Will the National Energy Guarantee hit pause on renewables?

Frank Jotzo, Australian National University and Salim Mazouz, Australian National University

The federal government’s new National Energy Guarantee (NEG) proposal looks likely to put the brakes on renewable energy investment in Australia. And based on the sparse detail so far available, there are serious questions about whether the plan really can deliver on its aims of reliability, emissions reductions and lower prices.

The broad mechanism design could be made to work, but to be effective in driving the transition of the energy sector it would need adequate ambition on carbon emissions and very careful thought about the reliability requirements of the future electricity grid.

Read more: Infographic: the National Energy Guarantee at a glance

The policy may well be used to force investment into the fossil fuel power fleet through regulatory intervention, and perhaps for the power sector to buy emissions offsets. This would risk locking in a carbon-intensive power system.

The NEG: top or flop?

Having rejected several options – including an emissions intensity scheme, the Clean Energy Target put forward by the Finkel Review, and any continuation of the Renewable Energy Target – the government has finally managed to get a policy proposal through the party room, formulated in advice by its newly established Energy Security Board.

Analysts’ initial reactions have ranged from unbridled enthusiasm to derisive rejection. It depends on political judgments, expectations about how the scheme might operate in practice, and how high one’s expectations are for efficiency and environmental effectiveness.

The politics of this are complicated, but there are hopes that the Labor opposition will agree to the scheme in principle. But the decision is ultimately with the Australian states, which would need to pass legislation to implement it.

Reliability guarantee: supporting fossil fuels?

The first element of the NEG is the “reliability guarantee”. This would require electricity retailers to buy some share of their electricity from “dispatchable” sources that can be readily switched on. The NEG list includes coal and gas, as well as hydro and energy storage – essentially, anything except wind and solar.

The NEG proposal might be informed by a political imperative to support coal. As John Quiggin has pointed out, defining coal-fired plants as dispatchable is questionable at best: they have long ramp-up times and are sometimes unavailable.

The Australian Energy Market Operator (AEMO) would prescribe the share of the “dispatchable” power sources and perhaps also the mix of technologies in retailers’ portfolios, separately in each state. This would be a remarkably interventionist approach.

Demand from retailers for the power sources they are told to use could trigger investment in new gas generators, refurbishment of existing coal plants, and some investment in energy storage. It is difficult to see how it would force the building of new coal plants, given their very large upfront cost and long-term emissions liabilities.

Would electricity prices be lower, as the Energy Security Board’s advice claims? Investment in new power generation will tend to reduce prices, cutting into profit margins. But the resulting investments will come at higher economic cost than market solutions, because they are determined by regulators’ orders made with a view to the short-term energy mix, not long-term cost-effectiveness. And there would be risk premiums on project finance, reflecting uncertainty about future policy settings.

Emissions guarantee: flexible but weak?

The NEG’s second pillar is the “emissions guarantee”. This would require retailers to keep their portfolio below some level of emissions intensity (carbon dioxide per unit of electricity).

This increases the demand for electricity from lower-emissions technologies, allowing them to command higher market prices and therefore encouraging investment in them. This price signal would benefit renewables and also favour gas over coal, as well as discriminating against the most polluting coal plants.

The Energy Security Board’s advice suggests that retailers would have flexibility in complying with that obligation, by buying and selling emissions components of their contracts, and potentially also using emissions offsets from outside the scheme to make up for any exceeding of emissions limits.

The reliability and emissions elements of the NEG interact with each other, and the net effect depends on the detailed implementation as well as the relative importance of the two components.

Given the politics within government, the weight could be on support for coal and gas generation. The reliability guarantee could therefore end up putting a tight lid on the amount of new wind and solar that can enter the system.

Renewables, gas or credits?

The Energy Security Board makes explicit reference to Australia’s Paris target of a 26-28% reduction in emissions, relative to 2005 levels, by 2030. Prime Minister Malcolm Turnbull has said the NEG will be expected to cut electricity emissions by a similar percentage, as a “pro rata” contribution to this goal.

But to meet the economy-wide target, the electricity sector would need to make deeper cuts, because emissions reductions are cheaper and easier here than elsewhere.

The Energy Security Board says it expects renewables to reach 28-36% by 2030. This is rather low, considering that the Finkel Review projected 42% under its proposed clean energy target, and 35% under business as usual. Other analyses have shown that much higher levels of renewables are achievable.

