tag:theconversation.com,2011:/africa/topics/australian-renewable-energy-agency-11468/articlesAustralian Renewable Energy Agency – The Conversation2023-04-11T05:11:42Ztag:theconversation.com,2011:article/2035452023-04-11T05:11:42Z2023-04-11T05:11:42ZBatteries won’t cut it – we need solar thermal technology to get us through the night<figure><img src="https://images.theconversation.com/files/520169/original/file-20230411-26-rhfmew.jpg?ixlib=rb-1.1.0&rect=38%2C38%2C4243%2C2805&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Solar Reserve</span>, <span class="license">Author provided</span></span></figcaption></figure><p>Australia’s transition to renewables is gathering speed, but there’s a looming <a href="https://arena.gov.au/blog/csiro-roadmap-points-to-big-energy-storage-gap/">problem with storage</a>. We will need much more long-duration storage to get us through the night, once coal and fossil gas exit the system. </p>
<p>We also need to find new and better ways to create heat for industrial processes. Renewables can supply much of that heat during the day, but energy storage will be required to meet industry’s night-time heat needs.</p>
<p>Solar thermal technology has the potential to provide both long-duration storage and industrial heat, yet it has been largely overlooked in the Australian context. That is about to change. </p>
<p>The <a href="https://www.csiro.au/en/work-with-us/services/consultancy-strategic-advice-services/csiro-futures/energy-and-resources/renewable-energy-storage-roadmap">CSIRO Renewable Energy Storage Roadmap</a> identifies a mix of technologies will be required, across sectors, to meet Australia’s energy storage needs, particularly at night. Solar thermal will be an important part of the mix. </p>
<p>Batteries alone won’t cut it. They’re good for short-duration storage, ranging from mere minutes to an hour or two. But you’d need an awful lot of them, at enormous cost, to cover 8-12 hours. Solar thermal becomes cost-effective for long-duration storage at scale, and brings other benefits too. </p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/dFKXGmV_DDE?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Solar Power at Night using Concentrated Solar Power by Engineering with Rosie.</span></figcaption>
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Read more:
<a href="https://theconversation.com/australias-energy-market-operator-is-worried-about-the-grids-reliability-but-should-it-be-200355">Australia's energy market operator is worried about the grid's reliability. But should it be?</a>
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<h2>Introducing thermal energy storage</h2>
<p>The Australian Energy Market Operator (AEMO) identified <a href="https://aemo.com.au/en/energy-systems/major-publications/integrated-system-plan-isp/2022-integrated-system-plan-isp">storage of four to 12 hours’ duration</a> as “the most pressing utility-scale need in the next decade”. That’s what’s required “to manage stronger daily variations in solar and wind output, and to meet consumer demand, also during more extreme days, as coal capacity declines”.</p>
<p>Most people know about lithium-ion battery (chemical) storage and pumped hydro (mechanical) storage. However, thermal energy storage is not well understood or recognised. This is partly due to perceived costs and engineering challenges. However, as concentrated solar thermal plants are built all over the world - <a href="https://www.solarpaces.org/china-now-has-30-csp-projects-with-thermal-energy-storage-underway/">30 are being developed in China</a> alone – the knowledge base is growing. </p>
<p>More than 80% of Australia’s total energy use involves a thermal process: </p>
<ul>
<li>combustion of coal and gas for electricity</li>
<li>combustion of fuels for transport</li>
<li>combustion of fuels for industrial process heat. </li>
</ul>
<p>A large proportion of these existing fossil-fuel thermal processes can be met with renewable thermal energy storage. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Sun-tracking mirrors (heliostats) focus sunlight on a central receiver or power tower at CSIRO Energy in Newcastle" src="https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=781&fit=crop&dpr=1 600w, https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=781&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=781&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=982&fit=crop&dpr=1 754w, https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=982&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/520170/original/file-20230411-16-mi0289.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=982&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The CSIRO Energy Centre in Newcastle contains the only operational high-temperature solar thermal research facility of its type in Australia. This is the largest high-concentration solar array in the Southern Hemisphere.</span>
<span class="attribution"><span class="source">CSIRO</span>, <span class="license">Author provided</span></span>
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<p>The CSIRO Roadmap found thermal energy storage was a relatively low-cost solution with multiple applications, including utility-scale power generation, renewable fuel production and industrial process heat. </p>
