The cost of large-scale battery storage is declining rapidly (source: IEA, Tracking Clean Energy Progress 2016)

Guest writer Dr Garry Glazebrook continues his series on projects that could be funded by his proposed Building Australia Fund:

Australia faces something of a “perfect electrical storm”, with rising prices, increasing carbon emissions and falling reliability.  This has its genesis in:

  • The “gaming” of the national electricity market, creating extremely high spot prices
  • The debacle over carbon pricing
  • The Federal Government’s attacks on renewable energy
  • Unilateral decisions by private energy companies, for example to close down Leigh Creek and Hazelwood power stations
  • Extreme weather events, linked to climate change. 

In response to the growing crisis, South Australia released a $550m electricity plan earlier this month. This takes back partial control of its electricity grid, invests in batteries, gas fired power plants and diesel generators to reduce the risk of more blackouts, and proposes an interconnector between SA and NSW.

One day later the Prime Minister announced a feasibility study into a $2 billion expansion of the Snowy Hydro Scheme, aimed at increasing its peak generating capacity by 2,000 megawatts using pumped storage.

A national plan

Australia has some of the most emissions-intensive electricity in the world; our emissions are amongst the world’s highest and are actually rising. Many of our coal-fired power stations are now reaching the end of their economic lives.

The initiatives announced by the SA Premier and the Prime Minister are encouraging developments, but they don’t make a comprehensive, national plan. There are now calls from many quarters for such a plan. What should be its key elements?

First, we need a rapid ramp-up of generation from renewables. Fortunately, we have some of the best wind, solar, geothermal, wave power and other renewable potential in the world, and the costs of renewable energy are continuing to fall.

Second, we need to add storage i.e. pumped hydro, batteries, ultra capacitors, liquid salt, and other technologies. This needs to occur at the generation end as well as at the consumer end, to enable both supply and demand to adjust in real time. The cost of battery storage is also falling rapidly (see exhibit).

Third, we need more inter-connectors, including:

  • New links between South Australia, NSW and Queensland, to increase resilience in the grid, and open up solar and geothermal power along the inter-connector routes.
  • Strengthening of the SA – Victorian inter-connector, which will open up more wind power.
  • Strengthening the Bass Strait inter-connector, to take advantage of pumped hydro storage potential in Tasmania.
  • In the longer term, an inter-connector across the Great Australian Bight to link WA into the National Grid. It would open up some of the best wind resources in the country, as well as wave power, solar power and pumped storage potential around the Bight. The latter is already proposed for a trial plant in SA. Linking WA to the national grid will also take advantage of time zone differences – WA would be developing significant solar power just as it is most needed in the East Coast.

Fourth, we need a plan for the phased retirement of coal-fired power stations, including economic stimulus for the Latrobe Valley, Hunter Valley, Lithgow and Central Queensland regions.

Fifth, we will eventually need to phase out gas-fired electricity as well. Gas is a premium fuel for heavy industry and source of hydrocarbons for the petrochemical industry.  However gas fired electricity will be needed in the short term while the other strategies are developed.

Sixth, we need a “smart grid”, which will link multiple sources, stores and consumers of electricity, enabling fluctuating supply and demand to be managed much more effectively.

Global developments

Renewables accounted for 23% of global electricity production in 2015, and their share is rising as investment moves away from fossil fuels.

Many countries are also investing in long-range high voltage DC transmission lines to link cities with renewable energy sources. For example:

  • China began building HVDC lines in 2010. The most recent is the 3,400 km Changji – Guquan interconnector, which will carry 12,000 MW (half of Spain’s average power use).
  • India is also building such links, for example the 1,700 km, 6,000 MW line from hydroelectric power stations in Assam to Uttar Pradesh.
  • In the US, Oklahoma is building a 1,100 km, ultra-high voltage (600,000 V) line to feed wind power into the Tennessee Valley Authority’s grid.
  • The Australian Electricity Market Operator has identified the need for more inter-connectors in Australia, specifically links between SA, NSW, Queensland, Victoria and Tasmania. 

Implementation

How could we implement such a plan?

Logically, electricity generation can be left to the private sector, given that in the future there will be hundreds of large-scale renewable projects and millions of individual residents and commercial premises with their own solar PV installations.

However governments should ideally ultimately own and control the National Electricity Grid, which will link all of this together. In the short term governments should:

  • Build the critical missing inter-connectors, and major storage solutions like the Snowy scheme and SA’s battery farm. The proposed Building Australia Fund could help finance this, with an estimated investment of $10 billion over fifteen years.
  • Continue incentives for research into renewables, so that the cheapest mix of sources can be utilized.
  • Support individual customers to invest in local storage solutions. This will allow the community to re-gain control over pricing, which is currently manipulated by a small number of players in the market.
  • Legislate a simple but effective carbon price. This could start low, e.g. $5/tonne of CO2, but steadily ramp up to perhaps $20/tonne by 2030, sending a clear signal to invest in renewables and to start closing down coal-fired and later, gas-fired power, an approach actually supported by industry. The proceeds from such a tax could either be redistributed to individuals on a simple per-capita basis (e.g. as proposed by James Hansen in the US) and/or could be allocated to the Building Australia Fund to help pay for the investments in inter-connectors, renewables and storage solutions.

One thing is abundantly clear – our current electricity policy is a disaster in terms of price, emissions and reliability. A new approach is definitely needed, but one which can take advantage of the many technological developments currently available and in the pipeline.