tag:theconversation.com,2011:/au/topics/cost-of-renewable-energy-6068/articlescost of renewable energy – The Conversation2024-02-26T21:18:58Ztag:theconversation.com,2011:article/2231642024-02-26T21:18:58Z2024-02-26T21:18:58ZRenewable energy innovation isn’t just good for the climate — it’s also good for the economy<p>As the climate crisis escalates, there are urgent and difficult choices that need to be made to drastically <a href="https://www.ipcc.ch/2023/03/20/press-release-ar6-synthesis-report/">reduce our carbon emissions</a> before more <a href="https://www.ipcc.ch/report/ar6/wg2/chapter/summary-for-policymakers/">irreparable damage</a> is done. </p>
<p><a href="https://www.iea.org/news/new-iea-report-highlights-the-need-and-means-for-the-oil-and-gas-industry-to-drastically-cut-emissions-from-its-operations">Many have argued the energy industry needs to change</a> to <a href="https://www.theguardian.com/environment/2023/mar/20/ipcc-climate-crisis-report-delivers-final-warning-on-15c">reduce carbon emissions</a>, but one concern that remains is the consequence this will have on economic prosperity. </p>
<p>Discussions vary across interest groups. Do we need to outright <a href="https://priceofoil.org/2023/08/16/shut-down-60-percent-existing-fossil-fuel-extraction-1-5c/">replace the fossil fuel industry with the renewable energy industry</a> as soon as possible? Should we slowly <a href="https://doi.org/10.1038/s41467-018-07999-w">phase out fossil fuels while making clean renewable replacements</a>? Or, should we <a href="https://oilprice.com/Energy/Oil-Prices/Why-We-Still-Need-Oil-Gas-For-Decades-To-Come.html">continue with a powerful fossil fuel industry</a> while separately growing a renewable industry in parallel? </p>
<p>How these different choices could impact our economies seems unclear, and it is this lack of clarity that opens up the field for frustrating discussions. At the recent COP28 climate summit in the United Arab Emirates, the conference president shockingly said that there is <a href="https://www.theguardian.com/environment/2023/dec/03/back-into-caves-cop28-president-dismisses-phase-out-of-fossil-fuels">“no science”</a> behind any decision to phase-out fossil fuels from our energy systems — a statement which he later <a href="https://www.theguardian.com/environment/live/2023/dec/04/cop28-backlash-after-president-claims-no-science-behind-fossil-fuel-phase-out">claimed was “misinterpreted.”</a> </p>
<p>My recent research <a href="https://doi.org/10.1016/j.jclepro.2024.141018">examines energy industry restructuring options for a green transition to renewable energy</a> from an economic perspective.</p>
<p>Although economic analysis is helpful, it is not sufficient on its own for making these important decisions. So, my research also draws on <a href="http://www.un-documents.net/our-common-future.pdf">sustainability</a> which involves considering the conditions faced by future generations, and a concept known as <a href="https://www.merriam-webster.com/dictionary/equifinality">equifinality</a> reminding us to keep our minds open to many possible approaches that may satisfy the same objectives.</p>
<h2>Renewable energy innovation and GDP</h2>
<p>My research indicates that renewable energy innovation contributes to higher GDP. Contrary to some commonly held beliefs, a clean transition is, and has been for at least a decade, good for the economy — even in earlier stages of its development. </p>
<p>My findings also suggest that <a href="https://www.cfr.org/backgrounder/how-us-oil-and-gas-industry-works">government and industry support for the fossil fuel industry</a> negatively affects a country’s renewable energy innovation. The two industries are not compatible. </p>
<p>When the fossil fuel industry invests in itself, it also <a href="https://www.canadianenergycentre.ca/the-oil-and-gas-sectors-contribution-to-canadas-economy-2/">appears to improve GDP</a>, which creates confusion about the best way to ensure economic prosperity while transitioning to clean energy.</p>
<p>But this investment, often made through <a href="https://www.cbc.ca/news/canada/cop28-fossil-fuel-lobbyists-1.7048746">lobbying</a>, only prolongs the existence of the fossil fuel industry by keeping renewable energy competition out. This creates a false dichotomy between reducing emissions and improving GDP when, in fact, clean innovation can achieve both simultaneously.</p>
<p>My research indicates that clean innovation makes a stronger economy <em>and</em> reduces emissions. If we want to reinforce that dual progress, rather than accepting trade-offs, then we have to stop supporting the fossil fuel industry which aims to slow it down.</p>
<h2>Helping renewable energy thrive</h2>
<p>Economically speaking, the fossil fuel industry is <a href="https://competition-policy.ec.europa.eu/about/why-competition-policy-important-consumers_en">negatively impacting consumer welfare</a> by maintaining <a href="https://www.cbc.ca/news/canada/calgary/oil-gas-enserva-report-industry-canadian-energy-sector-1.7059687">higher-than-necessary prices due to limited competition</a>. This, in turn, bumps up GDP through inflated profits, having subsidised an already dominant polluting industry, reducing clean innovation and delaying cleaner progress — obviously not the way to grow a healthy economy. </p>
<p><a href="https://www.investopedia.com/terms/g/gdp.asp#toc-gdp-vs-gnp-vs-gni">In fact, GDP is not a standard of living measure or a measure of innovative competitiveness</a>. To address inflation and the cost of living crisis, we should be promoting more competition across industries. This is a more productive type of capitalism that brings wider benefits to all of us, including more innovation, lower prices, and better products for domestic and export markets.</p>
<p><a href="https://www.ipolitics.ca/opinions/we-must-stop-investing-in-the-fools-gold-that-is-fossil-fuel">Government subsidies</a> that boost the fossil fuel industry hinder consumer welfare and the transition to clean energy. Some examples include subsidies to fund more <a href="https://www.desmog.com/2023/12/08/report-canada-u-s-carbon-capture-and-storage-ccs-public-subsidies-funding-oil-change-international/">carbon capture and storage technology</a> and the use of fossil energy in <a href="https://environmentaldefence.ca/federal-fossil-fuel-subsidies-tracking/">hydrogen storage systems</a>. </p>
<p>Instead of funding these backward subsidies, governments should implement <a href="https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work/putting-price-on-carbon-pollution.html">pollution taxes</a> while also supporting renewable energy innovation. </p>
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Read more:
<a href="https://theconversation.com/state-owned-energy-companies-are-among-the-worlds-most-polluting-putting-a-price-on-carbon-could-help-213501">State-owned energy companies are among the world's most polluting – putting a price on carbon could help</a>
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<p>My research demonstrates that pollution taxes work well with clean innovation capabilities. Supporting research and innovation in renewable energy and using a carbon tax as a tool can boost the economic benefits of transitioning to clean energy.</p>
<p>The findings of my work suggest that a robust economy is related to industry restructuring so that renewable energy innovation can thrive. Fostering novel scientific discoveries in clean energy innovation should be prioritized while reducing non-competitive industry formations and organizations, such as fossil fuel oligopolies and industry associations.</p>
<h2>Making decisions with the future in mind</h2>
<p>Increasing public awareness and understanding of <a href="https://news.harvard.edu/gazette/story/2021/09/oil-companies-discourage-climate-action-study-says/">fossil fuel industry games</a> is a way to accelerate change. It’s important to recognize that industries at different <a href="https://www.investopedia.com/terms/i/industrylifecycle.asp">life cycle stages</a> contribute to the economy in different ways. </p>
<p>A newer rising industry with determined entrepreneurs, like that of renewable energy, invests in innovation to create value. On the other hand, a declining industry plays end-game strategies, like engaging in self-promotional activities, to maintain their existing position and <a href="https://www.investopedia.com/ask/answers/061115/how-strong-are-barriers-entry-oil-and-gas-sector.asp">create barriers to new industry entries</a>. </p>
<p>However, consumer welfare increases with competition, not collusion. Economic analysis is not sufficient on its own for decision-making in this area because positive economic outcomes can be generated by different kinds of strategies supporting an industry’s life cycle goals.</p>
<p>Government policy decisions should be made based on economic analyses alongside broader sustainability criteria. Ignoring the equifinality argument and reverting to discussions about <a href="https://www.bloomberg.com/news/articles/2023-12-13/cop28-deal-signals-role-for-gas-in-transition-to-clean-energy">replacing coal with gas as a bridge</a> only ensures fossil fuels remain in use for at least another generation of infrastructure. </p>
<p>Communities should apply sustainability and equifinality lenses to decision-making, understanding that there are many possible means to an end. For example, if a community has specific concerns about one type of renewable energy system, they should explore <a href="https://www.un.org/en/climatechange/what-is-renewable-energy">other alternative clean energy options</a> instead of defaulting to fossil fuels. </p>
<p>An educated public should reject simplistic and single-sided arguments and understand there are usually more nuanced solutions to problems supported by evidence-based analysis. By embracing a more holistic approach, we can develop more sustainable societies by opening up renewable energy possibilities.</p><img src="https://counter.theconversation.com/content/223164/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah de Lange receives funding from SSHRC and ESRC. She is a member of/volunteer for the Liberal Party of Canada and The Writers' Union of Canada.</span></em></p>Recent research about energy industry restructuring options for a green transition indicates that innovation in renewable energy positively influences GDP.Deborah de Lange, Associate Professor, Global Management Studies, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1960332022-12-14T19:03:49Z2022-12-14T19:03:49ZAustralia needs much more solar and wind power, but where are the best sites? We mapped them all<p>Renewable energy’s share of Australia’s <a href="https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/about-the-national-electricity-market-nem">main electricity grid</a> has more than doubled from <a href="https://opennem.org.au/energy/nem/?range=1y&interval=1M">16% to 35%</a> in five years, and the federal government wants this figure to reach <a href="https://reneweconomy.com.au/the-staggering-numbers-behind-australias-82-per-cent-renewables-target/">82% by 2030</a>. </p>
<p>Nearly all new power plants in Australia are <a href="https://www.cleanenergyregulator.gov.au/">solar and wind</a> because these are the <a href="https://www.iea.org/reports/world-energy-outlook-2021/executive-summary">cheapest sources of electricity</a>. Some of the extra solar capacity will be on rooftops. However, most solar and wind farms will necessarily be in regional areas. So where are the best sites?</p>
<p>Our report, released today, set out to answer this question. We developed so-called “<a href="https://re100.eng.anu.edu.au/heatmaps/">heat maps</a>” that identify which sites across Australia are – and are not – suitable for wind and solar projects. </p>
<p>The maps highlight the importance of being close to existing or planned high-voltage transmission lines. We hope our findings will empower communities, landholders, local councils when negotiating with renewable energy developers. </p>
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<h2>What makes a site suitable?</h2>
<p>So what makes a site suitable for a renewable energy project? It depends on:</p>
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<li><p>solar and wind resources – wind in particular can vary greatly from place to place, such as a windy ridge top versus a still valley bottom</p></li>
<li><p>access to <a href="https://theconversation.com/what-is-the-electricity-transmission-system-and-why-does-it-need-fixing-147903">high-voltage transmission</a> – the transformers, towers and cables that carry generated electricity to the cities</p></li>
<li><p>social, cultural and environmental constraints – urban areas, national parks and remnant native forest are unsuitable</p></li>
<li><p>aspect (ideally north-facing for solar) and slope (not too steep)</p></li>
<li><p>willing hosts – landholders host solar and wind farms and <a href="https://reneweconomy.com.au/nsw-landowners-to-get-800m-to-host-high-voltage-transmission-in-renewables-push/">transmission lines</a> in return for large annual payments</p></li>
<li><p><a href="https://theconversation.com/we-want-to-be-part-of-that-movement-residents-embrace-renewable-energy-but-worry-how-their-towns-will-change-184743?utm_source=twitter&utm_medium=bylinetwitterbutton">social licence</a> – local community support in response to the economic activity and jobs that flow from constructing and maintaining solar and wind farms</p></li>
<li><p>government incentives or disincentives</p></li>
<li><p>access to roads, skilled workers and local electrical loads.</p></li>
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<p>The two important siting factors that most often vary greatly from place to place within a region are access to the transmission network and to wind resources. </p>
<p>Access to transmission is the largest constraint. Typical power lines cross dozens to hundreds of properties and require complex negotiations with many people.</p>
<p>In contrast, solar and wind farms generally fit on one or a few properties. That usually makes an access agreement much easier to negotiate. </p>
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Read more:
<a href="https://theconversation.com/what-is-the-electricity-transmission-system-and-why-does-it-need-fixing-147903">What is the electricity transmission system, and why does it need fixing?</a>
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<h2>A closer look at the heat maps</h2>
<p>Our <a href="https://re100.eng.anu.edu.au/heatmaps/#map-links">high-resolution heat maps</a> identify the solar and wind potential of all prospective areas close to existing or approved high-power transmission. </p>
<p>Pixels in the map are red if a location scores well. Yellow and blue pixels indicate less preferred locations. Green pixels are unsuitable land such as conservation reserves, urban regions and native forests. </p>
<p>The pixels are 1km by 1km for solar and 250m by 250m for wind, because the wind resource varies more rapidly with location. </p>
<p>Users can zoom and pan with ease. Clicking on a pixel obtains an indicative relative cost of generating solar or wind electricity (in A$/MWh) for that location. It includes the cost of energy from a solar or wind farm plus the cost of a low-voltage powerline to the nearest existing or planned high-voltage transmission lines.</p>
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Read more:
<a href="https://theconversation.com/renewables-need-land-and-lots-of-it-that-poses-tricky-questions-for-regional-australia-156031">Renewables need land – and lots of it. That poses tricky questions for regional Australia</a>
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<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=353&fit=crop&dpr=1 600w, https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=353&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=353&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=444&fit=crop&dpr=1 754w, https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=444&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/499897/original/file-20221208-13153-n2wbh1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=444&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Heat map showing Victorian solar resource for a low-cost scenario with overhead powerlines.</span>
<span class="attribution"><a class="source" href="https://www.arcgis.com/home/webmap/viewer.html?webmap=f1a311a1f6cf42399f39d67dd04c6adf&extent=83.751,-49.176,180,-0.0352">RE100 Group</a>, <span class="license">Author provided</span></span>
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<p>It doesn’t include costs for environmental and geotechnical approvals, road upgrades, substations, payments to host farmers, risk and others. These costs vary greatly with the scale of the project. To include these costs, heat-map users can select high, medium or low-range costs.</p>
<p>All existing and planned transmission lines with voltage of 275kV or above are included. These include anticipated or actionable projects discussed in the Australian Energy Market Operator’s 2022 <a href="https://aemo.com.au/newsroom/media-release/aemo-releases-30-year-electricity-market-roadmap">Integrated System Plan</a>. We added two scenarios for 220kV lines in Tasmania in order to include the <a href="https://www.hydro.com.au/clean-energy/battery-of-the-nation">Battery of the Nation</a> hydropower project.</p>
<p>We modelled <a href="https://re100.eng.anu.edu.au/heatmaps/#map-links">12 scenarios</a>: six each for solar and wind. The scenarios cover high, medium and low-cost assumptions, with overhead or underground low-voltage powerline connection to the transmission network. Going underground increases the cost by six times. </p>
<p>Landholders might be able to negotiate a substantial annual access fee for overhead powerlines to the transmission network, to allow developers to avoid the costs of going underground. Hybrid overhead-underground powerlines might sometimes be an attractive compromise. </p>
<p>Solar and wind generation within each pixel is assigned to one of five cost classes: A, B, C, D and E. The lower-cost A, B and C classes are strongly preferred.</p>
<p>For each local government area in Australia, we estimated potential solar and wind capacities for the five different cost classes. The renewable resource that can be used will depend on local transmission line capacity and local loads. We can provide detailed information to local councils. </p>
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Read more:
<a href="https://theconversation.com/up-to-90-of-electricity-from-solar-and-wind-the-cheapest-option-by-2030-csiro-analysis-151831">Up to 90% of electricity from solar and wind the cheapest option by 2030: CSIRO analysis</a>
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<h2>There’s no shortage of suitable sites</h2>
<p>Class A, B and C sites are all close to existing and planned high-voltage transmission. This consideration outranks excellence of local solar and wind resources. Landholders in Class A/B/C regions can negotiate attractive terms to host solar and wind farms and powerline connections to transmission networks. </p>
<p>A particularly attractive region for solar and wind farms in NSW is the Goulburn-Lithgow district. It’s well served by transmission and has good wind and solar resources. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=340&fit=crop&dpr=1 600w, https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=340&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=340&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=428&fit=crop&dpr=1 754w, https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=428&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/499940/original/file-20221209-21714-c5cvm1.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=428&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Heat map around Goulburn for the scenario with underground power lines and low solar costs.</span>
<span class="attribution"><a class="source" href="https://www.arcgis.com/home/webmap/viewer.html?webmap=f1a311a1f6cf42399f39d67dd04c6adf&extent=83.751,-49.176,180,-0.0352">RE100 Group</a>, <span class="license">Author provided</span></span>
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<p>In Victoria, the Yallourn district is attractive because of good wind potential and strong existing transmission into Melbourne, plus there’s a need to replace local coal industry jobs. There’s also extensive wind potential west of Melbourne, good solar potential in the state’s north and extensive offshore wind resources in Bass Strait.</p>
<p>South Australia has excellent wind and solar potential to the east of St Vincent and Spencer gulfs. </p>
<p>Queensland’s best wind and solar sites follow the coastal transmission lines north from Brisbane. </p>
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<a href="https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=485&fit=crop&dpr=1 600w, https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=485&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=485&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=610&fit=crop&dpr=1 754w, https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=610&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/499951/original/file-20221209-24715-hv1x1s.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=610&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Queensland sites for solar under the low-cost scenario with overhead powerlines.</span>
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<p>Good wind and solar sites in Western Australia follow the transmission lines north and south of Perth. </p>
<p>Tasmania has extensive wind resources along the north coast, on King and Flinders islands and in Bass Strait. Their development depends on the <a href="https://www.marinuslink.com.au/">Marinus Link</a> being constructed across Bass Strait.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=634&fit=crop&dpr=1 600w, https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=634&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=634&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=797&fit=crop&dpr=1 754w, https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=797&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/499952/original/file-20221209-24-sovms3.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=797&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tasmanian sites for wind under the low-cost scenario with overhead powerlines.</span>
</figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/theres-a-huge-surge-in-solar-production-under-way-and-australia-could-show-the-world-how-to-use-it-190241">There's a huge surge in solar production under way – and Australia could show the world how to use it</a>
</strong>
</em>
</p>
<hr>
<h2>Who’ll benefit from these maps?</h2>
<p>Solar and wind farm developers have extensive information and experience in evaluating locations. This creates a large imbalance in knowledge when they negotiate with landholders, communities and governments.</p>
<p>By empowering local councils and landholders to identify suitable sites, our heat maps will help reduce this imbalance.</p>
<p>Developers might benefit, too, if the maps reduce the complexity and time involved in gaining legal access and community acceptance. </p>
<p>Local governments can also use these maps to identify potential zones for multiple solar and wind farms. These <a href="https://www.climatecouncil.org.au/resources/what-is-renewable-energy-zone/">renewable energy zones</a>, which are recognised by the states, could help attract developers, boosting local economic activity.</p>
<hr>
<p><em>The authors gratefully acknowledge funding support for this research from CWP Renewables and Innovation Connections.</em></p><img src="https://counter.theconversation.com/content/196033/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cheng Cheng receives funding from the Australian Renewable Energy Agency, Innovation Connections, and several private companies. </span></em></p><p class="fine-print"><em><span>Andrew Blakers receives funding from the Australian Renewable Energy Agency, Innovation Connections and several private companies</span></em></p><p class="fine-print"><em><span>Anna Nadolny receives funding from the Australian Renewable Energy Agency.</span></em></p>To achieve a target of 82% renewable energy generation by 2030 requires a huge number of new sites for solar and wind farms.Cheng Cheng, Research Officer, School of Engineering, Australian National UniversityAndrew Blakers, Professor of Engineering, Australian National UniversityAnna Nadolny, Research Officer, 100% Renewable Energy Group, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/935942018-03-26T03:40:36Z2018-03-26T03:40:36ZFactCheck Q&A: are South Australia’s high electricity prices ‘the consequence’ of renewable energy policy?<figure><img src="https://images.theconversation.com/files/211112/original/file-20180320-31602-918p7m.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Minister for Urban Infrastructure and Cities Paul Fletcher, speaking on Q&A.</span> <span class="attribution"><span class="source">ABC Q&A</span></span></figcaption></figure><p><strong>The Conversation fact-checks claims made on Q&A, broadcast Mondays on the ABC at 9.35pm. Thank you to everyone who sent us quotes for checking via <a href="http://www.twitter.com/conversationEDU">Twitter</a> using hashtags #FactCheck and #QandA, on <a href="http://www.facebook.com/conversationEDU">Facebook</a> or by <a href="mailto:checkit@theconversation.edu.au">email</a>.</strong></p>
<hr>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/9JRkHDUAAH0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Excerpt from Q&A, March 19, 2018.</span></figcaption>
</figure>
<blockquote>
<p>Now, the consequence of [Jay Weatherill’s] policies was that South Australians faced the highest electricity charges, the highest retail electricity charges, in the country.</p>
<p><strong>– Minister for Urban Infrastructure and Cities Paul Fletcher, <a href="https://youtu.be/9JRkHDUAAH0">speaking on Q&A</a>, March 19, 2018</strong></p>
</blockquote>
<p>During an <a href="http://www.abc.net.au/tv/qanda/txt/s4805964.htm">episode of Q&A</a>, Minister for Urban Infrastructure and Cities Paul Fletcher said that South Australia has the “highest retail electricity charges in the country”. That statement in itself <a href="https://theconversation.com/factcheck-does-south-australia-have-the-highest-energy-prices-in-the-nation-and-the-least-reliable-grid-92928">is correct</a>.</p>
<p>But Fletcher went on to say that the high prices were “the consequence” of former SA Premier Jay Weatherill’s renewable energy policies, which included the introduction of a 50% renewable energy target, <a href="http://www.abc.net.au/news/2017-04-10/south-australia-renewable-energy-target-reached-early/8429722">met in 2017</a>.</p>
<p>Was Fletcher right?</p>
<h2>Checking the source</h2>
<p>In response to a request for sources and comment, a spokesperson for Fletcher pointed The Conversation to the Australian Energy Market Commission’s 2017 Residential Electricity Price Trends <a href="https://www.aemc.gov.au/markets-reviews-advice/2017-residential-electricity-price-trends">report</a>, wholesale electricity price data from the Australian Energy Market Operator, and a 2017 Australian Competition and Consumer Commission <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Inquiry%20-%20Preliminary%20report%20-%2013%20November%202017.pdf">report</a>, which stated that: </p>
<blockquote>
<p>… the combination of significant network investment over the past decade, recent increases to gas prices, more concentrated wholesale markets, and the transition from large scale synchronous generation to variable and intermittent renewable energy resources has had a more pronounced effect on retail prices and number of offers in South Australia than any other state in the National Electricity Market.</p>
</blockquote>
<p>You can read the full response from Fletcher’s office <a href="https://theconversation.com/full-response-from-a-spokesperson-for-paul-fletcher-for-a-factcheck-on-electricity-prices-and-renewable-energy-93662">here</a>.</p>
<hr>
<h2>Verdict</h2>
<p>Paul Fletcher was correct to say that South Australia has the highest retail electricity prices in Australia.</p>
<p>Current prices for the typical South Australian customer are 37.79 cents per kilowatt-hour (c/kWh). The Australian Capital Territory has the lowest retail electricity prices in Australia, at around 23.68 c/kWh.</p>
<p>But there are many factors that affect retail electricity prices. Increasing levels of renewable energy generation is just one.</p>
<p>Other factors include network costs, gas prices, changes in supply and demand dynamics and market competition issues.</p>
<p>Therefore, Fletcher’s assertion that South Australia’s high retail electricity prices are “the consequence” of former Premier Jay Weatherill’s renewable energy policies is incorrect.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/factcheck-does-south-australia-have-the-highest-energy-prices-in-the-nation-and-the-least-reliable-grid-92928">FactCheck: does South Australia have the 'highest energy prices' in the nation and 'the least reliable grid'?</a>
</strong>
</em>
</p>
<hr>
<h2>Does South Australia have the highest retail electricity prices in the nation?</h2>
<p>First, a quick terminology reminder. “Energy” is a broad term that includes sources such as petrol, diesel, gas and renewables, among other things. “Electricity” is a specific form of energy that can be produced from many different sources.</p>
<p>The “retail electricity price” is what you’ll typically see in your home electricity bill, and is usually expressed in cents per kilowatt-hour (c/kWh). </p>
<p>According the Australian Energy Market <a href="https://www.aemc.gov.au/markets-reviews-advice/2017-residential-electricity-price-trends">2017 Residential Electricity Price Trends</a> report, South Australia does indeed have the highest retail prices in the nation. Current prices for the typical South Australian customer are 37.79c/kWh.</p>
<p>The lowest retail electricity prices in the country are in the Australian Capital Territory, where the typical customer pays around 23.68c/kWh. </p>
<hr>
<p><iframe id="1BYc9" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/1BYc9/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>The retail electricity price includes the wholesale price of the electricity, the network costs (or the “poles and wires” that bring the electricity to your home), retailing costs, and levies related to “green schemes” (such as the renewable energy target or solar feed-in tariffs). </p>
<p>The chart below shows how the different components contributed the electricity price increase in South Australia between 2007-08 and 2015-16.</p>
<hr>
<iframe src="https://datawrapper.dwcdn.net/NujQW/6/" scrolling="no" frameborder="0" allowtransparency="true" width="100%" height="450"></iframe>
<hr>
<p>For many years the drivers for retail prices have been network costs – which have very little to do with renewables.</p>
<p>But over the past 18 months, there has also been a increase in <em>wholesale</em> electricity prices across the entire National Electricity Market – the interconnected power system that covers Queensland, New South Wales, the Australian Capital Territory, Victoria, South Australia and Tasmania.</p>
<p>A range of factors have contributed to this.</p>
<p>These include the increase in gas prices, and the tightening of the supply-demand balance.</p>
<p>The closures of South Australia’s <a href="https://en.wikipedia.org/wiki/Northern_Power_Station_(South_Australia)">Northern Power Station</a> in 2016 and Victoria’s <a href="https://en.wikipedia.org/wiki/Hazelwood_Power_Station">Hazelwood Power Station</a> have contributed to a reduction in electricity supply (capacity).</p>
<p>The ACCC is also <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Inquiry%20-%20Preliminary%20report%20-%2013%20November%202017.pdf">investigating</a> “transfer pricing” – which is when a business that’s an energy generator as well as a retailer shifts costs from one part of its business to another. </p>
<h2>Are the prices ‘the consequence’ of Weatherill’s renewable energy policy?</h2>
<p>No. Even if wholesale prices become the main driver of retail prices, it’s not accurate to place the blame squarely on renewables. </p>
<p>Increased renewable energy generation may have contributed to decisions for some power plants to close. But so would other factors – such the <a href="http://www.abc.net.au/news/2016-12-01/worksafe-notices-detail-extent-of-repairs-needed-at-hazelwood/8082318">A$400 million safety upgrade</a> required for the Hazelwood power plant to have stayed open.</p>
<p>As mentioned above, other factors such as gas prices and competition issues have also contributed to increases in wholesale electricity prices. And as shown below, these are not confined to South Australia.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=377&fit=crop&dpr=1 600w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=377&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=377&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=473&fit=crop&dpr=1 754w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=473&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=473&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Electricity futures prices for 2017–18.</span>