<p>For utility-scale power generation, the lowest cost technology for eight-hour storage in 2050 is thermal energy storage using concentrated solar thermal power. The cost in 2050 was slightly over A$100/MWh, compared with lithium-ion battery at A$140/MWh and pumped hydro at around A$155/MWh.</p>
<p>For 24-hour storage technologies in 2050, thermal energy storage was again the lowest cost at A$99/MWh, compared with pumped hydro at A$145/MWh or grid-charged electrical (using solar photovoltaics and wind) thermal energy storage at A$150/MWh.</p>
<p>Short-duration storage is likely to remain the domain of lithium-ion battery for at least up to two hours duration, and perhaps as high as four hours. </p>
<h2>Here’s how it works</h2>
<p>Concentrated solar thermal power uses mirrors to convert sunlight into heat energy. This heat energy is typically stored. </p>
<p>The stored thermal energy can then be used, at any time of day or night, on demand, to produce steam for electricity production, or heat/steam for industrial processes. </p>
<p>The system typically provides for six to 24 hours of operations. What this means is concentrated solar thermal can provide continuous, on demand power and/or process heat 24/7. It can also simultaneously generate power and store heat at the same time.</p>
<p>The stored thermal energy is typically used at night. Concentrated solar thermal systems deployed in China, Spain, the United States, South America, Africa and the Middle East generally have over ten hours of storage, which allows for the overnight generation of renewable power and heat.</p>
<p>Concentrated solar thermal is also a synchronous technology because it uses a traditional spinning turbine (identical to those used in coal-fired power plants). This creates much-needed system-strength and frequency services to the grid. In essence, when coal fired power stations close, concentrated solar thermal is a technology that could continue to provide essential system services.</p>
<p>While more than 100 concentrated solar thermal plants, <a href="https://www.solarpaces.org/csp-technologies/csp-projects-around-the-world/">generating 7GWh of power</a>, have been deployed around the world, the technology has not yet been deployed at scale in Australia. This will soon change with the construction by <a href="https://www.vastsolar.com/">Vast Solar</a> of a 30MW concentrated solar thermal plant in Port Augusta, supported in part by the federal government. The project will have ten hours of thermal energy storage to generate power for supply to the grid, primarily at night. The project will also provide renewable heat and power to produce more than 7,000 tonnes of green (renewable) methanol each year. (Methanol is an essential chemical building block for hundreds of consumer and industrial products such as paints, carpets, fabrics, building materials and liquid fuels). </p>
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<a href="https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Vast Solar's pilot concentrated solar thermal plant in Jemalong, NSW, as seen from the air" src="https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=439&fit=crop&dpr=1 600w, https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=439&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=439&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=551&fit=crop&dpr=1 754w, https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=551&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/520189/original/file-20230411-28-r8z07i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=551&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In Vast Solar’s modular design, deployed at the Jemalong Pilot Plant in central western New South Wales, there are five separate arrays, each concentrating solar radiation onto their own 27m thermal receiver tower.</span>
<span class="attribution"><span class="source">Vast Solar</span>, <span class="license">Author provided</span></span>
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<h2>Heed the warning</h2>
<p>We need to start building long-duration energy storage systems now, so we have secure and reliable power when the sun doesn’t shine and the wind doesn’t blow. We also need to replace fossil fuels used to create industrial process heat. </p>
<p>Sectors such as mining, industry, transport, agriculture, and households all require secure, reliable, and affordable renewable energy. For many sectors, this need occurs at night, and that necessitates storage. </p>
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<p><em><strong>Editor’s note:</strong> Dominic Zaal contributed to the CSIRO Renewable Energy Storage Roadmap as one of a number of internal and external technical advisers.</em></p>
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Read more:
<a href="https://theconversation.com/australias-116-new-coal-oil-and-gas-projects-equate-to-215-new-coal-power-stations-202135">Australia's 116 new coal, oil and gas projects equate to 215 new coal power stations</a>
