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Will Australia miss the global solar boom?

Federal Resources and Energy Minister Martin Ferguson next month will have the honour of chairing the biennial meeting of 36 energy ministers hosted by the International Energy Agency. The topic will be the world’s energy future, and the contents are likely to be surprising — so much so that Ferguson may have cause to consider if Australia is well prepared for the energy revolution ahead.

Since its establishment in the 1970s, after the oil price shock, the IEA’s principal mandate has been around the protection of oil supplies, and its forecasts for the world’s long-term energy mix were viewed — particularly by those pushing renewables — with some suspicion.

In the past couple of years, however, the IEA has focused more on different scenarios for the world’s future energy needs —   both in terms of energy security and in reducing emissions. In doing so, it has emerged as one of the world’s most bullish proponents of renewable energy, in particular solar.

Around the time that Ferguson will host the meeting in Paris, the IEA will produce a study that predicts more than half the world’s energy needs, and most of its electricity needs, will come from solar energy sources by 2060. The question that Australia needs to ask itself, as it signs yet another multibillion-dollar contract to develop LNG resources, is how it is placed to benefit from a solar future that will dominate future energy sources in the same way as coal and oil has in the past.

At a solar summit in Melbourne earlier this month, the Clean Energy Council warned that Australia had a five-year window in which to seize the initiative in large scale solar or miss out on a huge economic opportunity. It warned that Australia, despite obvious expertise, risked being left behind because of the massive rate of deployment overseas of large-scale solar —   PV, solar thermal and with storage — and the rapid fall in costs.

As the world’s biggest energy groups — GE, Alstom, Areva, Abengoa and Siemens (which has abandoned nuclear) — focus more on their solar technologies, and invest billions in new projects, Australia needed to accelerate its deployment and knowledge so that it, too, would have expertise that it could export rather than import.

That warning was made even before the IEA previewed its latest solar road-map, which it has expanded upon at the World Solar Congress in Germany at the start of the month, and at the SolarPaces conference in Spain last week. According to its chief renewables analyst Cedric Philibert, many solar thermal technologies will fall to $US100/MWh by 2030 — making it as cheap or cheaper than the wholesale price of fossil fuels in many countries — meaning that its take-up — as a source of dispatchable power, for district and industrial heating, and as storage, would be irresistible.

Professor Andrew Blakers,  from the Energy Change Institute at the ANU, has a similarly bullish view for solar in Australia. He argues that by 2050, solar could be providing more than half of Australia’s electricity needs, with a mixture of wind, geothermal, ocean energy, biomass and some residual gas plants providing the rest.

He says that the prospects for solar are so bright that even having the wrong policies would merely delay the take-up of solar technologies, rather than prevent it. However, he agreed with the CEC that Australia’s interests would be best served by policies that encourage early deployment because it would give Australia engineering expertise and knowledge that it could export to other countries.

Blakers points to the plunging cost of solar PV, which is already below retail price parity in many parts of Australia. (Like the IEA, he says solar will be the best and cheapest option for 6-7 billion people worldwide, as it is the sunnier climates that will witness most population growth). Blakers says wholesale parity — at about 8c-12c/kWh, could be achieved by the latter half of the decade, given the expectations for the rising costs of coal and gas and the carbon price.

If this is the case, then the take-up of solar could be so great that Australia would be adding 4GW of solar capacity from about 2020 — enough to obviate the need for new coal and gas (apart from some peaking plants), and will mean CCS and nuclear missing the boat. He says that in these cases, planning, infrastructure and security issues are all much simpler.

Blakers is particularly bullish about the prospects of PV — on commercial rooftops and in utility-scale arrays — backed by pumped hydro — a relative cheap and fast response option that needs storage on two levels, rather than a damming a river. He says this will be followed by solar thermal with storage such as molten salt. Others predict an earlier and more prominent role for solar thermal.

