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Jan 15, 2014

Tony Abbott’s half-baked war on renewable energy

The Abbott government seems to hate renewable energy, but the march of progress is unstoppable at this point. The only question is, when will the government get out of the way?

solar panels

Last week it was quietly announced that the Australian Cleantech Competition would henceforth be known as the Australian Technologies Competition. It was another subtle reminder of how the new Australian conservative government is going about the rephrasing of Australia’s energy future. Anything that involves the words climate, clean energy, or cleantech are considered projects or institutions non grata.

In the public arena, it’s not just a renaming that’s taking place, but a concerted attack on renewables. For the second time in as many weeks, Prime Minister Tony Abbott has criticised renewable energy, its intermittency and its supposed costs — repeating the force-fed lines from his main business adviser, Maurice Newman, extremist blogs and some mainstream media, and encouraged by the fossil fuel incumbents, whose greatest fear is that their coal- and gas-fired generation is being sidelined and rendered unprofitable by the growing capacity of wind and solar.

Abbott’s complaints fail on numerous counts. For a start, the Renewable Energy Target is having little impact on retail prices. The Queensland Competition Authority notes in its latest finding that the large-scale renewable target (the apparent subject of the new government’s attacks) will cost Queensland households $26 a year, or about 1.3% of their bills — about half the rise in retail bills caused by soaring gas prices.

Wind and solar do not need new back-up power. South Australia has got to 31% wind and solar without the need for any new equipment. That’s because most of the peaking plants that respond to changes in demand — and supply — already exist to cope when a whole bunch of people switch on air-conditioners at the same time, or when coal- or gas-fired generation has unexpected shutdowns, such as when the Millmerran coal-fired generator shut down last March, or the two major gas generators lost large amounts of capacity in South Australia. The difference with wind and solar is that at least their output is predictable.

Abbott’s outburst are cheered, and sometimes inspired from the sidelines, by elements of the mainstream media. The Australian took another bash at Germany last weekend, which it likes to cite as what happens to a country when it moves away from baseload — coal and nuclear — and towards renewables. The newspaper’s principal complaints were there were more coal plants, more emissions, and more costs.

Germany is the nightmare scenario for the fossil fuel industry because if the biggest manufacturing economy in Europe can wean itself off nuclear, coal and gas, then so can everyone else — which is why its policies are attacked with such gusto.

What The Australian omits to tell its readers is that coal-fired generators coming on line now were planned and construction was begun well before Fukushima, and before the extent of the rapid growth in renewables was acknowledged. The net impact is a lot more coal projects are being abandoned. The country’s big three utilities — RWE, E.ON and Vattenfall — have made it clear they intend to build no new fossil fuel plants, because some of them are having to close new plants almost as quickly as they are opened.

Investment bank UBS, for instance, predicts that one-third of Germany’s fossil fuel capacity will need to be closed by 2017 because it is no longer economic, and they are no longer needed. Germany industry has not been affected by the renewable energy roll-out because it is only charged the wholesale price of electricity, plus a margin. Its costs have fallen substantially in recent years, not risen.

To try and illustrate its lament, The Australian sought to create drama by pointing to a period in early December when renewables contributed just 5% of generation needs on some days.  I presume these charts reflect the issue.


Actually, it’s not the dips that are worrying the incumbent utilities or the grid operators — it’s the big lumps of clean energy that are forcing their generators offline when they produce. Currently, Germany gets just under 25% of its electricity from renewables over a year, and this will rise to around 60% by 2035 (the new government’s new target). As that happens, those gaps will disappear, the lumps will get bigger, and new storage solutions will mean there will be even less need for fossil fuel or “baseload” generation. A similar scenario would take place in Australia, which is why the incumbents are so keen to neuter the Renewable Energy Target so they can extend their revenues as far as possible.

The problem with the current debate in Australia is that much of this information will simply be ignored. The new government — like its noisy boosters and spokespeople — has shown itself to be uninterested in clean technology, even when it makes environmental, economic and financial sense.

Take the Clean Energy Finance Corporation as an example. It has now established that it will be able to do its job of investing up to $10 billion in low-carbon technologies, while achieving up to half the government’s emissions reduction target, and return a surplus to the budget.

Too good to be true? Must be. Because even though Treasurer Joe Hockey accepted the CEFC’s numbers in his budget update just before Christmas, the government has given no indication it will abandon its attempts to scrap the CEFC.

