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Leo Shanahan

Realising Australia’s renewable energy potential

There are signs that things are changing. Last summer’s devastating Australian bushfires put climate in the front of mind for many normal people who had not previously considered it a priority.

For decades there has been overwhelming intransigence on climate and emissions policy in Australia. This lack of progress has not only resulted in inertia, but at times a self-destructiveness that has meant climate and environmental policy has become a graveyard for consecutive governments and oppositions.

Recently, however, there are signs that things are changing. Last summer’s devastating Australian bushfires put climate in the front of mind for many normal people who had not previously considered it a priority. The fires made `+many Australians realise the destructive impacts of climate change which are occuring in their generation – not some intangible concept that takes place generations from now.

As a result, the Liberal and National conservative coalition government led by Prime Minister Scott Morrison has sought, subtly, to change the discussion on climate change and clean energy. While the pace and policy approach are never enough for some, the government is favouring a technology centred approach over long-term targets.

Australian states, including New South Wales and Victoria, have already committed to a net zero by 2050 target. While maintaining targets for 2030 the Morrison government has repeatedly said it won’t commit to net zero by 2050 without a plan to get there.

However, this is not to say significant progress is not being made in terms of renewables and decreasing reliance on coal. The backbone of the Coalition’s policy on renewables is the Technology Investment Roadmap, which aims to drive investment in renewables while boosting the economy and jobs. While some have criticised the roadmap’s aims for eschewing hard targets and timelines, it does at least demonstrate commitment to renewables as part of a strong policy platform.

In fact, in September 2020, for the first time in Australia’s history, solar and wind generated more power than coal. Overall electricity prices continue to fall from their highs in Australia, with historically high prices in recent times feeding discontent with renewables.

Along with ongoing aims to decarbonise the grid through renewables like solar, wind and pumped hydro, there is genuine excitement within government ranks about the prospect of hydrogen. The government has short listed seven potential hydrogen electrolysis plant projects, with two to be given the green light in the new year. Energy and Emissions Minister Angus Taylor regularly talks about the possibility of Australia turning into a hydrogen exporting superpower and has spoken at  Coalition for Conservation events about its incredible potential.

There is also a great deal of potential for “blue” and “green” steel projects in Australia.

British billionaire and Whyalla steel works owner Sanjeev Gupta recently announced a plan to develop up to 3000 megawatts of renewables in addition to the planned 280MW Cultana solar farm in South Australia, all with an aim to power his new green hydrogen steel plant at Whyalla produced with clean energy.

Australia’s clean energy funding agency ARENA has largely laid the groundwork for the nation’s solar and wind industries. Its success in helping fund solar projects has meant that the solar industry is so far advanced that it is basically at capacity under our current energy grid conditions. The next step is to build transmission to allow greater access to the system.

In fact, in September 2020, for the first time in Australia’s history, solar and wind generated more power than coal. Overall electricity prices continue to fall from their highs in Australia, with historically high prices in recent times feeding discontent with renewables. Wholesale energy prices across eastern states fell for 12 straight months between 2019 and 2020, with reductions of up to 46 per cent. In fact the challenge for solar in Australia in the coming years will be to make money given how cheap solar is becoming.
 

While major coal fired plants, such as Liddell in NSW, are due to go offline in 2023 this could precipitate another “cliff event” that causes steep price rises. To mitigate this loss of dispatchable power the Morrison government has embarked upon what it has labelled a “gas-led recovery” to replace the lost energy and stimulate the economy post-COVID19. The government has gone so far as to promise to build a new gas plant to fill the shortfall unless the private sector commits to an alternative by April 2021 to replace the lost 1000 megawatts. It’s an extraordinary intervention in the market, especially by a conservative government, but goes to show the urgency with which energy security and keeping costs low is being treated by the government.

The problem Australia has is since state-wide blackouts in South Australia in 2016, the government doesn’t trust or believe renewables are capable of filling the gap left by coal. While many climate change activists and renewables purists will criticise the government for incorporating gas into its plan, the truth of the matter is gas was always going to play a role when coal plants came offline.

Attacks on an interim gas policy also ignore the fact there’s a broader strategic decision to move away from the use of coal. It wasn’t that long ago that there was serious discussion among some in the Coalition about government funded coal-fired plants. Those types of discussions have ceased. There is also the fundamental point that gas, although being a fossil fuel, has a quarter of the emissions of coal when used in conjunction with renewables.

Coal-fired plants cannot be removed from the power grid without causing severe price spikes for consumers.There are at least two promising projects that could go some way to filling the gap left in dispatchable power.  The new Snowy Hydro 2.0 pumped hydro goes online by the end of 2024 and could provide up to 10 percent of dispatchable power in Australia and the world’s biggest pumped storage plant. It also does not require new dams to be built as it relies on the existing Snowy Hydro electric scheme. Another large-scale project is the Marinus Link between Victoria and the island state of Tasmania, which offers a 1500 megawatt underground electricity connection.

Private investment in Australian renewables would be a lot easier if the government could present industry with a long-term plan underpinned by a net zero 2050 carbon target. Putting a stake in the ground and setting up a net zero 2050 target would create certainty for business and likely get the very investment the government is demanding.