The IEA’s Philibert foresees three broad categories of situations — where solar thermal and storage dominates sunny and dry climates, where PV is backed by hydro and pumped hydro, and in temperate climates, where PV in combined with wind power. In the northern climates this is likely to mean a higher contribution from other energy sources.

If these forecasts are right — even if they are half right — it would present an enormous opportunity for the development of a solar industry in Australia, far greater than seems to be contemplated in current domestic scenarios — Treasury only includes a 5% solar target in its forecasts. But to exploit these scenarios would require policy commitment.

This could come from bodies such as the Clean Energy Finance Corporation, and the IEA is strongly supportive — and has been for several years — of early incentives such as feed-in-tariffs to build scale and know-how to accelerate the cost curve decline. “This is the price to pay to bring solar technologies to competitiveness with fossil fuels,” Philibert says.

Australian companies know this all too well — its new technologies, such as Carnegie’s wave energy machines, Atlantis Resources’s tidal energy turbines, Dyesol’s solar dyes, or Ceramic Fuel Cell’s BlueGen units, will be deployed at scale overseas because that is where the greatest incentives lie. Many of Australia’s geothermal companies, as well as the largest independent renewables group Pacific Hydro, are now focused on South America and near Asian neighbours for the same reason.

All this should present some food for thought for Ferguson and his advisers. Ferguson, like the IEA, has mostly been interested in protecting the supply of fossil fuels or export or use at home, although he has shown an increasing interest in solar of late, spending more time in recent months at solar summits and gladly appearing at solar announcements.

His attachment to LNG-style mega projects is all well and good, and the export income is crucial. But perhaps Australia can walk and talk at the same time. Given that Saudi Arabia, and other Gulf emirates, are now looking to a massive investment in solar energy for their domestic electricity so they have more fossil fuels to sell, perhaps it’s time for Australia to consider the same route — particularly given its expertise in solar R&D — allowing it build a major stake in the energy of the future as well as profiting from the boom in commodity energy sales.

*This article first appeared on Climate Spectator

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  • 1
    Jimmy
    Posted Tuesday, 27 September 2011 at 1:33 pm | Permalink

    If Germany can be a leader in Solar, Australia should have no trouble.

  • 2
    Stevo the Working Twistie
    Posted Tuesday, 27 September 2011 at 2:13 pm | Permalink

    @Jimmy, Australia will never be a leader in anything. Have you listened to what laughingly passes for political discourse in this country lately? Heard what our leaders try to sell as “vision”? Listened to our captains of industry squeal every time they perceive a threat to their guaranteed profit margins? Watched our best and brightest escape overseas because of the entrenched conservatism and niggardly, penny-pinching attitudes of our corporate and government sectors?

    Australia is a great place to live, at present, but if you want forward thinking and innovation, it’s just not in our genetic make-up any more.

  • 3
    Mark Duffett
    Posted Tuesday, 27 September 2011 at 3:24 pm | Permalink

    see comments at direct link: climatespectator.com.au/commentary/will-australia-miss-global-solar-boom

  • 4
    Microseris
    Posted Tuesday, 27 September 2011 at 3:29 pm | Permalink

    Ferguson is a monotone, robotic party hack busy spouting party lines. All the while welding Australia to last centuries technology that is soon to be obsolete. You don’t have to have talent to be in politics only do your time and follow orders.

  • 5
    nicolino
    Posted Tuesday, 27 September 2011 at 5:28 pm | Permalink

    Ferguson has and always will be a slave to fossil fuel and the lobbyists in that sector.

  • 6
    Bohemian
    Posted Tuesday, 27 September 2011 at 5:56 pm | Permalink

    God this really is bollocks.

    The biggest solar producer in the world solar company in the world is hangin’ on by the short and curlies and without further massive govt subsidies is about to go belly up because…. solar is great for your and my house but is not looking viable on scale because ……we still dont know how to store the energy over any period. Got me!

    Let me give you a tip. The reason people keep buying oil futures isn’t that they think its about to be rendered redundant any time soon. And, there is an unlimited supply under the surface of the planet. There is no such thing as peak oil…only peak gullibility.

