The Greens have unveiled their energy policy ahead of the
next federal election and small target policy it ain’t.
You want detail?
They’ve released a closure schedule detailing the year major
fossil fuel power stations would need to begin shutting off individual
generating units, with the listing for NSW generators below as an example.
Tired of politicians refusing to lay out ambitious policies
while in opposition?
Well the Greens want to shut down all the coal-fired power
stations while they simultaneously try to use electricity to replace the use of
oil in transport and gas in heating. The Greens say that based on analysis by
ClimateWorks it should be possible to double energy efficiency by 2030, which
they’d seek to achieve, but these extra power loads mean electricity
consumption would grow from 247 terawatt hours today to 358 TWh by 2030.
So no returning to the trees for the Greens, it seems.
Instead it seems they want a Tesla in every driveway and an
air conditioner in every living room (alongside solar panels on the roof), not
to mention a high speed electric train to take you interstate.
So what’s going to fill this huge massive gap as coal shuts
off and power demand surges?
As you’d expect for the Greens it will be 90 per cent
renewable energy by 2030. The Greens foresee that wind and solar PV will fill
the bulk of energy requirements because they are the cheapest source of
renewable energy that is capable of being rapidly expanded. Hydro, biomass,
solar thermal (with heat storage), geothermal and a small amount of fossil
fuels, alongside widespread deployment of batteries and electric vehicles will
then provide a source of controllable power that can be flexed up and down as
wind and solar output varies. The chart below details the possible fuel mix the
Greens imagine would fill the place of the shut-down fossil fuels. Although they
sensibly note this is not “prescriptive, because technology shifts, cascading
cost savings, energy efficiency gains and the switch to electrification of
vehicles and fuel-powered infrastructure are impossible to anticipate over a
15-year timeframe.”
So how will this all be paid for?
This is where the Greens have decided to basically abandon
the liberalised electricity market.
They don’t foresee this transformation being driven by
carbon pricing nor by largely expanding the Renewable Energy Target, which
works via a market in tradeable certificates.
Indeed, they observe that while they still want to
reinstitute a carbon price, “on its own, a price on pollution will not drive
the necessary transformation in the energy sector unless the price was set at
around an unrealistic $100 a tonne [of CO2]”.
Instead the Greens propose that a more hands-on government
authority drive the process and that government would once again get back into
the business of owning power stations.
This authority they title ‘Renew Australia’, would offer
long-term contracts to private sector and community-based operators,
guaranteeing them a minimum price for power and selecting them via reverse
auctions similar to that undertaken by the ACT Government.
The Greens have proposed this initiative, rather than
relying on an expansion of the Renewable Energy Target, because they reason
that a government contract provides a more secure source of revenue conducive
to low-cost finance than relying on synthetic market that can be undermined by
policy changes.
But the Greens have gone beyond this, also proposing that
Renew Australia would itself be an owner-operator of power plants funded by
raising capital via government bonds. This represents a complete reversal of
Australian policy thinking since the Keating-Hawke government kicked off the
process of market liberalisation, the competition policy reforms and a steady pullback
of governments from owning major business enterprises.
The chart below provides one of two scenarios for how the
Greens envisage each policy mechanism driving the growth of renewable energy in
Australia’s electricity supply. The pink shaded section represents the role of
the Renewable Energy Target, which since 2001 has been the major driver of new
renewable energy installations in the country.
While the Greens want to expand this scheme further,
increasing it to 52,500GWh by 2030 from the current target of 33,000GWh in
2020, Renew Australia’s direct contracting and ownership of power stations
becomes more important by 2020. The Greens have also chosen not to detail any
additional policy mechanisms to support the installation of solar PV on
rooftops beyond the existing Small-scale Renewable Energy Scheme.
Most critics of the Greens and renewable energy will
probably get stuck at the stage of choking on the idea of closing down all
Australia’s power stations to replace them with renewable energy within 15
years – a truly incredible feat to contemplate.
But what will unnerve even many of those who share the
Greens’ aspiration of decarbonising the power system is their intention to
roll-back markets in the power sector.
The Greens argue such an approach is necessary because,
“…of the size of the transformation to our energy system and
the speed at which we need to transform, Australia needs all shoulders to the
wheel. Government has a key role to play. The market cannot achieve the
necessary transformation in the required timeframe on its own without clear signals
and guidance from the government - acting in the public interest.”
At present many of those businesses trying to build
large-scale renewable energy power projects are finding that even with a
government stating they will “never ever” reduce the Renewable Energy Target
again, they are struggling to attract investment without a major power retailer
providing a contract that provides revenue certainty. A number would love the
idea of a government long-term contract for their power.
However, many will also be unnerved by the idea of having to
compete against a government authority that is also their primary customer.
In addition many of those outside the renewable energy
sector will worry about the potential for us to repeat the mistakes of the past
as government authorities went overboard building power stations for which the
demand wasn’t there to justify them. Then they went further, trying to attract
energy-intensive industries to justify these power stations. This led to a lot
of wasted resources.
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