<span class="attribution"><span class="source">ACCC 2017, Retail Electricity Pricing
Inquiry, Preliminary report (page 56)</span></span>
</figcaption>
</figure>
<hr>
<p>Gas prices are particularly important in the South Australian context, which is the most gas-dependent region in the National Electricity Market. </p>
<p>In addition, the South Australian market is the <a href="https://www.aer.gov.au/publications/state-of-the-energy-market-reports/state-of-the-energy-market-may-2017">most concentrated in terms of competition</a>.</p>
<p>So, Fletcher was not correct to say that South Australia’s high electricity prices are “the consequence” of Weatherill’s renewable energy policies. </p>
<p>Indeed, a large proportion of the existing renewable investment in South Australia has been financed as a result of the federal Renewable Energy Target, introduced by the Howard government, rather than state policy. <strong>– Dylan McConnell</strong></p>
<hr>
<h2>Blind review</h2>
<p>I agree with the verdict.</p>
<p>The price question is not contentious. South Australia has the highest retail electricity prices in Australia.</p>
<p>But no single factor or decision is responsible for the electricity prices we endure today.</p>
<p>The prices are the result of <a href="https://theconversation.com/a-high-price-for-policy-failure-the-ten-year-story-of-spiralling-electricity-bills-89450">many different policies and pressures</a> at every step of the electricity supply chain. <strong>– David Blowers</strong></p>
<hr>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&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 Conversation FactCheck is accredited by the International Fact-Checking Network.</span>
</figcaption>
</figure>
<p><em>The Conversation’s FactCheck unit was the first fact-checking team in Australia and one of the first worldwide to be accredited by the International Fact-Checking Network, an alliance of fact-checkers hosted at the Poynter Institute in the US. <a href="https://theconversation.com/the-conversations-factcheck-granted-accreditation-by-international-fact-checking-network-at-poynter-74363">Read more here</a>.</em></p>
<p><em>Have you seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at <a href="mailto:checkit@theconversation.edu.au">checkit@theconversation.edu.au</a>. Please include the statement you would like us to check, the date it was made, and a link if possible.</em></p><img src="https://counter.theconversation.com/content/93594/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell has received funding from the AEMC's Consumer Advocacy Panel and Energy Consumers Australia.</span></em></p><p class="fine-print"><em><span>David Blowers 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>On Q&A, Minister for Urban Infrastructure and Cities Paul Fletcher said South Australia’s high electricity prices were “the consequence” of Jay Weatherill’s renewable energy policies. Is that right?Dylan McConnell, Researcher at the Australian German Climate and Energy College, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/929282018-03-13T10:33:48Z2018-03-13T10:33:48ZFactCheck: does South Australia have the ‘highest energy prices’ in the nation and ‘the least reliable grid’?<blockquote>
<p>Look, this is probably the single most important issue to most households in South Australia — what they’ve been left with now are the highest energy prices in Australia — some say in the world — and the least reliable grid.</p>
<p>And it’s all because this government decided we had to go headlong into intermittent renewable energy without the baseload to support that transition.</p>
<p><strong>– SA Liberal Party leader Steven Marshall, speaking at the <a href="http://iview.abc.net.au/programs/sa-votes-leaders-debate/NS1806S001S00">SA Votes: Leaders’ Debate</a>, Adelaide, March 5, 2018</strong></p>
</blockquote>
<p>Electricity prices and the reliability of South Australia’s energy grid will be key issues for voters in this Saturday’s state election. </p>
<p>During a public leaders’ debate, SA Liberal Party leader Steven Marshall claimed that, under the Weatherill Labor government, South Australians had been left with “the highest energy prices in Australia – some say in the world – and the least reliable grid”.</p>
<p>Marshall said this was “all because this [Labor] government decided we had to go headlong into intermittent renewable energy without the baseload to support that transition”.</p>
<p>Let’s look at the evidence.</p>
<h2>Checking the source</h2>
<p>A spokesperson for Marshall told The Conversation that when the opposition leader said energy prices, he was referring to retail electricity prices.</p>
<p>To support Marshall’s statement, the spokesperson provided The Conversation with <a href="https://cdn.theconversation.com/static_files/files/45/ESOO_2017_AEMO20180326-22189-ni1kvl.PDF?1522072784">two</a> <a href="https://cdn.theconversation.com/static_files/files/46/SA_System_Strength_201720180326-22189-lnq050.pdf?1522072786">2017 documents</a> from the Australian Energy Market Operator, one 2015 document from the <a href="https://cdn.theconversation.com/static_files/files/47/AER_State_of_the_energy_market20180326-22189-3tnyfb.pdf?1522072788">Australian Energy Regulator</a>, <a href="https://cdn.theconversation.com/static_files/files/48/20170609-Electricity-1July2016SAElectricityPriceIncreases-AdviceToTreasu.._20180326-22189-16wvsmj.pdf?1522072790">a letter</a> from the Essential Services Commission of South Australia (ESCOSA) to the SA Minister for Energy Tom Koutsantonis, and a <a href="https://cdn.theconversation.com/static_files/files/49/highest_prices_AFR20180326-22189-lq1iyd.PDF?1522072792">2017 article</a> from the Australian Financial Review.</p>
<p>Regarding the reliability of South Australia’s grid, the spokesperson said the Australian Energy Market Operator’s <a href="https://cdn.theconversation.com/static_files/files/45/ESOO_2017_AEMO20180326-22189-ni1kvl.PDF?1522072784">Electricity Statement of Opportunities</a> shows that “in 2017-18 South Australia has the highest percentage of unserved energy at 0.0025%”, adding that “the reliability standard is 0.0020%”. </p>
<p>You can read the full response from Marshall’s office <a href="https://theconversation.com/full-response-from-steven-marshall-for-a-factcheck-on-electricity-prices-in-south-australia-93131">here</a>.</p>
<hr>
<h2>Verdict</h2>
<p>SA Liberal Party leader Steven Marshall said South Australia has “the highest energy prices in Australia — some say in the world”.</p>
<p>It’s true that South Australia has the highest retail electricity prices in Australia (although not in the world). </p>
<p>Marshall also said South Australia has the “the least reliable grid”. </p>
<p>In the energy industry, the word “reliability” means having enough energy generation capacity and inter-regional network capacity to supply customers.</p>
<p>The Australian Energy Market Operator is currently preparing estimates of unserved energy (the measure of reliability) for 2016-17. It is possible that there will be unserved energy for South Australia over this period.</p>
<p>However, it’s far from clear that South Australia would have had the highest level of unserved energy in the National Electricity Market.</p>
<p>People in South Australia do experience interruptions to their electricity supply. </p>
<p>But more than 97% of these are due to distribution outages (caused by things like trees falling on power lines) and are unrelated to the source of electricity – renewable or otherwise – flowing through the power lines.</p>
<p>There are many factors that affect electricity prices, grid reliability and power outages. Increasing levels of renewable energy generation is one factor. </p>
<p>Therefore, Marshall’s assertion that these outcomes are “all because this [Labor] government decided we had to go headlong into intermittent renewable energy without the baseload to support that transition” is incorrect.</p>
<hr>
<h2>Responding to the sources</h2>
<p>The sources provided by Marshall’s spokesperson are from reputable government agencies. However, it’s far from clear that the sources support the conclusions Marshall drew in the leaders’ debate. </p>
<p>For example, the spokesperson cited an Australian Energy Market Operator (AEMO) report stating that South Australia would breach the regulator’s reliability standard in 2017-18.</p>
<p>But this is a projection, and doesn’t include some measures that have already been taken to ensure that the grid is reliable in 2017-18. </p>
<p>You can read more analysis of the sources provided by Marshall’s office <a href="https://theconversation.com/full-response-from-a-spokesperson-for-steven-marshall-for-a-factcheck-on-electricity-issues-in-south-australia-93131">here</a>.</p>
<h2>‘Energy’ vs ‘electricity’ prices</h2>
<p>In making his statement, Marshall referred to “energy” prices. Energy and electricity prices are different things. Marshall’s spokesperson later told The Conversation that the MP was referring to “household electricity prices”.</p>
<p>Energy is a broad term that includes sources such as petrol, diesel, gas and renewables, among other things. Electricity is a specific form of energy that can be produced from many different sources.</p>
<p>The retail electricity price is what you’ll typically see in your home electricity bill, and is usually expressed in cents per kilowatt-hour (c/kWh). </p>
<h2>Does South Australia have the highest retail electricity prices in the nation?</h2>
<p>According the Australian Energy Market <a href="https://www.aemc.gov.au/markets-reviews-advice/2017-residential-electricity-price-trends">2017 Residential Electricity Price Trends</a> report, South Australia does indeed have the highest retail prices in the nation. Current prices for the typical SA customer are 37.79c/kWh.</p>
<p>According to that report, the Australian Capital Territory has the lowest retail electricity prices in Australia, at around 23.68 c/kWh.</p>
<p>The retail electricity price includes the wholesale price of the electricity, the network costs (or the “poles and wires” that bring the electricity to your home), retailing costs, and levies related to “green schemes” (such as the renewable energy target or solar feed-in tariffs). </p>
<p>The chart below shows how the different components contributed the electricity price increase in South Australia between 2007-08 and 2015-16.</p>
<iframe src="https://datawrapper.dwcdn.net/NujQW/5/" scrolling="no" frameborder="0" allowtransparency="true" width="100%" height="450"></iframe>
<p>For many years the drivers for retail prices have been network costs – which have very little to do with renewables.</p>
<p>But over the past 18 months, there has also been a increase in <em>wholesale</em> electricity prices across the entire National Electricity Market. A range of factors have contributed to this. These include the increase in gas prices, and the tightening of the supply-demand balance.</p>
<p>The closures of South Australia’s <a href="https://en.wikipedia.org/wiki/Northern_Power_Station_(South_Australia)">Northern Power Station</a> in 2016 and Victoria’s <a href="https://en.wikipedia.org/wiki/Hazelwood_Power_Station">Hazelwood Power Station</a> have contributed to a reduction in electricity supply (capacity).</p>
<p>The ACCC is also <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Inquiry%20-%20Preliminary%20report%20-%2013%20November%202017.pdf">investigating</a> “transfer pricing” – which is when a business that’s an energy generator as well as a retailer shifts costs from one part of its business to another. </p>
<p>But as I’ll explain below, even if wholesale prices become the main driver of retail prices, it’s not accurate to place the blame squarely on renewables.</p>
<h2>Does South Australia have the highest retail electricity prices in the world?</h2>
<p>Because of differences in tax structures and energy systems, it’s no simple matter to compare energy and electricity prices between countries. </p>
<p>A 2017 Australian Competition and Consumer Commission report <a href="https://www.accc.gov.au/system/files/Retail%20Electricity%20Inquiry%20-%20Preliminary%20report%20-%2013%20November%202017.pdf">compared retail electricity prices</a> among countries in the Organisation for Economic Co-operation and Development (OECD).</p>
<p>Australian prices were in the lower end of the range, but above the OECD total. While SA prices are above the Australian national average, they would still not be the most expensive in the OECD on a <a href="https://theconversation.com/factcheck-are-australians-paying-twice-as-much-for-electricity-as-americans-69980">purchasing power parity</a> basis. </p>
<h2>Does South Australia have the ‘least reliable grid’?</h2>
<p>In the context of energy supply, the word “reliable” will mean different things to different people. </p>
<p>The Australian Energy Market Commission defines “reliability” as having sufficient generation, demand side response, and interconnector capacity in the system to generate and transport electricity to meet consumer demand.</p>
<p>Under this definition, the National Energy Market meets a <a href="https://www.aemc.gov.au/markets-reviews-advice/reliability-standard-and-settings-review-2018">reliability standard</a> as long as the maximum expected amount of “unserved energy” in any region doesn’t exceed 0.002% of the region’s annual energy consumption.</p>
<p>“Unserved energy” means the amount of customer demand that can’t be supplied within a region of the National Electricity Market, <em>specifically</em> due to a shortage of generation or interconnector capacity.</p>
<p>Marshall’s office did refer The Conversation to the AEMO’s <a href="https://cdn.theconversation.com/static_files/files/45/ESOO_2017_AEMO20180326-22189-ni1kvl.PDF?1522072784">Electricity Statement of Opportunities</a>, which predicts South Australia’s unserved energy over 2017-18 at 0.0025%, just above the reliability standard.</p>
<p>However, and crucially, these projections do not include the new state-owned diesel generators (which can provide up to 276 megawatts) <a href="https://theconversation.com/full-response-from-steven-marshall-for-a-factcheck-on-electricity-prices-in-south-australia-93131">among other things</a>. And these projections are made in order for the market to respond, and prevent the shortfall from occurring.</p>
<p>Between 2010-11 and 2015-16, the amount of unserved energy in the National Electricity Market was zero. </p>
<p>AEMO is currently preparing estimates of unserved energy for 2016-17. It is possible that there will be unserved energy for South Australia over this period.</p>
<p>However, it’s far from clear that South Australia would have had the highest level of unserved energy.</p>
<p>In fact, AEMO directed more <a href="https://www.aemo.com.au/media/Files/About%20the%20industry/Fact%20sheets/AEMO_FactSheet_LoadShedding_2015.pdf">load-shedding</a> in New South Wales than South Australia on proportional basis. If this load-shedding were to be considered unserved energy, then New South Wales may technically have been less reliable.</p>
<h2>Then why has South Australia had so many blackouts?</h2>
<p>The technical definition above might not be of much comfort to South Australians experiencing power outages.</p>
<p>The average South Australian experienced <a href="https://www.aer.gov.au/networks-pipelines/network-performance/sa-power-networks-network-information-rin-responses">970 cumulative minutes of blackout in 2016-17</a>. This was extraordinarily high due to the statewide blackouts in September 2016 caused by extreme weather. In 2015-16, the average total was <a href="https://www.aer.gov.au/networks-pipelines/network-performance/sa-power-networks-network-information-rin-responses">173 minutes</a>. </p>
<p>But across the National Electricity Market the vast majority of these – over 97% – are due to distribution outages, which can be caused by anything from trees falling on power lines to “<a href="https://www.sapowernetworks.com.au/centric/customers/power_outages_information/high_voltage_interruptions_and_causes.jsp">possum flashovers</a>”. These occur regardless of the source of electricity flowing through the power lines.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/209478/original/file-20180308-146675-yz0t0t.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/209478/original/file-20180308-146675-yz0t0t.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=369&fit=crop&dpr=1 600w, https://images.theconversation.com/files/209478/original/file-20180308-146675-yz0t0t.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=369&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/209478/original/file-20180308-146675-yz0t0t.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=369&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/209478/original/file-20180308-146675-yz0t0t.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=464&fit=crop&dpr=1 754w, https://images.theconversation.com/files/209478/original/file-20180308-146675-yz0t0t.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=464&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/209478/original/file-20180308-146675-yz0t0t.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=464&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Sources of supply interruptions in the NEM: 2007-08 to 2015-16.</span>
<span class="attribution"><span class="source">AEMC 2017, Reliability Frameworks Review, Interim Report (page 54)</span></span>
</figcaption>
</figure>
<p>South Australia may have the highest number of supply interruptions, but this is essentially unrelated to electricity supply mix. </p>
<h2>Is this ‘all because’ of state Labor policy?</h2>
<p>No. Even if wholesale prices become the main driver of retail prices, it’s not accurate to place the blame squarely on renewables. </p>
<p>Increased renewable energy generation may have contributed to decisions for some power plants to close. But so would other factors – such the <a href="http://www.abc.net.au/news/2016-12-01/worksafe-notices-detail-extent-of-repairs-needed-at-hazelwood/8082318">A$400 million safety upgrade</a> required for the Hazelwood power plant to have stayed open.</p>
<p>As mentioned above, other factors such as gas prices and competition issues have also contributed to increases in wholesale electricity prices. And as shown below, these are not confined to South Australia.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=377&fit=crop&dpr=1 600w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=377&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=377&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=473&fit=crop&dpr=1 754w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=473&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/210029/original/file-20180313-30979-jg4ezc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=473&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Electricity futures prices for 2017–18.</span>
<span class="attribution"><span class="source">ACCC 2017, Retail Electricity Pricing
Inquiry, Preliminary report (page 56)</span></span>
</figcaption>
</figure>
<p>Gas prices are particularly important in the South Australian context, which is the most gas-dependent region in the National Electricity Market. </p>
<p>In addition, the SA market is the <a href="https://www.aer.gov.au/publications/state-of-the-energy-market-reports/state-of-the-energy-market-may-2017">most concentrated in terms of competition</a>.</p>
<p>In this sense, Marshall was not correct to say that price increases are “all because this [Labor] government decided we had to go headlong into intermittent renewable energy without the baseload to support that transition”. </p>
<p>Indeed, a large proportion of the existing renewable investment in South Australia has been financed as a result of the federal Renewable Energy Target, introduced by the Howard government, rather than state policy. <strong>– Dylan McConnell</strong></p>
<h2>Blind review</h2>
<p>I broadly agree with the verdict.</p>
<p>The price question is not contentious. South Australia has the highest retail electricity prices in Australia – but not in the world.</p>
<p>An argument could be made for South Australia being the least reliable system in the National Energy Market – if you look beyond the technical definition. A series of power losses and near misses in 2016-17 clearly raise questions for SA residents.</p>
<p>But, as the author rightly points out, the vast majority of these were caused by storms and other technical issues – not by renewables. <strong>– David Blowers</strong></p>
<hr>
<p><strong>The Conversation is fact-checking the South Australian election. If you see a ‘fact’ you’d like checked, let us know by sending a note via <a href="mailto:checkit@theconversation.edu.au">email</a>, <a href="http://www.twitter.com/conversationEDU">Twitter</a> or <a href="http://www.facebook.com/conversationEDU">Facebook</a>.</strong></p>
<p><strong>The Conversation thanks <a href="https://theconversation.com/the-conversation-is-fact-checking-the-south-australian-election-and-we-want-to-hear-from-you-92809">The University of South Australia</a> for its support.</strong></p>
<hr>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&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 Conversation FactCheck is accredited by the International Fact-Checking Network.</span>
</figcaption>
</figure>
<p><em>The Conversation’s FactCheck unit is the first fact-checking team in Australia and one of the first worldwide to be accredited by the International Fact-Checking Network, an alliance of fact-checkers hosted at the Poynter Institute in the US. <a href="https://theconversation.com/the-conversations-factcheck-granted-accreditation-by-international-fact-checking-network-at-poynter-74363">Read more here</a>.</em></p>
<p><em>Have you seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at <a href="mailto:checkit@theconversation.edu.au">checkit@theconversation.edu.au</a>. Please include the statement you would like us to check, the date it was made, and a link if possible.</em></p><img src="https://counter.theconversation.com/content/92928/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell has received funding from the AEMC's Consumer Advocacy Panel and Energy Consumers Australia.</span></em></p><p class="fine-print"><em><span>David Blowers 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>SA Liberal Party leader Steven Marshall said that state Labor policy had left South Australians with ‘the highest energy prices in Australia’ and ‘the least reliable grid’. Is that right?Dylan McConnell, Researcher at the Australian German Climate and Energy College, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/914422018-02-09T17:03:31Z2018-02-09T17:03:31ZThe EU wants to fight climate change – so why is it spending billions on a gas pipeline?<figure><img src="https://images.theconversation.com/files/205470/original/file-20180208-180813-ifievy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:TAP_in_Albania.jpg">Albinfo/Wikipedia</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Over the past few years there has been <a href="https://www.enelgreenpower.com/media/news/d/2017/12/renewables-exponential-growth">exponential growth</a> in clean energy investment – while fossil fuel assets are increasingly considered to be <a href="https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-TCFD-Annex-062817.pdf">risky</a>. Yet, on February 6, the European Investment Bank, the EU’s long-term lending institution, voted to provide a <a href="http://www.eib.org/infocentre/press/releases/all/2018/2018-030-eib-backs-eur-6-5-billion-energy-sme-transport-and-urban-investment">€1.5 billion loan</a> to the controversial Trans Adriatic Pipeline (TAP).</p>
<p>The TAP is the Western part of a larger Southern Gas Corridor proposal that would ultimately connect a large gas field in the Caspian Sea to Italy, crossing through Azerbaijan, Turkey, Greece and Albania. And while gas might be cleaner than coal, it’s still a fossil fuel. </p>
<p>So how does the EU’s support for this major project fit in with its supposed goal of addressing climate change?</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/205365/original/file-20180207-74487-1cg5u8d.png?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"></a>
<figcaption>
<span class="caption">The proposed Trans Adriatic Pipeline will run nearly 900km from Greece to Italy.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Trans_Adriatic_Pipeline.png">Genti77 / wiki</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>Influencing investors</h2>
<p>A key problem is the message this sends to the private sector, where renewable energy is increasingly seen as a good investment. Technologies once perceived as too risky and too expensive are now delivering worthwhile returns thanks to reduced costs and breakthroughs in energy storage. The price of electricity generated by solar, wind or hydro is now comparable with the national grid. Over the past decade, investor meetings have shifted from discussing whether the transition to a low carbon economy will start before 2050, to whether it will be completed in the same period. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"949194987337650176"}"></div></p>
<p>But there is still not enough money being spent on renewables. While clean energy investment in 2017 <a href="https://about.bnef.com/blog/runaway-53gw-solar-boom-in-china-pushed-global-clean-energy-investment-ahead-in-2017/">topped US$300 billion for the fourth year in a row</a>, this is far short of what is needed to unlock the technology revolution necessary to tackle climate change. There is clearly a gap between what is required and what is being delivered. </p>
<p>The private sector will continue to invest significant capital into energy projects over the next few decades, so one issue facing policy makers is how to influence investors away from fossil fuels and <a href="https://www.sciencedirect.com/science/article/pii/S0301421511005064">towards renewable projects</a>. To really scale up investment into renewable infrastructure, <a href="http://www.unepfi.org/fileadmin/documents/Investment-GradeClimateChangePolicy.pdf">long-term and stable policy is required</a> – which investors <a href="https://www.sciencedirect.com/science/article/pii/S0959652615006277">see as clearly lacking</a>. </p>
<p>By funding the Trans Adriatic Pipeline, the EU’s investment bank is hardly signalling to the private sector that governments are committed to a green energy transition. </p>
<h2>Risky business</h2>
<p>If Europe really was to follow through and successfully switch to green energy – and such a transition is partially underway – then the pipeline project may even represent a risk to public finances.</p>
<p>Studies on climate change point to the need for a greater sense of urgency and ambition and, to stay within its “carbon budget” under current agreed emissions targets, the EU needs to be <a href="http://www.foeeurope.org/sites/default/files/extractive_industries/2017/can_the_climate_afford_europes_gas_addiction_report_november2017.pdf">fossil fuel free by 2030</a>. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/HSKcvoBKYxc?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<p>So any large oil and gas infrastructure projects with investment returns beyond 2030 are saddled with risk. In just a decade or two, super-cheap solar and wind power could mean that gas pipelines such as TAP would no longer make financial sense and would become worthless “<a href="https://www.carbontracker.org/terms/stranded-assets/">stranded assets</a>”. Yet TAP backers are touting economic benefits for countries such as <a href="http://www.oxfordeconomics.com/Media/Default/economic-impact/economic-impact-home/Economic-Impact-trans-Adriatic-Pipeline.pdf">Albania</a> extending to 2068 – well beyond the date when Europe must entirely ditch fossil fuels.</p>
<p>The EU’s official stance is to hail natural gas as a cleaner “bridge fuel” between coal and renewables. But <a href="http://science.sciencemag.org/content/343/6172/733.summary">high leakage rates</a> and the <a href="http://www.climatechange2013.org/images/uploads/WGIAR5_WGI-12Doc2b_FinalDraft_All.pdf">potent warming impact</a> of methane (the primary constituent of natural gas) means that the Southern Gas Corridor’s climate footprint may be <a href="https://bankwatch.org/publication/smoke-and-mirrors-why-the-climate-promises-of-the-southern-gas-corridor-don-t-add-up">as large, or larger, than equivalent coal</a>. Abundant natural gas is also highly likely to <a href="http://iopscience.iop.org/article/10.1088/1748-9326/9/9/094008/meta">delay the deployment of renewable technologies</a>. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"952216497123835906"}"></div></p>
<p>For the first decade of this century Europe prided itself on leading the political debate on tackling climate change. Now, it appears to be losing its boldness. To drive through a new technology revolution, the public sector needs to lead from the front and take bold decisions about its energy strategy.</p>
<p>A gas pipeline is not a technology of the future. If California can release <a href="https://www.youtube.com/watch?v=HSKcvoBKYxc">YouTube videos</a> describing the importance of considering stranded assets during this energy transition, and New York City can announce plans to <a href="https://twitter.com/NYCMayor/status/952216497123835906">divest from fossil fuels</a>, then maybe it is time for the EU to turn off the TAP.</p><img src="https://counter.theconversation.com/content/91442/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Aled Jones 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>The European Investment Bank’s funding of the Trans Adriatic Pipeline will harm the climate and makes little financial sense.Aled Jones, Professor & Director, Global Sustainability Institute, Anglia Ruskin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/844332017-09-27T01:07:23Z2017-09-27T01:07:23ZRenewables will be cheaper than coal in the future. Here are the numbers<p>In a recent Conversation FactCheck I examined the question: “<a href="https://theconversation.com/factcheck-qanda-is-coal-still-cheaper-than-renewables-as-an-energy-source-81263">Is coal still cheaper than renewables as an energy source?</a>” In that article, we assessed how things stand today. Now let’s look to the future.</p>
<p>In Australia, <a href="https://www.environment.gov.au/system/files/resources/97a4f50c-24ac-4fe5-b3e5-5f93066543a4/files/independent-review-national-elec-market-prelim.pdf">87%</a> of our electricity generation comes from fossil fuels. That’s one of the highest levels of fossil fuel generation <a href="https://www.energycouncil.com.au/media/1318/2016-06-23_aec-renewables-fact-sheet.pdf">in the world</a>.</p>
<p>So we have important decisions to make about how we’ll generate energy as Australia’s fleet of coal-fired power stations <a href="https://theconversation.com/the-true-cost-of-keeping-the-liddell-power-plant-open-83634">reach the end of their operating lives</a>, and as we move to decarbonise the economy to meet our climate goals following the <a href="http://www.environment.gov.au/climate-change/international/paris-agreement">Paris agreement</a>.</p>
<p>What will the cost of coal-fired and renewable energy be in the coming decades? Let’s look at the numbers.</p>
<h2>Improvements in technology will make renewables cheaper</h2>
<p>As technology and economies of scale improve over time, the initial capital cost of building an energy generator decreases. This is known as the “learning rate”. Improvements in technology are expected to reduce the price of renewables more so than coal in coming years.</p>
<p>The chart below, <a href="https://www.environment.gov.au/system/files/resources/1d6b0464-6162-4223-ac08-3395a6b1c7fa/files/emissions-mitigation-policies.pdf">produced</a> by consulting firm Jacobs Group and published in the recent <a href="http://www.environment.gov.au/energy/national-electricity-market-review">Finkel review of the National Electricity Market</a>, shows the projected <a href="https://en.wikipedia.org/wiki/Cost_of_electricity_by_source">levelised cost of electricity</a> (LCOE) for a range of technologies in 2020, 2030 and 2050.</p>
<p>The chart shows a significant reduction in the cost of solar and wind, and a relatively static cost for mature technologies such as coal and gas. It also shows that large-scale solar photovoltaic (PV) generation, with a faster learning rate, is projected to be cheaper than wind generation from around 2020.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=363&fit=crop&dpr=1 600w, https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=363&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=363&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=456&fit=crop&dpr=1 754w, https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=456&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/179968/original/file-20170727-8486-4pt9x.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=456&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Notes: Numbers in Figure A.1 refer to the average.