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<p class="fine-print"><em><span>Dominic Zaal receives funding from the Australian Renewable Energy Agency (ARENA), which is a Federal Government funding agency. </span></em></p>Solar thermal technology has the potential to provide both long-duration storage and industrial heat, yet it has been largely overlooked in the Australian context. That is about to change.Dominic Zaal, Director, Australian Solar Thermal Research Institute (ASTRI), CSIROLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1463412020-09-17T01:01:30Z2020-09-17T01:01:30Z‘A dose of reality’: Morrison government’s new $1.9 billion techno-fix for climate change is a small step<figure><img src="https://images.theconversation.com/files/358417/original/file-20200916-16-b338h5.jpeg?ixlib=rb-1.1.0&rect=26%2C0%2C4466%2C2991&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Dean Lewins/AAP</span></span></figcaption></figure><p>The Morrison government <a href="https://www.minister.industry.gov.au/ministers/taylor/media-releases/investment-new-energy-technologies">today announced</a> A$1.9 billion over ten years to develop clean technology in industry, agriculture and transport. In some ways it’s a step in the right direction, but a far cry from what’s needed to drive Australia’s shift to a low emissions economy. </p>
<p>The big change involves what the money is for. The new funding will enable the Australian Renewable Energy Agency (ARENA) to support technologies such as green steel production, industrial processes to reduce energy consumption and somewhat controversially, carbon-capture and storage and soil-carbon sequestration. </p>
<p>This is a big move away from ARENA’s current <a href="https://arena.gov.au/about/investment-priorities/">investment priorities</a>. Importantly it means ARENA will continue to operate, as it is running out of money now. </p>
<p>However technology development alone is not enough to cut Australia’s emissions deeply and quickly – which is what’s needed to address the climate threat. Other policies and more money will be needed. </p>
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<img alt="Interior of steelworks" src="https://images.theconversation.com/files/358488/original/file-20200916-16-rnuh2e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/358488/original/file-20200916-16-rnuh2e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/358488/original/file-20200916-16-rnuh2e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/358488/original/file-20200916-16-rnuh2e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/358488/original/file-20200916-16-rnuh2e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/358488/original/file-20200916-16-rnuh2e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/358488/original/file-20200916-16-rnuh2e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Cutting emissions from industry will be a focus of the new spending.</span>
<span class="attribution"><span class="source">Dean Lewins/AAP</span></span>
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<h2>New role for ARENA</h2>
<p>ARENA will receive the lion’s share of the money: A$1.4 billion over ten years in guaranteed baseline funding. ARENA has spent A$1.6 billion since it was established in 2012. So the new funding is lower on an annual basis. It’s also far less than what’s needed to properly meet the challenge, in a country with a large industrial sector and huge opportunities for zero carbon production. </p>
<p>To date, ARENA’s investments have focused on renewable energy supply. Prime Minister Scott Morrison today said the renewables industry was enjoying a “world-leading boom” and no longer needs government subsidies. Critics may be dismayed to see ARENA steered away from its original purpose. But it is true solar parks and wind farms are now commercially viable, and technologies to integrate large amounts of renewables into the grid are available. </p>
<p>So it makes sense to spend new research and development (R&D) funding on the next generation of low-emissions technologies. But how to choose what to spend the money on? </p>
<p>A few simple principles should inform those choices. The spending should help develop new zero- or low-emissions technologies or make them cheaper. It should also enable the shift to a net-zero emissions future, rather than locking in structures that continue to emit. The investment choices should be made by independent bodies such as ARENA’s board, based on research and expert judgement, rather than politically determined priorities.</p>
<p>For the industrial sector, the case for supporting zero-emissions technologies is clear. A sizeable share of Australia’s total emissions stem from fossil fuel use in industry.</p>
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<strong>
Read more:
<a href="https://theconversation.com/government-targets-emerging-technologies-with-1-9-billion-saying-renewables-can-stand-on-own-feet-146327">Government targets emerging technologies with $1.9 billion, saying renewables can stand on own feet</a>
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<p>In some cases, government-supported R&D could help lay the foundation for zero-emissions industries of the future. But in others, what’s needed is a financial incentive for businesses to switch to clean energy or zero-emissions production methods, or regulation to require cleaner processes. </p>
<p><a href="https://theconversation.com/australians-want-industry-and-theyd-like-it-green-steel-is-the-place-to-start-137999">Green steel</a> is a perfect example of the positive change that is possible. Steel can be made using clean hydrogen and renewable electricity, and the long term possibility of a green steel industry in Australia is tantalising.</p>