So if the NEG is not geared to support renewables, how could significant emissions reductions be achieved?

One way would be to replace coal with gas-fired power, and brown coal with black coal. But the government has flagged that it is opposed to closing old coal plants. And a large-scale shift to gas would raise electricity prices further, unless gas prices were to tumble.

Read more: The government’s energy policy hinges on some tricky wordplay about coal’s role

That leaves another option, mentioned in the Energy Security Board’s report: power retailers could buy emissions offset credits from elsewhere to make up for not meeting the emissions standard, specifically from projects under the government’s Emissions Reduction Fund (ERF).

This might be attractive for the government, as electricity retailers would then pay for ERF credits, rather than government as has been the case until now. It may also be attractive to the power industry, as it would reduce the cost of complying with the new obligations. Retailers would pass on the costs to their customers, so electricity consumers would end up paying for ERF projects.

Even assuming that all of the ERF’s emissions reductions are real (and some of them may not be), all this does is shift the adjustment burden from electricity to other sectors such as agriculture.

The ConversationThe NEG has the potential to reduce emissions effectively if the parameters are adjusted accordingly. But what seems more likely is that it will put the brakes on investment in renewables, solidify the status quo and delay the energy transition.

Frank Jotzo, Director, Centre for Climate Economics and Policy, Australian National University and Salim Mazouz, Research Associate, Centre for Climate Economics and Policy, Australian National University

This article was originally published on The Conversation. Read the original article.


After the storm: how political attacks on renewables elevates attention paid to climate change

File 20171008 25764 1l2bb7h

AAP/David Mariuz

David Holmes, Monash University

This time last year, Australia was getting over a media storm about renewables, energy policy and climate change. The media storm was caused by a physical storm: a mid-latitude cyclone that hit South Australia on September 29 and set in train a series of events that is still playing itself out.

The events include:

In one sense, the Finkel Review was a response to the government’s concerns about “energy security”. But it also managed to successfully respond to the way energy policy had become a political plaything, as exemplified by the attacks on South Australia.

New research on the media coverage that framed the energy debate that has ensued over the past year reveals some interesting turning points in how Australia’s media report on climate change.

While extreme weather events are the best time to communicate climate change – the additional energy humans are adding to the climate is on full display – the South Australian event was used to attack renewables rather than the carbonisation of the atmosphere. Federal MPs hijacked people’s need to understand the reason for the blackout “by simply swapping climate change with renewables”.

However, the research shows that, ironically, MPs who invited us to “look over here” at the recalcitrant renewables – and not at climate-change-fuelled super-storms – managed to make climate change reappear.

The study searched for all Australian newspaper articles that mentioned either a storm or a cyclone in relation to South Australia that had been published in the ten days either side of the event. This returned 591 articles. Most of the relevant articles were published after the storm, with warnings of the cyclone beforehand.

Some of the standout findings include:

  • 51% of articles were about the power outage and 38% were about renewables, but 12% of all articles connected these two.

  • 20% of articles focused on the event being politicised by politicians.

  • 9% of articles raised climate change as a force in the event and the blackouts.

  • 10% of articles blamed the blackouts on renewables.

  • Of all of the articles linking power outages to renewables 46% were published in News Corp and 14% were published in Fairfax.

  • Narratives that typically substituted any possibility of a link to climate change, included the “unstoppable power of nature” (18%), failure of planning (5.25%), and triumph of humanity (5.6%).

Only 9% of articles discussed climate change. Of these, 73% presented climate change positively, 21% were neutral, and 6% negative. But, for the most part, climate change was linked to the conversation around renewables: there was a 74% overlap. 36% of articles discussing climate change linked it to the intensification of extreme weather events.

There was also a strong correlation between the positive and negative discussion of climate change and the ownership of newspapers.

The starkest contrast was between the two largest Australian newspaper groups. Of all the sampled articles that mentioned climate change, News Corp was the only group to has a negative stance on climate change (at 50% of articles), but still with 38% positive. Fairfax was 90% positive and 10% neutral about climate change.

Positive/negative stance of articles covering climate change by percentage.

Given that more than half of all articles discussed power outages, the cyclone in a sense competed with renewables as a news item. Both have a bearing on power supply and distribution. But, ironically, it was renewables that put climate change on the news agenda – not the cyclone.