For each generation technology shown in the chart, the range shows the lowest cost to the highest cost project available in Jacobs’ model, based on the input assumptions in the relevant year. The average is the average cost across the range of projects; it may not be the midpoint between the highest and lowest cost project.
Large-scale Solar Photovoltaic includes fixed plate, single and double axis tracking.
Large-scale Solar Photovoltaic with storage includes 3 hours storage at 100 per cent capacity.
Solar Thermal with storage includes 12 hours storage at 100 per cent capacity.
Cost of capital assumptions are consistent with those used in policy cases, that is, without the risk premium applied.
The assumptions for the electricity modelling were finalised in February 2017 and do not take into account recent reductions in technology costs (e.g. recent wind farm announcements).</span>
<span class="attribution"><a class="source" href="http://www.environment.gov.au/system/files/resources/1d6b0464-6162-4223-ac08-3395a6b1c7fa/files/electricity-market-review-final-report.pdf">Independent Review into the Future Security of the National Electricity Market</a></span>
</figcaption>
</figure>
<p>Wind prices are already falling rapidly. For example: the graph above shows the 2020 price for wind at A$92 per megawatt-hour (MWh). But when the assumptions for the electricity modelling were finalised in February 2017, that price was already out of date.</p>
<p>In its <a href="http://www.environment.act.gov.au/__data/assets/pdf_file/0006/918528/200-MW-Next-generation-Renewable-Factsheet.pdf">2016 Next Generation Renewables Auction</a>, the Australian Capital Territory government secured a fixed price for wind of <a href="http://www.environment.act.gov.au/__data/assets/pdf_file/0006/918528/200-MW-Next-generation-Renewable-Factsheet.pdf">A$73 per MWh</a> over 20 years (or A$56 per MWh in constant dollars at 3% inflation).</p>
<p>In May 2017, the <a href="https://www.originenergy.com.au/about/investors-media/media-centre/origin-adds-530mw-of-renewable-energy-to-its-portfolio.html">Victorian renewable energy auction</a> set a record low fixed price for wind of <a href="http://reneweconomy.com.au/origin-stuns-industry-with-record-low-price-for-530mw-wind-farm-70946/">A$50-60 per MWh</a> over 12 years (or A$43-51 per MWh in constant dollars at 3% inflation). This is below the AGL price for electricity from the <a href="http://reneweconomy.com.au/origin-stuns-industry-with-record-low-price-for-530mw-wind-farm-70946/">Silverton wind farm of $65 per MWh fixed over five years</a>.</p>
<p>These long-term renewable contracts are similar to a LCOE, because they extend over a large fraction of the lifetime of the wind farm.</p>
<p>The tables and graph below show a selection of renewable energy long-term contract prices across Australia in recent years, and illustrate a gradual decline in wind energy auction results (in constant 2016 dollars), consistent with improvements in technology and economies of scale. </p>
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<p>But this analysis is still based on LCOE comparisons – or what it would cost to use these technologies for a simple “plug and play” replacement of an old generator. </p>
<p>Now let’s price in the cost of changes needed to the entire electricity network to support the use of renewables, and to price in other factors, such as climate change.</p>
<h2>Carbon pricing will increase the cost of coal-fired power</h2>
<p>The economic, environmental and social costs of greenhouse gas emissions are not included in simple electricity cost calculations, such as the LCOE analysis above. Neither are the costs of other factors, such as the health effects of air particle pollution, or deaths arising from coal mining.</p>
<p>The risk of the possible introduction of carbon emissions mitigation policies can be <em>indirectly</em> factored into the LCOE of coal-fired power through higher rates for the <a href="https://en.wikipedia.org/wiki/Weighted_average_cost_of_capital">weighted average cost of capital</a> (in other words, higher interest rates for loans).</p>
<p>The <a href="https://www.environment.gov.au/system/files/resources/1d6b0464-6162-4223-ac08-3395a6b1c7fa/files/emissions-mitigation-policies.pdf">Jacobs report</a> to the <a href="http://www.environment.gov.au/energy/national-electricity-market-review">Finkel Review</a> estimates that the weighted average cost of capital for coal will be 15%, compared with 7% for renewables.</p>
<p>The cost of greenhouse gas emissions can be incorporated more directly into energy prices by putting a price on carbon. Many economists maintain that carbon pricing is the most <a href="http://www.oecd.org/env/tools-evaluation/effective-carbon-prices-9789264196964-en.htm">cost-effective way</a> to reduce global carbon emissions.</p>
<p>One megawatt-hour of coal-fired electricity creates approximately <a href="http://www.environment.gov.au/energy/national-electricity-market-review">one tonne of carbon dioxide</a>. So even a <a href="http://carbonpricemodelling.treasury.gov.au/content/report/04overview.asp">conservative carbon price</a> of around A$20 per tonne would increase the levelised cost of coal generation by around A$20 per MWh, putting it at almost A$100 per MWh in 2020.</p>
<p>According to the <a href="https://www.environment.gov.au/system/files/resources/1d6b0464-6162-4223-ac08-3395a6b1c7fa/files/emissions-mitigation-policies.pdf">Jacobs analysis</a>, this would make both wind and large-scale photovoltaics – at A$92 and A$91 per MWh, respectively – cheaper than any fossil fuel source from the year 2020.</p>
<p>It’s worth noting here the ultimate inevitability of a price signal on carbon, even if Australia continues to resist the idea of implementing a simple carbon price. Other policies currently under consideration, including some form of a <a href="https://theconversation.com/finkels-clean-energy-target-plan-better-than-nothing-economists-poll-82066">clean energy target</a>, would put similar upward price pressure on coal relative to renewables, while the global move towards carbon pricing will eventually see Australia follow suit or risk imposts on its carbon-exposed exports.</p>
<h2>Australia’s grid needs an upgrade</h2>
<p>Renewable energy (excluding hydro power) accounted for <a href="https://www.environment.gov.au/system/files/resources/97a4f50c-24ac-4fe5-b3e5-5f93066543a4/files/independent-review-national-elec-market-prelim.pdf">around 6%</a> of Australia’s energy supply in the 2015-16 financial year. Once renewable energy exceeds say, 50%, of Australia’s total energy supply, the LCOE for renewables should be used with caution.</p>
<p>This is because most renewable energy – like that generated by wind and solar – is intermittent, and needs to be “balanced” (or backed up) in order to be reliable. This <a href="http://www.environment.gov.au/energy/national-electricity-market-review">requires investment in energy storage</a>. We also need more transmission lines within the electricity grid to ensure ready access to renewable energy and storage in different regions, which increases transmission costs.</p>
<p>And, there are additional engineering requirements, like building “<a href="https://theconversation.com/relying-on-renewables-need-not-mean-dealing-with-blackouts-28635">inertia</a>” into the electricity system to maintain voltage and frequency stability. Each additional requirement increases the cost of electricity beyond the levelised cost. But by how much?</p>
<p>Australian National University researchers calculated that the addition of <a href="https://theconversation.com/want-energy-storage-here-are-22-000-sites-for-pumped-hydro-across-australia-84275">pumped-hydro storage</a> and extra network construction would add a levelised cost of <em>balancing</em> of <a href="http://www.sciencedirect.com/science/article/pii/S0360544217309568?via%3Dihub">A$25-30 per MWh</a> to the levelised cost of renewable electricity.</p>
<p>The researchers predicted that eventually a future 100% renewable energy system would have a levelised cost of <em>generation</em> in current dollars of around A$50 per MWh, to which adding the levelised cost of <em>balancing</em> would yield a network-adjusted LCOE of around A$75-80 per MWh.</p>
<p>The Australian National University result is similar to the <a href="https://www.environment.gov.au/system/files/resources/1d6b0464-6162-4223-ac08-3395a6b1c7fa/files/emissions-mitigation-policies.pdf">Jacobs 2050 LCOE prediction</a> for large-scale solar photovoltaic plus pumped hydro of around A$69 per MWh, which doesn’t include extra network costs.</p>
<p>The <a href="https://www.environment.gov.au/system/files/resources/d67797b7-d563-427f-84eb-c3bb69e34073/files/100-percent-renewables-study-modelling-outcomes-report.pdf">AEMO 100% Renewables Study</a> indicated that this would add another A$6-10 per MWh, yielding a comparable total in the range A$75-79 per MWh.</p>
<p>This would make a 100% renewables system competitive with new-build supercritical (ultrasupercritical) coal, which, according to the Jacobs calculations in the chart above, would come in at around A$75(80) per MWh between 2020 and 2050.</p>
<p>This projection for supercritical coal is consistent with other studies by the <a href="http://www.co2crc.com.au/wp-content/uploads/2016/04/LCOE_Report_final_web.pdf">CO2CRC in 2015</a> (A$80 per MWh) and used by <a href="https://www.csiro.au/en/Do-business/Futures/Reports/Low-Emissions-Technology-Roadmap">CSIRO in 2017</a> (A$65-80 per MWh).</p>
<h2>So, what’s the bottom line?</h2>
<p>By the time renewables dominate electricity supply in Australia, it’s highly likely that a price on carbon will have been introduced. A conservative carbon price of at least A$20 per tonne would put coal in the A$100-plus bracket for a megawatt-hour of electricity. A completely renewable electricity system, at A$75-80 per MWh, would then be more affordable than coal economically, and more desirable environmentally.</p><img src="https://counter.theconversation.com/content/84433/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ken Baldwin receives funding from the Australian Research Council.</span></em></p>The price of renewable energy will fall significantly relative to new-build coal in coming decades, making an all-renewable electricity system more desirable, both economically and environmentally.Ken Baldwin, Director, Energy Change Institute, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/511152015-11-24T03:05:11Z2015-11-24T03:05:11ZThe Greens’ plan for 90% renewables by 2030 sounds hard, but it stacks up<p>The Australian Greens this weekend <a href="http://renewaustralia.org.au/wp-content/uploads/sites/16/2015/11/2015_11_Renew_Australia.pdf">announced a target</a> of 90% renewable electricity by 2030 – pledging to go further than Labor, which has already backed a <a href="https://theconversation.com/labor-seeks-to-turn-climate-policy-into-a-positive-with-ambitious-renewables-goal-45048">target of 50%</a>. How hard is it to reach these targets?</p>
<p>The Abbott government made plain its dislike of renewable energy by <a href="http://www.abc.net.au/news/2015-05-08/government,-opposition-reach-deal-on-renewable-energy-target/6455406">reducing</a> the <a href="https://theconversation.com/au/topics/renewable-energy-target">renewable electricity target (RET)</a> for 2020 to 33 terawatt hours (TWh) of new renewable electricity. </p>
<p>Under this target, about 24% of electricity will come from renewable sources in 2020, comprising existing renewables (mostly hydro-electricity with some biomass) and new renewables (mostly wind energy and photovoltaic (PV) solar energy). It’s straightforward to calculate the annual additions (gigawatts, GW) of wind and PV required to hit a 50% or 90% RET in 2030. </p>
<p>First, let’s assume that Australia’s electricity demand remains static at <a href="http://www.tai.org.au/content/power-down">about 200 TWh per year</a>. Demand has been falling or static since 2008, caused by improving energy efficiency of buildings and appliances, reduced demand from heavy industry, and increased price of retail electricity, together with the rise and rise of behind-the-meter rooftop PV systems. </p>
<p>Second, let’s assume that wind and PV will each constitute half of new generation. These two technologies constitute virtually all new generation capacity in Australia, and together are being installed at a <a href="http://www.ren21.net/Portals/0/documents/Resources/GSR/2014/GSR2014_full%20report_low%20res.pdf">greater rate worldwide</a> than the combined amount of new fossil and nuclear capacity. They are set to dominate the world’s energy future because they are effectively unconstrained by energy resource, raw materials, greenhouse gas emissions, local pollution, security concerns, or price. </p>
<p>Third, let’s assume that the “capacity factors” of these technologies remain at their current typical values of 25% for tracking PV and 40% for wind. (Capacity factor is the effective proportion of time that an electricity generator operates at nominal full load.)</p>
<p>Under these assumptions, we would need about 3 GW of new PV and 2 GW of new wind power capacity each year to reach a 90% renewables target by 2030. This is about 5% of the current worldwide installation rates, which themselves are increasing at 10-20% per year. </p>
<p>The corresponding figures for Labor’s target of 50% by 2030 are 1.2 GW of PV and 0.8 GW of wind per year. </p>
<h2>An achievable prospect</h2>
<p>Labor’s target is a straightforward prospect. In years gone by, Australia has installed this much PV and wind in a year, and can readily do so again. It is not much more than the installation rate needed to meet the 2020 RET. </p>
<p>The Greens’ target, meanwhile, is about 2.5 times more challenging than Labor’s, but still readily achievable. The Australian Capital Territory and South Australia have shown the way by adding new renewable electricity capacity equivalent to 90% and 40% respectively of their annual electricity consumption – mostly over a period of about 5 years. There are no practical constraints in terms of land because of Australia’s vast solar and wind resources. </p>
<p>Australia’s electricity system is becoming increasingly renewable. From the greenhouse point of view, natural gas should be pushed out of the market in favour of electrically driven heat pumps for the supply of water heating and space heating and cooling. This may happen anyway for <a href="https://theconversation.com/get-more-out-of-your-solar-power-system-by-using-water-as-a-battery-37807">economic reasons</a>. </p>
<p>Similarly, conversion of land transport to electric vehicles will eliminate another substantial source of greenhouse gas emissions. As heat pumps and electric cars are about three times more efficient than gas heating and petrol cars, only a few years of extra building of PV and wind would be required to meet the extra electricity demand. A combination of existing hydroelectric power stations, new off-river <a href="https://theconversation.com/how-pushing-water-uphill-can-solve-our-renewable-energy-issues-28196">pumped hydro energy storage</a>, and <a href="https://theconversation.com/storage-can-replace-gas-in-our-electricity-networks-and-boost-renewables-48101">battery storage</a>, allows stabilisation of a 100% renewable electricity system.</p>
<p>The most straightforward mechanism to achieve a 50% or 90% renewables target by 2030 is simply to extend and uplift the existing 2020 RET. However, recent experience shows how easily governments can create investment risk by seeking to reduce the target, and how this can <a href="https://theconversation.com/how-will-the-reduced-renewable-energy-target-affect-investment-41505">inhibit investment</a>. Various other mechanisms can be introduced to confer investment certainty, including reverse auctions to lock in prices for 20 years (as pioneered in Australia by the ACT Government).</p>
<h2>How much will it cost?</h2>
<p>This question is difficult to answer. At present, wind power costs about 8 cents per kilowatt hour (kWh), and PV about 12 cents per kWh in Australia when constructed on a moderate scale (less than a gigawatt per year). PV in particular is falling rapidly in price, and both are likely to reach 6-8 cents per kWh by 2020 when constructed at a scale greater than a gigawatt per year. </p>
<p>The overall wholesale price of electricity is currently 3-4 cents per kWh, but this is mostly from old fossil fuel generators for which the capital cost has already been repaid, and for which there is no longer a carbon price. Energy from new-build gas or coal generators would cost 8-12 cents per kWh – so it could potentially end up being more expensive than new renewables. </p>
<p>Most of Australia’s existing coal power stations will be retired over the next two decades in the ordinary course of business, perhaps replaced by cheaper PV and wind. In this sense, the conversion to renewables would cost nothing extra. </p>
<p>One way of measuring whether a rapid phase-out of fossil fuel generation will affect the economy is to observe that the carbon price during 2012-14 was 2.5 cents per kWh, and that this constitutes most of the difference in cost between old (sunk-cost) fossil fuel generators and the 2020 cost of electricity from PV and wind. That carbon price did not noticeably affect the economy.</p><img src="https://counter.theconversation.com/content/51115/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Blakers receives research funding from organisations including the Australia Indonesia Centre, the Australian Renewable Energy Agency, the Australian Research Council and several solar companies.</span></em></p>The Greens have backed a renewable energy goal of 90% by 2030. With wind and solar getting cheaper all the time, it’s an achievable challenge.Andrew Blakers, Director of the Centre for Sustainable Energy Systems (CSES) , Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/458032015-08-07T19:06:40Z2015-08-07T19:06:40ZRather than make energy more expensive, it’s time to invest in the technologies of tomorrow<figure><img src="https://images.theconversation.com/files/91196/original/image-20150807-27587-cgmtd4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The EPA Clean Power Plan imposes limits on power plants' carbon emissions. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/ataferner/17266641021">ataferner/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>Democrats (myself included) enjoy ridiculing Republicans who deny the scientific consensus behind climate change. But we then deny the inconvenient truth behind our own preferred climate policies: they will have regressive impacts on the poor and middle class. </p>
<p>The Energy Information Agency (EIA) projected in May that President Obama’s new <a href="https://theconversation.com/us/topics/epa-clean-power-plan">Clean Power Plan</a> (CPP) will lead to <a href="http://www.eia.gov/analysis/requests/powerplants/cleanplan/">retail electricity prices 3%-7% higher</a> for the nation as a whole in 2020-25, before falling to “near-baseline” levels in 2030. Yet speaking in the White House on August 3, the president denied the CPP would “cost you more money.”</p>
<p>Region by region, according to the EIA report, the CPP will cost some ratepayers quite a bit more money. Electricity prices in 2030 are expected to be 10% higher in Florida, the Southeast, the Southern Plains and the Southwest. Obscuring this fact, the White House says the “average American family” will save on their energy bills by 2030. </p>
<p>Democrats should be wary of this denial strategy, because higher electricity costs burden the poor far more than the rich. The National Bureau of Economic Research, an independent research firm, has <a href="http://www.nber.org/digest/jan10/w15239.html">shown</a> that higher energy prices create a burden relative to income that is six times greater for those in the bottom income quintile compared to the top income quintile. </p>
<p>Speaking at the White House, Obama specifically dodged the issue of higher short-run energy costs for the poor and minorities, and for some regions higher long-run costs as well. Instead, he changed the subject to talk about reduced asthma risks. Obama does not have to run for office again, but Democrats who support his CPP, like Hillary Clinton, will need to find a better explanation for its regressive impacts on minorities and the poor. The issue is already giving Republicans an undeserved opportunity to pose as populists. Marco Rubio uses this line to rip the CPP: “If you’re a single mom in Tampa, Florida, and your electric bill goes up by $30 a month, <a href="http://www.washingtonpost.com/news/powerpost/wp/2015/08/02/at-koch-summit-rubio-says-new-epa-rule-will-be-catastrophic/">that’s catastrophic</a>.” </p>
<h2>Renewables to the rescue?</h2>
<p>Progressive Democrats have been tripped up by this issue once before. In the 2009 cap-and-trade debate in Congress, Warren Buffett, who was an early supporter of Barack Obama, said cap-and-trade was “<a href="http://green.blogs.nytimes.com/2009/03/09/buffett-cap-and-trade-is-a-regressive-tax/?_r=0">pretty regressive</a>.” Obama’s press secretary at the time did not deny the assertion, and said the president looked forward to “working with Congress to put a solution together.” But a solution was never found, and cap-and-trade (which Republicans rebranded as “cap-and-tax”) failed in Congress. The fear that climate policy would lead to higher energy costs contributed to Democrats losing control of the House in the 2010 midterm election, so Obama decided to avoid the issue completely when seeking his own reelection in 2012.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=246&fit=crop&dpr=1 600w, https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=246&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=246&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=310&fit=crop&dpr=1 754w, https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=310&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/91192/original/image-20150807-27582-u2mk86.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=310&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Can innovation make low-carbon energy cheaper?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/deapeajay/3789399078/in/photolist-6LREjS-nPRNGZ-5gprcZ-nR54yM-oX2LF3-bL6qEH-6A5nS-ehh8M7-8fsj1n-37sZmR-37t7j6-379p3x-37sNMc-37t2PX-37tjbP-37xEUf-37e4XQ-37xrWC-37xTDC-37sViZ-fQgApw-brkvQk-cR5KuU-bdg1D4-EUkiQ-gGYE6-dhgUBC-kmu8nH-8nSpUr-e9ruQr-pMBzuc-9bGHDi-41b7bg-5x34pj-7QWpMT-nv4rUs-6PFXbE-dHMVuu-krqaLN-i8gBY-pPotKv-bgMQ1-8nWRwy-fUoFsz-ibha4-kmu5HV-7deXYt-nJGpW9-5RZh9J-4HjbTQ">David Joyce/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Are there ways to reduce greenhouse gas emissions without placing a disproportionate burden on the poor? Using federal subsidies and tax breaks to speed the deployment of solar panels and wind turbines seemed like the answer several years ago. Yet despite billions of dollars in wind and solar subsidies since 2009 (including US$16 billion in guaranteed loans over four years, through the Department of Energy’s <a href="http://energy.gov/lpo/services/section-1705-loan-program">1705 program</a>), the share of America’s energy consumption satisfied by non-hydro renewables increased just slightly, from <a href="http://www.state.gov/e/oes/rls/rpts/car6/index.htm">4.7% up to 6.5%</a> from 2008 to 2012.</p>
<p>Our installed capacity – or potential power from renewables – has increased thanks to the subsidies, but actual energy production, not so much. America’s <a href="http://www.eia.gov/electricity/data/browser/#/topic/0?agg=2,0,1&fuel=vtvo&geo=g&sec=g&linechart=ELEC.GEN.ALL-US-99.A%7E%7E%7E%7E%7EELEC.GEN.WND-US-99.A%7EELEC.GEN.SUN-US-99.A&columnchart=ELEC.GEN.ALL-US-99.A%7EELEC.GEN.COW-US-99.A%7EELEC.GEN.NG-US-99.A%7EELEC.GEN.NUC-US-99.A%7EELEC.GEN.HYC-US-99.A%7EELEC.GEN.WND-US-99.A&map=ELEC.GEN.ALL-US-99.A&freq=A&start=2001&end=2014&chartindexed=0&ctype=linechart&ltype=pin&rtype=s&pin=&rse=0&maptype=0">net energy generation from solar and wind</a> grew from 1.8% in 2009 to 4.9% in 2014. In 2013, Obama’s own EIA projected the impact of extending tax credits and subsidies for renewables out to the year 2040, and found that doing so would slow the increase in America’s energy-related <a href="http://www.eia.gov/forecasts/aeo/pdf/0383%282013%29.pdf">CO2 emissions only slightly</a>, and not result in an actual decline.</p>
<h2>Tepid R&D</h2>
<p>Progressives not afraid of more radical change have championed an alternative approach called <a href="https://citizensclimatelobby.org/carbon-fee-and-dividend/">fee-and-dividend</a>, which limits the burning of fossil fuels either with direct taxes or auctioned permits, and then delivers some or all of the revenue back to households or individuals in a progressive manner, ensuring that the poor get back more than they had to pay. </p>
<p>Presidential candidate Bernie Sanders, progressive to a fault, <a href="http://grist.org/climate-energy/sanders-and-boxer-introduce-fee-and-dividend-climate-bill-greens-tickled-pink/">has favored this approach</a>. Yet the fee-and-dividend approach fails to gain much political traction, because it implies a vast and unpopular expansion of Internal Revenue Service intrusion into the nation’s economy, and because it requires a controversial new overlay of tariffs and export subsidies at the border, to preserve America’s competitiveness abroad.</p>
<p>Over the long run, the only way to make climate policies both effective and less regressive is to lower the present high cost of non-fossil energy. Forcing out coal to scale up today’s wind and solar technologies will be regressive, so we should be working harder to speed the discovery of tomorrow’s low-carbon technologies. One way to do this is with larger federal R&D investments. </p>
<p>It is a scandal that the Department of Energy (DOE) today is spending less than half as much on energy R&D as it did in the 1970s, before our climate crisis emerged. In constant dollars discounted for inflation, the DOE spent only $3.7 billion on energy R&D in 2013, compared to $8 billion in 1979. Even more scandalous, only 19% of today’s DOE research spending goes for renewables, versus <a href="https://www.fas.org/sgp/crs/misc/RS22858.pdf">24% still going for fossil fuels</a>.</p>
<h2>Investment in innovation</h2>
<p>One forward-looking, nonregressive federal climate policy would be the creation of a Low-Carbon Energy Research Trust Fund, modeled on the Interstate Highway Trust Fund. </p>
<p>This fund could be built and replenished through a carbon fee small enough to have no impact on the poor, yet large enough to fund the needed public research. As improved low-carbon technologies emerge from the research pipeline, they could be deployed without the energy cost penalties implied in the CPP.</p>
<p>This research-led approach could also help secure adequate international climate cooperation. With today’s technologies, coal-dependent rising powers such as China and India will restrain carbon emissions only at the margin, where they can capture direct benefits in the form of less soot in the air, or less energy waste. They will not sacrifice their own economic growth to solve the collective problem of climate change driven by growing atmospheric CO2 accumulations. If America’s R&D investments can deliver alternatives to coal that are cheap enough to operate without any sacrifice of economic growth, prospects for international burden sharing with these countries will improve.</p>
<p>Hillary Clinton’s Vision for Renewable Power energy plan does include, a bit as an afterthought, a call for more investment in innovation. She should enlarge this part of her program by setting specific spending targets for federal R&D outlays, and by pledging to create a self-sustaining Federal Low-Carbon Research Fund.</p>
<p>We cannot decarbonize our economy and also protect the poor and middle class if we attempt a forced-pace scale up of the wind and solar technologies available today. Progressive Democrats should lead in demanding more public money to speed the arrival of tomorrow’s improved low-carbon alternatives.</p><img src="https://counter.theconversation.com/content/45803/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Paarlberg does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Poor Americans suffer disproportionately from higher energy prices. Energy policies should fund innovation to make low-carbon energy cheaper.Robert Paarlberg, Adjunct Professor of Public Policy, Harvard UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/452882015-07-30T06:31:11Z2015-07-30T06:31:11ZFactCheck: Would Labor’s renewable energy plan cost consumers $60 billion?<blockquote>
<p>(It) will mean a massive bill, perhaps A$60 billion or more, that will have to be carried by the consumers of Australia. – <strong>Prime Minister Tony Abbott, <a href="https://theconversation.com/abbotts-60-billion-cost-for-labors-renewables-goal-came-from-back-of-envelope-45261">speaking</a> to reporters about Labor’s plan to source half the nation’s power from renewable energy sources by 2030, July 27, 2015</strong>.</p>
</blockquote>
<p>Abbott’s quote, a response to the new Labor policy to set a goal of 50% renewable energy by 2030, appears to be drawing on reported comments by Paul Hyslop, chief executive of ACIL Allen - <a href="https://retreview.dpmc.gov.au/sites/default/files/files/ACIL_Report.pdf">the company</a> used by the government’s <a href="https://retreview.dpmc.gov.au/">Warburton review</a> into the existing Renewable Energy Target (RET). </p>
<p>The prime minister’s office <a href="https://theconversation.com/abbotts-60-billion-cost-for-labors-renewables-goal-came-from-back-of-envelope-45261">sourced</a> the A$60 billion figure to an <a href="http://www.theaustralian.com.au/business/mining-energy/renewable-energy-glut-of-supply-will-raise-prices/story-e6frg9df-1227453225244">article in The Australian</a> last week that quoted Hyslop saying of Labor’s 50% renewables pledge that: </p>
<blockquote>
<p>If this were met by wind power it would require 10,000 to 11,000 additional turbines… with capital costs for the turbines alone of $65 billion.</p>
</blockquote>
<p>Hyslop’s ACIL Allen colleague, Owen Kelp, <a href="https://theconversation.com/abbotts-60-billion-cost-for-labors-renewables-goal-came-from-back-of-envelope-45261">told Sky News</a> this week that the A$60 billion was a “fairly simplistic, back-of-the-envelope calculation”. </p>
<p>When asked by The Conversation for a copy of any calculations to see how the A$65 billion capital costs figure was reached, Hyslop said the internal analysis was not publicly available, but explained that:</p>
<blockquote>
<p>To get to the 50%, you need about another 80,000 gigawatt-hours… To build that with renewables, the current cheapest technology would be wind. We estimate between 10,000 and 11,000 additional wind turbines with a bottom end estimate of around $65 billion in capital costs… Would it have an impact on consumers? It really depends on the trade-off on the cost of funding the subsidy versus the downward pressure on electricity prices. We don’t know exactly what that would look like. That would be a significant piece of modelling.</p>
</blockquote>
<h2>Capital costs versus consumer costs</h2>
<p>The first thing to note is that ACIL Allen’s estimate referred to <em>capital costs</em>, not cost to consumers. So it is misleading for Abbott to say that the A$60 billion (or A$65 billion) would be “carried by the consumers of Australia” directly.</p>
<p>The additional investment will be borne by the electricity companies. </p>