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<img alt="Steel being made" src="https://images.theconversation.com/files/358429/original/file-20200916-16-13hjlwr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/358429/original/file-20200916-16-13hjlwr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/358429/original/file-20200916-16-13hjlwr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/358429/original/file-20200916-16-13hjlwr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/358429/original/file-20200916-16-13hjlwr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/358429/original/file-20200916-16-13hjlwr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/358429/original/file-20200916-16-13hjlwr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Steel could be made cleanly using hydrogen instead of coking coal.</span>
<span class="attribution"><span class="source">Dean Lewins/AAP</span></span>
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<h2>A future for fossil fuels?</h2>
<p>The government’s support for carbon capture and storage (CCS) will be highly contested, because it’s a way to continue using fossil fuels at reduced – though not zero – emissions. This is achieved by capturing carbon dioxide before it enters the atmosphere and storing it underground, a technically feasible but costly process. </p>
<p>CCS will not perpetuate fossil fuel use in the energy sector, because renewables combined with energy storage are now much cheaper. Rather, CCS can be an option in specific processes that do not have ready alternatives, such as the production of cement, chemicals and fertiliser. </p>
<p>One step further is so-called “carbon capture and use” (CCU), where carbon dioxide is not pumped underground but turned into products, such as building materials. One program announced is for pilot projects of that kind.</p>
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Read more:
<a href="https://theconversation.com/yes-carbon-emissions-fell-during-covid-19-but-its-the-shift-away-from-coal-that-really-matters-138611">Yes, carbon emissions fell during COVID-19. But it's the shift away from coal that really matters</a>
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<p>A different proposition is the idea of hydrogen produced from coal or gas, in which some resulting emissions are captured. This method <a href="https://theconversation.com/for-hydrogen-to-be-truly-clean-it-must-be-made-with-renewables-not-coal-128053">competes</a> with “green” hydrogen produced using renewable electricity. It seems the government for now intends to support fossil fuel-derived hydrogen.</p>
<p>Reducing fossil fuel use, and using CCS/CCU where it makes sense, will not get the world to net-zero emissions. Emissions from other sources must be cut by as much as technically possible, at justifiable cost. Remaining emissions must then be negated by drawing carbon dioxide from the atmosphere. Such “negative emissions” can be achieved through technological means, and also by permanently increasing the amount of carbon stored in plants and soil.</p>
<p>The new funding includes support for increasing the amount of soil carbon. This method may hold promise in principle, but in practice its effectiveness is uncertain, and hard to measure. At the same time, the large emissions from agriculture are not yet addressed. </p>
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<img alt="Gas flaring from an industrial plant" src="https://images.theconversation.com/files/358431/original/file-20200916-14-13cugac.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/358431/original/file-20200916-14-13cugac.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/358431/original/file-20200916-14-13cugac.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/358431/original/file-20200916-14-13cugac.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/358431/original/file-20200916-14-13cugac.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/358431/original/file-20200916-14-13cugac.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/358431/original/file-20200916-14-13cugac.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Reducing the burning of fossil fuels is not enough to get to net-zero emissions.</span>
<span class="attribution"><span class="source">Matt Black Productions</span></span>
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<h2>A piecemeal effort</h2>
<p>The spending amounts to A$140 million per year for ARENA, plus about A$500 million all up through other programs. A dose of reality is needed about what this money can achieve. It will create better understanding of options, some technological progress across the board and surely the occasional highlight. But a much greater effort is likely needed to achieve fundamental technological breakthroughs. And crucially, new technologies must be widely deployed. </p>
<p>For a sense of scale, consider that the Snowy 2.0 scheme is costed at around A$5 billion, and a single 1 gigawatt gas power plant, as mooted by the government for the Hunter Valley, would <a href="https://publications.csiro.au/publications/#publication/PIcsiro:EP201952">cost</a> in the order of A$1.5 billion to build. </p>
