Federal government sets sights on August approval for National Energy Guarantee



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Josh Frydenberg met with state energy ministers in Melbourne the latest round of discussions over the National Energy Guarantee.
AAP Image/Luis Ascui

Michael Hopkin, The Conversation

Federal energy minister Josh Frydenberg says he is confident of securing state governments’ support for the National Energy Guarantee, with a final decision now timetabled for August.

At a meeting today, state energy ministers agreed to progress towards a final version of the policy, which aims to ensure a reliable electricity supply while also cutting the sector’s greenhouse emissions by 26% by 2030.

Details of the policy were first unveiled in October 2017, after the federal government opted against Chief Scientist Alan Finkel’s recommended Clean Energy Target. It features two components: a “reliability guarantee” and an “emissions guarantee”.



The Conversation, CC BY-ND

Under the latest iteration of the policy, developed by the Energy Security Board, electricity retailers would be required to ensure they do not exceed a certain level of greenhouse emissions per unit of electricity sold. They would also be expected to invest in extra generation capacity in advance of any forecast shortfall, so as to ensure reliability.

Grattan Institute energy analyst David Blowers wrote this week that although the 26% emissions target is far too modest, the policy could deliver much-needed bipartisan political support. It would create investment certainty and then could be ramped up later.

But RMIT’s Alan Pears previously wrote that the government’s slow and modest policy ambition has been overtaken by the breakneck pace of change in renewables and energy efficiency.

Economic analysts have voiced fears that the policy’s “technology-neutral” approach is a stalking-horse for coal and may put the brakes on renewable energy investment in Australia.

Frydenberg today confirmed that the policy will not prevent states from pursuing their own more ambitious renewable energy targets. But he said the overall emissions reduction target for the electricity sector will not be increased beyond 26% by 2030.

“States can knock their socks off with their own renewable energy schemes, as long as they meet their reliability obligations under the National Energy Guarantee,” he said.

The ConversationAsked about the views of the Monash Forum, a grouping of Coalition MPs that has agitated for new government-funded coal-fired power stations, Frydenberg said he did not expect any new coal stations to be built. But he said it was likely that Australia’s 20 existing coal power stations would continue to attract private investment.

Michael Hopkin, Section Editor: Energy + Environment, The Conversation

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

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AGL’s plan to replace Liddell is cheaper and cleaner than keeping it open


span>Kriti Nagrath, University of Technology Sydney

The Commonwealth government called last week for AGL Energy to consider selling its Liddell power station to rival Alinta.

Federal Energy Minister Josh Frydenberg has raised concerns that the scheduled 2022 shutdown of Liddell will affect New South Wales’ energy reliability. It’s suggested the sale would provide a way to keep the ageing power station open past the end of its normal 50-year operating life.

However, AGL responded to government concerns in December 2017 by releasing a replacement plan. Liddell’s theoretical maximum output is 1,800 megawatts (MW), but the firm capacity – the power that can be relied upon at peak time – is 1,000 MW. AGL is confident this can be replaced by a mix of improved efficiency, renewables and demand response.

AGL’s proposal unpacked

Late last year, in response to the Commonwealth government’s pressure, AGL updated its Liddell replacement plan. The updated plan includes generator efficiency upgrades, new natural gas and renewable energy generation capacity, and demand response.

This plan builds on the planned 2022 closure of the Liddell station. Phased investments in new, low-emissions generation and upgrades to existing generation will replace the 1,000 MW of coal-fired power by:

  • increasing the capacity of AGL’s nearby Bayswater coal-fired power station by 100MW
  • installing 750MW of high-efficiency gas power (at potential sites in Newcastle and/or elsewhere in NSW)
  • adding 1,600MW of new renewable generation capacity (wind and solar farms)
  • providing 100MW of firm capacity from demand response and 250MW from battery storage.

The replacement portfolio is split into three stages. The first aims for 550MW of new generation: 300MW from two solar power plants, to be built by third-party developers, and 250MW from a new gas peaking power station located at Newcastle (or other suitable sites in NSW).

Further, AGL has already approved 650MW of wind projects. The Bayswater efficiency upgrade will add 100MW to the capacity without burning any additional coal.

This, along with the 20MW of demand response, will provide the “firm capacity” required to meet existing customer needs, in line with the federal National Energy Guarantee. The “firm capacity factor” is the proportion of the installed capacity (the theoretical maximum) that can be relied upon to be available at peak time.

The next two stages will progressively add new capacity from renewables, battery storage and demand response to meet the energy needs of AGL’s potential uncontracted customers. Stage 2 and Stage 3 feasibility is expected to start by 2020 and 2021 respectively, for a 2022 delivery.

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AGL is relying on the market

AGL’s Liddell replacement plan is designed to provide an equivalent amount of energy and dispatchable power at a similar level of reliability.

The plan’s total investment of A$1.36 billion is more than the A$920 million estimate of the 2027 Liddell extension plan, but once operating and fuel costs are included the average cost of replacement generation is more affordable at A$83 per megawatt hour (MWh), compared with extending the life of Liddell at A$106 per MWh.