<p>They will recover this investment by amortising it over the lifetime of the plant and factoring this into the levelised cost of electricity they sell to consumers. (The LCOE is the cost of generating electrical energy using a given technology that includes whole-of-lifetime costs for the plant).</p>
<p>As Hyslop points out, we don’t actually know what the direct impact on consumers would be. </p>
<h2>Prices falling</h2>
<p>But even if we assume the prime minister misspoke and meant to say A$65 billion in <em>capital costs</em>, there’s reason to believe the capital costs of additional wind turbines could potentially be much lower. </p>
<p>There are a series of continuing trends that could all conceivably reduce the capital cost, including:</p>
<ul>
<li>reductions in the cost of wind turbines</li>
<li>technical improvements in turbine efficiency</li>
<li>reduction in the demand for electricity <a href="https://theconversation.com/renewable-energy-deal-gives-no-certainty-over-coming-decades-42329">(having fallen by 9% since 2010)</a> </li>
<li>growth in generation from rooftop solar.</li>
</ul>
<p>However, even then this focus on capital costs overstates the case, given the following considerations:</p>
<p><strong>Ageing power plants</strong>. <a href="http://www.afr.com/markets/commodities/energy/fix-up-ret-mess-now-says-agl-20140916-jevry">More than 75%</a> of our fossil-fuel power plants are past their use-by date. Assuming a 50-year lifetime, more than a third of the existing coal-fired power plants will be retired by 2030. Replacing these with the most cost-effective new sources has to happen anyway, and this inevitably means new capital costs – no matter what the energy source.</p>
<p><strong>Wind’s cost-effectiveness</strong>. According to the <a href="http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Pages/Australian-energy-technology-assessments.aspx">2013 Australian Energy Technology Assessment</a> of LCOE, wind is the most cost-effective form of commercially proven new-build power generation, even without a price on carbon (and will be joined by large scale solar by 2030). The <a href="http://www.cmd.act.gov.au/open_government/inform/act_government_media_releases/corbell/2015/wind-auction-result-delivers-renewable-energy-and-economic-benefits-to-the-act">2014 ACT Government wind power reverse auction</a> has now demonstrated this to be the case, having achieved an LCOE of A$81.50 per megawatt hour (MWh) locked in for 20 years. This is equivalent to a discounted LCOE of about A$65 per MWh at current rates, which outcompetes existing gas and new-build coal generation. </p>
<p><strong>Carbon pricing</strong>. This fossil-fuel retirement would be accelerated by the introduction of a price on carbon – something that <a href="http://www.rtcc.org/2015/05/26/carbon-pricing-inevitable-world-bank-climate-envoy/">many</a> analysts <a href="http://sustainability.thomsonreuters.com/2014/07/29/executive-persepctive-carbon-pricing-inevitable-profitable/">believe</a> is <a href="http://www.smh.com.au/environment/climate-change/australian-price-on-carbon-inevitable-concedes-hockey-20100519-vfcg.html">inevitable</a> worldwide, whether through emissions trading schemes (ETS) or other mechanisms. If Australia doesn’t introduce a carbon pricing mechanism like an ETS – acknowledged by <a href="http://www.theguardian.com/australia-news/2015/jul/27/ets-would-be-more-cost-effective-than-higher-renewables-target-analyst-says">Paul Hyslop</a> and most <a href="http://www.smh.com.au/federal-politics/political-opinion/economists-remain-convinced-carbon-tax-or-ets-is-the-way-forward-20131027-2w9rv.html">economists</a>) as the most efficient carbon-reduction mechanism available – then Australia runs the risk of being isolated by effective trade barriers.</p>
<p><strong>Renewables’ effect on power prices once built</strong>. <a href="http://www.cleanenergycouncil.org.au/policy-advocacy/renewable-energy-target/ret-policy-analysis.html">All</a> <a href="http://images.smh.com.au/file/2013/06/25/4518185/SKM.pdf?rand=1372130430845">studies</a> of <a href="http://www.secontact.com/lret">the</a> <a href="http://www.recagents.asn.au/raa-report-on-impact-of-the-renewable-energy-target-on-power-prices">RET’s</a> <a href="http://www.iesys.com/ies/Portals/2/Documents/Insider/IES%20Insider%2016_2014%20RET%20review%20and%20its%20impact%20on%20the%20NEM.pdf">impact</a> – including the government’s own study by <a href="https://retreview.dpmc.gov.au/sites/default/files/files/ACIL_Report.pdf">ACIL Allen</a> – show that introducing competition from renewables puts downward pressure on electricity prices, that in the long term compensates consumers for the price contribution from the RET. </p>
<p><strong>The costs of the status quo</strong>. The economic <a href="http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/stern_review_report.cfm">cost of doing nothing</a> about climate change is much more than the cost of the solution. Fixing climate change will inevitably involve a cost, but it will be a lower cost than ignoring it. The faster the solutions are implemented, the lower the cost will be.</p>
<p>Acting earlier by mandating 50% renewables in 2030 – combined with introducing a carbon price through an ETS – will help reduce the cost for all generations.</p>
<h2>Verdict</h2>
<p>Tony Abbott’s statement that consumers will pay A$60 billion or more for Labor’s 2030 50% renewables pledge is misleading.</p>
<p>Much of the existing coal-fired generating capacity will have to be replaced anyway, and this re-investment is always reflected in the price charged for electricity. Wind power will likely be the most cost-effective replacement as it is now the <a href="http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Pages/Australian-energy-technology-assessments.aspx">cheapest</a> <a href="http://www.cmd.act.gov.au/open_government/inform/act_government_media_releases/corbell/2015/wind-auction-result-delivers-renewable-energy-and-economic-benefits-to-the-act">new-build power source</a>. </p>
<p>Many studies (including the government’s) show that because of this, a high renewable energy target is likely to increase competition in the energy sector, with the potential net effect of putting downward pressure on electricity prices.</p>
<hr>
<h2>Review</h2>
<p>This is a sound analysis. I agree with the underlying principles noted and we must remember that the cost of energy delivered is only partly related to capital cost. Renewable generation does have a large up-front capital cost, but it also has no fuel costs. I agree that there are ageing traditional electricity plants (many in areas where there are more than sufficient renewable energy resources) that need replacing and we should look at more sustainable options with the levelised cost of electricity of wind and solar now providing an economic alternative. – <strong>Craig Froome</strong></p>
<hr>
<p><div class="callout"> Have you ever seen a “fact” that doesn’t look quite right? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/45288/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ken Baldwin receives funding from the ARC.</span></em></p><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>Prime Minister Tony Abbott said this week that Labor’s pledge to source half the nation’s power from renewable energy by 2030 will “mean a massive bill, perhaps $60 billion or more, that will have to be carried by the consumers of Australia.” Is that right?Ken Baldwin, Director, Energy Change Institute, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/449562015-07-23T03:37:47Z2015-07-23T03:37:47ZFactCheck: does coal-fired power cost $79/kWh and wind power $1502/kWh?<blockquote>
<p>80% of Australian energy comes from coal, coal-fired power, and it’s about $79 a kilowatt hour. Wind power is about $1502 a kilowatt hour. That is unaffordable. If you take that power and feed it into the grid, then every person watching this program has electricity bills going through the roof. – Broadcaster Alan Jones, <a href="http://www.abc.net.au/tv/qanda/txt/s4256959.htm">panel discussion</a> on Q&A, ABC TV, July 20, 2015</p>
</blockquote>
<p>Alan Jones has told The Conversation by email he acknowledges this comment was made in error and is not correct, saying:</p>
<blockquote>
<p>I think you have rightly highlighted a ridiculous mistake that I made… why I said kilowatt-hours and not megawatt-hours and where the 1502 comes from, I have absolutely no idea. What I can tell you is that I’ve used figures for some time now on this issue to merely confirm that renewable energy is many multiples dearer than coal-fired power[…] I previously used that $79 figure but as you can imagine, it’s based on the price of coal. Wind has always been, in my words, three or four times dearer than that.</p>
<p>[…] But if I’ve said that, that is wrong, and I’ll be writing to the ABC to that effect. I have no comment to make other than to thank you for pointing this out to me. I guess we all make mistakes and I’m always happy to correct them when I’m told about them.</p>
</blockquote>
<p>Electrical energy is usually measured in kilowatt-hours (kWh) or megawatt-hours (MWh). Kilowatt-hours are the unit generally used for metering and charging residential electricity consumption, and represents the amount of energy a device drawing one kilowatt of power would use in an hour. A megawatt-hour is 1000 times larger, and is typically used to measure large loads or generators. The price quoted (A$79/kWh) is about 300 times more expensive than the typical <a href="http://www.aemc.gov.au/Markets-Reviews-Advice/2014-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2014-Residential-Electricity-Price-Trends-report.aspx">retail price of electricity</a> paid by residential customers around Australia (and about 2000 times more than <a href="http://www.aemo.com.au/Electricity/Data/Price-and-Demand/Average-Price-Tables">current wholesale prices</a>).</p>
<p>Mr Jones’ error in saying kilowatt-hours instead of megawatt-hours is an easy mistake to make.</p>
<p>A$79 per <em>megawatt</em>-hour is consistent with the range of costs <a href="http://www.pc.gov.au/inquiries/completed/carbon-prices/report/carbon-prices.pdf">reported</a> by the Electric Power Research Institute for new coal-fired electricity in 2010, without carbon capture and storage or a price on emissions.</p>
<p>However, even with the right units, the figure of $1502 for wind power did not make sense. Mr Jones was not able to say from what source he got that figure of $1502 for wind power. So I decided to investigate. </p>
<p>The claim that coal-fired power energy costs $79 a kilowatt-hour and wind power costs $1502 a kilowatt-hour pops up a few times on websites of <a href="http://www.menzieshouse.com.au/?p=2063">groups</a> opposing the renewable energy target, <a href="http://www.au.agwscam.com/pdf/ComparingPowerGenerationCosts.pdf">climate sceptics</a>, and even in <a href="http://www.parliament.nsw.gov.au/prod/parlment/hansart.nsf/V3Key/LC20110826037">Hansard</a>. Mostly, this claim is referenced to an unnamed Productivity Commission report released in 2010. </p>
<p>The source of the $1502 figure on sceptic sites <em>may</em> be a now-corrected Paul Sheehan opinion <a href="http://www.smh.com.au/federal-politics/political-opinion/labor-all-tied-up-in-red-and-green-tape-20110724-1hv8i#ixzz1oGUu4imp">piece</a> published by Fairfax in 2011. The correction there reads:</p>
<blockquote>
<p>Correction: An earlier version of this piece misquoted energy figures. The Productivity Commission said the cost of electricity generated by wind was $150 to $214 per megawatt-hour, not $1502; and solar was $400 to $473 per MWh, not $4004.</p>
</blockquote>
<h2>So what did the Productivity Commission actually say?</h2>
<p>The 2011 Productivity Commission report that the Fairfax correction appears to refer to was titled “<a href="http://www.pc.gov.au/inquiries/completed/carbon-prices/report/carbon-prices.pdf">Carbon Emission Policies in Key Economies</a>”.</p>
<p>Box 4.1 of that report, titled “The costs of electricity sources” is about the “levelised cost of electricity” (LCOE), a widely-used measure of the cost of electricity generation technologies energy that includes all lifetime costs and factors in the lower utilisation rates of wind power. Box 4.1 says:</p>
<blockquote>
<p>The Electric Power Research Institute (2010) reported estimates of the LCOE of
various sources of electricity in Australia, including:</p>
<ul>
<li><p>coal-fired electricity (without carbon capture and storage) — A$78–91/MWh</p></li>
<li><p>combined-cycle gas turbines (without carbon capture and storage) — A$97/MWh</p></li>
<li><p>wind — A$150–214/MWh</p></li>
<li><p>medium-sized (five megawatt) solar PV systems — A$400–473/MWh.</p></li>
</ul>
</blockquote>
<p>Without being certain, my best guess is that some of the groups or websites using the figures of $79 per kilowatt-hour for coal-powered energy and $1502 per kilowatt-hour for wind powered energy <em>may</em> have based their figures on the now-corrected Paul Sheehan opinion piece. </p>
<p>There is no credible economic analysis that reports wind power costs at A$1502 a megawatt-hour.</p>
<p>As he has readily acknowledged, Alan Jones’ figures on the cost of wind energy are not correct.</p>
<h2>Are those Productivity Commission figures up to date?</h2>
<p>The Commission’s <a href="http://www.pc.gov.au/inquiries/completed/carbon-prices/report/carbon-prices.pdf">report</a> said that in 2010, the Electric Power Research Institute estimated that the levelised cost of coal-fired electricity (without carbon capture and storage) was between A$78 and $91/MWh. For wind, the figure was between A$150 and $214/MWh. At the time the Commision’s report was released (May 2011), these figures were already higher than <a href="http://www.energy.unimelb.edu.au/documents/renewable-energy-technology-cost-review">other reported costs for renewable energy technology</a>.</p>
<p>More recent costs for <em>new</em> coal plants have been estimated by the former Bureau of Resources and Energy Economics in their <a href="http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/aeta/australian_energy_technology_assessment.pdf">Australian Energy Technology Assessment</a>.</p>
<p>This report provides a measure of the cost of a large range of generation technologies, now (or rather, in 2012 when the most recent report was published) and into the future. Using data from Table 5.2.1 of that report, the table below shows the “levelised” cost of energy for some coal and wind technologies. </p>
<iframe src="https://datawrapper.dwcdn.net/K9uaL/2/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="320"></iframe>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=840&fit=crop&dpr=1 600w, https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=840&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=840&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1055&fit=crop&dpr=1 754w, https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1055&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/89433/original/image-20150723-22826-ujv6b2.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1055&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Levelised Cost of Energy, NSW in 2012.</span>
<span class="attribution"><span class="source">BREE</span></span>
</figcaption>
</figure>
<p>The chart above, from the <a href="http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/aeta/AETA-Update-Dec-13.pdf">Australian Energy Technology Assessment 2013 Model Update</a> (Figure 8) also shows more current levelised costs of energy.</p>
<h2>Does 80% of Australia’s energy comes from coal-fired power?</h2>
<p>Nearly, but not quite. More than two-thirds of electricity is produced from coal, 19% from gas, and 10% from renewables with the balance from liquid fuels such as diesel, according to the government’s <a href="http://www.ga.gov.au/webtemp/image_cache/GA21797.pdf">Australian Energy Resource Assessment</a>.</p>
<p>In the National Electricity Market, supplying the eastern seaboard, brown and black coal supplied 76% of output last financial year, and <a href="https://www.aer.gov.au/sites/default/files/State%20of%20the%20energy%20market%202014%20-%20Complete%20report%20(A4)_0.pdf">74% the year before that</a>.</p>
<h2>Does feeding renewable energy into the grid drive electricity prices through the roof?</h2>
<p><a href="https://retreview.dpmc.gov.au/">Modelling</a> done by ACIL Allen Consulting as part of the government’s report of the expert panel on the Renewable Energy Target shows that renewable energy generation can represent a net saving to consumers:</p>
<blockquote>
<p>The ACIL Allen modelling estimates that repealing the RET would initially result in lower retail electricity prices, however from around 2021 retail prices would be on average 3.1% higher for residential, commercial and industrial customers. </p>
</blockquote>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=310&fit=crop&dpr=1 600w, https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=310&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=310&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=390&fit=crop&dpr=1 754w, https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=390&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/89116/original/image-20150721-12522-h4wxjf.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=390&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Impact of the Renewable Energy Target on retail electricity costs</span>
<span class="attribution"><span class="source">ACIL Allen (prepared for the DPMC RET review, 2015)</span></span>
</figcaption>
</figure>
<h2>Verdict</h2>
<p>As he has readily acknowledged, Alan Jones’ statement on Q&A on the cost of wind and coal powered energy is not correct.</p>
<p>His claim that renewable energy is having a large impact on residential electricity bills also runs counter to <a href="https://retreview.dpmc.gov.au/">modelling</a> commissioned by the government. </p>
<h2>Review</h2>
<p>This is a thorough FactCheck article. Mr Jones’ cost estimate for coal (assuming it is per megawatt-hour, not per kilowatt-hour) is confirmed by the fact checker. This applies to new coal plant, not existing units.</p>
<p>With regard to the percentage of Australian electricity generated from coal, the FactCheck author is correct. Some people quote higher coal percentages. First, it used to be higher. Second, some people confuse the percentages of input fuel used to generate electricity (historically easier to identify from public data) with the share of electricity actually generated. Since coal plant is less efficient than some other options such as hydroelectricity, this approach makes its share look bigger. </p>
<p>In terms of impacts on future electricity prices, all estimates are based on assumptions. For example, if more old coal generation capacity is retired than some models have assumed, baseline electricity prices could be higher because new generation options of all kinds are typically more expensive than old existing power stations.</p>
<p>Further, the costs of renewable electricity generation are falling, as discussed above. For example, a 2014 Bureau of Resources and Energy Economics <a href="http://industry.gov.au/Office-of-the-Chief-Economist/Publications/Pages/Asia-Pacific-Renewable-Energy-Assessment.aspx">study</a> shows 2013 estimates for wind energy cost of A$63 to A$107 per levelised Megawatt-hour of electricity – 6.3 to 10.7 cents per kilowatt-hour, lower than earlier estimates (Figure 19, p.67). – <strong>Alan Pears</strong></p>
<hr>
<p><div class="callout"> Have you ever seen a “fact” that doesn’t look quite right? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/44956/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell received funding from the AEMC's consumer advocacy panel.</span></em></p><p class="fine-print"><em><span>Alan Pears AM provides advice to a range of sustainable energy and community groups. He and his superannuation funds own shares in the renewable energy industry. He sometimes receives funding from sustainable energy industry organisations and individual companies although, at present he is not receiving such funding. He is a member of ARENA’s advisory panel. </span></em></p>Broadcaster Alan Jones told the Q&A audience this week that coal fired power costs about $79 a kilowatt-hour, while wind power is about $1502 a-kilowatt hour. Is that right?Dylan McConnell, Research Fellow, Melbourne Energy Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/431822015-06-12T03:53:43Z2015-06-12T03:53:43ZCoal closures give South Australia the chance to go 100% renewable<figure><img src="https://images.theconversation.com/files/84790/original/image-20150612-11433-1d211zb.jpeg?ixlib=rb-1.1.0&rect=0%2C0%2C638%2C390&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">South Australia's wind farms have coped without baseload power before - they can do it again.</span> <span class="attribution"><span class="source">Fairv8/Wikimedia Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>South Australia is facing the <a href="http://www.abc.net.au/news/2015-06-11/power-stations-port-augusta-alinta-energy/6537814">closure of its Northern and Playford B power stations and Leigh Creek coal mine</a>, after Alinta Energy yesterday announced plans to shut them ahead of schedule. It will cost 438 jobs in the coal-mining and coal-fired electricity industries. But this threat to employment could be transformed into an opportunity for creating many new jobs in renewable energy.</p>
<p>The South Australian electricity system could be operated entirely on scaled-up, commercially available, renewable energy sources. This is the conclusion of my forthcoming report (to be published next week) to the Conservation Council of South Australia.</p>
<p>Our modelling at UNSW Australia shows that the SA system could be supplied mainly by a mix of wind power; solar photovoltaic (PV) panels, both on rooftops and in large solar farms; and concentrated solar thermal (CST) power with thermal storage. Gas-fired turbines and demand management via “smart” meters and switches would manage the infrequent small lulls in wind and solar supply.</p>
<p>I estimate this transition would take 15–25 years, during which time the natural gas fuel for the gas turbines would be gradually replaced by biofuels from agricultural residues – thus making the system fully renewable. There would be increased trading of electricity with Victoria and possibly over a new transmission link to New South Wales. </p>
<h2>Already a leader… by Australian standards</h2>
<p>SA is already the leading Australian state in non-hydro renewable energy, with about <a href="http://reneweconomy.com.au/2014/south-australia-leaps-towards-40-wind-and-solar-61283">40% of annual electricity consumption</a> now coming from wind and sunshine. SA has already shown that it can operate reliably and stably for hours when the contribution of variable renewable energy reaches <a href="http://reneweconomy.com.au/2015/australia-sets-new-wind-energy-record-breaks-3gw-for-first-time-36122">two-thirds of demand</a>, and last weekend wind power and gas <a href="http://reneweconomy.com.au/2015/how-south-australia-coped-without-any-baseload-power-65138">coped admirably when the coal-fired Northern power station went unexpectedly offline</a>. </p>
<p>In Europe, the idea of a state moving to 100% renewable energy would not be regarded as a controversial proposal. The north German states of <a href="http://reneweconomy.com.au/2014/renewables-in-german-state-produce-120-of-electricity-76949">Mecklenburg-Vorpommern</a> and <a href="http://reneweconomy.com.au/2014/100-renewable-electricity-will-achieved-german-state-soon-91074">Schleswig-Holstein</a> are already operating on 100% net renewable energy, mostly from wind. The “net” indicates trading with each other and their neighbours. Although SA has transmission connections to Victoria only, it has the advantage over northern Europe that it is very sunny as well as windy. </p>
<h2>Bye bye baseload</h2>
<p>Our calculations show that SA does not need any baseload power stations, such as coal or nuclear. Indeed, the lack of operational flexibility of coal and nuclear makes them poor partners for high penetrations of variable renewable energy. The SA system has already operated reliably for long periods without its coal-fired stations, as <a href="http://reneweconomy.com.au/2015/how-south-australia-coped-without-any-baseload-power-65138">last weekend’s incident demonstrated</a>. </p>
<p>Moving fully to renewable energy will deliver environmental, social and economic benefits. The transition would reduce SA’s greenhouse gas emissions, air pollution and associated respiratory diseases. It would cap electricity prices. </p>
<p>SA could create a wide range of new jobs in manufacturing, installation, grid connection, technical support and sales, which could help to compensate for the forthcoming job losses in its coal industry. </p>
<p>As for the nuclear question, the multinational financial analyst Lazard <a href="http://www.lazard.com/PDF/Levelized%20Cost%20of%20Energy%20-%20Version%208.0.pdf">estimates</a> the average costs of subsidized new nuclear energy in the United States in 2017 to be 12.4–13.2 US cents per kilowatt hour (kWh), compared with unsubsidized costs of 3.7–8.1 c/kWh for onshore wind, and 7.2–8.6 c/kWh for large-scale solar PV. For Britain’s proposed new nuclear power station Hinkley C, the UK government is offering a <a href="http://reneweconomy.com.au/2015/why-nuclear-industry-needs-to-be-paid-500mwh-67193">guaranteed price of 9.25 p/kWh</a> (14 US c/kWh) increasing with inflation for 35 years. Thus new nuclear energy prices are roughly double those of onshore wind, and also higher than those for solar farms.</p>
<p>Compared with nuclear power, an appropriate mix of renewable energy sources is just as reliable, less dangerous, cheaper, <a href="http://theconversation.com/sure-lets-debate-nuclear-power-just-dont-call-it-low-emission-21566">emits less carbon dioxide overall</a>, offers a wider range of environmental, health and employment benefits, can be implemented much more rapidly, and is more likely to enjoy community support. </p>
<p>What’s more, a nuclear power station (600 megawatts or more) would be too big for the SA grid system, and smaller “modular” reactor designs are not yet commercially available. Renewable energy, in contrast, is technically and economically feasible, and environmentally and socially desirable.</p><img src="https://counter.theconversation.com/content/43182/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Diesendorf receives funding from the CRC for Low Carbon Living.</span></em></p>Coal closures announced this week in South Australia will cause employment pain, but could also help pave the way for the state to go 100% renewable - something that modelling suggests is eminently possible.Mark Diesendorf, Associate Professor and Deputy Director, Institute of Environmental Studies, UNSW, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/359202015-01-07T19:27:25Z2015-01-07T19:27:25ZOnly a mug punter would bet on carbon storage over renewables<figure><img src="https://images.theconversation.com/files/68331/original/image-20150107-1968-1pbccvt.jpg?ixlib=rb-1.1.0&rect=41%2C55%2C4398%2C2654&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Renewables or oil? The former means betting each-way on energy storage. The latter means hoping to pull off a trifecta on carbon storage.</span> <span class="attribution"><span class="source">Hans Engbers/Shutterstock.com</span></span></figcaption></figure><p>The question of whether the future will be powered by coal and oil or by renewable energy is crucially important, both to the medium-term future of the Australian economy and to the long-term future of the planet. For either to succeed, there is a storage problem to overcome.</p>
<p>A future based on “clean coal” can only be achieved through the large-scale implementation of <a href="https://theconversation.com/au/topics/carbon-capture-and-storage">carbon capture and storage (CCS)</a>. That is, the carbon dioxide generated by fossil fuels must be captured at the point of combustion and then stored indefinitely in underground repositories, or perhaps in biomass such as trees.</p>
<p>On the other hand, the main renewable energy sources – wind and solar panels – face a different storage problem. Wind is intermittent and solar power is generated only during the day, as well as being affected by cloud cover. So a system dominated by renewables must either use variable pricing to manage demand, or include some form of energy storage.</p>
<p>Presented this way, the problem seems symmetrical. In reality, however, the problem of energy storage has many possible solutions, whereas that of CCS has only a handful, none of which look likely to work. To see why this is so, let’s first consider the broader phenomenon of renewable energy.</p>
<h2>Cost-competitive renewables</h2>
<p>Over the past decade, the cost of renewable electricity generation, most notably solar, has plummeted. It has now reached the point where, in many locations, it is cost-competitive with new coal-fired power, even in the absence of targets, subsidies or high carbon prices. </p>
<p>At the same time, we have seen significant advances in electric and hybrid vehicles, although <a href="http://www.abb-conversations.com/2014/03/electric-vehicle-market-share-in-19-countries">market shares remain small</a>. The result is that it is now possible to <a href="https://theconversation.com/renewable-energy-target-can-go-all-the-way-to-100-if-we-let-it-26318">contemplate an all-renewable energy system</a>, encompassing both electricity generation and electric vehicles, developing over the next few decades.</p>
<p>It is no coincidence that these developments have occurred at precisely the time when concerns about climate change have become pressing. The need to stop burning carbon-based fuels has created both market and non-market incentives to find solutions to the problem. Where carbon prices exist or are seen as likely to exist in the future, they create a demand for any carbon-free technology that will deliver energy in a useful form (electricity or vehicle power).</p>
<p>Bright researchers, motivated both by the importance of the problem and the availability of research funds, have focused their attention on renewable energy and away from other topics that have declined in relative importance (the advice to Dustin Hoffman in The Graduate that “plastics” were the one-word key to a prosperous future comes to mind).</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/PSxihhBzCjk?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">The research funding committee will probably want a bit more detail.</span></figcaption>
</figure>
<p>Emissions trading schemes and renewable energy mandates have encouraged firms to invest in the research and development work needed to turn theoretical advances into marketable products. Feed-in tariffs and other incentives have encouraged electricity generators and households alike to adopt these products. In turn, this has created a virtuous circle where growing demand drives cost reductions (because of the economy of scale), which then drives demand still further. </p>
<p>The result is that solar panels are now being installed globally at a rate of <a href="http://cleantechnica.com/2014/12/16/energytrend-places-2014-pv-demand-44-gw-expects-2015-top-50-gw">a gigawatt every week</a>, almost as much the <a href="https://en.wikipedia.org/wiki/Growth_of_photovoltaics">total amount installed during the 20th century</a>.</p>