<p>As well as additional spending, policies will be needed to drive the uptake of low-emissions technologies. The <a href="https://energy.anu.edu.au/files/2020%2009%2003%20-%20Austalia%20the%20global%20renewable%20energy%20pathfinder%20-%20Andrew%20Blakers%2C%20Ken%20Baldwin%2C%20Matthew%20Stocks.pdf">shift to renewables</a> is now happening in the energy sector without government help, though some hurdles remain. But we cannot expect the same across the economy. </p>
<p>Governments will need to help drive uptake through policy. The most efficient way is usually to ensure producers of emissions pay for the environmental damage caused. In other words, putting a <a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">price on carbon</a>. </p>
<p>The funding announced today is merely one piece of a national long-term strategy to deeply cut emissions – and not a particularly big piece. </p>
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Read more:
<a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">Carbon pricing works: the largest-ever study puts it beyond doubt</a>
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<img src="https://counter.theconversation.com/content/146341/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Jotzo leads research projects supported respectively by the Australian government and the 2050 Pathways Platform, and occasionally consults to organisations, governments and businesses. No conflicts of interest exist in relation to this article.</span></em></p>We cannot rely on technology development alone to deeply cut Australia’s emissions. Other policies and more money will be needed.Frank Jotzo, Director, Centre for Climate and Energy Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/445932015-07-13T20:19:31Z2015-07-13T20:19:31ZThe Clean Energy Finance Corporation is meant to back winners, not minnows<p>In defending the federal government’s decision to <a href="https://theconversation.com/the-government-should-keep-its-hands-off-clean-energy-finance-44581">bar the Clean Energy Finance Corporation (CEFC) from investing in wind and small-scale solar power</a>, environment minister Greg Hunt <a href="http://www.abc.net.au/radionational/programs/breakfast/greg-hunt-on-govts-renewable-energy-investment-bans/6614576">explained to ABC Radio</a> what he sees as the future direction for the CEFC. He said that the funding was to focus on projects that were “not mature and not commercial”, identifying three main areas as worthy recipients of investment:</p>
<ul>
<li>large-scale solar, including new solar thermal technologies</li>
<li>emerging technologies such as wave energy</li>
<li>measures to improve energy efficiency.</li>
</ul>
<p>Yet despite Hunt’s claim that these objectives are consistent with the reasons why CEFC was first established, they are not. The CEFC was not designed to back minor players; it was set up to make money from relatively safe investments. As its <a href="http://www.cleanenergyfinancecorp.com.au/what-we-do.aspx">website states</a>:</p>
<blockquote>
<p>The CEFC focuses on projects and technologies at the later stages of development which have a positive expected rate of return and have the capacity to service and repay capital.</p>
</blockquote>
<p>True, the corporation’s <a href="http://www.cleanenergyfinancecorp.com.au/what-we-do/2018-portfolio-vision.aspx">2018 Portfolio Vision</a> envisages around half of its investments being made in “energy efficiency and low emissions” projects, but the other half of its portfolio, focused on renewable energy, features wind and solar photovoltaic at the top of the list. How does Hunt’s description of “not mature and not commercial” relate to the CEFC’s mission to invest in “later stages of development which have a positive expected rate of return”?</p>
<p>The renewable energy goalposts appear to be moving yet again, although many would question whether they have held any stationary position in Australia over the past few years. </p>
<h2>New technologies already have an agency</h2>
<p>Most people would agree that emerging renewable energy technologies need support, particularly during the “not mature and not commercial” stage. But that is the job of the <a href="http://arena.gov.au/">Australian Renewable Energy Agency (ARENA)</a>. This body was put in place to provide funding (not loans) to develop emerging technologies to a point where the commercialisation stage is within reach. Then, with commercial viability on the horizon but not yet secure, the CEFC can step into a zone where commercial lenders might not dare tread.</p>
<p>If we look at ARENA’s <a href="http://arena.gov.au/about-arena/">objectives</a>, we see that they are stated as: </p>
<blockquote>
<p>…to improve the competitiveness of renewable energy technologies and to increase the supply of renewable energy within Australia.</p>
</blockquote>
<p>The government’s latest move appears to shift the responsibility for delivering emerging renewable energy technologies from ARENA (a taxpayer-financed support agency) to the CEFC (a statutory finance institution).</p>
<p>It is not difficult to imagine that the government will argue that ARENA will become redundant should this change in responsibilities occur. And thus another nail would be hammered into the already built coffin of renewable energy support in Australia.</p>
<h2>Remember the RET</h2>
<p>A complete picture of the issue also needs to take account of the <a href="https://theconversation.com/au/topics/renewable-energy-target">Renewable Energy Target (RET)</a>, and indeed Hunt did refer to it several times during his interview. While this program is, to quote the minister, “a mandate” for renewable energy, the benefits are only obtainable after the infrastructure is in place and generating electricity.</p>
