Archive for May, 2017

Evolution, not revolution

It seems that one of the harder things for lay people to get their heads around in the energy debate is that scenarios are not predictions.

I reflect on this having watched some of the coverage (including by “our” ABC) of the Electricity Network Transformation Roadmap produced by CSIRO and Energy Networks Australia with a 2050 horizon.

The Roadmap, the organizations point out, is “informed by an evidence based approach, referencing over 19 reports that summarise expert analyses, scenario analyses and quantitative modelling to 2050.”  Which from my perspective, given that 2050 is 33 years from here (the equivalent of looking at today from 1984) or 11 federal elections, makes the project interesting but not predictive.

There is no allowance for nuclear power, for example, in this work. Given our concerns here about climate change and a whole range of other factors, like the issues bedevilling gas development, would you care to bet that Australia will not buy in to nuclear energy (especially small reactors) in the next three decades? My regret is that I won’t be around to take your money.

Having said this, the CSIRO/ENA project is helpful in considering some pathways towards a different electricity supply mix.

At every turn, the public needs reminding that our immediate challenge in meaningful terms – hopefully being taken up by the Finkel task force, due to report in the near future – is to get to 2025 and 2030 in better shape.

(As an exercise in understatement I rather like this extract from an op-ed by Josh Frydenberg in today’s Australian Financial Review: “Integrating (much more) renewables into the system will present some challenges but with the right planning energy security can be maintained and challenges overcome.” By contrast there is this comment by the Australian Energy Market Commission this week to a South Australian parliamentary committee looking at last year’s blackout: “The widespread deployment of new technologies in the electricity market is having major impacts on the maintenance of power system security.”)

The CSIRO/ENA report asserts that “the next decade to 2027 is likely to see a step change in the rapid adoption of new technologies driven by falling costs and global carbon abatement measures.” CSIRO/ENA go on to declare that “this decade provides a limited window of opportunity to reposition Australia’s electricity system to deliver efficient outcomes to customers.”

Which is not (or shouldn’t be) an invitation to the body politic to plunge ahead with shutting down or curbing existing conventional generation and bidding the farm solely on the exciting future of intermittent renewables and battery storage.

We all need to be conscious, I think, that a transition is an evolution not a revolution.

(And just by the by, when you contemplate 2030, bear in mind that this is the equivalent of standing in 2004 and looking at today. We have had no less than three federal government white papers on energy security since 2004. Did any of them scope, let alone predict, the domestic energy supply shemozzle we have on our hands in 2017?)

Apart from all the stuff about 2050, the CSIRO/ENA modelling shows a scenario where, in 2030, we could be looking at about 181 terawatt hours of generation in the NEM under a carbon price scheme – with 19 TWh from brown coal (45 TWh today with Hazelwood included), 82 TWh of black coal (114 TWh at present), 73 TWh from gas (versus 19 TWh now), 64 TWh of non-hydro renewables (20 TWh now) and a continuing 16 TWh of hydro power (not reflecting the recent Turnbull lunges towards Snowy 2.0 and Hydro Tasmania 2.0).

Even this level of change, which is nothing like the Apocalypse Now for fossil fuels desired by the Greens et al, poses substantial market management challenges.

And it doesn’t take a great deal more thinking to conclude that whatever policymaking delivers us in the next 13 years (along with the developments in technology we actually take up as opposed to talk up and the reactions of the community to what is proposed, including smart meters and cost-reflective network charges) will be big factors influencing what then happens from 2030 to 2050.

All of which, and not for the first time, brings me to point to the report by South Australian nuclear royal commissioner Kevin Scarce, who has urged our federated system to “collaborate on the development of a comprehensive national energy policy that enables all technologies, including nuclear, to contribute to a reliable, low-carbon electricity network at the lowest possible system cost.” Is this what Finkel & Co are pursuing?

Scarce added: “identifying whether a particular generation portfolio will deliver electricity at the lowest possible cost requires analysis of the future cost of the whole system, ie the total costs of generation, transmission and distribution.” And he observed that claims made to date do not take account of the uncertainty surrounding assumed costs reductions in some technologies.

Coming back to the Roadmap, it is postulated on electricity sector carbon abatement reaching 40 per cent by 2030, a lot more than the across-the-board national target of 26 to 28 per cent, something which carries considerable implications for NEM security and the cost of power to consumers.

In the CSIRO/ENA scenario this would involve an investment in solar PVs reaching 29,000 gigawatts and in battery storage able to contribute 34,000 gigawatt hours a year at the end of the next decade.

Buried in the report (it runs to 116 pages) is a graph showing household electricity bills rising from $1,500 a year (an average) to $1,900 annually in 2030 whether under today’s trends or a system that includes a carbon price. Is this what Us Outdoors think we are hearing from the Coalition and Labor?

Now it’s simply not possible to do justice to the CSIRO/ENA research in 1,100 words.

Their project is an interesting exercise and one they should be complimented for pursuing. It contains many references to the challenges of resilience for a market undergoing fundamental, long-term change. But the risk that the charge of The Green Light Brigade will use the desirable (to them) highlights of the report to run over the more cautious tones of Scarce and others is real. They did that with the AEMO 100 per cent renewables report five years ago.