<p>There is nothing mysterious about the fact that research into carbon-free energy has been successful. The nature of the problem ensures that the range of potential solutions is vast. Anything that can turn a turbine can generate electricity. That includes physical forces like wind, waves and tides; fuels that can boil water to make steam; and heat differences like those that drive geothermal energy. The energy in sunlight can also be turned into electricity, either by concentrating its heat or through the photovoltaic effect in solar panels.</p>
<p>When the push for renewable energy began in earnest at the beginning of this century, there was no way to know if any particular one of these technologies would be cost-effective or applicable on a large scale. Each represented a bet, at fairly long odds, that the limitations that had previously prevented large-scale deployment of these technologies could be overcome.</p>
<p>But betting on a lot of horses, even if all of them are outsiders, gives a good chance of backing at least one winner. And so it has proved. While geothermal and concentrated solar energy have made only modest progress, and wave and tidal energy hardly any, bets on wind power and solar photovoltaics have proved successful.</p>
<h2>Storage solutions</h2>
<p>The problem of energy storage can be thought of in the same way. Any reversible process involving energy constitutes a potential storage technology. Going one way, the process uses energy derived from an electricity source that is in excess supply, such as solar panels at noon, or wind turbines turning late at night during low demand. Going the other way, the stored energy is turned back into electricity. Some energy is lost along the way, and other costs must be met, but if the difference in demand is great enough, there is still a net benefit.</p>
<p>The general nature of the storage problem means that the range of possible solutions is vast. The reversible process might involve chemical energy (as in batteries), heat energy (as in off-peak hot water), kinetic energy (as in flywheels) or potential energy (as in pumped hydro). This means that solutions could be found to a wide range of energy storage problems, depending on whether the crucial requirement is cost, speed, or energy density.</p>
<p>Power stations might prioritise cost-effectiveness, for example, or speed and flexibility. Car batteries, meanwhile, need dense energy storage. It will take some time to adapt existing solutions to new requirements, or to develop wholly new solutions. But this <a href="http://www.renewableenergyworld.com/rea/blog/post/2014/09/energy-storage-progress-and-promise">process is already under way, and substantial progress is being made</a>.</p>
<h2>The carbon horse is a long shot</h2>
<p>The contrast with carbon capture and storage is striking. A CCS technology involves three stages, each with a limited range of technological options. First, the carbon dioxide from fossil fuels must be captured before it escapes into the atmosphere. Even the <a href="http://www.abc.net.au/news/2012-10-29/vincent-carbon-capture-and-storage/4337870?">best available technologies</a> involve the loss of up to 30% of the energy generated through combustion. </p>
<p>Second, the captured carbon dioxide must be transported to a storage site. This could be avoided by building the power station close to a suitable site, but that would probably add costs in terms of fuel transport and long-distance power transmission.</p>
<p>The final and most difficult step is the storage itself. The current best approach involves <a href="https://en.wikipedia.org/wiki/Carbon_capture_and_storage">pumping the carbon dioxide into an underground repository</a>, which must be stable enough to prevent leakage over an indefinite period. This approach has proved too expensive except, ironically, in places where the pressurized gas is used to help recover yet more crude oil from depleted wells.</p>
<p>To sum up, if investing in energy storage is like backing every horse on a race, investing in CCS is like a <a href="http://en.wikipedia.org/wiki/Parlay_(gambling)">parlay bet</a>, which pays off only if we can pick the winners of several races in succession. </p>
<p>When you think about it like that, it’s not surprising that the smart money is on storing energy, not carbon.</p><img src="https://counter.theconversation.com/content/35920/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin is a Member of the Climate Change Authority</span></em></p>The question of whether the future will be powered by coal and oil or by renewable energy is crucially important, both to the medium-term future of the Australian economy and to the long-term future of…John Quiggin, Professor, School of Economics , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/333562014-10-23T04:55:24Z2014-10-23T04:55:24ZThe pitfalls of using renewable energy as a political football<figure><img src="https://images.theconversation.com/files/62590/original/bgt54g4k-1414030153.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5520%2C3677&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The government knows that solar panel subsidies are very popular with voters.</span> <span class="attribution"><span class="source">zstock/Shutterstock</span></span></figcaption></figure><p>Federal industry minister Ian Macfarlane has finally revealed his opening gambit on negotiations on the future of the Renewable Energy Target (RET). He and environment minister Greg Hunt have pledged to leave household solar alone but want <a href="https://theconversation.com/planned-cut-to-renewable-energy-target-a-free-kick-for-fossil-fuels-33317">deep cuts to targets for all other forms of renewable energy development</a>.</p>
<p>This was not unexpected, and it is just a symbolic <a href="http://en.wikipedia.org/wiki/Ambit_claim">ambit claim</a>, an opening position designed to accommodate future compromise. But it does highlight some interesting points about the politics of renewable energy.</p>
<p>First, the government understands that millions of votes are potentially at risk if it tries to cut incentives for home-scale rooftop solar panels. These subsidies, the small-scale component of the RET scheme, are worth around A$2,500 for a 3 kilowatt solar system, and have helped to encourage households to go solar by making panels more affordable.</p>
<p>Leaving the small-scale RET alone may also encourage homeowners to disengage from the debate over the large-scale RET, which deals with facilities such as wind turbines and solar farms, and the effects of competing energy choices on both industry and household power bills.</p>
<p>The government has to seek a balance between some disparate positions. Many Coalition MPs <a href="https://theconversation.com/sorry-joe-hockey-canberra-is-australias-home-of-wind-farms-26243">seem to loathe large-scale renewables</a>, and there is a sense in some quarters that the RET is the focus of a symbolic battle with “green communists”, in which asking industry to continue subsidising renewables is seen as caving in to the climate “alarmists”. </p>
<p>At the same time, the powerful incumbent electricity and coal industries see the RET as cementing their feared “death spiral”. Their decades of unquestioned dominance are under challenge. But, as we have seen from recent statements by <a href="http://www.smh.com.au/federal-politics/political-news/coal-is-good-for-humanity-says-tony-abbott-at-mine-opening-20141013-115bgs.html">Prime Minister Tony Abbott</a> and <a href="http://www.smh.com.au/federal-politics/political-news/absolutely-ridiculous-joe-hockey-denies-australia-is-dirtiest-greenhouse-gas-emitter-in-oecd-20141014-115q9g.html">Treasurer Joe Hockey</a>, these industries are very influential within the government.</p>
<h2>Opposition support for renewables</h2>
<p>On the other hand, Labor, the Greens and the crossbenchers are generally supportive of the RET in its present form. Apart from <a href="http://www.afr.com/p/national/labor_agrees_to_aluminium_exemption_oVOiYhUewsEUtNpHBSleMN">allowing the aluminium industry an exemption</a> and maybe letting the 2020 target slip by a couple of years, there seems to be <a href="http://www.businessspectator.com.au/news/2014/10/22/national-affairs/labor-rejects-ret-offer-report">little interest in compromise</a>.</p>
<p>There are some interesting individual threads to the issue. Independent senator Nick Xenophon <a href="https://au.news.yahoo.com/sa/a/25216721/renewable-energy-target-campaigners-fail-to-win-nick-xenophons-commitment">seems to dislike wind energy</a>, whereas his fellow independent Ricky Muir <a href="http://www.smh.com.au/federal-politics/political-news/ricky-muir-set-to-introduce-amendments-to-block-funding-cuts-to-australian-renewable-energy-agency-20140708-3bkgl.html">likes renewables</a>: his background as a camper and former low-income rural worker means he understands renewable energy better than most politicians.</p>
<p>The failure of the <a href="https://theconversation.com/us/topics/renewable-energy-target-review">Warburton review</a> to make an objective economic case against maintaining (or even expanding) the RET has given these groups a powerful bargaining position. And the Clean Energy Council has <a href="http://www.cleanenergycouncil.org.au/media-centre/media-releases/october-2014/141022-government-proposal-on-RET-would-devastate-industry.html">sharpened its lobbying</a> in a bid to capture public support. </p>
<p>Some state governments and prospective governments have suggested that any cut in the national RET could be offset by state-level commitments. South Australia has already <a href="http://www.abc.net.au/news/2014-09-23/sa-commits-to-50-per-cent-renewable-energy-target/5763640">increased its 2020 target</a>, having met the previous target years ahead of schedule. The Australian Capital Territory has set an <a href="http://www.canberratimes.com.au/act-news/act-plans-vast-expansion-in-renewable-energy-20140226-33isg.html">ambitious renewable energy goal</a>, while Victoria’s Labor opposition (with support from the Greens) has <a href="http://reneweconomy.com.au/2014/vic-labor-flags-state-based-renewable-target-if-fed-folds-94000">flagged a possible renewables scheme</a> if it wins next month’s election.</p>
<p>State action could be linked to rural jobs and revenue streams for struggling farmers who host renewable energy facilities: a much more attractive option than hosting coal seam gas wells.</p>
<p>The negotiations will be as much about managing views within the government as about finding a deal with Labor and the crossbenchers. Meanwhile, the electricity and coal industries will try to extend their age of entitlement while we confront the possibility of <a href="https://theconversation.com/climate-council-heatwaves-are-getting-hotter-and-more-frequent-23253">another record hot summer</a>. </p>
<p>If some states firm up their commitments to neutralise any reduction in the RET, the government will be on a path to nowhere. If the government can maintain uncertainty, it can win through attrition, but at the risk of votes at the next election. For Labor and the crossbenchers, being seen as white knights by the public would boost their vote. I’m glad I’m not Ian Macfarlane.</p><img src="https://counter.theconversation.com/content/33356/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Pears AM provides advice to a range of sustainable energy and community groups. He and his superannuation funds own shares in the renewable energy industry. He sometimes receives funding from sustainable energy industry organisations and individual companies although, at present he is not receiving such funding. </span></em></p>Federal industry minister Ian Macfarlane has finally revealed his opening gambit on negotiations on the future of the Renewable Energy Target (RET). He and environment minister Greg Hunt have pledged to…Alan Pears, Sustainable Energy & Climate Researcher, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/296942014-07-29T20:28:46Z2014-07-29T20:28:46ZHow does the Renewable Energy Target affect your power bills?<figure><img src="https://images.theconversation.com/files/55159/original/jr98vhdw-1406617022.jpg?ixlib=rb-1.1.0&rect=10%2C26%2C695%2C505&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Clouding the issue: the latest analysis of the impact of the Renewable Energy Target contradicts previous reports.</span> <span class="attribution"><a class="source" href="http://commons.wikimedia.org/wiki/File:Wind_Farm_Albany.jpg#file">Bo-deh/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The <a href="https://retreview.dpmc.gov.au">review of the Renewable Energy Target</a> is due to be handed to the federal government any day now, yet amazingly there are still conflicts over whether the policy makes electricity more or less expensive. </p>
<p>Amid <a href="http://www.abc.net.au/worldtoday/content/2014/s4036677.htm">claims that the target raises power prices</a>, most people will want to know what will happen to their bills if the scheme is wound back or scrapped.</p>
<p>The economic analyses carried out so far have delivered wildly differing results. The most recent report says bills will fall if the target is scrapped, while others say the exact opposite.</p>
<h2>A deluge of reports</h2>
<p>The latest analysis, commissioned by peak business groups and carried out by Deloitte Access Economics, <a href="http://www.acci.asn.au/Research-and-Publications/Media-Centre/Media-Releases-and-Transcripts/Economics-Industry/Renewable-Energy-Target-Needs-to-be-Amended">was released last week</a>. </p>
<p>This work adds to the growing list of attempts to model the effect of the Renewable Energy Target (RET) on electricity prices. We have now seen reports commissioned by the <a href="http://climatechangeauthority.gov.au/ret">Climate Change Authority</a>, the <a href="http://www.cleanenergycouncil.org.au/policy-advocacy/renewable-energy-target/ret-policy-analysis.html">Clean Energy Council</a> and the <a href="http://www.aemc.gov.au/About-Us/Resources/Corporate-publications/Submission-to-the-Review-of-the-Renewable-Energy-T">Australian Energy Market Commission</a>, as well as analyses by <a href="http://about.bnef.com/white-papers/modelling-options-australias-ret-review/">Bloomberg New Energy Finance</a> and <a href="http://www.iesadvisory.com.au/index.php/publications/insider/">IES Advisory Services</a>. The Climate Change Authority is also set to deliver another review later this year — assuming it still exists by then.</p>
<p>Another recent modelling effort is the <a href="https://retreview.dpmc.gov.au/papers">ACIL Allen report</a>, carried out on behalf of the RET review panel itself. </p>
<p>Perhaps inevitably, these reviews have reached different conclusions — mostly because they started with different assumptions. The differences are particularly stark between the two most recent reports, so let’s focus on those. </p>
<p>The ACIL Allen modelling concludes that electricity prices will be lower if the RET is left unchanged, while the Deloitte work concludes that they will be higher.</p>
<p>Deloitte says that scrapping the RET completely would save between A$47 and A$65 dollars per year per household. But ACIL Allen says the target will cut power bills from 2021 onwards, by up to A$91 per year by 2030. </p>
<p>While the A$156 gap between these two forecasts may not amount to much by 2030, they clearly can’t both be right.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/55126/original/6zf76qdp-1406605237.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/55126/original/6zf76qdp-1406605237.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=310&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55126/original/6zf76qdp-1406605237.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=310&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55126/original/6zf76qdp-1406605237.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=310&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55126/original/6zf76qdp-1406605237.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=390&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55126/original/6zf76qdp-1406605237.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=390&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55126/original/6zf76qdp-1406605237.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=390&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">From 2020 on, ACIL Allen forecasts that households would pay lower power bills if the current Renewable Energy Target is retained.</span>
<span class="attribution"><span class="source">RET Review Workshop Preliminary Modelling results presentation, 23 June 2014</span></span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/55122/original/4knvj28c-1406604796.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/55122/original/4knvj28c-1406604796.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=403&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55122/original/4knvj28c-1406604796.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=403&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55122/original/4knvj28c-1406604796.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=403&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55122/original/4knvj28c-1406604796.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=506&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55122/original/4knvj28c-1406604796.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=506&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55122/original/4knvj28c-1406604796.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=506&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Deloitte forecasts that households would pay higher power bills if the current Renewable Energy Target is retained.</span>
<span class="attribution"><span class="source">Assessing the impact of the renewable energy target Australian, Chamber of Commerce and Industry (Lead Sponsors) Business Council of Australia Minerals Council of Australia, 23 July 2014</span></span>
</figcaption>
</figure>
<h2>Differing cost assumptions</h2>
<p>The two models differ in their assumptions of the costs of installing renewable energy. ACIL Allen uses a figure based on the Bureau of Resources and Energy Economics’ <a href="http://www.bree.gov.au/publications/australian-energy-technology-assessments">Australian Energy Technology Assessment</a>.</p>
<p>Deloitte, meanwhile, uses the Australian Energy Market Operator’s 2013 capital cost assumptions. This would seem like a reasonable and official source to use. However, these data are not from 2013 at all, as AEMO’s planning assumption document (available <a href="http://www.aemo.com.au/Consultations/National-Electricity-Market/Planning-Studies-2013-Consultation">here</a>) makes clear:</p>
<blockquote>
<p>In 2012 AEMO engaged WorleyParsons to develop technology availability and cost data, based on the Guidance of the scenario drivers outlined in Table 1. The same data will be used in 2013.</p>
</blockquote>
<p>The cost data from WorleyParsons was actually delivered to AEMO in July 2012, making it just over two years old. And further to that the Worley report used a 2010 “cost range midpoint”, though modified that with a “recent experience” to come up with a 2012 cost of $3.38 per watt.</p>
<p>Anyone who follows the changing cost of solar power will know that two years is a long time. Based on a <a href="http://www.solarchoice.net.au/blog/commercial-solar-pv-system-prices-july-2014-10kw-30kw-50kw-100kw">price check for July 2014</a>, the average unsubsidised price (for 100 kilowatt systems) is between A$2130 and A$2260 per kilowatt – well below the current and long-term projections in the Deloitte study. </p>
<p>Similarly, the Deloitte analysis assumes that wind power costs A$2500 per kilowatt to build and, barring a few wobbles, will stay at that price. Yet the recently completed Snowtown wind farm <a href="http://www.businessspectator.com.au/article/2014/7/25/renewable-energy/echo-chamber-sequel-power-price-scaremongering">reportedly cost around A$1700 per kilowatt</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/55124/original/jp87jsb9-1406604897.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/55124/original/jp87jsb9-1406604897.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=363&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55124/original/jp87jsb9-1406604897.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=363&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55124/original/jp87jsb9-1406604897.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=363&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55124/original/jp87jsb9-1406604897.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=457&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55124/original/jp87jsb9-1406604897.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=457&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55124/original/jp87jsb9-1406604897.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=457&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">ACIL Allen forecasts that solar photovoltaic prices will continue to decline.</span>
<span class="attribution"><span class="source">RET Review Workshop Preliminary Modelling results presentation, 23 June 2014</span></span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/55125/original/5pyqbtrm-1406604997.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/55125/original/5pyqbtrm-1406604997.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=383&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55125/original/5pyqbtrm-1406604997.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=383&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55125/original/5pyqbtrm-1406604997.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=383&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55125/original/5pyqbtrm-1406604997.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=481&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55125/original/5pyqbtrm-1406604997.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=481&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55125/original/5pyqbtrm-1406604997.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=481&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Deloitte forecasts that solar photovoltaic (And wind) cost will increase from 2020.</span>
<span class="attribution"><span class="source">Chamber of Commerce and Industry (Lead Sponsors) Business Council of Australia Minerals Council of Australia, 23 July 2014</span></span>
</figcaption>
</figure>
<h2>Wholesale Market Effects</h2>
<p>The other important consideration with regard to household bills is the Renewable Energy Target’s effect on the wholesale electricity market (also known as <a href="http://theconversation.com/electricity-prices-fall-renewable-energy-deserves-merit-13300">the merit order effect</a>). Put simply, the target supports the introduction of additional power into the market, and like any other market this extra supply should depress prices. </p>
<p>ACIL Allen predicts that this effect will be much stronger than the Deloitte analysis does. </p>
<p>Deloitte’s assumptions here are less clear than the ACIL Allen’s, so it is hard to assess the difference. Deloitte’s model suggests that lower gas prices (an important factor in the short term) could explain the discrepancy. Unfortunately it is not clear what Deloitte’s gas price projections are, or why they are lower.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/55127/original/h5y9kyk3-1406605822.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/55127/original/h5y9kyk3-1406605822.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=361&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55127/original/h5y9kyk3-1406605822.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=361&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55127/original/h5y9kyk3-1406605822.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=361&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55127/original/h5y9kyk3-1406605822.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=453&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55127/original/h5y9kyk3-1406605822.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=453&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55127/original/h5y9kyk3-1406605822.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=453&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">ACIL Allen forecasts pronounced effects on the wholesale price.</span>
<span class="attribution"><span class="source">RET Review Workshop Preliminary Modelling results presentation, 23 June 2014</span></span>
</figcaption>
</figure>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/55128/original/j6v8h5px-1406605896.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/55128/original/j6v8h5px-1406605896.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=439&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55128/original/j6v8h5px-1406605896.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=439&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55128/original/j6v8h5px-1406605896.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=439&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55128/original/j6v8h5px-1406605896.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=552&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55128/original/j6v8h5px-1406605896.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=552&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55128/original/j6v8h5px-1406605896.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=552&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Deloitte forecasts moderate effects on wholesale prices.</span>
<span class="attribution"><span class="source">Assessing the impact of the renewable energy target, Australian Chamber of Commerce and Industry (Lead Sponsors) Business Council of Australia Minerals Council of Australia, 23 July 2014</span></span>
</figcaption>
</figure>
<h2>So who is right?</h2>
<p>Compared with the ACIL Allen study, Deloitte says renewable energy is more expensive and exerts less downward pressure on wholesale prices.</p>
<p>If it’s true that solar power costs A$3500 a kilowatt to build while wind costs A$2500 a kilowatt; that adding 7500 megawatts of wind and 10,000 megawatts of solar power by 2030 will not markedly affect wholesale prices; and that gas prices will stay low, then perhaps Deloitte is correct. </p>
<p>If however, the technology turns out to cost less than this and the wholesale market is more competitive, the ACIL Allen analysis seems more realistic.</p>
<h2>The bigger picture</h2>
<p>But at the end of the day, “who is right” actually misses the point of the RET: reducing emissions and encouraging Australia’s renewable energy industry. As the Deloitte study makes clear:</p>
<blockquote>
<p>It is important to note that we have not included an assessment of the environmental costs and benefits of adjusting or abolishing the RET. We also have not modelled potential benefits of developing local expertise within renewable energy. Including an assessment of these elements would be likely to influence the broader costs and benefits of the RET.</p>
</blockquote>
<p>The difference is likely to be pretty small in the scheme of things. As <a href="http://reneweconomy.com.au/2014/the-full-renewable-energy-catastrophe-1-per-home-per-week-86444">other commentators have pointed out</a>, Deloitte’s pessimistic forecast still only adds up to an extra 50 cents a week for the average household. </p>
<p>That seems a reasonable price to cut roughly 25 million tonnes of carbon dioxide emissions per year by 2020 – the lion’s share of Australia’s greenhouse reduction pledge.</p><img src="https://counter.theconversation.com/content/29694/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell received funding from the AEMC's consumer advocacy panel</span></em></p>The review of the Renewable Energy Target is due to be handed to the federal government any day now, yet amazingly there are still conflicts over whether the policy makes electricity more or less expensive…Dylan McConnell, Research Fellow, Melbourne Energy Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/292002014-07-21T04:13:18Z2014-07-21T04:13:18ZRenewable energy is ready to supply all of Australia’s electricity<figure><img src="https://images.theconversation.com/files/54096/original/yyy3xrn9-1405580597.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Even when the wind doesn't blow, it is technically possible for Australia to get all its electricity needs from renewable sources. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/daveclarkecb/14655534612">David Clarke/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>In a <a href="https://theconversation.com/renewables-still-have-a-long-way-to-go-to-compete-with-fossil-fuels-28670">recent article</a> on The Conversation, University of Melbourne Professor Emeritus Frank Larkins wrote that Australia’s targets to increase renewable energy will make electricity more expensive, thanks to problems with consistency and storage. </p>
<p>But Professor Larkins is several years behind developments in renewable energy and its integration into electricity grids. In fact, we already have technically feasible scenarios to run the Australian electricity industry on 100% renewable energy — without significantly affecting supply. </p>
<h2>When the sun doesn’t shine…</h2>
<p>Professor Larkins states that hydro, wind, solar depend on: </p>
<blockquote>
<p>irregular weather patterns, which lead to uncertain and intermittent power output. This is a big challenge for electricity generators and retailers, and it can cost lots of money.</p>
</blockquote>
<p>But the problem of “consistency” or variability of some renewable energy sources is now better understood, both from empirical experience with lots of wind power in electricity grids, and from hourly computer simulations of electricity supply and demand performed for many states, countries and global regions.</p>
<p>For instance, South Australia nominally has two coal-fired power stations, several gas-fired ones, and at least 15 operating wind farms. Wind now supplies an annual average of 27% of South Australia’s electricity generation. As a result, one of the coal stations is now shut down for half the year and the other for the whole year. And the state’s electricity supply system is operating reliably without the need for any additional non-renewable energy supply. </p>
<p>In Germany, the northern states of <a href="http://reneweconomy.com.au/2014/100-renewable-electricity-will-achieved-german-state-soon-91074">Schleswig-Holstein</a> and <a href="http://reneweconomy.com.au/2014/renewables-in-german-state-produce-120-of-electricity-76949">Mecklenburg-Vorpommern</a> have about 100% and 120%, respectively, of their electricity generated from the wind. Of course they use their transmission links with neighbouring states (including each other) to assist in balancing supply and demand with such high wind penetrations. </p>
<h2>100% renewable — without supply problems</h2>
<p>But Australia’s <a href="https://theconversation.com/topics/national-electricity-market">National Electricity Market</a> (NEM) has no such links to other electricity supplies. How could it increase generation from renewable energy without hurting electricity supply? </p>
<p>Ben Elliston, Iain MacGill and I at UNSW have performed thousands of computer simulations of the hour-by-hour operation of the NEM with different mixes of 100% commercially available renewable energy technologies scaled up to meet demand reliably. </p>
<p>We use actual hourly electricity demand and actual hourly solar and wind power data for 2010 and balance supply and demand for almost every hour, while maintaining the required reliability of supply. The <a href="http://www.ies.unsw.edu.au/our-people/associate-professor-mark-diesendorf">relevant papers</a>, published in peer-reviewed international journals, can be downloaded from <a href="http://www.ceem.unsw.edu.au/staff/mark-diesendorf">my UNSW website</a>. </p>