<p>A joined-up, comprehensive renewables policy would use the already existing agencies to do the following:</p>
<ul>
<li>fund technology development (ARENA);</li>
<li>finance potentially commercially viable technologies (CEFC); and</li>
<li>support existing renewables until competitive with fossil fuels (RET).</li>
</ul>
<p>All of the above programs are important if we want to move from our current position to a more sustainable energy future, where energy security is not reliant upon imports or minerals with a life expectancy that, while hard to predict exactly, will surely be only a few generations. </p>
<p>But what we have instead is a process that appears to be geared towards stagnating the development of renewable energy, under the guise of promoting it.</p><img src="https://counter.theconversation.com/content/44593/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Froome does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Environment minister Greg Hunt wants the Clean Energy Finance Corporation to focus on new technologies, not wind and solar. But that’s not what it was set up to do, and Australia already has an agency for that.Craig Froome, Global Change Institute – Clean Energy Program Manager , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/415052015-05-08T04:31:35Z2015-05-08T04:31:35ZHow will the reduced Renewable Energy Target affect investment?<figure><img src="https://images.theconversation.com/files/80949/original/image-20150508-9093-1xvhnhf.jpg?ixlib=rb-1.1.0&rect=10%2C122%2C2258%2C1340&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Investment in technologies beyond the existing wind and solar could stagnate in the face of the government's reduced Renewable Energy Target.</span> <span class="attribution"><a class="source" href="http://commons.wikimedia.org/wiki/File%3ACallicum_Hills_Wind_Farm.jpg">Rolandg/Wikimedia Commons</a></span></figcaption></figure><p>After <a href="https://theconversation.com/why-has-investment-in-renewable-energy-projects-stalled-34197">months of uncertainty</a> over the future level of Australia’s Renewable Energy Target (RET), the federal government and opposition have <a href="http://www.abc.net.au/news/2015-05-08/government-opposition-reach-deal-on-renewable-energy-target/6455406">reached a compromise agreement</a> to scale back the target.</p>
<p>The deal will see the RET wound back to 33,000 gigawatt hours of renewable energy by 2020, down from its previous level of 41,000 GWh. The government had earlier sought a target of <a href="https://theconversation.com/planned-cut-to-renewable-energy-target-a-free-kick-for-fossil-fuels-33317">around 27,000 GWh</a>, but the new compromise was reached after the <a href="http://www.businessspectator.com.au/news/2015/4/8/policy-politics/labor-backs-33500gwh-compromise-target-ret">Labor opposition</a> and the <a href="http://reneweconomy.com.au/2015/cec-proposes-compromise-deal-and-massive-cut-to-ret-86215">renewables industry</a> each indicated they would be willing to agree on a level in the low-30,000s to end the stalemate.</p>
<p>An end to uncertainty, yes, but what will the new target mean for the future of Australia’s renewable energy industry? </p>
<h2>Fossil fuels still dominant</h2>
<p>The Energy Supply Association of Australia, in its <a href="http://www.esaa.com.au/policy/electricity_gas_australia_2014">Electricity Gas Australia 2014</a> report, indicates that 88% of power generation (192,205 GWh of the 218,000 GWh total) still comes from fossil fuels. Most of the rest comes from hydro power, most of which falls outside the RET scheme. Solar, wind and biofuels only account for about 8,000 GWh.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=456&fit=crop&dpr=1 600w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=456&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=456&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=573&fit=crop&dpr=1 754w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=573&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=573&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Australia’s energy-generation mix.</span>
<span class="attribution"><span class="source">ESAA (2014)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>This means that to meet the newly mandated 33,000 GWh in 2020, the renewable energy sector will have to more than quadruple in size from its current level of output. Encouraging investment will be crucial.</p>
<p>The government’s rationale for the cut is that, given future projections, 41,000 GWh will end up being far more than the 20% of total energy output that the scheme was intended to deliver. But future energy projections are inherently uncertain, being dependent on economic growth and a host of other factors.</p>
<p>What we can say, based on the most recent (2012-13) annual power generation figure of 218,000 GWh, is that if this level of demand is the same in 2020, then 20% of that would be 43,600 GWh of renewables. This is more than the current 41,000 GWh provided in the legislation, so why reduce the target and widen the gap even more?</p>