Of the articles discussing renewables, 67% were positive about renewables with only 33% “negative” and blaming them for the power outages.

In this way, the negative frame that politicians put on renewable energy may have sparked debate that was used to highlight the positives of renewable energy and what’s driving it: reduced emissions.

But perhaps the most interesting finding is the backlash by news media against MPs’ attempts to politicise renewables.

19.63% of all articles in the sample had called out (mainly federal) MPs for politicising the issue and using South Australians’ misfortune as a political opportunity. This in turn was related to the fact that, of all the articles discussing renewables, 67% were positive about renewables with only 33% supporting MPs’ attempts to blame them for the power outages.

In this way, while many MPs had put renewables on the agenda by denigrating them, most journalists were eager to cover the positive side of renewables.

Nevertheless, the way MPs sought to dominate the news agenda over the storm did take away from discussion of climate science and the causes of the cyclone. Less than 4% of articles referred to extreme weather intensifying as a trend.

This is problematic. It means that, with a few exceptions, Australia’s climate scientists are not able to engage with the public in key periods after extreme weather events.

When MPs, with co-ordinated media campaigns, enjoy monopoly holdings in the attention economy of news cycles, science communication and the stories of climate that could be told are often relegated to other media.

The ConversationWith thanks to Tahnee Burgess for research assistance on this article.

David Holmes, Director, Climate Change Communication Research Hub, Monash University

This article was originally published on The Conversation. Read the original article.

Poor households are locked out of green energy, unless governments help

Alan Pears, RMIT University

A report released this week by the Australian Council of Social Service has pointed out that many vulnerable households cannot access rooftop solar and efficient appliances, describing the issue as a serious problem.

It has provoked controversy. Some have interpreted the report as an attack on emerging energy solutions such as rooftop solar. Others see it as exposing a serious structural crisis for vulnerable households.

The underlying issue is the fundamental change in energy solutions. As I pointed out in my previous column, we are moving away from investment by governments and large businesses in big power stations and centralised supply, and towards a distributed, diversified and more complex energy system. As a result, there is a growing focus on “behind the meter” technologies that save, store or produce energy.

What this means is that anyone who does not have access to capital, or is uninformed, disempowered or passive risks being disadvantaged – unless governments act.

The reality is that energy-efficient appliances and buildings, rooftop solar, and increasingly energy storage, are cost-effective. They save households money through energy savings, improved health, and improved performance in comparison with buying grid electricity or gas. But if you can’t buy them, you can’t benefit.

In the past, financial institutions loaned money to governments or big businesses to build power stations and gas supply systems. Now we need mechanisms to give all households and businesses access to loans to fund the new energy system.

Households that cannot meet commercial borrowing criteria, or are disempowered – such as tenants, those under financial stress, or those who are disengaged for other reasons – need help.

Governments have plenty of options.

  • They can require landlords to upgrade buildings and fixed appliances, or make it attractive for them to do so. Or a bit of both.

  • They can help the supply chain that upgrades buildings and supplies appliances to do this better, and at lower cost.

  • They can facilitate the use of emerging technologies and apps to identify faulty and inefficient appliances, then fund their replacement. Repayments can potentially be made using the resulting savings.

  • They can ban the sale of inefficient appliances by making mandatory performance standards more stringent and widening their coverage.

  • They can help appliance manufacturers make their products more efficient, and ensure that everyone who buys them know how efficient they are.

To expand on the last suggestion, at present only major household white goods, televisions and computer monitors are required to carry energy labels. If you are buying a commercial fridge, pizza oven, cooker, or stereo system, you are flying blind.

The Finkel Review made it clear that the energy industry will not lead on this. It clearly recommends that energy efficiency is a job for governments, and that they need to accelerate action.

The ConversationIt’s time for governments to get serious about helping everyone to join the energy transition, not just the most affluent.

Alan Pears, Senior Industry Fellow, RMIT University

This article was originally published on The Conversation. Read the original article.

Solar is now the most popular form of new electricity generation worldwide

Andrew Blakers, Australian National University

Solar has become the world’s favourite new type of electricity generation, according to global data showing that more solar photovoltaic (PV) capacity is being installed than any other generation technology.

Worldwide, some 73 gigawatts of net new solar PV capacity was installed in 2016. Wind energy came in second place (55GW), with coal relegated to third (52GW), followed by gas (37GW) and hydro (28GW).