Levelised cost of energy based on information sourced by AGL including: the capital cost of the Liddell life extension works as advised by Worley Parsons (Advisian). AGL’s discount rate in line with their commercial target returns. Westpac Banking Corporation’s forecast of the Newcastle coal price discounted based on the lower calorific value required for power station coal. A carbon emissions cost has been included as per AEMO’s ‘moderate’ 2015 scenario.
AGL’s NSW Generation Plan

Though the replacement plan has an installed capacity of 2,900MW, it accounts for a firm capacity of 1,000MW.

The Australian Energy Market Operator has endorsed AGL’s Liddell replacement plan. It said the plan provides more than enough energy and capacity to meet the potential shortfall created by the closure if AGL completes all three stages by the 2022 deadline.

Some of this plan is already under way, as the AGL board has approved the upgrades at Bayswater and Liddell and the new solar and wind power plants. However, the next two stages are dependent on market signals and investments other companies make in new resources.

If stages 2 and 3 of AGL’s plan are not undertaken in time and other market players do not invest, there could be a reliability gap that results in supply interruptions. While this is unlikely to occur, this is exactly the type of problem that the government’s National Energy Guarantee is supposed to fix. The guarantee envisions that retailers carry the responsibility of meeting the required amount for dispatchable energy. Failure to do so would invite financial penalties, with the energy market operator stepping in as the procurer of last resort.

However, AGL has proposed an adequate plan to meet the gap that the Liddell closure would create. It’s ultimately improbable that regulator intervention will be needed.

That said, AGL’s plan is not necessarily the best plan. There are other lower-emission options that are more cost-effective.

The ConversationA study by the Institute for Sustainable Futures (which I have contributed to) proposes a third “clean energy package”, including renewable energy, energy efficiency, energy storage, demand response and flexible pricing. Rather than selling Liddell, if the Commonwealth is looking for low-cost and reliable solutions, this is the approach it should be pursuing.

Kriti Nagrath, Senior Research Consultant, University of Technology Sydney

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

As the Libs claim South Australia, states are falling into line behind the National Energy Guarantee


Kate Griffiths, Grattan Institute

Former prime minister Paul Keating used to say that when you change the government, you change the country. On Saturday South Australians changed their government, and now the country’s energy policy could finally change – and for the better, if current policy uncertainty is put to bed.

Prime Minister Malcolm Turnbull certainly seems to think it will. He is already claiming the SA election result as an endorsement of his National Energy Guarantee.




Read more:
How the National Energy Guarantee could work better than a clean energy target


Incoming Liberal Premier Steven Marshall has consistently supported a national approach to energy policy, and on his first day in office he pledged to end South Australia’s go-it-alone approach.

But while South Australia’s support is vital, the National Energy Guarantee – which aims to reduce greenhouse gas emissions and ensure reliability in Australia’s National Electricity Market – is not a done deal yet.

Designing the guarantee

The independent Energy Security Board recommended a National Energy Guarantee last October, and the Turnbull government quickly adopted it as policy.

In November, at a meeting of the COAG Energy Council, New South Wales, Victoria and Tasmania voted for work on a detailed design of the guarantee. South Australia and the ACT voted against (Queensland was absent).

The weekend’s election result seems to have brought South Australia into the tent; it certainly draws a line under the tensions between the outgoing premier, Jay Weatherill, and Federal Energy Minister Josh Frydenberg, which bubbled over in a public stoush last year.

But the ACT government still has concerns about the guarantee, and all states will be holding out for more detail on the policy.

In February the ESB released a consultation paper on the design of the guarantee, which indicated that there is much work still to be done.

The design should not be rushed – getting the detail right is crucial if Australia is to tackle climate change and maintain a reliable electricity supply at lowest cost.

The guarantee is a means to an end, not the end itself. It is neither pro-coal nor pro-renewables. It is a mechanism to achieve national targets. The emissions target itself – a 26-28% cut in greenhouse gas emissions relative to 2005 levels by 2030 – remains a political choice of the federal government.

The design must be sufficiently robust to produce the desired outcomes, but should also be flexible enough to allow the emissions target and required level of reliability to change over time. People’s preferences change, new technologies are emerging, and current and future governments will almost certainly need to increase emissions targets under the Paris Agreement.

A design that is flexible in response to alternative political choices has a much better chance of getting unanimous support from the states and territories. A state or territory supporting the guarantee need not endorse the current target.

What next for renewables?

Weatherill famously declared South Australia’s election to be “a referendum on renewable energy”. His defeat almost certainly means that South Australia’s 50% renewable energy target, which Weatherill had pledged to extend to 75%, will be abolished.

But South Australia’s wind, solar and battery projects aren’t going anywhere. While there has been some concern about the future of individual projects, the change in policy won’t affect existing solar and wind farms. Marshall has promised to honour existing contracts. South Australia remains the location of choice for many projects under the federal Renewable Energy Target.

The National Energy Guarantee would not replace or preclude state targets for renewable energy. They achieve different things. A renewable energy target is aimed at guiding and shaping industry investment, rather than specifically reducing emissions (although states have used renewable energy targets in recent years to attempt to cut emissions in the absence of a credible federal scheme).




Read more:
Will the National Energy Guarantee hit pause on renewables?


South Australia is likely to continue to contribute strongly to a national emissions reduction target, with or without a local renewable energy target. High levels of intermittent renewable energy in the state will require backup generation and demand response to meet the reliability obligation.