<p>Using conservative projections to 2030 for the costs of renewable energy by the federal government’s <a href="http://www.bree.gov.au/">Bureau of Resources and Energy Economics</a> (BREE), we found an <a href="http://www.ies.unsw.edu.au/sites/all/files/profile_file_attachments/LeastCostElectricityScenariosInPress2013.pdf">optimal mix</a> of renewable electricity sources. The mix looks like this: </p>
<ul>
<li>Wind 46%;</li>
<li><a href="https://theconversation.com/with-a-bit-of-concentration-solar-thermal-could-power-your-town-2005">Concentrated solar thermal</a> (electricity generated by the heat of the sun) with thermal storage 22%;</li>
<li><a href="https://theconversation.com/explainer-what-is-photovoltaic-solar-energy-12924">Photovoltaic solar</a> 20% (electricity generated directly from sunlight);</li>
<li>Biofuelled gas turbines 6%; and</li>
<li>Existing hydro 6%.</li>
</ul>
<p>So two-thirds of annual energy can be supplied by wind and solar photovoltaic — energy sources that vary depending on the weather — while maintaining reliability of the generating system at the required level. How is this possible?</p>
<p>It turns out that wind and solar photovoltaic are only unable to meet electricity demand a few times a year. These periods occur during peak demand on winter evenings following overcast days that also happen to have low wind speeds across the region. </p>
<p>Since the gaps are few in number and none exceeds two hours in duration, there only needs to be a small amount of generation from the so-called flexible renewables (those that don’t depend on the vagaries of weather): hydro and biofuelled gas turbines. Concentrated solar thermal is also flexible while it has energy in its thermal storage. </p>
<p>The gas turbines have low capital cost and, when operated infrequently and briefly, low fuel costs, so they play the role of reliability insurance with a low premium.</p>
<h2>No need for batteries</h2>
<p>Our research, together with similar extensive hourly computer simulations by others spanning up to a decade from Europe and the USA (reviewed in Chapter 3 of “<a href="https://www.bookshop.unsw.edu.au/details.cgi?ITEMNO=9781742233901">Sustainable Energy Solutions for Climate Change</a>”), refute Professor Larkins’ statement that “We need baseload electric power [from non-renewable sources] to guarantee security of supply”. </p>
<p>Many regions of the world could operate a 100% renewable electricity system reliably without any baseload power stations. Indeed, in electricity supply systems with a lot of renewable energy, inflexible coal and nuclear baseload power stations get in the way. What we really need to balance the variability of wind and photovoltaic solar are the flexible renewable energy power stations: hydro, solar thermal and biofuelled gas turbines.</p>
<p>This mix needs only a little storage from hydro and solar thermal to maintain reliable supply. With enough fuel, biofuelled gas turbines could also be considered storage. Such a mix has no need for expensive batteries or hydrogen fuel cells.</p>
<p>Using BREE’s conservative projections for the costs of renewable energy technologies in 2030, we find that the cost of 100% renewable energy is A$7-10 billion per year more than that of the existing polluting fossil fuelled system. Although this is a 50% increase, it is likely to be less than the damage caused by the increased frequency of heatwaves, droughts and floods in a business-as-usual scenario.</p>
<p>The renewable scenarios would be economically competitive with the fossil system either with a carbon price of A$50 per tonne of CO<sub>2</sub> (reflecting part of the environmental and health damage from fossil fuels) or, in the absence of a carbon price, by removing the existing subsidies to the production and use of fossil fuels and transferring them temporarily to renewable energy. </p>
<p>As an alternative to BREE’s cost estimates, <a href="http://reneweconomy.com.au/2013/renewables-now-cheaper-than-coal-and-gas-in-australia-62268">Bloomberg New Energy Finance</a> calculates that wind and solar are already cheaper than new build coal and gas in Australia. If this is correct, 100% renewable systems are already economically competitive with a new fossil-fuelled system. </p>
<h2>Australia could be more ambitious</h2>
<p>Is Australia’s <a href="https://theconversation.com/topics/renewable-energy-target">Renewable Energy Target</a> of 41,000 gigawatt hours per year in 2020 “ambitious”? Not on a world scale. The table below compares several countries’ renewable energy contributions, as well as their official long-term targets. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=326&fit=crop&dpr=1 600w, https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=326&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=326&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=410&fit=crop&dpr=1 754w, https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=410&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/54163/original/3mzwd32m-1405646184.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=410&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>Considering that Australia has much greater solar energy and wind potential than the European countries, its present renewable contribution and its 2020 target are both modest. </p>
<p>Moving to 100% renewable electricity is safe, technically feasible and affordable. It can cut greenhouse gas and other emissions and land degradation, while creating local jobs and energy security. It is ready to go!</p><img src="https://counter.theconversation.com/content/29200/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Diesendorf receives funding from the Cooperative Research Centre for Low Carbon Living.</span></em></p>In a recent article on The Conversation, University of Melbourne Professor Emeritus Frank Larkins wrote that Australia’s targets to increase renewable energy will make electricity more expensive, thanks…Mark Diesendorf, Associate Professor and Deputy Director, Institute of Environmental Studies, UNSW, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/286702014-07-09T20:11:54Z2014-07-09T20:11:54ZRenewables still have a long way to go to compete with fossil fuels<figure><img src="https://images.theconversation.com/files/53378/original/8sns6q8z-1404880575.jpg?ixlib=rb-1.1.0&rect=45%2C36%2C5934%2C3935&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Wind farms: great, unless it's not windy.</span> <span class="attribution"><a class="source" href="http://commons.wikimedia.org/wiki/File%3ALeonards_Hill_Hepburn_Wind_Farm.JPG">mattinbgn/Wikimedia Commons</a>, <a class="license" href="http://artlibre.org/licence/lal/en">FAL</a></span></figcaption></figure><p>Australia has some fairly ambitious goals for green energy: a <a href="https://theconversation.com/topics/renewable-energy-target">renewable energy target</a> (currently <a href="https://theconversation.com/renewables-inquiry-leader-vows-open-mind-on-targets-future-23305">under review</a>) of 20% of electricity from renewables by 2020, and a forecast to get <a href="http://www.bree.gov.au/sites/default/files/files//publications/aep/australian-energy-projections-to-2050.pdf">51% of electricity from renewables by 2050</a>. </p>
<p>But in setting these targets, not enough consideration is being given to the difficulty of getting the job done – in terms of generating enough renewable energy, and of storing it so it can be supplied 24 hours a day. </p>
<p>Renewable energy sources, mainly hydroelectric and wind with a smaller amount of solar, currently provide around 13% of Australia’s power; the rest comes from fossil fuels. Increasing renewable sources to and beyond 20% will depend on being able to generate power at the right locations, and building enough storage infrastructure too.</p>
<h2>The problem of consistency</h2>
<p><a href="https://theconversation.com/explainer-what-is-hydroelectricity-12931">Hydroelectric power</a> requires reliable rainfall upstream; <a href="https://theconversation.com/topics/wind-power">wind power</a> needs consistent wind speeds; and <a href="https://theconversation.com/topics/solar-power">solar energy</a> naturally depends on sunshine. <a href="https://theconversation.com/explainer-what-is-geothermal-energy-12913">Geothermal</a> and <a href="https://theconversation.com/explainer-what-is-ocean-energy-12921">ocean</a> power sources are unproven at any scale in Australia, while <a href="https://theconversation.com/topics/bioenergy">biomass</a> resources will always be very limited without having a <a href="https://theconversation.com/if-we-burn-wood-for-energy-we-cant-have-our-cake-and-eat-it-15634">major impact on food production</a>.</p>
<p>The common factor for all of these sources is irregular weather patterns, which lead to uncertain and intermittent power output. This is a big challenge for electricity generators and retailers, and it can cost lots of money. </p>
<p>Solar and wind, even in favourable locations, typically produce power at around 20-30% of their total theoretical capacity, compared with more than 90% for many fossil fuel plants. This means that to produce the same amount of electricity, the renewable plant must have around four times the capacity of the fossil fuel plant. For example, a 1000 megawatt wind farm would typically be needed to produce the same electricity output as a 250 megawatt coal or gas plant.</p>
<p>To look at it another way, while fossil fuel plants can be online 24 hours a day, we can only rely on wind or solar sources to generate electricity for an average of 5 to 8 hours each day (although the energy can potentially be stored for use later in the day, which we will come to shortly).</p>
<h2>Consumer expectations</h2>
<p>Australians expect that when they turn on a light switch, be it 8 am or 8 pm, the light will come on. If we depended solely on renewable energy for direct power generation, this wouldn’ happen. We need baseload electric power, generated reliably around the clock, to guarantee security of supply.</p>
<p>Advocates for high levels of renewable electricity, such as supporters of the <a href="http://www.bree.gov.au/">Bureau of Resources and Energy Economics</a> projection of 51% by 2050, or even for 100% renewable energy, argue that energy storage can overcome this problem. In reality, however, few financially and technically viable solutions exist to store large amounts of electrical energy for significant periods of time. <a href="https://theconversation.com/how-pushing-water-uphill-can-solve-our-renewable-energy-issues-28196">Pumped water storage</a> is the favoured solution, but this requires dams and water normally near to the power sources to minimise transmission losses. </p>
<p>Australia has very limited capacity for growth in this area. Battery storage is typically limited to tens of kilowatt hours discharged over a few hours or days at best. Batteries will not serve the needs of most industries. Molten salt storage has been advocated for solar thermal plants, but the scale required to achieve more than a few hours’ storage makes this solution unviable for most applications. An electrolysis process to produce hydrogen from water for subsequent use in a gas-fired plant or with fuel cells is possible, but unlikely on a large scale because of practicality and cost.</p>
<h2>Weighing the options</h2>
<p>So what options do we have in Australia to ensure security of electricity supply on a 24/7 basis? The reality is that the higher the proportion of electricity produced from renewable sources, the more we must have available standby baseload capacity from fossil- or nuclear-fuelled plants for when the wind does not blow and the sun does not shine. </p>
<p>Of course, it is expensive to have power stations sitting there on standby, which in turn drives up the cost to consumers. Gas-fired standby plants are favoured because of their flexibility, but the long-term security of supply and the <a href="https://theconversation.com/dont-get-burnt-by-gas-price-rises-tips-for-homes-and-industry-28198">escalating cost of gas</a> are significant concerns.</p>
<p>A credible Australian energy policy must reflect the limitations on the use of renewable energy sources, and focus more on other greenhouse gas mitigation strategies. It has been proven internationally that coal-fired electricity generating plants can be around twice as efficient as most existing Australian plants. Technology also exists to capture around 90% of all the emissions from fossil-fuelled plants, but further cost reductions and incentives will be needed to help generators invest this new equipment. The other option is to build low-emitting nuclear plants, but that is another story. And consumers can also focus on trying to reduce their own power use.</p>
<p>More attention must be given to greenhouse gas emissions from outside the energy sector, which account for more than 60% of all Australia’s emissions. Direct fuel combustion, transport and agriculture <a href="http://www.climatechange.gov.au/reducing-carbon/reducing-australias-emissions/australias-emissions-projections">contribute some 46% of emissions</a> – and might offer easier ways to cut down.</p><img src="https://counter.theconversation.com/content/28670/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Larkins 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>Australia has some fairly ambitious goals for green energy: a renewable energy target (currently under review) of 20% of electricity from renewables by 2020, and a forecast to get 51% of electricity from…Frank Larkins, Professor Emeritus and Former Deputy Vice Chancellor, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/272342014-06-22T20:29:55Z2014-06-22T20:29:55ZSlash Australians’ power bills by beheading a duck at night<figure><img src="https://images.theconversation.com/files/51175/original/c234qv6n-1402897605.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">While Australians love Michael Leunig's whimsical ducks, there's another 'duck' pushing your power bills higher.</span> <span class="attribution"><a class="source" href="http://www.leunig.com.au/">Used with permission from Michael Leunig</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Rooftop solar power has slashed Australians’ demand for electricity during the day, but left evening peak power demand largely unchanged. That’s why, as strange as it may sound, we now need to behead a duck.</p>
<p>With a mix of individual household, power company and government action, we could significantly reduce our demand for the most expensive peak-power that requires massive, wasteful infrastructure spending.</p>
<p>In doing so, we’d be tackling one of the biggest, most unfair, hidden charges built in Australians’ power bills: we could reduce the A$350 a year that households without air conditioners are being slugged to subsidise the bills of households running air conditioning at peak times.</p>
<p>And Australia’s 1 million-plus solar homes can play an important role in reducing that hidden air conditioning subsidy, while also defusing the argument that solar homes aren’t paying their share of electricity costs.</p>
<h2>Solar homes powering big changes</h2>
<p>The replacement of substantial daytime electricity consumption by PV panels on more than 1.2 million installed solar systems across Australia has visibly changed the way we draw power from the electricity grid.</p>
<p>The new-look daily trend in Australians’ power use has been nicknamed “the duck”: the green line on the graph below, from a <a href="http://www.ena.asn.au/wp-content/uploads/2014/04/The-Road-to-Fairer-Prices_Web.pdf">recent Energy Networks Association publication</a> The Road to Fairer Prices, shows why! </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/50765/original/twyd8r4p-1402446955.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How demand for power over the day has changed dramatically in recent years linked with the rise of solar PV panels. There is now a steep drop in demand during the day but little has changed to the evening peak, sparking this call to “behead the duck”.</span>
<span class="attribution"><a class="source" href="http://www.ena.asn.au/wp-content/uploads/2014/04/The-Road-to-Fairer-Prices_Web.pdf">Energy Networks Association, 2014</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>However, Australia’s power duck is not as <a href="http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=11227630">benign as Michael Leunig’s well-loved ducks</a>. It drives large amounts of investment in electricity supply infrastructure – and that costs everyone connected up to a power pole more money.</p>
<p>So what can we do to avoid wasteful electricity spending to cut down on all our power bills?</p>
<h2>Real solar and air conditioning costs</h2>
<p>Many now argue that, while solar PV hits daytime electricity sales and revenue, it does little or nothing to reduce this evening peak, as shown in the Energy Networks Association (ENA) graph above. This peak now drives electricity supply infrastructure costs, which comprise around half of our electricity bills.</p>
<p>Indeed, the ENA – the national body representing electricity transmission and distribution businesses throughout Australia – has recently suggested that a power consumer without solar PV panels now pays about A$60 a year more to subsidise homes with solar PV panels, due to “under-recovery of network costs” during summer evening peak periods.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=369&fit=crop&dpr=1 600w, https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=369&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=369&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=464&fit=crop&dpr=1 754w, https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=464&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/50764/original/5cjhdvcg-1402446745.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=464&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 rapid rise of small-scale solar PV installations across Australia.</span>
<span class="attribution"><a class="source" href="http://ret.cleanenergyregulator.gov.au/REC-Registry/Data-reportsmall%20scale">Data from the Clean Energy Regulator, small scale installations summary data </a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=306&fit=crop&dpr=1 600w, https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=306&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=306&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=384&fit=crop&dpr=1 754w, https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=384&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/51038/original/c94sr8cx-1402637255.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=384&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 rapid rise of home air conditioners is driving up the cost of power for all Australians. By 2020, experts warn that electricity use for air conditioning looks set to be five times greater than in 1990.</span>
<span class="attribution"><a class="source" href="http://www.pc.gov.au/__data/assets/pdf_file/0017/123038/electricity-volume2.pdf">Productivity Commission 2013, Electricity Network Regulatory Frameworks</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Even so, that A$60 a year cost is much smaller than the subsidy to users of air conditioners. </p>
<p>The Productivity Commission estimates that the installation of each air conditioner adds A$2500 to the capital cost of powerlines and power stations: costs that all power consumers have to cover. </p>
<p>Much of that extra equipment is used for <a href="https://theconversation.com/australias-rising-air-con-use-makes-us-hot-and-bothered-20258">only a few hours each year</a>, mainly on hot summer evenings. </p>
<p>However, there are ways we can reduce those big costs by cutting demand in the evening peak.</p>
<h2>An expensive night in at home</h2>
<p>This graph below, from the Productivity Commission’s 2013 report on electricity networks, shows power use from a sample of 3000 Sydney homes. As you can see, the maximum demand for household power in the evening can be up to 5 kilowatts, or almost double the average demand on evenings for most of the year.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=326&fit=crop&dpr=1 600w, https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=326&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=326&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=410&fit=crop&dpr=1 754w, https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=410&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/51140/original/6gxjkrnx-1402886647.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=410&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">caption.</span>
<span class="attribution"><a class="source" href="http://www.pc.gov.au/__data/assets/pdf_file/0017/123038/electricity-volume2.pdf">Productivity Commission, Inquiry Report, Volume 2, Electricity Network Regulatory Frameworks, p.348</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>If we look at the difference between the average and peak day, and presume that all of this peak difference is due to air conditioning load, what do we find? It seems peak demand is around 2.4 kilowatts higher between 7pm and 10pm. </p>
<p>It would be interesting to audit this sample of homes. Do they have large numbers of halogen lights? How many had several inefficient plasma TVs and multiple desktop computers? How energy efficient are the buildings themselves?</p>
<p>And what kinds of air conditioners do they have? The efficiency of your air conditioner, combined with other factors like the colour of your roof and how draughty the house is, can make a huge difference to your bills.</p>
<p>If most of the homes in the Sydney sample shown above have pre-2010 ducted cooling systems with poorly insulated ducts inside black tile roofs, they may be very inefficient: possibly using <em>two to four times</em> as much power as the best technology.</p>
<h2>How to keep your cool without air con</h2>
<p>One of the most common and costly mistakes people make with their electricity use is to only consider how to keep their home cool – and not to think about why it might be getting so hot in the first place.</p>
<p>Key factors to consider:</p>
<ul>
<li>Is heat from the western sun getting into the building in the late afternoon and early evening?</li>
</ul>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/51159/original/4yn53bzj-1402891355.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How much are you heating up your home without even realising it?</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-115972660/stock-vector-fan-heater.html?src=L64HmoVxzDbHxFllIb-RKA-1-0">Denis Barbulat/Shutterstock</a></span>
</figcaption>
</figure>
<ul>
<li>Does your home have shading or heat-rejecting window films, insulation and draught proofing? </li>
</ul>
<p>Not having those features can allow four times as much heat to enter the house as for a well-designed building – up to 20 kilowatts, equivalent to running 10 plug-in fan heaters on high setting at the hottest time of the day. And every three square metres of extra unshaded window exposed to sun adds the equivalent of another fan heater. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=787&fit=crop&dpr=1 600w, https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=787&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=787&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=990&fit=crop&dpr=1 754w, https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=990&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/51160/original/vs4rbc2t-1402891520.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=990&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Hot stuff: halogen lamps.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-192234143/stock-photo-dichroic-halogen-lamps-type-focus-lined-up.html?src=aOKEHdg6BVFqdcfw4px81w-1-1">Julio Embun/Shutterstock</a></span>
</figcaption>
</figure>
<ul>
<li>How many appliances and other heat-generating equipment are you using while trying to stay cool? </li>
</ul>
<p>For example, running 30 halogen lamps can add 1.5 kilowatts of heat, and the radiant heat they give off can make you feel hotter, so that you turn up the air con. Two older plasma TVs can easily add another 600 watts of heat. </p>
<p>Cooking can add a couple of kilowatts; even more through wasteful habits such as not putting lids on pots. The range hood fan does remove some cooking heat, but also drags large amounts of hot outdoor air into the house, equivalent to a cooling load of around 2 to 3 kilowatts on a very hot day. And so on. </p>
<p>If we tackled those and other areas of wasteful energy use in inefficient air conditioned Australian homes, I’m confident that we could avoid <em>at least</em> A$250 a year in hidden subsidies for each of those houses. And we could save even more if we targeted high peak-demand homes in areas where network infrastructure is already under pressure. </p>
<p>But what about homeowners with solar panels: how could they help cut down on power bills?</p>
<p>We should be encouraging new and existing homes with solar panels to add some battery storage, as well as improving their energy efficiency in some of the ways outlined above. If we did, it would increase the amount of time when solar homes were still using their own power, also helping to cut expensive peak demand.</p>
<p>As an example of the potential for change, the graph below presents results from a UK study in which a range of energy efficiency and demand management strategies was used to cut their peak demand times. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=305&fit=crop&dpr=1 600w, https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=305&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=305&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=383&fit=crop&dpr=1 754w, https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=383&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/51161/original/c3fc9d7k-1402892554.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=383&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tackling peak evening demand with energy efficiency.</span>
<span class="attribution"><span class="source">The 40 per cent House Project, Heriot Watt University, Edinburgh, 2004</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The single biggest period of demand for power in the UK happens in the late afternoon and early evening. </p>
<p>When the study authors added extra plasma TVs into the mix (scenario 1, the top line), power demand climbed even further. So they showed how it was possible to reduce that demand with a mix of better appliances, LED lighting and low-energy refrigeration (scenario 6, shown with the red line).</p>
<p>Combine low-energy appliances with more efficient LCD TVs, rather than plasma TVs, and the demand fell sharply (shown with scenario 8, the bottom line).</p>
<h2>Cutting Australians’ cost of living</h2>
<p>Energy efficiency is not a topic that grabs many news headlines. Yet report after report shows how under-rated it is as a way to <a href="https://theconversation.com/energy-smart-appliances-cut-australian-power-bills-by-billions-25816">save billions of dollars in Australia</a> and <a href="http://reneweconomy.com.au/2013/hidden-fuel-worth-hundreds-of-billions-ieas-new-energy-focus-27544">hundreds of billions of dollars</a> globally.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=409&fit=crop&dpr=1 600w, https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=409&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=409&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=514&fit=crop&dpr=1 754w, https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=514&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/51169/original/mbvy8h73-1402895060.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=514&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">California has kept its electricity consumption relatively flat even as it’s soared across the US.</span>
<span class="attribution"><a class="source" href="http://www.eia.gov/state/seds/%20seds-data-complete.cfm#Consumption">US Energy Information Administration</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>But we need the electricity industry and governments to do more to help individual households, as has happened in places like <a href="http://www.nrdc.org/energy/files/ca-success-story-FS.pdf">California</a>.</p>
<p>Significantly, if we take the steps I’ve outlined we could cut household power bills <em>far</em> more than by adopting a more simplistic approach of winding back Australia’s <a href="https://theconversation.com/search?q=renewable+energy+target">Renewable Energy Target</a>, which is currently under review amid speculation of <a href="http://www.theaustralian.com.au/national-affairs/policy/backbenchers-push-for-ret-changes/story-e6frg6xf-1226956653910">major changes on the way</a>.</p>
<p>Instead, we could behead Australia’s most expensive duck – and end up with a tasty meal for all of us.</p><img src="https://counter.theconversation.com/content/27234/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Pears AM has carried out consulting work for many sustainable energy organisations and provides policy advice to a variety of organisations. At present he has no paid roles for such organisations. He is an honorary adviser to the Energy Efficiency Council, Climate Alliance and Alternative Technology Association.</span></em></p>Rooftop solar power has slashed Australians’ demand for electricity during the day, but left evening peak power demand largely unchanged. That’s why, as strange as it may sound, we now need to behead a…Alan Pears, Sustainable Energy & Climate Researcher, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/263182014-05-06T20:37:41Z2014-05-06T20:37:41ZRenewable energy target can go all the way to 100% – if we let it<figure><img src="https://images.theconversation.com/files/47841/original/frkfjbg7-1399342347.jpg?ixlib=rb-1.1.0&rect=12%2C12%2C3969%2C2803&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia has a possible path to 100% renewables – if governments and business can be persuaded to take it.</span> <span class="attribution"><span class="source">AAP Image/Alan Porritt</span></span></figcaption></figure><p>The political outlook for renewable energy is not great – and I’m not just talking about <a href="http://www.abc.net.au/news/2014-05-02/joe-hockey-wind-turbines-utterly-offensive/5425804">the view out of Joe Hockey’s car window</a>.</p>
<p>The <a href="http://www.environment.gov.au/topics/cleaner-environment/clean-air/renewable-energy-target-scheme">Renewable Energy Target (RET)</a>, which aims to deliver 41 million megawatt-hours of extra renewable energy by 2020, is <a href="https://theconversation.com/killing-renewables-softly-with-endless-reviews-23409">under review by the federal government</a>. The signs are not promising for preservation of the target, given the views espoused by the Treasurer and the composition of the Review Committee.</p>
<p>But the RET is not an end in its own right. It is also a stepping stone for moving to a 100% renewable power sector by 2050. The problem is that getting there requires not just a practical plan, but also the political will to put it into action.</p>
<h2>Investing in renewables</h2>