Together, PV and wind represent 5.5% of current energy generation (as at the end of 2016), but crucially they constituted almost half of all net new generation capacity installed worldwide during last year.

It is probable that construction of new coal power stations will decline, possibly quite rapidly, because PV and wind are now cost-competitive almost everywhere.

Hydro is still important in developing countries that still have rivers to dam. Meanwhile, other low-emission technologies such as nuclear, bio-energy, solar thermal and geothermal have small market shares.

PV and wind now have such large advantages in terms of cost, production scale and supply chains that it is difficult to see any other low-emissions technology challenging them within the next decade or so.

That is certainly the case in Australia, where PV and wind comprise virtually all new generation capacity, and where solar PV capacity is set to reach 12GW by 2020. Wind and solar PV are being installed at a combined rate of about 3GW per year, driven largely by the federal government’s Renewable Energy Target (RET).

This is double to triple the rate of recent years, and a welcome return to growth after several years of subdued activity due to political uncertainty over the RET.

If this rate is maintained, then by 2030 more than half of Australian electricity will come from renewable energy and Australia will have met its pledge under the Paris climate agreement purely through emissions savings within the electricity industry.

To take the idea further, if Australia were to double the current combined PV and wind installation rate to 6GW per year, it would reach 100% renewable electricity in about 2033. Modelling by my research group suggests that this would not be difficult, given that these technologies are now cheaper than electricity from new-build coal and gas.

Renewable future in reach

The prescription for an affordable, stable and achievable 100% renewable electricity grid is relatively straightforward:

  1. Use mainly PV and wind. These technologies are cheaper than other low-emission technologies, and Australia has plenty of sunshine and wind, which is why these technologies have already been widely deployed. This means that, compared with other renewables, they have more reliable price projections, and avoid the need for heroic assumptions about the success of more speculative clean energy options.

  2. Distribute generation over a very large area. Spreading wind and PV facilities over wide areas – say a million square kilometres from north Queensland to Tasmania – allows access to a wide range of different weather, and also helps to smooth out peaks in users’ demand.

  3. Build interconnectors. Link up the wide-ranging network of PV and wind with high-voltage power lines of the type already used to move electricity between states.

  4. Add storage. Storage can help match up energy generation with demand patterns. The cheapest option is pumped hydro energy storage (PHES), with support from batteries and demand management.

Australia currently has three PHES systems – Tumut 3, Kangaroo Valley, and Wivenhoe – all of which are on rivers. But there is a vast number of potential off-river sites.

Potential sites for pumped hydro storage in Queensland, alongside development sites for solar PV (yellow) and wind energy (green). Galilee Basin coal prospects are shown in black.
Andrew Blakers/Margaret Blakers, Author provided

In a project funded by the Australian Renewable Energy Agency, we have identified about 5,000 sites in South Australia, Queensland, Tasmania, the Canberra district, and the Alice Springs district that are potentially suitable for pumped hydro storage.

Each of these sites has between 7 and 1,000 times the storage potential of the Tesla battery currently being installed to support the South Australian grid. What’s more, pumped hydro has a lifetime of 50 years, compared with 8-15 years for batteries.

Importantly, most of the prospective PHES sites are located near where people live and where new PV and wind farms are being constructed.

Once the search for sites in New South Wales, Victoria and Western Australia is complete, we expect to uncover 70-100 times more PHES energy storage potential than required to support a 100% renewable electricity grid in Australia.

Potential PHES upper reservoir sites east of Port Augusta, South Australia. The lower reservoirs would be at the western foot of the hills (bottom of the image).
Google Earth/ANU

Managing the grid

Fossil fuel generators currently provide another service to the grid, besides just generating electricity. They help to balance supply and demand, on timescales down to seconds, through the “inertial energy” stored in their heavy spinning generators.

But in the future this service can be performed by similar generators used in pumped hydro systems. And supply and demand can also be matched with the help of fast-response batteries, demand management, and “synthetic inertia” from PV and wind farms.

Wind and PV are delivering ever tougher competition for gas throughout the energy market. The price of large-scale wind and PV in 2016 was A$65-78 per megawatt hour. This is below the current wholesale price of electricity in the National Electricity Market.