Under the guarantee, states and territories can still choose to deliver greater emissions reductions than the federal target. They can do this through renewable energy targets or more direct emissions policies. But individual states that want to pursue these deeper cuts could end up doing the heavy lifting for the nation, unless states can collectively agree to beat the national target.

Unanimous support still needed

The COAG Energy Council will meet again on April 20 to discuss the future of the National Energy Guarantee. With South Australia’s support looking much more likely this time around, the policy can be expected to remain on the table. But all states and territories will no doubt reserve judgement until they have the final design, and that won’t be until the second half of 2018.

The ConversationAustralia is edging closer to finally having a national, integrated, energy and climate policy. We’ve been here before, and previously have let the perfect become the enemy of the good. Let’s not make that mistake again – let’s get a foundation in place to build on. So many politicians have fallen trying. But perhaps Weatherill will be the last.

Kate Griffiths, Senior Associate, Grattan Institute

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

Tesla’s ‘virtual power plant’ might be second-best to real people power



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Researchers talk to Bruny Islanders who have signed up to an experimental new method of managing energy.
Chris Crerar

Hedda Ransan-Cooper, Australian National University; Archie Chapman, University of Sydney; Paul Scott, Australian National University, and Veryan Anastasia Joan Hann, University of Tasmania

The South Australian government and Tesla recently announced a large-scale solar and storage scheme that will distribute solar panels and batteries free of charge to 50,000 households.

This would form what has been dubbed a “virtual power plant”, essentially delivering wholesale energy and service systems. This is just the latest in South Australia’s energetic push to embrace renewables, make energy cheaper and reduce blackout-causing instability.




Read more:
Explainer: what can Tesla’s giant South Australian battery achieve?


The catch is that more than a third of the costs of a power system are in the distribution networks, as are most of the faults. A virtual power plant on its own can’t necessarily solve the problems of costly network management.

The bundling of batteries together to power a network doesn’t consider the needs of either households or the network.

To address these problems, we’re trialling technology in Tasmania that intelligently controls fleets of batteries and other home devices with the aim of making networks more flexible, reliable, and cheaper to operate.

The Bruny Island Battery trial

Part of what we need to transition to a more reliable and cleaner grid is better control of power networks. This will improve operation during normal times, reduce stress during peak times, and remove the need for costly investment over the long term.

For instance, sometimes the network simply needs more energy in one particular location. Perhaps a household doesn’t want the grid to draw power from their battery on a particular day, because it’s cheaper for them to use it themselves. Most models of virtual power plants don’t take these different needs into account.

Bruny Island in Tasmania is the site of a three-year trial, bringing together researchers from the the Australian National University, the University of Sydney, the University of Tasmania, TasNetworks and tech start-up Reposit Power.




Read more:
Charging ahead: how Australia is innovating in battery technology


Thirty-three households have been supplied with “smart battery” systems, charged from solar cells on their roofs, and a “controller” box that sits between the house and the power lines.

Participants are paid when their batteries supply energy to the Bruny Island network, which is sometimes overloaded during peak demand. Their bills will also go down because they’ll be drawing household power from their battery when it is most cost-effective for them.

In a world first, Network-Aware Coordination (NAC) software coordinates individual battery systems. The NAC automatically negotiates battery operations with the household (via the controller box), to decide whether the battery should discharge onto the grid or not.

In these negotiations, computer algorithms request battery assistance at a price that reflects the value to the network. If the price is too low for the household, for example because they are better off storing the energy for their own use later in the day, the controller will make a counter-offer to the network with a higher price.

The negotiation continues until they find a solution that works for the network, at the lowest overall cost.

The NAC-based negotiation is half of the economic equation. Battery owners will also be compensated for their work in supporting the grid. The trial team are working out a payment system that passes on some of the networks’ savings created by avoiding diesel generator use on Bruny Island.

Solving big problems

The problem of co-ordinating Australia’s 1.8 million rooftop solar installations in one of the longest electricity networks in the world is not trivial.

Distributed battery systems, such as in Tesla’s South Australian proposal, represent one possible future. The question that we’re exploring is how to coordinate large numbers of customer-owned batteries to work in the best interests of both the consumer and the network.

The primary feature of virtual power plants, to lump together resources, runs counter to what is required for targeted distribution network support. Nor do virtual power plants necessarily have to act in the best interest of householders.




Read more:
Meet the new ‘renewable superpowers’: nations that boss the materials used for wind and solar


In contrast, we’re trialling technology that acts in the financial interests of householders, to earn value from their batteries by providing location-specific services to networks, at a time and price that suits the customer.

As currently conceived, the South Australian scheme may not be the most cost-effective solution to dealing with our evolving electricity system’s needs. The Bruny trial shows a different possible future grid – one which allows people to produce and store energy for themselves, and also share it, reducing pressure on the network and allowing higher penetrations of renewables.

The Conversation
The Bruny trial is funded by ARENA, and is a collaborative venture lead by The Australian National University, with project partners The University of Sydney, University of Tasmania, battery control software business Reposit Power, and TasNetworks.