<p>A prime purpose of the RET is to reduce greenhouse gas emissions. In conjunction with energy efficiency, the RET has been doing this so effectively that Australia’s emissions from electricity generation have been <a href="http://bit.ly/1iSkbvp">falling since 2008</a>. The RET allows renewable energy to compete directly with old-build gas and coal power stations as they move towards the end of their useful lives.</p>
<p>Despite the fact that the government may be preparing to wind back the RET to something more modest, it is not an especially challenging target in its current form. The most likely way to hit the 2020 target will be to deploy wind and photovoltaic (PV) solar power, which are by far the leading types of renewable energy being deployed around the world. To hit the target, Australia will need about 9000 megawatts of new capacity from each of these two technologies.</p>
<p>Australia already has about 6000 MW of wind and PV capacity, mostly constructed over the past five years. So that means building about 1200 MW each of PV and wind power each year for the rest of the decade. Not too difficult, considering that 1000 MW of PV power was installed in 2012, <a href="http://apvi.org.au">mostly on rooftops</a>. Indeed, there are now more than 1.3 million PV rooftops in Australia.</p>
<p>In terms of costs, both PV and wind are <a href="http://www.bree.gov.au/sites/default/files/files/publications/aeta/AETA-Update-Dec-13.pdf">competitive with new-build gas and coal power stations</a>. And the outlook for coal is not as certain as many in the sector in Australia would like, with new analysis suggesting that the industry <a href="http://www.ieefa.org/press-release-the-beginning-of-the-end-of-imported-coal-in-india-report-exposes-economic-flaws">could decline</a> because of softening import markets in China and India. As a share of the Australian power generation market, coal has been <a href="http://bit.ly/1iSkbvp">declining since 2008</a>, as a result of improved energy efficiency and the rise of renewables.</p>
<p>As all current fossil fuel power generators will have reached the end of their useful lives before 2050, they will have to be steadily replaced over the coming 35 years. Installation of solar and wind will allow this to be done with minimal additional cost and with near-zero greenhouse gas emissions.</p>
<h2>The RET as a stepping stone</h2>
<p>Moving to 100% renewables by mid-century might sound like a tall order. But the current RET actually puts us on track to do it – all it would require would be to carry on at the same rate of investment beyond 2020.</p>
<p>Installing around 1200 MW each of new solar and wind power every year, as required by the RET, would be enough to replace the entire existing fossil fuel electricity sector by 2050.</p>
<p>There would be no need to decommission existing power stations early – rather, they could just be replaced as they reach the end of their useful lives. Thus the RET offers a stepping stone to 100% renewable energy by natural attrition – an important attribute if we are to avoid spending money unnecessarily.</p>
<p>The RET offers a way to ensure that ageing coal-fired power stations are replaced by low-emission renewable alternatives. Wind and solar power are essentially unconstrained by environmental, resource, material supply, security and other problems that beset fossil fuels. The need for the RET will decline over time as retirement of existing generators gathers pace.</p>
<h2>The political will?</h2>
<p>Demolishing the effectiveness of the RET will make it more difficult to meet the government’s <a href="http://www.climatechange.gov.au/climate-change/greenhouse-gas-measurement-and-reporting/australias-emissions-projections/national">greenhouse emissions target of a 5% reduction on 2000 levels by 2020</a>. The sooner Australia adapts to the radical changes in the global electricity industry, caused by dramatic falls in renewable energy costs, the better. If the federal government leaves the RET alone, Australia will be on track for an all-renewable electricity system by mid-century. </p>
<p>Meanwhile, the amount of land taken up by wind farms is trivial, compared with the footprint of an open-cut mine or a gas processing hub – a few tens of square metres per tower, plus access tracks. The farmers who host the wind generators continue farming as usual, but benefit from what is effectively a second cash crop that pays them thousands of dollars per machine per year. </p>
<p>While Mr Hockey might find the view of wind turbines along Lake George “utterly offensive”, others might take exception to the sight of open-cut coal mines, coal and gas export terminals, oil spills, fracking equipment, smog, and <a href="https://theconversation.com/victorias-coal-fire-poses-a-rare-challenge-for-firefighting-23698">coal seam fires</a>. </p>
<p>They might also have an opinion about whether consequences such as oil-related warfare and global warming are more offensive than an allegedly spoiled view.</p><img src="https://counter.theconversation.com/content/26318/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Blakers 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>The political outlook for renewable energy is not great – and I’m not just talking about the view out of Joe Hockey’s car window. The Renewable Energy Target (RET), which aims to deliver 41 million megawatt-hours…Andrew Blakers, Director of the Centre for Sustainable Energy Systems (CSES) , Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/235282014-02-25T19:39:11Z2014-02-25T19:39:11ZHow to save business billions, without cutting renewable jobs<p><a href="https://theconversation.com/renewables-inquiry-leader-vows-open-mind-on-targets-future-23305">The debate</a> about the future of Australia’s <a href="http://ret.cleanenergyregulator.gov.au/about-the-schemes">Renewable Energy Target (RET)</a> has largely focused on the issue of <a href="http://www.theaustralian.com.au/national-affairs/policy/cabinet-rift-on-ret-hunt-firm-amid-scrapping-calls/story-e6frg6xf-1226799349909">immediate costs</a> to business. But if we’re thinking about Australia’s long-term economic interests, there are a number of reasons why leaving the target as it is makes good business sense. </p>
<p>Instead of trying to reduce power bills by undercutting investment and jobs in one growing industry, there are other ways for big and small businesses to cut their power bills – starting with the cost savings available from using energy more efficiently.</p>
<h2>Billions in opportunities</h2>
<p>A <a href="http://www.climateworksaustralia.org/project/current/industrial-energy-efficiency-data-analysis">2012 report for the federal government found</a> that Australian industry could cut its energy use by 11% without adversely affecting business activity, saving A$3.3 billion in the process. Doing so would also cut 15 million tonnes of greenhouse gas emissions.</p>
<p>Looking at medium to large industrial businesses across mining, manufacturing and transport, the study found that many of those savings could be made with a payback period of less than two years. </p>
<p>It is important to note that the study also found that there are often multiple barriers in the way of making those investments and savings. But there are plenty of examples of why it’s worth the effort to overcome those barriers, as case studies published last year by <a href="http://eeo.govspace.gov.au/files/2013/08/Systems-Optimisation-Case-Study-2013.pdf">the Department of Industry</a> highlight.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/42448/original/jfyztgd3-1393307243.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/42448/original/jfyztgd3-1393307243.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=901&fit=crop&dpr=1 600w, https://images.theconversation.com/files/42448/original/jfyztgd3-1393307243.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=901&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/42448/original/jfyztgd3-1393307243.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=901&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/42448/original/jfyztgd3-1393307243.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1133&fit=crop&dpr=1 754w, https://images.theconversation.com/files/42448/original/jfyztgd3-1393307243.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1133&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/42448/original/jfyztgd3-1393307243.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1133&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Give peas a chance.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-130216721/stock-photo-frozen-peas-in-a-glass-bowl-on-a-wooden-table.html?src=0gkq0hg9zqPQGpB8SFjd8A-1-1">Aleksandrs Samuilovs/Shutterstock</a></span>
</figcaption>
</figure>
<p>For instance, <a href="http://www.simplot.com.au/">Simplot Australia</a> upgraded the refrigeration and power systems at its Devonport plant in Tasmania, which produces frozen vegetables under the Birds Eye and Edgell brands. </p>
<p>When the plant was hit with a power failure during their peak frozen pea production period, the real-time electricity data they had on hand meant they could respond quickly, avoiding what could have been a major shutdown.</p>
<p>Simplot’s Devonport plant has cut its energy intensity by 20% in the last few years, which has <a href="http://eeo.govspace.gov.au/files/2013/08/Systems-Optimisation-Case-Study-2013.pdf">“resulted in significant cost savings each year”</a>.</p>
<p>In another case, control system upgrades at Anglo Gold Ashanti have significantly reduced energy intensity per unit of production, reduced maintenance and downtime, increased throughput and reduced unit costs.</p>
<p>These are precisely the types of initiatives that will improve the competitiveness of Australian industry. And as those examples show, when managers go searching for energy savings, they often find <a href="http://www.iea.org/topics/energyefficiency/multiplebenefitsofenergyefficiency/">multiple benefits</a> for the business that go well beyond just cutting energy bills.</p>
<h2>How Australia compares</h2>
<p>As <a href="https://www.engineersaustralia.org.au/sites/default/files/shado/Representation/Government%20Submissions/2010/national_building_energy_standard_-_setting_assessment_and_rating_framework_may_2010.pdf">Engineers Australia has pointed out</a> in the past, using less energy to do more should be an indispensable part of our energy policy, yet: </p>
<blockquote>
<p>Australia’s record on energy efficiency is poor in comparison to other
countries … Energy efficiency has been treated as an optional extra</p>
</blockquote>
<p>Australia is not the only country that could be doing more. The <a href="http://www.iea.org/media/ieajournal/Issue4_WEB.pdf">International Energy Agency has identified US$1 trillion</a> of energy savings available in its 28 member nations, which include Australia. But in late 2012 it reported there had been <a href="http://www.smh.com.au/business/carbon-economy/how-tapping-the-hidden-fuel-could-save-trillions-and-the-climate-20121112-298cw.html#ixzz2uIMyW9j9">“disappointingly slow progress”</a> over the past decade. </p>
<p>As the graphs below show, <a href="http://www.iea.org/publications/insights/progress_implementing_25_ee_recommendations.pdf">a 2012 International Energy Agency report compared</a> how much progress Australia and other member countries had made on key areas of energy efficiency. In some areas like appliances and lighting, Australia is doing better than the IEA average. But in others, such as utilities and transport, it’s done less.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=460&fit=crop&dpr=1 600w, https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=460&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=460&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=578&fit=crop&dpr=1 754w, https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=578&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/42419/original/xkph3fcy-1393294683.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=578&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 progress on key areas of energy efficiency.</span>
<span class="attribution"><a class="source" href="http://www.iea.org/publications/insights/progress_implementing_25_ee_recommendations.pdf">International Energy Agency</a></span>
</figcaption>
</figure>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=462&fit=crop&dpr=1 600w, https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=462&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=462&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=581&fit=crop&dpr=1 754w, https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=581&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/42420/original/yh6m2vff-1393294725.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=581&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Progress on key areas of energy efficiency in all IEA member countries, which include Australia, New Zealand, the US, UK, Japan and many European nations.</span>
<span class="attribution"><a class="source" href="http://www.iea.org/publications/insights/progress_implementing_25_ee_recommendations.pdf">International Energy Agency</a></span>
</figcaption>
</figure>
<h2>Jobs for tomorrow’s graduates</h2>
<p>We need to think strategically about where the Australian economy is headed, not just where we are today.</p>
<p>Australia has strong traditions in engineering and technology, <a href="http://www.shanghairanking.com/FieldENG2013.html">with five of our universities in the top 100</a> globally for engineering and technology. We also have a number of highly specialised research centres in alternative and renewable energy.</p>
<p>Around Australia, our university engineering faculties and research centres are developing the key future-oriented technical skills that may provide the high-end manufacturing more suitable for this country, in areas like hydro, biomass, geothermal, solar and wind technologies. (Follow these links to see some of the work underway at the universities of <a href="http://www.utas.edu.au/centre-for-renewable-energy-and-power-systems/about-creps/funding">Tasmania</a>, <a href="http://www.energy.unimelb.edu.au/energy-production">Melbourne</a>, <a href="http://www.engineering.unsw.edu.au/energy-engineering/">NSW</a>, <a href="http://www.qut.edu.au/research/our-research/research-areas/energy">QUT</a> and <a href="http://www.uts.edu.au/research-and-teaching/our-research/centre-clean-energy-technology">UTS</a>.)</p>
<p>Many of our students will be well-equipped for leadership roles in the energy sector, with a growing number choosing to undertake combined business/engineering degrees.</p>
<p>Other countries like China have already seized the lead in some areas, such as manufacturing solar cells. So we should be thinking about how Australian-trained engineers with business savvy could help give our industry a stronger competitive edge, such as by using energy more efficiently, improving system design and servicing, and cutting energy costs and emissions.</p>
<h2>Investment certainty</h2>
<p>Scrapping or weakening the current Renewable Energy Target may seem like the right thing to do for the sake of industry, particularly coming at a time of painful structural change and <a href="http://www.abc.net.au/news/2014-02-19/bill-shorten-cherrypicking-manufacturing-job-loss-figures/5260996">job losses in manufacturing</a>.</p>
<p>But playing to the entrenched interests of the <a href="http://www.theaustralian.com.au/national-affairs/policy/renewable-energy-target-distorting-market-bca/story-e6frg6xf-1226826629736">established energy generators</a> is short-term thinking, which will not serve Australia’s longer-term interests well. Doing so would reduce the opportunities for our skilled graduates in the future.</p>
<p>It is true that the renewables industry is being subsidised by industry and Australian taxpayers through the Renewable Energy Target. However, it also true that Australia – like many countries – still has a long list of national and state fossil fuel subsidies, as <a href="http://www.oecd-ilibrary.org/environment/inventory-of-estimated-budgetary-support-and-tax-expenditures-for-fossil-fuels-2013_9789264187610-en">this 2013 OECD inventory</a> details. </p>
<p>In its 2013 World Energy Outlook, <a href="http://www.worldenergyoutlook.org/media/weowebsite/2013/WEO2013_Ch06_Renewables.pdf">the IEA predicted</a> that renewables were on track to become the second-largest source of electricity by 2015, and approach coal as the primary source by 2035, with continued growth of hydropower and bioenergy, plus rapid expansion of wind and solar PV.</p>
<p>The possibility of Australia’s main renewable energy scheme being watered down or scrapped sends <a href="http://www.smh.com.au/environment/energy-smart/solar-pv-jobs-to-crash-if-renewable-energy-target-is-scrapped-report-finds-20140129-31m9x.html">a negative message to investors</a> in wind, solar and other renewable generation options. For example, Meridian Energy has already <a href="http://www.theaustralian.com.au/business/latest/meridian-will-quit-if-ret-scrapped/story-e6frg90f-1226831754580">stated it will not invest further</a> in renewable energy in Australia if the RET is scrapped.</p>
<p>Australia needs to build a <a href="https://www.uts.edu.au/sites/default/files/Australia%27s_Manufacturing_Future.pdf">more innovative industry and manufacturing base</a> for the future, including creating more jobs in nanotechnology and biotechnology. It’s in Australia’s interests not to be left behind in the growth industries of the future – and those include renewable energy.</p><img src="https://counter.theconversation.com/content/23528/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Patrick Crittenden is the Director of Sustainable Business Pty Ltd a consulting company that provides advice to business and government on energy efficiency policy and practice. He has previously consulted to the International Energy Agency, the Federal Government Department of Industry and the NSW Office of Environment and Heritage and on the development and deployment of energy efficiency policies and programs.
</span></em></p><p class="fine-print"><em><span>Suzanne Benn 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>The debate about the future of Australia’s Renewable Energy Target (RET) has largely focused on the issue of immediate costs to business. But if we’re thinking about Australia’s long-term economic interests…Suzanne Benn, Chair in Sustainable Enterprise, UTS Business School , University of Technology SydneyPatrick Crittenden, Researcher and PhD Student, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/234092014-02-19T02:52:19Z2014-02-19T02:52:19ZKilling renewables softly with endless reviews<figure><img src="https://images.theconversation.com/files/41904/original/s2yhnhhp-1392777105.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">One in five Queensland homes have gone solar, like this house in Brisbane's Alexandra Hills.</span> <span class="attribution"><a class="source" href="http://www.flickr.com/photos/68676385@N00/6689340997/in/photolist-bc7C2t-bc7BX8-9bweoo-9Qvv3L-7AC2Nq-8R8hLQ-9s2fi6-beg99H-dcWj5G-czAMZA-cAfXZS-dUXAQP-bxxCXp-hTMFjw-99Et3T-9eyfMV-dBQu7n-9MVSHX-9MYCn5-9MYB2W-i6Vjes-9YhkfW-dUbJ7p-dQmU1Q-dUkUp4">Melanie Cook/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>You have to feel sorry for people working in renewable energy. Their industry has been reviewed to within an inch of its short life, and the goalposts have been shifted so many times that they don’t know where to kick the ball.</p>
<p>And now they are to be reviewed again, this time by a panel that is hostile to them. The chair of the review, Dick Warburton, <a href="http://reneweconomy.com.au/2014/australia-chooses-climate-change-denier-to-head-renewables-review-65883">does not believe</a> in human-caused climate change. So if there is no problem with greenhouse gas emissions, why would we need policies to reduce them?</p>
<p>He is joined, <a href="https://theconversation.com/renewables-inquiry-leader-vows-open-mind-on-targets-future-23305">among others</a>, by Brian Fisher, who has a long history of working closely with the fossil fuel industries. For many years he was the executive director of the Australian Bureau of Agricultural and Resource Economics, a government research agency that was <a href="http://www.ombudsman.gov.au/files/investigation_1998_01.pdf">castigated</a> by the Commonwealth Ombudsman for taking money from the fossil fuel industries to finance its work on climate change policy. Fisher did not agree that his work had been “compromised” or that he displayed “poor judgment” in having his agency’s policy work partly funded by Exxon, BHP and the Australian Coal Association.</p>
<h2>Renewables under review - again</h2>
<p>The last review of the <a href="http://ret.cleanenergyregulator.gov.au/about-the-schemes">Renewable Energy Target (RET)</a> was published just over a year ago, and was conducted for the federal government by the independent Climate Change Authority. I was part of that review and remain one of the <a href="http://climatechangeauthority.gov.au/board">Authority’s members</a>.</p>
<p>The RET scheme currently mandates that electricity retailers must source 41,000 GWh of electricity from new renewable sources by 2020. During the six months that our review took, the most frequent plea from industry we heard was to provide investment certainty for the emerging companies.</p>
<p>Even the Australian Industry Group, <a href="http://www.aigroup.com.au/policy/submissions/environment">no friend of strong greenhouse gas reduction policy</a>, argued that any further change threatened to “reduce the credibility and reliability of energy policy as a whole”.</p>
<p>The Climate Change Authority published <a href="http://climatechangeauthority.gov.au/ret">its findings in December 2012</a>, concluding:</p>
<blockquote>
<p>Transitioning to a clean energy future will require considerable investment over decades. A stable and predictable policy environment is crucial to fostering the confidence required for such investment.</p>
</blockquote>
<p>The Authority’s 2012 conclusions echoed those from a decade earlier.</p>
<p>Back in 2003, the Howard government called its own review into whether to extend or end Australia’s first renewable energy target. Chaired by former Coalition Senator Grant Tambling, it came to the same conclusion — stop meddling.</p>
<p>In fact, the <a href="http://catalogue.nla.gov.au/Record/3085554">Tambling review</a> recommended <em>expanding</em> the renewable energy target, “as a sensible insurance policy against significant greenhouse gas abatement measures being introduced in the future”.</p>
<h2>History repeating?</h2>
<p>Yet the meddling with the renewables industry has begun again. Even before the new Warburton review gets under way, the message has been sent to renewable energy investors: the coal lobby is back in town. </p>
<p>As former Liberal staffer Guy Pearse revealed in his shocking book, <a href="http://www.highanddry.com.au/media/GP_High%20_Dry_Oct_07_presentation.pdf">High and Dry</a>, in the Howard years the fossil fuel lobby became so accustomed to setting energy policy that they bragged about vetting cabinet submissions.</p>
<p>The <a href="http://www.abc.net.au/4corners/content/2006/s1566257.htm">“greenhouse mafia”</a>, as they called themselves, have certainly had the ear of the Coalition in the past. In May 2004, Prime Minister John Howard convened a <a href="http://www.blackincbooks.com/blackitv/scorcher-dirty-politics-climate-change-clive-hamilton">secret meeting</a> with Industry Minister Ian Macfarlane (in the same portfolio then as now) and energy executives to come up with alternatives to avoid expanding the Renewable Energy Target, which was then a piddling 2% objective.</p>
<p><a href="http://www.theage.com.au/articles/2004/10/02/1096527990014.html">Leaked minutes</a> taken by Rio Tinto’s Sam Walsh show Macfarlane chiding senior executives of Rio Tinto, BHP Billiton, Alcoa, Origin Energy and others for their “roaring silence” and for letting renewables advocates set the public agenda. At the end of the meeting, <a href="http://www.tai.org.au/documents/downloads/WP56.pdf">the minutes</a> noted Macfarlane: </p>
<blockquote>
<p>stressed the need for absolute confidentiality. He said if the Renewables Industry found out there would be a huge outcry.</p>
</blockquote>
<h2>Falling demand boosting renewables’ market share</h2>
<p>A decade on, the coal-fired generators need all the political help they can get because something has happened that no one predicted. Four years ago, after 100 years of uninterrupted growth, demand for electricity in Australia went into decline.</p>
<p>Energy analyst Hugh Saddler <a href="http://theconversation.com/why-is-electricity-consumption-decreasing-in-australia-20998">estimates</a> that the fall from expected levels has been equivalent to the output of three coal-fired power plants. He attributes it to more energy-efficient buildings and appliances, structural change in the economy away from energy-intensive industry (including manufacturing), and residential consumers taking less power from the grid, in part because of huge growth in rooftop solar panels.</p>
<p>The decline in demand means that the 41,000 GWh of new renewable energy is expected to represent around 27% of electricity supply in 2020, instead of the 20% initially estimated. This is very good news, not least to those concerned about climate change – but not for coal-fired power generators.</p>
<p>But isn’t renewable energy too costly? Interestingly, the Climate Change Authority found that the entry of new renewables into the market has actually been <a href="https://theconversation.com/is-15-a-year-really-too-much-to-pay-for-renewable-energy-22848">driving the wholesale price of electricity down</a>, both because they increase supply and because they have lower marginal costs of production. The profits of coal-fired generators are being squeezed, and they hate it.</p>
<p>For all their lobbying of <a href="http://www.theaustralian.com.au/national-affairs/policy/cabinet-rift-on-ret-hunt-firm-amid-scrapping-calls/story-e6frg6xf-1226799349909">sympathetic MPs and senators</a>, there is a problem. Other than in some local communities where attitudes to wind farms have been poisoned by disinformation spread by groups like the shadowy <a href="http://www.sourcewatch.org/index.php?title=Waubra_Foundation">Waubra Foundation</a> (which shares a PO box with a mining investment company), Australians love the idea of getting energy from the wind and the sun.</p>
<h2>Solar homes as a political force</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=617&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=617&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=617&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=776&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=776&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41876/original/973q3pb5-1392768189.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=776&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Solar photovoltaic panel uptake across Australia.</span>
<span class="attribution"><a class="source" href="http://www.acilallen.com.au/cms_files/ACILAllenSolarPhotovoltaic2013.pdf">ACIL Allen Consulting for the Australian Renewable Energy Agency</a></span>
</figcaption>
</figure>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=638&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=638&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=638&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=802&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=802&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41878/original/gvw93vx3-1392768516.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=802&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Going solar in the suburbs: solar PV uptake in Brisbane.</span>
<span class="attribution"><a class="source" href="http://www.acilallen.com.au/cms_files/ACILAllenSolarPhotovoltaic2013.pdf">ACIL Allen Consulting</a></span>
</figcaption>
</figure>
<p>While most Australians took a set against the carbon price, the Renewable Energy Target has always enjoyed strong public support, even if it does increase average household electricity bills by <a href="http://climatechangeauthority.gov.au/sites/climatechangeauthority.gov.au/files/20121210%20Renewable%20Energy%20Target%20Review_MASTER.pdf">$1.30 a week</a>, or $68 a year, as the Authority’s <a href="http://climatechangeauthority.gov.au/sites/climatechangeauthority.gov.au/files/20121210%20Renewable%20Energy%20Target%20Review_MASTER.pdf">report found</a>.</p>
<p>Australians particularly like the element of the scheme that encourages the installation of rooftop solar energy. The surge in demand caught everyone by surprise, and now <a href="http://www.sunshinecoastdaily.com.au/news/mcardle-plain-wrong-energy-says-howard-adviser/2174677/">1.4 million homes</a> across the nation generate their own electricity from the sun. </p>
<p>And contrary to popular myth, that’s not just happening in wealthy homes. <a href="http://www.acilallen.com.au/cms_files/ACILAllenSolarPhotovoltaic2013.pdf">Research for the federal government</a> late last year found that outer suburbs and regional areas have led the way in going solar, as these maps of Australia and Brisbane show. (You can see detailed city and state maps at the end of <a href="http://www.acilallen.com.au/cms_files/ACILAllenSolarPhotovoltaic2013.pdf">this report</a>.)</p>
<p>For this reason, the government knows it cannot simply kill off the scheme as <a href="http://www.theaustralian.com.au/national-affairs/opinion/no-end-in-sight-to-soaring-electricity-prices/story-e6frgd0x-1226830886617">the mining lobby</a>, some <a href="http://www.theaustralian.com.au/national-affairs/policy/renewable-energy-target-distorting-market-bca/story-e6frg6xf-1226826629736">power companies</a> and <a href="http://www.theaustralian.com.au/national-affairs/policy/cabinet-rift-on-ret-hunt-firm-amid-scrapping-calls/story-e6frg6xf-1226799349909">many Coalition MPs and senators</a> would like. </p>
<p>Instead, it is easier to choke renewables slowly - and the Warburton review is the government’s way of slipping the rope around the industry’s neck.</p><img src="https://counter.theconversation.com/content/23409/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Clive Hamilton is a member of the Climate Change Authority.</span></em></p>You have to feel sorry for people working in renewable energy. Their industry has been reviewed to within an inch of its short life, and the goalposts have been shifted so many times that they don’t know…Clive Hamilton, Vice Chancellor's Chair, Centre For Applied Philosophy & Public Ethics (CAPPE), Charles Sturt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/233052014-02-17T05:26:58Z2014-02-17T05:26:58ZRenewables inquiry leader vows ‘open mind’ on target’s future<figure><img src="https://images.theconversation.com/files/41676/original/msypzxpq-1392610446.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Environment Minister Greg Hunt has announced a review of Australia's renewable energy target.</span> <span class="attribution"><span class="source">AAP/Alan Porritt</span></span></figcaption></figure><p>The head of the Abbott government’s new renewable target review says he is going into the inquiry with “a very open mind”, despite his scepticism about humans’ contribution to global warming.</p>
<p>Former Reserve Bank board member and business leader Dick Warburton told The Conversation that while people probably knew his position on global warming, they should not assume he had a pre-determined plan to undermine the renewable energy scheme.</p>
