up to 200TJ a year.
Biomethane: the benefits and challenges for Australia
A report by the International Energy Agency earlier this year said biogas and biomethane could cover 20% of global natural gas demand while reducing greenhouse emissions.
As well as creating zero-emissions energy from wastewater, biomethane can be produced from waste created by agriculture and food production, and from methane released at landfill sites.
The industry is a potential economic opportunity for regional areas, and would generate skilled jobs in planning, engineering, operating and maintenance of biogas and biomethane plants.
Methane emitted from organic waste at facilities such as Malabar is 28 times more potent than CO₂. So using it to replace fossil-fuel natural gas is a win for the environment.
It’s also a win for Jemena, and all energy users. Many of Jemena’s gas customers, such as the City of Sydney, want to decarbonise their existing energy supplies. Some say they will stop using gas if renewable alternatives are not found. Jemena calculates losing these customers would lose it A$2.1 million each year by 2050, and ultimately, lead to higher costs for remaining customers.
The challenge for Australia will be the large scale roll out of biomethane. Historically, this phase has been a costly exercise for renewable technologies entering the market.
The global picture
Worldwide, the top biomethane-producers include Germany, the United Kingdom, Sweden, France and the United States.
The international market for biomethane is growing. Global clean energy policies, such as the European Green Deal, will help create extra demand for biomethane. The largest opportunities lie in the Asia-Pacific region, where natural gas consumption and imports have grown rapidly in recent years.
Australia is lagging behind the rest of the world on biomethane use. But more broadly, it does have a biogas sector, comprising than 240 plants associated with landfill gas power units and wastewater treatment.
In Australia, biogas is already used to produce electricity and heat. The step to grid injection is sensible, given the logistics of injecting biomethane into existing gas infrastructure works well overseas. But the industry needs government support.
Last year, a landmark report into biogas opportunities for Australia put potential production at 103 terawatt hours. This is equivalent to almost 9% of Australia’s total energy consumption, and comparable to current biogas production in Germany.
A clean way to a gas-led recovery
While the scale of the Malabar project will only reduce emissions in a small way initially, the trial will bring renewable gas into the Australia’s renewable energy family. Industry group Bioenergy Australia is now working to ensure gas standards and specifications are understood, to safeguard its smooth and safe introduction into the energy mix.
The Morrison government has been spruiking a gas-led recovery from the COVID-19 recession, which it says would make energy more affordable for families and businesses and support jobs. Using greenhouse gases produced by wastewater in Australia’s biggest city is an important – and green – first step.