Hedda Ransan-Cooper, Research fellow, Australian National University; Archie Chapman, Research Fellow in Smart Grids, University of Sydney; Paul Scott, Research fellow, Australian National University, and Veryan Anastasia Joan Hann, PhD Candidate – Energy Policy Innovation, University of Tasmania

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

China wants to dominate the world’s green energy markets – here’s why



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xieyuliang / shutterstock

Chris G. Pope, University of Sheffield

If there is to be an effective response to climate change, it will probably emanate from China. The geopolitical motivations are clear. Renewable energy is increasingly inevitable, and those that dominate the markets in these new technologies will likely have the most influence over the development patterns of the future. As other major powers find themselves in climate denial or atrophy, China may well boost its power and status by becoming the global energy leader of tomorrow.

President Xi Jinping has been vocal on the issue. He has already called for an “ecological civilization”. The state’s “green shift” supports this claim by striving to transition to alternative energies and become more energy efficient.

But there are material benefits as well. China’s proactive response has impacted on global energy markets. Today, five of the world’s six top solar-module manufacturers, five of the largest wind turbine manufacturers, and six of the ten major car manufacturers committed to electrification are all Chinese-owned. Meanwhile, China is dominant in the lithium sector – think: batteries, electric vehicles and so on – and a global leader in smart grid investment and other renewable energy technologies.

This is only a start. There are modest projections that just 20% of the country’s primary energy consumption will come from non-carbon sources by 2030. Nonetheless, China’s sheer size means Beijing’s aggressive pursuit of emergent and expanding renewables markets should not be ignored. After all, dominating such markets has strong material benefits, while pioneering a green revolution provides intangible benefits in terms of state image and prestige.

So what are these benefits? First, concerns over environmental degradation are very real in China, owing to issues such as air, food and water pollution, and should be acknowledged. Beijing doesn’t want food and water scarcity or smoggy skies either, whether for altruistic environmental reasons or concerns over its popular legitimacy.

But it is worth also considering the geopolitical implications of climate change leadership. Take the US for example, historically the largest carbon emitter. The country had previously been active in climate policy, if somewhat hypocritical (support for hydraulic fracturing, for instance). But the current Trump administration is forthright in its baseless denial of climate change, having withdrawn from the Paris Agreement. It has also hired climate deniers to head its environmental agencies and other offices of power.

Contrast this with China, which is becoming increasingly proactive. In 2016 it became the largest shareholder in a new Asian Infrastructure Investment Bank which, along with the BRICS-established New Development Bank, invests heavily in green energy. The two institutions are seen as potential competitors to the IMF and the World Bank.

Of course, the situation is not black and white with China “going green” and everyone else sitting idly by. The Shanghai Cooperation Organisation (SCO), which commits to political, economic and military integration across Eurasia, the world’s largest landmass, for instance, comprises of nations with strategic interests in exporting hydrocarbons and coal. However, the same is true for the more environmentally aware Obama administration which advocated forcefully the Trans-Pacific Partnership that would have overriden attempts to establish green industries and constrained signatory states to its agreements with big business ahead of climate change action.

To this end, former president Obama argued that it was necessary for the US to shape the rules of global trade to US benefit. That being the case, what about China? As a major power, it is strengthening its international agency by pioneering these multilateral alternatives, many of which heavily invest in green energy projects. Through development banks or Asian trade agreements, China can provide an alternative vision to an international integration ostensibly based on the universal values espoused by the US and its chief allies.

“Going green”, then, while undeniably necessary, is a useful image or value to uphold as it serves to legitimate Chinese international and regional leadership. In this sense, it mirrors the way G7 nations espouse “democracy” or “freedom”. Going green also happens to be economically viable for those that have the funds to invest, contributing to China’s transition from the world’s manufacturing base to a truly major power.

The ConversationChina’s response to climate change combined with the size of its economy has thrust it to the centre of a global shift. Large-scale funding through Chinese-led multilateral frameworks could see a new energy system emerge – led by China. This would greatly extend its influence on the international political economy at the expense of those major powers unable or unwilling to respond.

Chris G. Pope, Researcher, University of Sheffield

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

A month in, Tesla’s SA battery is surpassing expectations


Dylan McConnell, University of Melbourne

It’s just over one month since the Hornsdale power reserve was officially opened in South Australia. The excitement surrounding the project has generated acres of media interest, both locally and abroad.

The aspect that has generated the most interest is the battery’s rapid response time in smoothing out several major energy outages that have occurred since it was installed.

Following the early success of the SA model, Victoria has also secured an agreement to get its own Tesla battery built near the town of Stawell. Victoria’s government will be tracking the Hornsdale battery’s early performance with interest.

Generation and Consumption

Over the full month of December, the Hornsdale power reserve generated 2.42 gigawatt-hours of energy, and consumed 3.06GWh.

Since there are losses associated with energy storage, it is a net consumer of energy. This is often described in terms of “round trip efficiency”, a measure of the energy out to the energy in. In this case, the round trip efficiency appears to be roughly 80%.


Further reading: Yes, SA’s battery is a massive battery, but it can do much more besides


The figure below shows the input and output from the battery over the month. As can be seen, on several occasions the battery has generated as much as 100MW of power, and consumed 70MW of power. The regular operation of battery moves between generating 30MW and consuming 30MW of power.

Generation and consumption of the Hornsdale Power Reserve over the month of December 2018.
Author provided [data from AEMO]

As can be seen, the the generation and consumption pattern is rather “noisy”, and doesn’t really appear to have a pattern at all. This is true even on a daily basis, as can be seen below. This is related to services provided by the battery.