As some industry insiders suggest, it’s about time the PM accepts that Australia has a “super-abundance” of wind and solar, just as it has of coal and gas. The only difference being is that wind and solar generation will be cheaper — as the government’s own economic adviser suggests — and cause a lot less pollution.

The renewable energy industry is currently fearing the worst. If, as The Australian suggests, the only two cabinet ministers supporting the renewable energy target are Industry Minister Ian Macfarlane and Environment Minister Greg Hunt is true, there is big trouble ahead.

Macfarlane, it should be remembered, was responsible for neutering John Howard’s Mandatory Renewable Energy Target nearly a decade ago, but the new government is so extreme he is now considered a moderate. Hunt is said to have little within cabinet. The reality is, however, that there is more support than The Australian lets on. It may be less an observation of the cabinet dynamics than a threat.

Of course, if the PM is serious about limiting electricity price rises, he’d focus on reining in network charges, which, according to every analysis, has been by far the leading cause of electricity price increases. Of course, this might not be so easy in NSW and Queensland; this would mean less revenue for those state governments, as they own the networks. And more renewables mean less revenues for the generators — be they government-owned or private.

*This article was originally published at Renew Economy

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41 thoughts on “Tony Abbott’s half-baked war on renewable energy

  1. Aidan Stanger

    AR – Despite the higher cost and lower maximum temperatures, the Port Augusta solar thermal plant would use NaNO3 and KNO3, as they’re a much better heat storage medium than NaCl.

  2. Mark Duffett

    Jonathan Maddox “All of Australia is below 40 degrees south.”

    No it isn’t. But notwithstanding that, despite better conditions on a million Australian roofs, it still only amounts to, at best, a few percent of electrical energy over a 24 hour period. The yellow on the current Australian version of the graph would look a little bigger, but not that much.

    AR, very droll, but good luck trying to drive enough bulldozers, excavators and scrapers onto a salt lake to collect over 35,000,000 tonnes of the stuff.

    How much material would Beyond Zero Emission's zero carbon plan use for the concentrating solar thermal plants? A lot— John Morgan (@JohnDPMorgan) January 18, 2014

  3. Aidan Stanger

    Msrk Duffett #22

    Far better to use huge amounts of salt than burn huge amounts of coal!

    Yes, solar PV still only accounts for a few percent of electricity generated. The same could be said for wind a decade ago. At the moment, most Australians still don’t have solar panels on their roofs, and most of those who do have far fewer panels than their roofs could accommodate. Plus there’s plenty of scope for non-rooftop solar PV.

  4. JohnB

    Aidan, oh Aidan.

    Have you tried to do the maths, or do you just want to feel good?

    The east Australian grid was formerly 17% renewables, thanks mainly to the Snowy.

    It is now 7%, because the Snowy has not grown and our population has.

    Look even casually at how many rooftops and how many dollars you are locking us into and you will see that millions more roofs are needed to get back to 17%, where we once were, at a prohibitive cost. But it will be entirely ineffectual.

    Australia’s electrical energy carbon intensity is going backwards fast, and that is only electricity. Count transport fuels and domestic, industrial and commercial gas and you will soon realise that we need to find a way to a gas-free energy future, complete with massive reductions in transport and industrial sources which have nothing at all to do with electricity.

    How do you propose that fertiliser will be produced without gas? Cow poo? We all know the impact of cattle burps on our methane budget. Hint: Currently fertilisers are manufactured from natural gas.

    Contemplating a hydrogen car? Forget it. Hydrogen is commercially derived from natural gas. Splitting water into H2 and O2 is not economic.

    Explosives? Same story, but perhaps we will not need explosives or liquid fuels in a utopian vegan world where even the cars run on carbon monoxide derived from the partial combustion of bean stalks and the remaining million or so Australians grub around in the dirt for their food and give thanks for their low carbon lifestyle… until they light their cooking fire.

    It’s OK to come up with an answer to part of the greenhouse gas problem. The truly difficult part is continuing the analysis to the point where the greenhouse gas budget is balanced.

    But, don’t stop there. Even harder is progressing beyond balance to negative emissions. The world will very soon reach the point where the only way to avoid 2.5 degrees temp rise (or 3, or 4 – it makes little difference: pick your own target).

    From that day onwards, the options are stark:
    1. Remove CO2 and its equivalents from the earth’s atmosphere, worldwide, PDQ; and
    2. Condemn all earthlings, humans included, to a world with temperatures spiralling upwards.