Abundant anecdotal evidence suggests that wind and PV energy price has fallen to A$60-70 per MWh this year as the industry takes off. Prices are likely to dip below A$50 per MWh within a few years, to match current international benchmark prices. Thus, the net cost of moving to a 100% renewable electricity system over the next 15 years is zero compared with continuing to build and maintain facilities for the current fossil-fuelled system.

Gas can no longer compete with wind and PV for delivery of electricity. Electric heat pumps are driving gas out of water and space heating. Even for delivery of high-temperature heat for industry, gas must cost less than A$10 per gigajoule to compete with electric furnaces powered by wind and PV power costing A$50 per MWh.

Importantly, the more that low-cost PV and wind is deployed in the current high-cost electricity environment, the more they will reduce prices.

Then there is the issue of other types of energy use besides electricity – such as transport, heating, and industry. The cheapest way to make these energy sources green is to electrify virtually everything, and then plug them into an electricity grid powered by renewables.

A 55% reduction in Australian greenhouse gas emissions can be achieved by conversion of the electricity grid to renewables, together with mass adoption of electric vehicles for land transport and electric heat pumps for heating and cooling. Beyond this, we can develop renewable electric-driven pathways to manufacture hydrocarbon-based fuels and chemicals, primarily through electrolysis of water to obtain hydrogen and carbon capture from the atmosphere, to achieve an 83% reduction in emissions (with the residual 17% of emissions coming mainly from agriculture and land clearing).

Doing all of this would mean tripling the amount of electricity we produce, according to my research group’s preliminary estimate.

The ConversationBut there is no shortage of solar and wind energy to achieve this, and prices are rapidly falling. We can build a clean energy future at modest cost if we want to.

Andrew Blakers, Professor of Engineering, Australian National University

This article was originally published on The Conversation. Read the original article.

Who tilts at windmills? Explaining hostility to renewables

Marc Hudson, University of Manchester

Studying the catastrophe that has been Australian climate and energy policy these past 30 years is a thoroughly depressing business. When you read great work by Guy Pearse, Clive Hamilton, Maria Taylor and Phillip Chubb, among others, you find yourself asking “why”?

Why were we so stupid, so unrelentingly shortsighted? Why did the revelation in 2004 that John Howard had called a meeting of big business to help him slow the growth of renewables elicit no more than a shrug? Why did policy-makers attack renewable energy so unrelentingly?

About now, readers will be rolling their eyes and saying either “follow the money, stupid!” or “they are blinded by their marketophilia”. Fair enough, and they have a point.

My recently published paper, titled “Wind beneath their contempt: why Australian policymakers oppose solar and wind energy”
outlines the hostility to renewables from people like former treasurer Joe Hockey, who found the wind turbines around Canberra’s Lake George “utterly offensive”, and former prime minister Tony Abbott, who funded studies into the “potential health impacts” of wind farms.

It also deals with the policy-go-round that led to a drop in investment in renewables.

In a search for explanations for this, my paper looks at what we academics call “material factors”, such as party donations, post-career jobs, blame avoidance, diminished government capacity to act, and active disinformation by incumbents.

I then turn to ideological factors such as neoliberalism, the “growth at all costs” mindset, and of course climate denial.

Where it gets fun – and possibly controversial – is when I turn to psychological explanations such as what the sociologist Karl Mannheim called “the problem of generations”. This is best explained by a Douglas Adams quote:

Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.
Anything that’s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
Anything invented after you’re thirty-five is against the natural order of things.

Over the past 50 years, white heterosexual middle-class males with engineering backgrounds have felt this pattern particularly keenly, as their world has shifted and changed around them. To quote my own research paper:

This loss of the promise of control over nature occurred – by coincidence – at the same time that the British empire disintegrated, and the US empire met its match in the jungles of Vietnam, and while feminism, civil rights and gay rights all sprang up. What scholars of the Anthropocene have come to call the “Great Acceleration” from the 1950s, was followed by the great (and still incomplete) democratisation of the 1960s and 1970s.

The rising popularity of solar panels represents a similar pattern of democratisation, and associated loss of control for those with a vested interest in conventional power generation, which would presumably be particularly threatening to those attracted to status, power and hierarchy.

Consider the cringe

Here are a couple more ideas and explanations that didn’t make the cut when I wrote the research paper. First up is the “biological cringe” – analogous to the “cultural cringe”, the self-loathing Australian assumption that all things British were better.