Generation and consumption of the Hornsdale Power Reserve on the 6th of Jan 2018.
Author provided [data from AEMO]

Frequency Control Ancillary Services

There are eight different Frequency Control Ancillary Services (FCAS) markets in the National Electricity Market (NEM). These can be put into two broad categories: contingency services and regulation services.

Contingency services

Contingency services essentially stabilise the system when something unexpected occurs. This are called credible contingencies. The tripping (isolation from the grid) of large generator is one example.

When such unexpected events occur, supply and demand are no longer balanced, and the frequency of the power system moves away from the normal operating range. This happens on a very short timescale. The contingency services ensure that the system is brought back into balance and that the frequency is returned to normal within 5 minutes.


Read more: Baffled by baseload? Dumbfounded by dispatchables? Here’s a glossary of the energy debate


In the NEM there are three separate timescales over which these contingency services should be delivered: 6 seconds, 60 seconds, and 5 minutes. As the service may have to increase or decrease the frequency, there is thus a total of six contingency markets (three that raise frequency in the timescales above, and three that reduce it).

This is usually done by rapidly increasing or decreasing output from a generator (or battery in this case), or rapidly reducing or increasing load. This response is triggered at the power station by the change in frequency.

To do this, generators (or loads) have some of their capacity “enabled” in the FCAS market. This essentially means that a proportion of its capacity is set aside, and available to respond if the frequency changes. Providers get paid for for the amount of megawatts they have enabled in the FCAS market.

This is one of the services that the Hornsdale Power Reserve has been providing. The figure below shows how the Hornsdale Power Reserve responded to one incident on power outage, when one of the units at Loy Yang A tripped on December 14, 2017.

The Hornsdale Power Reserve responding to a drop in system frequency.
Author provide [data from AEMO’

Regulation services

The regulation services are a bit different. Similar to the contingency services, they help maintain the frequency in the normal operating range. And like contingency, regulation may have to raise or lower the frequency, and as such there are two regulation markets.

However, unlike contingency services, which essentially wait for an unexpected change in frequency, the response is governed by a control signal, sent from the Australian Energy Market Operator (AEMO).

In essence, AEMO controls the throttle, monitors the system frequency, and sends a control signal out at a 4-second interval. This control signal alters the output of the generator such that the supply and demand balanced is maintained.

This is one of the main services that the battery has been providing. As can be seen, the output of the battery closely follows the amount of capacity it has enabled in the regulation market.

Output of Horndale Power Reserve compared with enablement in the regulation raise FCAS market.
Author provided [data from AEMO]

More batteries to come

Not to be outdone by it’s neighbouring state, the Victorian government has also recently secured an agreement for its own Tesla battery. This agreement, in conjunction with a wind farm near the town of Stawell, should see a battery providing similar services in Victoria.

This battery may also provide additional benefits to the grid. The project is located in a part of the transmission network that AEMO has indicated may need augmentation in the future. This project might illustrate the benefits the batteries can provide in strengthening the transmission network.

It still early days for the Hornsdale Power Reserve, but it’s clear that it has been busy performing essential services and doing so at impressive speeds. Importantly, it has provided regular frequency control ancillary services – not simply shifting electricity around.

The ConversationWith the costs and need for frequency control service increasing in recent years, the boost to supply through the Hornsdale power reserve is good news for consumers, and a timely addition to Australia’s energy market.

Dylan McConnell, Researcher at the Australian German Climate and Energy College, University of Melbourne

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

‘Finkel’s new energy report’ isn’t new and it isn’t by Finkel


David Blowers, Grattan Institute

The headline almost writes itself: “Finkel backs Labor’s renewables policy”. A report released yesterday, The role of energy storage in Australia’s future energy supply mix, has found that Australia can reach 50% renewables by 2030 with limited impact on reliability.

It has, inevitably, lead to claims that Labor’s target of 50% renewables by 2030 is both achievable and correct. But focusing on the politics would be missing the point.


Read more: Shorten goes on front foot over 50% renewables ‘target’


It should first be noted that, despite the many headlines citing his involvement, Australia’s Chief Scientist Alan Finkel did not actually write the report. The report is by the Australian Council of Learned Academies (ACOLA), an independent, not-for-profit organisation that brings together Australian academics to provide evidence-based solutions to national and global policy problems. Yes, funding was provided by the Office of the Chief Scientist, and yes, Finkel himself has been supportive of the report, but describing it as a “new Finkel report” is stretching things a little.

The report explores how much energy storage – whether in batteries, pumped hydro or solar thermal – we will need as we increasingly rely on renewable, and therefore intermittent, electricity generation. As more renewable generation enters the system, there needs to be alternative sources of generation, such as storage, that can meet demand when the sun isn’t shining or the wind isn’t blowing.


Read more: Want energy storage? Here are 22,000 sites for pumped hydro across Australia


The ACOLA report finds that only a small amount of storage would be required to balance a system with 50% renewables. Cue the political debate about the quality of the electricity market modelling that ACOLA relied on to make this finding.

There is far too much focus on electricity market modelling in Australia these days – particularly regarding renewable energy. Finkel’s policies are distrusted and dismissed by people on one side of the debate because they believe his modelling shows too high a level of renewables. And the Coalition’s National Energy Guarantee (NEG) is distrusted and dismissed by people on the other side of the debate because they say it shows too low a level of renewables.