  • 7
    Microseris
    Posted Tuesday, 27 September 2011 at 7:38 pm | Permalink

    Yeah Bohemian. Fossil fuels are a magic pudding, we keep using them in ever increasing volumes and they never run out. Thats why the west initiates wars in far off lands and exploration is occuring in ever more difficult to access locations. Who woulda thought? Oh thats right the gullible..

  • 8
    Bohemian
    Posted Tuesday, 27 September 2011 at 8:34 pm | Permalink

    The Bakkan under Montana, North Dakota, Colorado et al and Prudhoe Bay Alaska are two of four major capped basins in the US. You’ll find they will come on stream as soon as war in the ME gets a roll on sending oil upwards of $200/bbl. But heck you read the papers you oughtta know!

    There is no record of any fossil finds below 16000 feet yet the Russians are drilling for oil in the Arctic and finding it at 40000 feet. By the way they are the only ones who have been successful at drilling at that depth. BP nearly poisoned the earth attempting a 30000 feet drilling escapade - mind you it was in the ocean whereas the Russians are doing it on land.

    Come back when you have read the Seven Sisters:The Great Oil Companies and the World They Shaped by Anthony Sampson.

  • 9
    AR
    Posted Tuesday, 27 September 2011 at 10:35 pm | Permalink

    BoHo - do you also believe in young oil - as in, it ain’t fossilised dinosaur shit? It’s perfectly simple to store energy - perhaps you meant “store electricity” which, using batteries, is a dead end, 19thC technology.
    However, as Sydney Water does daily, nothing like old, if good, ideas - water lifted by excess electricity can be used to generate electricity later when needed. A 10-20% loss but nothing like that of battery, inversion & HT lines.

  • 10
    michael r james
    Posted Tuesday, 27 September 2011 at 11:37 pm | Permalink

    Mark Duffett wrote: CEO endorsement of renewable energy says nothing about the merits of the technologies, and everything about how they know a big fat subsidy when they see one.

    Funny that big fat subsidies for nuclear still cannot persuade any companies to build new nuke plants in the US. And France! The whole thing has been fantastically subsidized, quite probably a correct decision since, like Japan, it was done to avoid spending trillions on imported fossil fuels. Remember both Areva (nuclear) and EDF (electricity generator/distributor/retailer) are both government created and owned entities. So the reason why the power in France is cheap (but in fact not that much cheaper than many other European countries) is that it does not reflect the huge capital cost invested by the French state over those 30-40 years.

    Alas because Australia uses its own dirt-cheap coal, and soon gas, nuclear cannot compete economically. (Similar problem in US). But one thing we do have in wonderful superabundance, and we don’t even have to dig it out of the ground: sunlight.

    So what does this ultra-condensed summary suggest Australia should do? Build extremely capital expensive nuclear that takes an age to build and is politically dead anyway? No, but use the French model and to say the hell with the initial capital cost (of both solar-PV and solar-thermal) and go for it. As Giles says, we could even build an industry, yet again what the French did with nuclear (who is building the only two nuclear reactors under construction in Europe? Areva. Probably they will build most of the proposed Brit ones too, if the Brits ever approve them.)

    Of course we knew this a decade ago. It is too late and we have missed the boat. Nothing has changed since I wrote over 2 years ago: (about CCS & coal subsidies)

    (crikey.com.au/2009/05/22/rudds-media-manipulation-and-more/)
    This appears to be another failed bit of industrial policy which one would imagine clever political operatives like Kevin Rudd might believe they were too savvy to have fallen into. One wonders if Rudd imagines getting a line in Australian history for favouring an 18th century industry, by a factor of about 30-to-1, over 21st century ones (solar-thermal, solar-PV, geothermal, wind etc)?