In Ecology and Empire: Environmental History of Settler Societies, the historian Tom Griffiths notes that:

Acclimatization societies systematically imported species that were regarded as useful, aesthetic or respectably wild to fill the perceived gaps in primitive Australian nature. This “biological cringe” was remarkably persistent and even informed twentieth-century preservation movements, when people came to feel that the remnants of the relic fauna, flora and peoples, genetically unable to fend for themselves, should be “saved”.

Second, and related, is the contempt and hatred that settler colonialists can feel towards wilderness, which in turn morphs into the ideology that there should be no limits on expansion and growth.

This means that people who speak of limits are inevitably attacked. One good example is Thomas Griffith Taylor (1880-1963), an Australian scientist who fell foul of the boosters who believed the country could and should support up to 500 million people.

Having seen his textbook banned in Western Australia for using the words “arid” and “desert”, Taylor set sail for the United States. At his farewell banquet at University of Sydney, he reinterpreted its motto Sidere mens eadem mutate (“The same spirit under a different sky”), as “Though the heavens fall I am of the same mind as my great-great-grandfather!”

I am anticipating that at least four groups will object to my speculations:
(vulgar) Marxists, for whom everything is about profits; positivists and Popperians, who will mutter about a lack of disprovability; deniers of climate science, who often don’t like being described as such; and finally, those who argue that renewables cannot possibly provide the energy return on investment required to run a modern industrial economy (who may or may not be right – we are about to find out).

The ConversationReader, of whatever category, what do you think?

Marc Hudson, PhD Candidate, Sustainable Consumption Institute, University of Manchester

This article was originally published on The Conversation. Read the original article.

With battery storage to the rescue, the Kodak moment for renewables has finally arrived

Image 20170319 6133 1xq9awd

AAP/Lukas Coch

David Holmes, Monash University

Who would have thought that, scarcely five weeks after Treasurer Scott Morrison, paraded a chunk of coal in parliament, planning for Australia’s energy needs would be dominated by renewables, batteries and hydro? The Conversation

For months now, the Coalition has been talking down renewables, blaming them for power failures, blackouts, and an unreliable energy network.

South Australia was bearing the brunt of this campaign. The state that couldn’t keep its lights on had Coalition politicians and mainstream journalists vexatiously attributing the blame to its high density of renewables.

But this sustained campaign, which would eventually hail “clean coal” as Australia’s salvation, all came unstuck when tech entrepreneur Elon Musk came out with a brilliant stunt: to install a massive battery storage system in South Australia “in 100 days, or it’s free”.

The genius of the stunt was not to win an instant contract to follow up on such a commitment, but to put an end to decades of dithering over energy policy that major political parties are so famous for in Australia and around the world, and which have intensified the climate crisis to dangerous levels.

Musk’s stunt was not without self-interest. It also aimed to position Tesla as a can-do company for future contracts. But where it was lethal was in completely neutering the campaign against renewables.

Anti-renewable politicians around the country, regardless of whether they are captive to the fossil-fuel lobby, could no longer argue for a dubious “clean-coal” powered station that would take between five and seven years to build when Tesla could fix a state’s energy crisis in 100 days – and not emit one gram of carbon at the end of the process.

Both the South Australian and Victorian governments have responded to Musk’s proposal by bidding for 100 megawatts of battery storage in their states. In South Australia’s case, a state-owned 250MW backup gas-fired fast-start aeroderivative power plant is also to be commissioned.

The state-owned gas power plant is, however, only a support to plans for a renewable-fed grid to be the main source of emergency dispatchable power. It is a plant that anticipates the way extreme weather can impact on energy infrastructure in much the same way desalination plants do for water infrastructure.

This is one reason it must be state-owned. But another is that a private operator would insist on full-time generation to maximise investment and profits. Thus, the South Australian gas plant is actually a critique of the privatisation of energy provision in Australia, which is the single greatest cause of why electricity prices have gone up.

As Giles Parkinson from RenewEconomy points out, within a framework in which privatisation dominates, the current market rules actually disadvantage the merits of non-domestic battery storage for consumers – because private power retailers can exploit arbitrage between low and high prices.

They can load up the batteries when excess wind and solar are cheap and sell it at peak demand for inflated prices. So, storage can actually enhance profits for power suppliers and create a bad deal for consumers.

However, the intrinsic value of storage is that the more you add, the less volatility there will be in a market. This creates a stable price for consumers and less profits for the corporations.