    A whole forest of solar panels on rooftops will do very little to avoid Option 2.

  5. JohnB

    Moderation, again?

    Yes, I know that I mentioned p-o-o and b-u-r-p-s and m-a-t-h-s.

    Must be the latter.

  6. Mark Duffett

    Aidan, far better than both would be to utilise comparatively minuscule amounts of uranium, thorium and waste from early-generation nuclear plants.

  7. Jonathan Maddox

    Thanks to new catalysts, water electrolysis is now far more cost-effective than it once was. Yes, fossil-derived hydrogen is still cheaper just as is fossil-derived electricity, but the difference is shrinking : energy efficiency of modern electrolysers approaches 80%.

    But we won’t be making hydrogen to burn it in cars. Battery-electric cars are already a very cost-effective alternative to fossil-fueled ones. Electrolytic hydrogen may come into its own as feedstock for chemical processes including synthesis of fertiliser and liquid fuel for those applications — aviation, shipping and farm machinery — where alternatives are not sufficiently energy dense. It also already plays a minor role in storage of excess electric energy (see power-to-gas).

  8. Aidan Stanger

    JohnB, your post is rather puzzling as I never claimed I wanted the use of natural gas to be eliminated. I’m certainly not looking to a utopian vegan world. I do think we should reduce our reliance on gas, but some will always be needed.

    We seem to have different concepts of what’s economic. You take what I call the accountant’s view (it costs too much so forget it) whereas I take the engineer’s view (it costs too much so why does it cost too much and how can we bring the cost down?). The nice thing about solar PV is that the costs are almost entirely fixed. Whether it is econmic depends mainly on the discount rate used in the calculations. Typically the rate used is significantly higher than the official interest rate (this was the trick the government used to make the NBN look uneconomic) but as the infrastructure will have a productivity enhancing effect, there’s a strong case for using a lower rate than the official RBA rate. I said something similar in my submission to the Productivity Commission’s infrastructure inquiry.

    Your state may have fallen below 7% renewables, but mine’s several times that. Rooftop solar has much more potential than what’s needed to get your figure back up to 17%, but there’s no reason to confine it to rooftops. Thesre’s plenty of arid grazing land where the animals would appreciate the shade of solar panels, and they wouldn’t adversely affect the land’s productivity as that’s limited by water availability.

    Solar thermal does have higher running costs (though still low by fossil fuel standards) but as its objective is to produce a lot of electricity on demand at times when the price is higher, I don’t see that as a big problem.

    Getting back to what you said about gas, the Haber process is now obsolete and I predict its use will have ceased by 2020 (though I’d like to see government intervention to end it sooner). And combined with more economic elecrolysis, we should be able to end our reliance on gas for fertilizer production.

    I agree our net CO2 emissions will need to be cut below zero, and I think biochar is the best way to do that (and is something that can also be used to supply some of our CH4 requirements). But we also need to decarbonize our economy now. And that’s not something that should require big lifestyle changes.

    You seem to bave reached the conclusion it can’t be done so we should give up and make the planet worse for future generations. I look at what can be done and what’s preventing it, and am baffled as to how anyone could even consider that opinion, let alone reach it.

    As for nuclear power, the world will need a lot of it, but Australia is so well suited to solar power that I’m not convinced nuclear would be economic here.

  9. Mark Duffett

    You’re “not convinced nuclear would be economic”? What happened to your ‘engineer’s view’ expressed at the outset?

  10. JohnB

    Since when is there a difference between engineers and accountants regarding economic analyses? As an engineer, I am on good terms with many accountants and I am no stranger to economic evaluation of projects.

    You have an objection to the cost of capital (discount rate) used in calculating comparisons on the basis of NPV or whatever; I don’t. It would be silly to use, say, 4% for solar projects and 8% for the rest. The discount factor must be the same for all proposals. Comparing like with like is a core principle of EA’s.

    Either Project A competes with Proposal B for funds on a level playing field or someone is fudging. If an external benefit exists, it should be costed and included in the evaluation, however I recognise the issue with externalities : the corporation will ignore them, even if the society it operates in is killed in the process. That is a political question, not an issue of discount rates.

    If large scale solar, either PV or thermal, was economic then it would be happening right now, without socialising portion of the costs via subsidies or distorted economic evaluations.

    The final comment, to the effect that nuclear power is OK, but not in Australia should be ignored because it is classic NIMBY-ism. I agree that we “will need a lot of it”; however, that includes in Australia.

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