  • 11
    Bellistner
    Posted Wednesday, 28 September 2011 at 3:52 am | Permalink

    Around the time that Ferguson will host the meeting in Paris, the IEA will produce a study that predicts more than half the world’s energy needs, and most of its electricity needs, will come from solar energy sources by 2060

    It’s going to have to, since Oil is at or past Peak as it is, and we can’t build Nukes fast enough even if we wanted to. It’s going to be basically Solar or nothing, for transport at least.

    There are two major Energy groups in the world: the IEA and the EIA. Of them, the EIA is better, although not without fault.

    When it comes to the IEA’s predictions, I’d taken them with a big grain of salt. They’ve been wrong again, and again, and again (although in the last WEO they did put a coded message semi-acknowledging Peak Oil). Just look at their price scenarios: http://www.theoildrum.com/files/EIA%20World%20oil%20price%20figure_31-lg.jpg
    It could be $200. It could be $50. And that still “doesn’t take into account all possible price scenarios” or something like that. Basically, “Dunno”.

    Will Stewart points out the IEA’s difficulty in making predictions, particularly Figure 40 of the WEO 2000.
    paal myrtvedt also notes the IEA’s systematic bias to optimism.

    Bohemian said:

    The Bakkan under Montana, North Dakota, Colorado et al and Prudhoe Bay Alaska are two of four major capped basins in the US. You’ll find they will come on stream as soon as war in the ME gets a roll on sending oil upwards of $200/bbl

    The Bakken gets it’s (quite small, in the scheme of things) production from 6,000 wells, or about 70bbl/day per well. That’s not much more than a decent stripper well from the tapped-out East Texas field.
    Prudhoe Bay has been online for decades, and production has been declining for most of that time. The Alaskan Pipeline is now down to <500,000bbl/day, well down on it’s peak flow of some 2,000,000bbl/day in the late 80’s.

    There is no record of any fossil finds below 16000 feet yet the Russians are drilling for oil in the Arctic and finding it at 40000 feet.

    Oil can, and often does, more downwards from the source rocks. It is unusual to find Oil at those depths (it’s usually Gas), but it’s not unknown.
    Aside from which, Oil is largely Plankton and small oceanic creature-derived, not dead dinosaurs.

  • 12
    Bellistner
    Posted Wednesday, 28 September 2011 at 3:54 am | Permalink

    Sorry, I’ve got those mixed around. The IEA is better, the EIA produced those optimistic charts.

  • 13
    Mark Duffett
    Posted Wednesday, 28 September 2011 at 9:53 am | Permalink

    @Bellistner and @MRJ ‘we can’t build nukes fast enough’, not true: bravenewclimate.com/2010/10/25/2060-nuclear-scenarios-p4/

    I utterly fail to follow the logic that essentially says ‘if we assume business-as-usual, then nuclear can’t do it, but if we pull out all the stops, then solar might’. Can you not see the double standards implicit in what you are saying?

  • 14
    michael r james
    Posted Wednesday, 28 September 2011 at 6:23 pm | Permalink

    @Mark.

    Sorry but I am not going on a headache-inducing excursion around BNC. As you know I have written any number of articles on the issue, which at its simplest comes down to cost and time-to-impliment. (Without even getting into safety, proliferation, waster storage or politics.) BNC’s positive case amounts to a whole series of conditional “what ifs” and forever-on-the-horizon breakthroughs eg. Thorium. (my response to the thorium argument is, fine, get back to us when there is a proven developed full scale commercial model running. See you in a couple of decades or 3 or 5.)

    As to the second half of your post, I equally cannot understand how anyone who has lived through the scientific advances of the past 50 years and doesn’t see that several of the renewables will follow a kind of Moore’s law. Clearly PV is on that trajectory — if not as dramatic as the Moores Law applied to IC. And storage too. Oh, and the fact that, unlike nuclear, some of these renewable techs can be scaled up very rapidly once they reach appropriate cost & efficiency etc.

    It is not a double standard — even if it does involve a judgement — because nuclear has had 50 years of development (closer to 60) and we hear the same tired old optimistic vision as we heard almost 40 years ago.

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