An example Parkinson uses is the Wivenhoe pumped storage facility in Queensland. This is:

… rarely used, because it would dampen the profits of its owners, which also own coal and gas generation.

Nevertheless, as a concept, the battery storage solution proposed by Musk, followed by South Australian Premier Jay Weatherill’s decisive action, really had constricted Malcolm Turnbull’s options. For a start, it makes redundant the longstanding fiction of “baseload power”, which was coined by the fossil-fuel industry to justify coal.

By last week, Turnbull would have already had the results of focus groups telling him that “clean” coal doesn’t wash with voters at all.

So, after reeling for most of last week over the humiliation that the Tesla and Weatherill challenge presented, and after scrambling for a counterpunch, Turnbull came up with Snowy Hydro 2.0. Here Musk’s stunt could only be really met with another stunt, but one in which Turnbull is only trying to salvage a very bad hand that he has played against battery-friendly renewables.

It is true that pumped hydro is currently cheaper than battery storage, but cannot be implemented nearly as quickly, and is not infinitely scalable as battery farms are.

Also, whereas the cost of battery storage continues to fall, the cost of the engineering needed for pumped hydro is not. And there are limited locations suitable for its operation.

But more important than all these considerations is that it while Snowy 2.0 will stabilise the national grid no matter whether clean or dirty energy is powering its pumps, it will only assist decarbonisation if the pumps are powered by wind and solar, which has all been glossed over in its PR sell.

With current energy market rules, there is still some incentive for dirty generators to feed the Snowy pumps. This helps energy security but does nothing for the climate crisis.

Yet, with his PR campaign, Turnbull thinks he is on a winner. The Snowy is also an icon of Australian nation-building and fable. And there is probably some political capital to be scored there. But the Snowy is a once-off, and not a part of the future as battery storage is.

But in having to play the part of the Man from Snowy River, Turnbull may have forestalled the inevitable onset of batteries, the price of which was that he was snookered into committing to an alternative substantial renewable-energy-friendly project.

So significant was the original stunt by Musk that set off a train of events cornering Turnbull into offering counter-storage that Giles Parkinson declared:

Turnbull drives stake through heart of fossil fuel industry.

But then, just when you thought coal had been cremated for the last time, it is revived over the weekend with the work of Chris Uhlmann, the ABC’s political editor, who gained notoriety for his anti-renewable stance on South Australia last year.

In his latest piece on the ABC, Uhlmann forewarns that the closure of the Hazlewood power station (5% of the nation’s energy output) will lead to east coast blackouts and crises in the manufacturing sector.

Uhlmann salutes the language of the coal companies in predicting that an energy crisis will result from no new investment in “baseload” power, even though this is precisely what renewables plus storage actually amounts to. He then quotes a Hazelwood unit controller as his source to raise the bogie of intermitancy once again:

Intermittent renewable energy could not be relied on during days of peak demand.

But the most misleading part of his piece was to point to the Australian Energy Market Operator’s prediction that shortfalls in supply next summer can be attributed to the closure of coal power stations, rather than the fact that climate-change-induced hotter temperatures are driving up demand during this period – as they did in the summer just gone, when Hazelwood was operating.

Perhaps Uhlmann’s piece would not look like such an advertorial for the coal industry had it not appeared on the same day as Resources Minister Matt Canavan’s speculation that a new coal-fired plant could be built in Queensland that will be subsidised by the A$5 billion Northern Australia Infrastructure fund.

On the ABC’s Insiders, Canavan lamented that Queensland did not have a:

… baseload power station north of Rockhampton … We’ve got a lot of coal up here, the new clean-coal technologies are at an affordable price, reliable power and lower emission.

It seems that while South Australia is leading the progress on a renewables Kodak moment, Queensland, with plans to build a coal-fired power stations and the Queensland Labor government going to great lengths to support the gigantic Adani coal mine, at least two states are moving in completely opposite directions.

David Holmes, Senior Lecturer, Communications and Media Studies, Monash University

This article was originally published on The Conversation. Read the original article.