This debate rages on even though no modelling has been revealed; the federal government has promised to unveil the modelling behind the NEG at a meeting of the COAG Energy Council this Friday.

The truth is, modelling is an inexact science. The outcomes depend on the assumptions you use and the data you shove in. This is why the results for Finkel and the NEG will differ so much, despite them using the same emissions reduction targets and using emissions reduction mechanisms that impact the market in very similar ways.


Read more: Politics podcast: Energy Security Board chair Kerry Schott on a national energy plan


As it happens, I have limited confidence that you need only a little storage with 50% renewables but a lot of storage at 75% renewables, as ACOLA’s report claims. But the specifics are not important. What is important is that Australia will need something to balance intermittent renewables – and at some point, we will need quite a lot of balancing.

The most important aspect of the ACOLA report is that it brings into focus an unavoidable fact: Australia has serious problems with its electricity system. System security – making sure that the system doesn’t break – is an immediate concern. Reliability – ensuring the system has enough power to meet demand – is a growing problem. And energy storage is a potential solution to both.

ACOLA is not the first to point this out. Finkel’s blueprint for the National Electricity Market, released in June, identified these concerns. The Australian Energy Market Operator in September identified the need for a new mechanism to address medium-term reliability issues in the market.

Without the right policy settings to address reliability and security concerns, storage will have no chance of helping to fix our energy mess, regardless of the quality of ALOCA’s modelling.

The ConversationOur politicians need to focus on the substance of this debate, rather than the headlines. Hitting each other over the head because there are too many – or too few – renewables in the policy basket is pointless and will ultimately prove self-defeating. Instead, how about finding an actual policy solution? Starting at this Friday’s COAG Energy Council meeting. Please?

David Blowers, Energy Fellow, Grattan Institute

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

Household savings figures in Turnbull’s energy policy look rubbery


Michelle Grattan, University of Canberra

The big questions about Malcolm Turnbull’s energy policy will be, for consumers, what it would mean for their bills and, for business, how confident it can be that the approach would hold if Bill Shorten were elected.

The government needs to convince people they’ll get some price relief, but even as Turnbull unveiled the policy the rubbery nature of the household savings became apparent.

Crucially, the policy aims to give investors the certainty they have demanded. But the risk is this could be undermined if Labor, which is well ahead in the polls, indicated an ALP government would go off in yet another direction.

And most immediately, there is also the issue of states’ attitudes, because their co-operation is needed for the policy’s implementation. Turnbull talked to premiers after the announcement, and the plan goes to the Council of Australian Governments (COAG) next month.

Turnbull describes the policy as “a game-changer” that would deliver “affordability, reliability and responsibility [on emissions reduction]”.

Unsurprisingly – given it would end the subsidy for renewables, rejecting Chief Scientist Alan Finkel’s recommendation for a clean energy target – the policy sailed through the Coalition partyroom with overwhelming support.

Finkel later chose to go along with it rather than be offended by the discarding of his proposal. The important thing, he said, was that “they’re effectively adopting an orderly transition” for the energy sector, which was what he had urged.

In the partyroom Tony Abbott was very much a minority voice when he criticised the plan; his desire for a discussion of the politics was effectively put down by a prime minister who had his predecessor’s measure on the day.

The policy – recommended by the Energy Security Board, which includes representatives of the bodies operating and regulating the national energy market – is based on a new “national energy guarantee”, with two components.

Energy retailers across the National Electricity Market, which covers the eastern states, would have to “deliver reliable and lower emissions generation each year”.

A “reliability guarantee” would be set to deliver the level of dispatchable energy – from coal, gas, pumped hydro, batteries – needed in each state. An “emissions guarantee” would also be set, to contribute to Australia’s Paris commitments.

According to the Energy Security Board’s analysis, “it is expected that following the guarantee could lead to a reduction in residential bills in the order of A$100-115 per annum over the 2020-2030 period”. The savings would phase up during the period.

When probed, that estimate came to look pretty rough and ready. More modelling has to be done. In Question Time, Turnbull could give no additional information about the numbers, saying he only had what was in the board’s letter to the government.

So people shouldn’t be hanging out for the financial relief this policy would bring. Although to be fair, Turnbull points to the fact it is part of a suite of measures the government is undertaking.

Business welcomed the policy, but made it clear it wanted more detail and – crucially – that it is looking for bipartisanship.

The Australian Chamber of Commerce and Industry said the policy’s detail “and its ability to win bipartisan and COAG support will be critical”. Andy Vesey, chief executive of AGL, tweeted that “with bipartisan support” the policy would provide investment certainty.

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The Australian Industry Group said it was “a plausible new direction for energy policy” but “only bipartisanship on energy policy will create the conditions for long-term investment in energy generation and by big energy users”.

It’s not entirely clear whether the government would prefer a settlement or a stoush with the opposition on energy.

Turnbull told parliament it had arranged for the opposition to have a briefing from the Energy Security Board, and urged Labor to “get on board” with the policy.

But Labor homed in on his not giving a “guarantee” on price, as well as the smallness of the projected savings. Climate spokesman Mark Butler said it appeared it would be “just a 50 cent [a week] saving for households in three years’ time, perhaps rising to as much as $2.00 per week in a decade”.