<p>Cutting back the RET risks future investment, because many companies looking at investing in projects that would help deliver this 20% are now likely to think twice, given that the reduced target means there is now much less subsidy on offer. It’s just as likely that future economic growth through to 2020 would require more electricity, not less – unless the government is planning to leave the economy in neutral, which is hardly likely given what its <a href="http://ewp.industry.gov.au/">Energy White Paper</a> has to say about growing resource exports. </p>
<h2>The investment pipeline</h2>
<p>Besides the renewable energy facilities that are already up and running, there is currently a further 1,540 megawatts of committed renewable energy projects (1,287 MW of wind and the rest solar) in the pipeline, according to a <a href="http://www.industry.gov.au/industry/Office-of-the-Chief-Economist/Publications/Pages/Major-electricity-generation-projects.aspx">report from the Bureau of Resource and Energy Economics</a>. (The intermittency of many renewable energy sources makes it difficult to say exactly how many GWh of power this new capacity will deliver.)</p>
<p>While Australia has been a leader in innovative renewable energy research in fields such as geothermal and wave systems, there is currently nothing committed in these two areas.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=365&fit=crop&dpr=1 600w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=365&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=365&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=458&fit=crop&dpr=1 754w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=458&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=458&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Hydro and wind are the most established renewable sources, but there is little more in the pipeline.</span>
<span class="attribution"><span class="source">BREE (2014)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>If we extend this to include renewable energy projects that are currently going through the feasibility stage, then the amount of renewable energy projects under consideration increases by an extra 14,048 MW of capacity. </p>
<p>But to put this into context, there is also an extra 13,094 MW of non-renewable generation – and given that the government’s <a href="http://ewp.industry.gov.au/">Energy White Paper</a> states that 75% of existing coal-fired power plants have already passed their expected useful life (and promises a “technology-neutral” approach to future generation capacity), one would expect to see even more coal and gas plants being developed before renewable projects, to ensure that baseload power needs are met.</p>
<p>As the Energy White Paper shows, the government is intent on ensuring that no favours are handed to the renewable energy sector. Instead, its focus is on how to progress exploration in the coal and gas sectors and increase revenues from exports, rather than delivering future energy security by diversifying into renewable energy.</p>
<h2>The problem with investing in renewables</h2>
<p>One of the constant problems with renewable energy projects is the up-front cost of development. </p>
<p>For the projects noted above that are at the feasibility stage, the total cost of the renewable projects is A$21.8 billion, compared with only A$9.1 billion for the fossil fuel projects with almost the same power-generating capacity.</p>
<p>But this comparison fails to take into account the cost of fuel over the life of the fossil fuel projects. While renewable projects may have higher up-front costs, they also deliver considerable long-term benefits. Initiatives such as the <a href="http://www.cleanenergyfinancecorp.com.au/">Clean Energy Finance Corporation (CEFC)</a> recognise this, but as stated in the Energy White Paper, the government is keen to push ahead with plans to abolish it. </p>
<p>This, along with the planned abolition of the <a href="http://arena.gov.au/">Australian Renewable Energy Agency (ARENA)</a>, will prolong the uncertainty for the renewables industry, even after the end of the guessing-game over the level of the RET.</p>
<p>This means we are likely to see further stagnation in investment in renewable energy projects. Many of the recently completed generation projects were approved several years ago, and while newer projects can still be expected to enter the planning phase, many will not move out of the feasibility stage.</p>
<p>While the RET will be retained in its reduced form, without the support of the CEFC and ARENA the ability to help industry to move projects from concept to deployment will be significantly diminished.</p>
<p>This means that renewable energy in Australia will be based solely on using mature and proven technologies (such as solar and wind), at the expense of less established prospects such as geothermal or wave energy. The innovation that Australia has been known for internationally within this sector would become a distant memory.</p><img src="https://counter.theconversation.com/content/41505/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Froome does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>After months of deadlock, a deal has finally been reached to reduce the Renewable Energy Target, ending the uncertainty for industry but also risking an already sparse pipeline of future projects.Craig Froome, Global Change Institute – Clean Energy Program Manager , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.