Gas crisis? Energy crisis? The real problem is lack of long-term planning

Image 20170317 6113 1aln8fl
The long view: energy policy needs to stay firmly focused on the horizon.
Mattinbgn/Wikimedia Commons, CC BY-SA

Alan Pears, RMIT University

If you’ve been watching the news in recent days, you’ll know we have an energy crisis, partly due to a gas crisis, which in turn has triggered a political crisis. The Conversation

That’s a lot of crises to handle at once, so lots of solutions are being put forward. But what do people and businesses actually need? Do they need more gas, or cheaper prices, or more investment certainty, or all or none of the above? How do we cut through to what is really important, rather than side details?

The first thing to note is that what people really care about is their energy costs, not energy prices. This might seem like a pedantic distinction, but if homes and businesses can be helped to waste less energy, then high prices can be offset by lower usage.

The second thing to note is that energy has become very confusing. A host of short- and long-term problems have developed over decades of policy failure, meaning that there is no single solution.

Take gas prices, which were indirectly responsible for South Australia’s blackouts last month. Last week, SA Premier Jay Weatherill responded by unveiling a A$550-million plan including a new state-owned gas power station, while Prime Minister Malcolm Turnbull claimed to have secured a promise of secure domestic supply from gas producers.

Short-term thinking

It is crucial to keep the ultimate goals in focus, or else our short-term solutions could exacerbate long-term problems.

For electricity, we want to avoid blackouts and limit prices and overall costs. We need to do this in ways that allow us to meet our climate constraints, so we need solutions with zero or very low greenhouse emissions.

For gas, we need to ensure enough supply for local demand, at reasonable prices, and give large consumers the opportunity to negotiate contracts over reasonable time frames.

This means we need to allocate more of our gas to local consumers, because increasing overall gas production would just add to our long-term climate problems.

Peak gas and electricity prices are entangled. In our electricity markets, the most expensive generator needed to maintain supply in a given period sets the price for all the generators. So if an expensive gas generator sets a high price, all of the coal and renewable energy generators make windfall profits – at the consumer’s expense.

So either we need to ensure gas generators don’t set the price, or that they charge a reasonable price for the power they generate.

Quick fixes

Demand management and energy storage are short-term fixes for high peak prices. Paying some electricity or gas consumers to use less at peak times, commonly called “demand response”, frees up electricity or gas, so prices don’t increase as much.

Unfortunately, policymakers have failed to introduce effective mechanisms to encourage demand response, despite the recommendations of numerous policy reviews over the past two decades. This is a serious policy failure our politicians have not addressed. But it could be fixed quickly, with enough political will.

Energy storage, particularly batteries and gas storage, can be introduced quickly (within 100 days, if Tesla’s Elon Musk is to be believed). Storage “absorbs” excess energy at times of low demand, and releases it at times of shortage. This reduces the peak price by reducing dependence on high-priced generators or gas suppliers, as well as reducing the scope for other suppliers to exploit the shortage to raise prices.

The same thinking is behind Turnbull’s larger proposal to add new “pumped hydro” capacity to the Snowy Hydro scheme, although this would take years rather than weeks.

Thus South Australia’s plan, which features battery storage and changes to the rules for feeding power into the grid, addresses short-term problems. Turnbull’s pumped hydro solution is longer-term, although his handshake deal with gas suppliers may help in the short term.

The long view

When we consider the long term, we must recognise that we need to slash our carbon emissions. So coal is out, as is any overall expansion of natural gas production.

Luckily, we have other affordable long-term solutions. The International Energy Agency, as well as Australian analysts such as ClimateWorks and Beyond Zero Emissions, see energy efficiency improvement as the number-one strategy – and in many cases, it actually saves us money and helps to offset the impact of higher energy prices. Decades of cheap gas and electricity mean that Australian industry, business and households have enormous potential to improve energy efficiency, which would save on cost.

We can also switch from fossil gas to biogas, solar thermal and high-efficiency renewable electricity technologies such as heat pumps, micro-filtration, electrolysis and other options.

Renewable energy (not just electricity) can supply the rest of our needs. Much to the surprise of many policymakers, it is now cheaper than traditional options and involves much less investment risk. Costs are continuing to fall.

But we need to supplement renewable energy with energy storage and smart demand management to ensure reliable supply. That’s where options such as pumped hydro storage, batteries and heat-storage options such as molten salt come in.

This is why the crisis is more political than practical. The solutions are on offer. It will become much more straightforward if politicians free themselves from being trapped in the past and wanting to prop up powerful incumbent industries.

Alan Pears, Senior Industry Fellow, RMIT University

This article was originally published on The Conversation. Read the original article.