But while the opposition has gone on the attack, it is also hedging its bets, playing for time.

“We’ve got to have … some meat on the bones,” Butler said. “Because all the prime minister really announced today was a bunch of bones.”

“We need detail to be able to sit down with stakeholders, with the energy industry, with big businesses that use lots of energy, with stakeholder groups that represent households, and obviously state and territory governments as well, and start to talk to them about the way forward in light of the announcement the government made today,” he said.

The initial reaction from state Labor is narky. Victorian Premier Daniel Andrews said it seemed Finkel had been replaced by “professor Tony Abbott as the chief scientist”, while South Australia’s Jay Weatherill claimed Turnbull “has now delivered a coal energy target.”

These are early days in this argument. Federal Labor will have to decide how big an issue it wants to make energy and climate at the election. Apart from talking to stakeholders and waiting for more detail, it wants to see whether the plan flies at COAG.

If it does, the federal opposition could say that rather than tear up the scheme in government, it would tweak it and build on it. That way, Labor would avoid criticism it was undermining investment confidence.

The ConversationBut if there is an impasse with the states and the plan is poorly received by the public, the “climate wars” could become hotter.

https://www.podbean.com/media/player/sk78v-786f19?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0

Michelle Grattan, Professorial Fellow, University of Canberra

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

Federal government unveils ‘National Energy Guarantee’ – experts react


Alan Pears, RMIT University; Anna Skarbek, Monash University, and Dylan McConnell, University of Melbourne

The federal government has announced a new energy policy, after deciding against adopting the Clean Energy Target recommended by chief scientist Alan Finkel.

The new plan, called the National Energy Guarantee, will require electricity retailers to make a certain amount of “dispatchable” power available at all times, and also to reduce the electricity sector’s greenhouse emissions by 26% relative to 2005 levels by 2030.

The government says it will save the average household up to A$115 a year after 2020, while also ensuring reliability. Below, our experts react to the new policy.


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


“The federal government will be even less important in energy policy”

Alan Pears, Senior Industry Fellow, RMIT University

Business, state governments and the energy industry have been clamouring for more certainty from the federal government. Now they have it: the federal government will be even less important in shaping energy and climate policy than in the past, leaving states and territories, local government, business and households to focus on driving the energy revolution and cutting emissions.

The new policy will impose a reliability obligation on energy retailers, who will presumably have to select an appropriate mix of energy suppliers to meet it, and the devil will be in the detail. If the required proportion of dispatchable electricity is reasonable, and if retailers and new renewable energy generators are free to decide how to deliver it, then the cost and difficulty of compliance may be modest.

For example, retailers and generators could piggyback on the demand response capacity volunteered for the ARENA Demand Response project. This could help accelerate the rollout of a variety of energy storage solutions, in turn reducing the market power of the big generators and driving down energy prices.

On the other hand, if the options are limited, the obligation could increase the market power of the gas industry, meaning no relief from high wholesale prices.

It will also be interesting to see if the obligation is applied across all new generation. If so, it could significantly increase the cost of new coal generation, as retailers would have to cover the risk of failure of a large generation unit, as well as managing its slow response to changing demand.


“Australia’s electricity sector can cut emissions more”

Anna Skarbek, Chief Executive, ClimateWorks Australia, Monash University

The key question is whether the emissions guarantee will be strong enough for Australia to meet its current and future climate obligations under the Paris Agreement.

Electricity creates more than one-third of Australia’s total emissions. If we don’t reduce the emissions in our electricity, then we don’t unlock other emissions reduction opportunities such as electric vehicles.

If the National Energy Guarantee aims at cutting emissions by only 26% by 2030 then other sectors across the economy would have to make greater emissions
reductions sooner.

But our research shows that Australia’s electricity sector can cut emissions by 60% below 2005 levels by 2030. Harnessing this potential will help us to reach future targets that progressively increase under the Paris Agreement.

If you don’t achieve deep emissions reductions in the electricity sector, a major strengthening of policy will be needed for the other sectors where there is less momentum currently. For example, stronger action would be needed in transport, buildings, industry and land.

Australia’s climate policy, which is being reviewed before the end of the year, will need to cover more than just the electricity sector. Other measures should include the introduction of vehicle emissions standards, a more stringent
national building code, a dramatic improvement in the uptake of energy efficiency measures across industry and stronger incentives for reforestation.


How the reliability guarantee will work

Dylan McConnell, Researcher at the Australian German Climate and Energy College, University of Melbourne

Under the NEG retailers are responsible for ensuring continuous supply of energy. But retailers don’t always generate the energy they sell. In order to meet the NEG’s reliability obligation retailers will most likely enter into cap contracts with generators.

Unlike other kinds of contracts, which impose a fixed price, cap contracts only come into play when high demand pushes energy prices over a certain pre-agreed level. At that point, generators with flexible dispatchable power guarantee that they will provide extra energy.

The extreme peaks, where the price heads to A$14,000 per megawatt hour – only come a couple of times a year, if at all. To compensate generators for building all that extra capacity, retailers pay a daily premium. Cap contracts essentially act as insurance: they protect retailers from extremely high prices during intense demand, and they offer generators the chance of steep profits.