<p>In 2011, Mr Warburton co-wrote an article <a href="http://quadrant.org.au/magazine/2011/03/the-intelligent-voter-s-guide-to-global-warming/">The Intelligent Voter’s Guide to Global Warming</a>, criticising “the groupthink of climate scientists”.</p>
<p>“But I’ll be going in [to the Renewable Energy Target review] with a very open mind on the outcome because there are a lot of issues other than global warming,” Mr Warburton said this afternoon. “There are economic issues and financial obligations already there.”</p>
<p>The new renewables review, due under existing law, will consider the contribution of the target to reducing emissions and its impact on electricity prices and energy markets, as well as the costs and benefits for the renewable energy sector, the manufacturing sector and Australian households.</p>
<p>Announcing the review, Industry Minister Ian Macfarlane said it would be “extensive. It won’t be a desktop audit.”</p>
<p><a href="http://ret.cleanenergyregulator.gov.au/about-the-schemes">The target at present</a> is for 20% of Australia’s electricity to come from renewable energy, such as wind, hydro and solar power, by 2020. </p>
<p>There have been calls from <a href="http://www.theaustralian.com.au/national-affairs/policy/cabinet-rift-on-ret-hunt-firm-amid-scrapping-calls/story-e6frg6xf-1226799349909">within the government and from industry</a> – particularly large energy and manufacturing companies – to water down or scrap that target to reduce power costs.</p>
<p>The last review of the Renewable Energy Target was <a href="http://climatechangeauthority.gov.au/sites/climatechangeauthority.gov.au/files/20121210%20Renewable%20Energy%20Target%20Review_MASTER.pdf">completed in December 2012</a> by the federal government’s Climate Change Authority. It concluded that the government should retain the current Renewable Energy Target, and that scrapping it would save an average household <a href="https://theconversation.com/is-15-a-year-really-too-much-to-pay-for-renewable-energy-22848">only $15 a year</a>.</p>
<p>The new review will be finished by the middle of this year and feed into the government’s <a href="http://ewp.industry.gov.au/">energy white paper</a>.</p>
<p>The announcement of the review came after United States Secretary of State John Kerry <a href="http://www.bloomberg.com/news/2014-02-16/kerry-burnishes-his-green-badge-in-asia-ahead-of-keystone-call.html">declared</a> on Sunday that:</p>
<blockquote>
<p>we have to invest in new technology that will help us bring renewable energy sources like solar, wind, and hydro power, not only to the communities where those resources are abundant but to every community and to every country on every continent.</p>
</blockquote>
<h2>Rethinking Australia’s energy mix</h2>
<p>In Canberra today, the Industry Minister said that Australia’s diversity of energy sources was one of our greatest national strengths. “Renewable energy has contributed to the energy mix, but we must ensure that the program is operating effectively,” Mr Macfarlane said.</p>
<p>Outlining the review’s scope, Environment Minister Greg Hunt said: “Our goals are very simple: to maintain investment certainty, to review progress and to ensure we can take the pressure off electricity prices.”</p>
<p>The government was “committed to easing the pressure of electricity prices for families and business. That’s why we’re getting rid of the carbon tax.”</p>
<p>The head of the review panel, Mr Warburton, came under fire after his appointment was announced because of his previously expressed view that <a href="http://www.abc.net.au/lateline/business/items/201110/s3336521.htm">“the science is not settled”</a> on the cause of climate change.</p>
<p>Asked about it today, Mr Warburton said he firmly believed there was climate change going on “but there are many issues and things that can cause climate change”.</p>
<p>“As far as global warming is concerned, I’m not a denier but I am a sceptic about whether man-made carbon dioxide is a principal cause of global warming”.</p>
<p>The other members of the review panel are Matthew Zema, the chief executive of the <a href="http://www.aemo.com.au/">Australian Energy Market Operator</a>; Brian Fisher, managing director of <a href="http://www.baeconomics.com.au/%E2%80%8E">BAEconomics</a> and a former senior federal bureaucrat; and <a href="http://au.linkedin.com/pub/shirley-in-t-veld/5a/867/976">Shirley In’t Veld</a>, a CSIRO board member and a former energy company CEO.</p>
<h2>‘Weapon of mass destruction’: Kerry</h2>
<p>Meanwhile, speaking in Jakarta at the end of his three-nation visit to Asia, US Secretary of State John Kerry declared climate change is “perhaps the world’s most fearsome weapon of mass destruction”, and dismissed its deniers as flat earthers.</p>
<p>In an extremely strongly-worded speech, Kerry said “a tiny minority of shoddy scientists and extreme ideologues” should not be allowed to compete with scientific fact.</p>
<p>“Nor should we allow any room for those who think that the costs associated with doing the right thing outweigh the benefits,” he said.</p>
<p>“We certainly should not allow more time to be wasted by those who want to sit around debating whose responsibility it is to deal with this threat, while we come closer and closer to the point of no return.”</p>
<p>He said that US President Barack Obama and he believed very deeply “that we do not have time for a meeting anywhere of the Flat Earth Society”.</p>
<p>The Abbott government is committed to reducing emissions by 5% on 2000 levels by 2020, but the repeal of the carbon tax is one of its central planks. It plans to replace this by a “direct action plan”, which critics argue will be less effective.</p>
<p>Kerry said that this week he would be instructing all the chiefs of missions of American embassies all over the world “to make climate change a top priority and to use all the tools of diplomacy that they have at their disposal in order to help address this threat”.</p>
<p>“In a sense, climate change can now be considered another weapon of mass destruction, perhaps the world’s most fearsome weapon of mass destruction,” he said.</p>
<p>The science of climate change was “leaping out at us like a scene from a 3D movie”, with 97% of climate scientists confirming that climate change was happening and that human activity was responsible. Scientists agreed that “if we continue to go down the same path that we are going down today, the world as we know it will change – and it will change dramatically for the worse”.</p>
<p>Scientists predicted that by the end of the century, the sea could rise by a full metre – enough to put half of Jakarta under water.</p>
<p>He said he would be the first to acknowledge the US’s responsibility to tackle the problem. But the US could not solve the problem or foot the bill alone. A global solution was needed. “That is why the United States is prepared to take the lead in bringing other nations to the table.”</p>
<p>He said that he was pleased to say the leaders of China – which he has just visited – “agree it is time to pursue a cleaner path forward.”</p><img src="https://counter.theconversation.com/content/23305/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan 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>The head of the Abbott government’s new renewable target review says he is going into the inquiry with “a very open mind”, despite his scepticism about humans’ contribution to global warming. Former Reserve…Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/228482014-02-10T19:33:54Z2014-02-10T19:33:54ZIs $15 a year really too much to pay for renewable energy?<figure><img src="https://images.theconversation.com/files/41146/original/59pq66q7-1392013185.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cooling towers at Yallourn, one of Victoria's major brown coal power generators.</span> <span class="attribution"><span class="source">Flickr/ccdoh1</span></span></figcaption></figure><p>Australia’s Renewable Energy Target looks likely to be weakened or even axed, with the Prime Minister saying the scheme needs to be reviewed because it is causing <a href="http://www.theguardian.com/environment/2013/dec/18/renewable-energy-tony-abbott-signals-he-could-wind-back-or-scrap-targets">“pretty significant price pressure”</a>. </p>
<p>But does $15 a year sound like a “pretty significant” cost to you?</p>
<p>According to the last national review of the Renewable Energy Target, $15 a year from now to 2031 is all that an average Australian household would save if we scrapped our national scheme to drive extra investment in renewable power.</p>
<p><a href="http://climatechangeauthority.gov.au/sites/climatechangeauthority.gov.au/files/20121210%20Renewable%20Energy%20Target%20Review_MASTER.pdf">That review</a> - by the independent Climate Change Authority, with <a href="http://climatechangeauthority.gov.au/sites/climatechangeauthority.gov.au/files/121217%20RET%20Review%20SKM%20MMA%20Report%20Final.pdf">economic modelling</a> by global consultants Sinclair Knight Merz - was completed just over a year ago, in December 2012.</p>
<p>Yet that very recent finding hasn’t stopped the federal government setting up a new Renewable Energy Target review, with Mr Abbott saying last week that the review would <a href="http://www.pm.gov.au/media/2014-02-06/joint-doorstop-interview-dr-bill-glasson-brisbane">“consider the impact of the renewable energy target on power prices”</a>. </p>
<p>Already there have been <a href="http://www.theaustralian.com.au/national-affairs/policy/cabinet-rift-on-ret-hunt-firm-amid-scrapping-calls/story-e6frg6xf-1226799349909">front page reports of rifts</a> within the government about the scheme’s future.</p>
<p>Some, including Nationals Senator Ron Boswell, want to scrap the renewables target entirely, while others, including Environment Minister Greg Hunt, say they are <a href="http://www.afr.com/p/national/direct_action_will_have_penalties_4iDLu7przLNuEYbABeVszL">“committed to keeping the RET because of the pre-election commitment and it’s been an effective way of reducing emissions”</a>. </p>
<p>So just what is the Renewable Energy Target? And what does it really cost an average Australian household - not just now, but in the future - according to the reviews and reports done on it before?</p>
<h2>What are we aiming for?</h2>
<p>The Renewable Energy Target (RET) is designed to encourage additional investment in renewable energy generation. It does this by requiring wholesale electricity consumers (mainly big power retailers) to purchase a certain percentage of renewable energy, which increases each year. This incurs a cost to retailers - companies like AGL and Origin - which is passed on to consumers through electricity bills.</p>
<p>The current scheme is a more ambitious version of the scheme first <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1314/ClimateChangeTimeline">set up by the Howard government</a> in 2001. In 2009, the target was increased five-fold (under the Rudd government, with <a href="http://www.pacia.org.au/mediacentre/media-20-08-2009-1">Coalition support</a>) to mandate that <a href="https://www.coag.gov.au/sites/default/files/Renewable_Energy_Target_Scheme.pdf">45,000 gigawatt hours</a> of Australia’s electricity generation must come from renewable resources by 2020. At the time the RET was legislated, this was projected to be the equivalent of 20% of total energy supplied in 2020.</p>
<p>It wasn’t controversial at the time; in fact, then opposition MP <a href="http://greghunt.com.au/Media/OpinionPieces/tabid/88/articleType/ArticleView/articleId/1223/Time-for-Bipartisanship-on-Renewable-Energy--article-in-The-Punch.aspx">Greg Hunt wrote an article that year</a>, questioning why it was taking so long to introduce.</p>
<h2>What does the renewable target cost you?</h2>
<p>Currently, around 3-4% of your bill can be attributed to the Renewable Energy Target. For a typical residential consumer, that works out to be about $50-$70 per year, out of an average bill of about $1800-$2200. So in that sense, the Prime Minister is right about there being some additional cost.</p>
<p>But let’s put that in perspective. As the graph below shows, the main reason for “pretty significant price pressure” on retail power prices is <a href="https://theconversation.com/factcheck-have-power-prices-gone-up-94-under-labor-15701">increasing network costs</a>. According to the <a href="http://www.aemc.gov.au/market-reviews/completed/retail-electricity-price-trends-2013.html">Australian Energy Market Commission</a>, these have and will continue to dominate electricity price increases. </p>
<p>You have to look hard to even see the costs associated with renewable energy.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=500&fit=crop&dpr=1 754w, https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=500&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/40947/original/zcv6w8s9-1391728661.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=500&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Components of residential electricity tariffs. The Renewable Energy Target scheme costs are shown in yellow (SRES: Small-scale Renewable Energy Scheme) and red (LRET: Large-scale Renewable Energy Target).</span>
<span class="attribution"><span class="source">Data from the Australian Energy Market Commision</span></span>
</figcaption>
</figure>
<h2>Increased competition, lower costs</h2>
<p>When you consider the way renewables interact with the wholesale electricity market, the overall cost is even less.</p>
<p>Adding more renewable energy into the mix of our electricity supplies actually has the effect of <em>lowering</em> wholesale electricity prices. It may seem counter-intuitive at first, but it is simply the laws of supply and demand at work.</p>
<p>If you increase supply and competition in a market, prices can be expected to fall. In the case of renewables, it is exacerbated by the low marginal cost of generation, and is known as the <a href="https://theconversation.com/electricity-prices-fall-renewable-energy-deserves-merit-13300">“merit order effect”</a>.</p>
<p>The merit order effect is often overlooked in discussions of renewable energy costs. If lower wholesale prices were passed through to consumers, the overall cost of the Renewable Energy Target scheme would be even lower.</p>
<p>In fact, some energy users may be effectively overcompensated, and benefiting from this effect. Trade exposed industries (such as aluminium smelting) are exempt from paying 90% of the Renewable Energy Target costs, but may benefit from lower wholesale prices.</p>
<h2>Why not tinker with the target?</h2>
<p>In the few years since the Renewable Energy Target was set, demand for electricity has dropped, meaning the amount of power we’re likely to consume in 2020 has been revised significantly downwards. Under current arrangements, that means that the RET scheme would end up providing more than 20% of total power demand in 2020 - probably more like 26%.</p>
<p>One option being <a href="http://www.smh.com.au/federal-politics/political-news/environment-minister-greg-hunt-says-he-is-keeping-green-investments-in-mind-20140205-321so.html">pushed by Origin Energy</a> is for a “25% by 2025” target. That might sound like an increase - but actually that would mean less renewable energy in 2025 than Australia is currently on track to build by 2020. </p>
<p>On the weekend, Finance Minister Mathias Cormann was asked if the government planned to scrap or weaken the RET <a href="http://www.financeminister.gov.au/transcripts/2014/tr-2014-14.html">on Sky News</a>. Senator Cormann said the government was looking for “sensible adjustments” to bring down power prices, since that would boost our international competitiveness while “helping families with cost of living pressures”.</p>
<p>So let’s say Australia adjusted its current target to make sure we don’t build any more than 20% renewable energy by 2020. How much would it help families with cost of living pressures?</p>
<p>The <a href="http://climatechangeauthority.gov.au/ret">previous review</a> for the federal government looked at just that option. And including the impacts on the wholesale market, the saving for an average Australian consumer was estimated to be between $0 and $10 per year. </p>
<p>Going further, and scrapping the Renewable Energy Target entirely, would save just $15 per year. </p>
<p>Yet the constant reviews and threat of further tinkering with the target is <a href="http://www.smh.com.au/federal-politics/political-news/clean-energy-firms-fear-cuts-to-targets-20140209-32a0v.html#ixzz2stSDB8ui">paralysing solar and wind energy projects worth up to $18 billion</a> and <a href="http://www.smh.com.au/environment/energy-smart/solar-pv-jobs-to-crash-if-renewable-energy-target-is-scrapped-report-finds-20140129-31m9x.html">putting thousands of jobs at risk</a>. As of late last year, the <a href="http://www.smh.com.au/environment/energy-smart/solar-pv-jobs-to-crash-if-renewable-energy-target-is-scrapped-report-finds-20140129-31m9x.html">solar PV industry alone</a> employed about 13,600 people.</p>
<h2>Will we let history repeat?</h2>
<p>With such a relatively small impact on retail prices, why all the fuss about needing to change the target?</p>
<p>The existing fossil fuel electricity generators <a href="http://reneweconomy.com.au/2014/latest-threat-networks-death-spiral-gas-83467?utm_source=rss&utm_medium=rss&utm_campaign=latest-threat-networks-death-spiral-gas-83467">have been hit hard</a> by the impact renewables has had on the market: not only are they being displaced by renewables and selling less energy, they are receiving a lower wholesale price.</p>
<p>In the past, the demands of the existing power industry to protect their own interests have easily won out against the emerging renewable industry. For instance, a <a href="http://www.audit.vic.gov.au/reports__publications/reports_by_year/2010-11/20110406_fred.aspx">2011 Victorian Auditor-General’s Report noted</a> that a state renewable energy scheme was weakened:</p>
<blockquote>
<p>primarily to alleviate the concerns of brown coal generators that the 10 per cent target would deliver too much renewable energy generation too quickly, which would reduce wholesale electricity prices and adversely affect existing generators.</p>
</blockquote>
<p>Will that happen all over again, this time at a national level?</p>
<p>Perhaps. But this time, the renewable industry has grown and is planning to fight back with a <a href="http://www.theguardian.com/environment/2014/feb/05/solar-industry-to-launch-marginal-seats-campaign-to-save-renewables-target">marginal seats campaign</a> and a public appeal to <a href="http://www.cleantechfundr.com/campaigns/save-the-ret/">save the current Renewable Energy Target</a>. </p>
<p>With a bigger renewables industry, more jobs at stake and greater public awareness, maybe this time will be different.</p><img src="https://counter.theconversation.com/content/22848/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell has previously received funding from the AEMC's Consumer Advocacy Panel. </span></em></p>Australia’s Renewable Energy Target looks likely to be weakened or even axed, with the Prime Minister saying the scheme needs to be reviewed because it is causing “pretty significant price pressure”. But…Dylan McConnell, Research Fellow, Melbourne Energy Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/197452013-11-06T06:30:57Z2013-11-06T06:30:57ZHearts and minds must be won for us to fill the energy gap<figure><img src="https://images.theconversation.com/files/34460/original/vzrzhj3f-1383667889.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Building in their backyard will annoy them - but the public know energy decisions have to be made.</span> <span class="attribution"><span class="source">John Giles/PA </span></span></figcaption></figure><p>On a clear day one can see North Somerset – the future site of Britain’s <a href="http://www.bbc.co.uk/news/business-24604218">Hinkley Point C</a> new nuclear power station – from Cardiff Bay, across the Severn Estuary. Deep in hilly Powys, arguments rage around where wind turbines should be located (or if they should be built at all). And although plans for the 11-mile, hydro-electric <a href="https://theconversation.com/the-untapped-potential-of-our-tides-14943">Severn Barrage</a> have once again been kicked into the long grass, few would bet against this hardy proposal rising again.</p>
<p>Wales faces critical decisions, as does the rest of the UK, about how to meet its future energy needs. An energy generation network that is cleaner and more resilient to shocks is slowly becoming a reality. But the question remains as to exactly what the future will hold.</p>
<p>Rising household energy bills threaten the living standards of many families. <a href="http://www.channel4.com/news/energy-price-justin-welby-big-six-british-gas">Public anger</a> at the “Big Six” energy companies and the government’s claims to be powerless to prevent further price hikes is growing. Fuel poverty – the choice between heating and eating – is <a href="http://www.telegraph.co.uk/finance/personalfinance/consumertips/household-bills/10402771/UK-second-only-to-Estonia-on-fuel-poverty.html">a harsh reality</a> for many.</p>
<p>So it is against this tense backdrop that public views about the energy system are formed and negotiated. <a href="http://psych.cf.ac.uk/understandingrisk/research/public.html">Studies show</a> that people are very positive towards renewable technologies like wind, wave and solar, dubious about the health and environmental impacts of fossil fuels like coal and gas, and in two minds about the “devil’s bargain” of nuclear power.</p>
<p>This picture changes a little on moving from the national perspective to a local one. Here specific developments are likely to be <a href="http://www.independent.co.uk/news/uk/home-news/the-battle-of-balcombe-west-sussex-town-is-new-front-line-in-fracking-debate-8784257.html">strongly challenged</a> and contested, whether they are wind turbines, or fracking gas and oil wells. People are often accused of adopting a “not in my backyard” – nimby attitude – but research has revealed a more complex picture. People’s views about energy are comprised of more than a kneejerk yes or no answer.</p>
<p>Often, it is the lack of public involvement at the early stages of discussion about where to site new energy infrastructure that is at the heart of opposition. So although there are some firm opponents of wind farms (as well as many enthusiastic supporters), politicians and planners should expect controversy over “fracking” to be just as heated.</p>
<p>Recent <a href="http://www.ukerc.ac.uk/support/article3045-New-UKERC-research-defines-values-which-determine-public-acceptance-of-energy-system-change">research</a>, conducted over four years at Cardiff University with thousands of members of the public, has produced the most comprehensive view of the public’s view of energy. The study found that although opinions on different energy technologies vary for a number of reasons, there are some core values that underpin these judgements.</p>
<p>Whether it is wind farms or nuclear power, the public make up their minds on energy technologies according to a set of underlying principles that include fairness, avoiding wastefulness and affordability. If a technology is seen as reflecting these values, it is likely to be approved of. If it seems to violate them, it will be viewed less favourably.</p>
<p>An important conclusion of the study was that the British public wants and expects change from the energy system - and that if change is going to happen, we have the opportunity to do it right. Although the cost of energy bills was a key consideration, people also considered that affordability was about paying a fair price, and balancing today’s needs with investing in the future.</p>
<p>The study’s key insight, though, is that it is people’s values, more than the facts and figures constantly thrown back and forth about energy, which play the biggest role in shaping perceptions of energy and climate change. This conclusion is an important reminder that tackling climate change is at heart a human challenge, not only a technological one.</p>
<p>How we produce and consume energy will change one way or another: ageing power stations must be replaced, and the need to move towards a cleaner, more sustainable energy system will guide these changes. But exactly what shape energy future will take is something in which we all have a stake – and so it’s a debate in which as many people as possible should be involved.</p>
<p><em>Dr Adam Corner speaks at the free talk, “Mind the gap: meeting the UK energy challenge”, at Cardiff University on November 6.</em></p><img src="https://counter.theconversation.com/content/19745/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Adam Corner receives funding from the Natural Environment Research Council. He also works for the Climate Outreach & Information Network (COIN) managing the Talking Climate programme. </span></em></p>On a clear day one can see North Somerset – the future site of Britain’s Hinkley Point C new nuclear power station – from Cardiff Bay, across the Severn Estuary. Deep in hilly Powys, arguments rage around…Adam Corner, Research Associate, Understanding Risk, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/166432013-08-02T05:44:02Z2013-08-02T05:44:02ZGermany decisive while UK dithers on green energy routes<figure><img src="https://images.theconversation.com/files/28508/original/znbk8p3f-1375374827.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Costs vs carbon</span> <span class="attribution"><span class="source">Rui Vieira/PA</span></span></figcaption></figure><p>Germany and the UK have ambitious clean energy policies. Both have set themselves national emission reduction targets beyond the European Union’s goal of 20% below emissions levels of 1990. Germany has committed itself to a 40% cut by 2020, the UK a reduction of 35% by 2022, and each promises further reductions in later years. Both countries are going to struggle to achieve these self-imposed goals.</p>
<p>In Germany’s case, one obvious reason for this is its 2011 decision following the Fukushima accident to close half the country’s nuclear reactors immediately, and phase out the rest <a href="http://www.bbc.co.uk/news/world-europe-13592208">within a decade</a>. Abandoning such a large source of low carbon energy clearly makes decarbonisation of the power system harder.</p>
<p>The difficulty is compounded by the fact that Chancellor Angela Merkel did not relax targets that had been toughed up only just the previous year. These had been made on the assumption that the lives of Germany’s current generation of reactors would be prolonged, not curtailed.</p>
<p>Britain’s problem is one of dither, not distaste. The numerous energy white papers drawn up by the UK government in the 1990s and early 2000s totally failed to address whether to replace the UK’s ageing reactor fleet, and if so how. The final realisation has come late in the game that this particularly expensive form of low carbon energy can only be financed in a liberalised energy market through taxpayer paid-for, state-organised price support. The exact level of that support is what the Treasury and France’s EdF are <a href="http://www.theguardian.com/politics/2013/jul/05/davey-minister-nuclear-power-hinkley-point">haggling over</a>, but it looks likely that Britain will be down to one functioning reactor before EdF gets around to building anything new.</p>
<p>One positive effect of Germany’s Fukushima fright was to boost support for renewables. It is important to realise that in Germany, unlike other countries and certainly unlike Britain, deploying wind turbines and solar panels has become a grassroots popular movement.<a href="http://www.oxfordenergy.org/wpcms/wp-content/uploads/2012/07/SP-26.pdf">Nearly half</a> the country’s installed renewable energy capacity is owned by private citizens, largely through cooperatives, who have responded to generous tariffs offered over 20 years and sometimes to a little moral urging by groups such as local Protestant churches.</p>
<p>By contrast, Germany’s big four utilities have only played a minor role in renewable energy in Germany and, ironically, a much bigger role outside. German company Eon, for instance, helped build the <a href="http://www.londonarray.com/">London Array</a> wind farm in the Thames estuary. The surge in renewable deployment has provided jobs in and orders for Germany’s extensive and highly capable engineering industry. According to the <a href="http://www.vdma.org/en_GB">VDMA</a> engineering sector, wind power accounts for 50,000 jobs directly in manufacturing and installing turbines, and another 50,000 indirectly in components. By comparison, a UK government employment estimate in 2011 for onshore wind was <a href="https://www.gov.uk/onshore-wind-part-of-the-uks-energy-mix">8,600 jobs</a>, though employment in offshore wind is expected to expand faster than in Germany.</p>
<p>The enthusiasm of German people for renewables helps explain the degree to which they have been prepared to pay higher renewable energy surcharges so that Germany’s energy-intensive companies can pay less. Of course, there’s also an element of industrial patriotism and pride in their world-leading exports, and most Germans want to keep it that way. However, this cross-subsidisation of companies by households may be coming to an end. Merkel’s government, in the run-up to this September’s election, has decided that energy-intensive companies should start to pay some of the fees that ordinary householders have been shouldering. Moreover, the European Commission is now investigating whether or not the discounts that German companies obtain on their renewable energy surcharges constitute <a href="http://www.spiegel.de/international/europe/european-commission-set-to-fight-german-energy-subsidies-a-902269.html">illegal state aid</a>.</p>
<p>The post-Fukushima phase in Germany’s enthusiasm for renewables is now passing, above all because of the soaring cost of renewable subsidies. These totalled €20 billion in 2012, and are approaching €30 billion this year. Subsidy reform is clearly on the way, whoever wins the September election. The challenge will be to reduce subsidy levels for new projects, especially where technology costs are coming down, such as with solar power, without alienating investors as many other European governments have done.</p>
<p>One possible way to make renewable subsidy levels more predictable and therefore in the long run more sustainable to taxpayers might be, ironically, to take a leaf out of Britain’s book. Alone among EU countries, the UK has set out a multi-year financial cap on renewable (and nuclear) subsidies, what the Treasury calls the <a href="http://www.greenpeace.org.uk/newsdesk/energy/analysis/everything-you-could-ever-want-know-about-levy-control-framework">Levy Control Framework</a>. The framework caps the total maximum annual subsidy for 2012-13 at £2.35 billion, rising to £7.6 billion by 2020 (at 2012-adjusted prices). This is far less than the £30 billion Germany is spending now - a measure of how empty much of the UK’s renewable rhetoric is. But the concept of a hard subsidy cap is something Germany might consider. After all, sustainability has a financial as well as an environmental dimension.</p><img src="https://counter.theconversation.com/content/16643/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Buchan receives funding from the European Parliament.</span></em></p>Germany and the UK have ambitious clean energy policies. Both have set themselves national emission reduction targets beyond the European Union’s goal of 20% below emissions levels of 1990. Germany has…David Buchan, Senior Research Fellow, Oxford Energy Institute, University of OxfordLicensed as Creative Commons – attribution, no derivatives.