Cap contracts are a standard part of the market, and retailers already used them to manage their risk exposure. The Energy Security Board has said:

This reliability guarantee would require retailers to hold forward contracts with dispatchable resources that cover a predetermined percentage of their forecast peak load.

If the new reliability standards are in line with retailers own internal guidelines, the impact on the market should be minimal. But if the government imposes higher standards, retailers will have to purchase more cap contracts (or build their own dispatchable power plants).

If demand for cap contracts increase, it would most likely encourage investment in gas and hydro power plants.


The ConversationThis article was updated on October 18.

Alan Pears, Senior Industry Fellow, RMIT University; Anna Skarbek, CEO at ClimateWorks Australia, Monash University, and Dylan McConnell, Researcher at the Australian German Climate and Energy College, University of Melbourne

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

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


John Quiggin, The University of Queensland

The most important thing to understand about the federal government’s new National Energy Guarantee is that it is designed not to produce a sustainable and reliable electricity supply system for the future, but to meet purely political objectives for the current term of parliament.

Those political objectives are: to provide a point of policy difference with the Labor Party; to meet the demands of the government’s backbench to provide support for coal-fired electricity; and to be seen to be acting to hold power prices down.

Meeting these objectives solves Prime Minister Malcolm Turnbull’s immediate political problems. But it comes at the cost of producing a policy that can only produce further confusion and delay.


Read more: Federal government unveils ‘National Energy Guarantee’ – experts react


The government’s central problem is that, as well as being polluting, coal-fired power is not well suited to the problem of increasingly high peaks in power demand, combined with slow growth in total demand.

Coal-fired power plants are expensive to start up and shut down, and are therefore best suited to meeting “baseload demand” – that is, the base level of electricity demand that never goes away. Until recently, this characteristic of coal was pushed by the government as the main reason we needed to maintain coal-fired power.

The opposite of baseload power is “dispatchable” power, which can be turned on and off as needed.

Classic sources of dispatchable power include hydroelectricity and gas, while recent technological advances mean that large-scale battery storage is now also a feasible option.

Coal-fired plants can be adapted to be “load-following” which gives them some flexibility in their output. But this requires expensive investment and reduces the plants’ operating life. The process is particularly ill-suited to the so-called High Efficiency, Low Emissions (HELE) plants being pushed as a solution to the other half of the policy problem, reducing carbon dioxide emissions.

Given that there is only limited capacity to expand hydro (Turnbull’s Snowy 2.0 is years away, if it ever happens) and that successive governments have made a mess of gas policy, any serious expansion of dispatchable power would realistically need to focus on batteries. The South Australian government reached this conclusion some time ago, making a decision to invest in its own battery storage. That move was roundly condemned by the federal government, which at the time was still focused on baseload.

The government’s emphasis on baseload was always mistaken, but the confusion and noise surrounding energy policy meant that few people understood this. That changed in September when the Australian Energy Market Operator (AEMO) reported that Australia’s National Electricity Market faced a capacity shortfall of up to 1,000 megawatts for the coming summer, and that older baseload power stations will struggle to cope.

Clearly this situation called for more flexibility in dispatchable sources in the short term, and widespread investment in dispatchables for the long term.

A question of definition

Obviously, this presented Turnbull with a dilemma. The policy advice clearly favoured dispatchables, but vocal members of his backbench wanted a policy to subsidise coal.

The answer was breathtakingly simple. The new policy redefines coal as dispatchable, despite it having the opposite technological characteristics.

This is not an entirely new approach. Before the government decided to abandon the proposed Clean Energy Target it put a lot of effort into redefining coal as “clean”. The approach here involved creating confusion between carbon capture and storage (CCS) and HELE power stations. CCS involves capturing carbon dioxide from power station smokestacks and pumping it underground, thereby avoiding emissions. This would be a great solution to the problems of carbon pollution if it worked, but unfortunately it’s hopelessly uneconomic

By contrast, HELE is just a fancy name for the marginal improvements made to coal-fired technology over the 30-50 years since most of our existing coal-fired plants were designed and built. The “low” emissions are far higher than those for gas-fired power, let alone renewables or, for that matter, nuclear energy (another uneconomic option).

The core of the government’s plan is a requirement that all electricity retailers should provide a certain proportion of dispatchable electricity – a term that has now been arbitrarily defined to include coal. By creating a demand for this supposedly dispatchable power, the policy discourages the retirement of the very coal units that AEMO has identified as ill-suited to our needs.

Elusive certainty?

Given that the policy is unlikely to survive beyond the next election, it’s unlikely that it will prompt anyone to build a new gas-fired power station, let alone a coal-fired plant. So the only real effect will be to discourage investment in renewables and create yet further policy uncertainty.

This undermines the basis for the (unreleased) modelling supposedly showing that household electricity costs will fall. These savings are supposed to arise from the investment certainty resulting from bipartisan agreement. But the political imperative for the government is to put forward a policy Labor can’t support, to provide leverage in an election campaign. If the government had wanted policy certainty it could have accepted Labor’s offer to support the Clean Energy Target.

The ConversationIt remains to be seen whether this scheme will achieve the government’s political objectives. It is already evident, however, that it does not represent a long-term solution to our problems in energy and climate policy.

John Quiggin, Professor, School of Economics, The University of Queensland

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