TODAY’S STUDY: NEW ENERGY IN AUSTRALIA

Australia's New Energy advocates continue to do a superb job, as the report highlighted below demonstrates, of documenting their nation's assets and tracking its progress toward putting those assets to work.

The current disastrous floods may create economic circumstances that will make further developing a New Energy economy somewhat more difficult. But the floods will also make denying the urgency of fighting climate change a LOT more difficult.

The world's heart now goes out to the Australian people in this hour of need. But the world will also be watching attentively in months and years ahead to see whether, as it recovers, Australia gets serious about the long-term development of its New Energy riches.

Or will it follow the sad example of the U.S. and use temporary economic burdens as an excuse to turn away from the global fight against greenhouse gas emissions and further toward denial?

In plotting its future course, Australians may want to take note of their Asian neighbors to the north. China, India, South Korea, Japan and others used the financial crisis as a excuse to invest in emissions-free domestic energy and infrastructure and, in the recovery, are emerging as New Energy economy powerhouses.

Clean Energy Australia 2010
December 2010 (Clean Energy Council)

Introduction

Clean energy is one of the world’s fastest-growing sectors. In Australia the national Renewable Energy Target will deliver 20 per cent of the country’s electricity from renewable sources such as solar and wind by 2020.

It will unlock more than $20 billion in investment and create more than 55,000 jobs, in addition to more than 8000 existing jobs. Much of this growth will be in regional Australia, creating employment opportunities and an economic boost for towns and communities. In 2009-10 alone, clean energy in Australia generated just under $1.8 billion in investment.

The Renewable Energy Target is projected to avoid 380 million tonnes of greenhouse gas emissions, making it the most significant climate change initiative in Australian history.

Australian Renewable Energy Snapshot

Percentage of electricity generation from renewables

The Australian electricity industry generated 251 terawatt hours of electricity in the past year to October. Renewable energy accounted for 8.67 per cent of electricity generated. This is a significant rise from previous years and was mostly due to the increased generation from hydro. Increased rainfall in key hydro catchments across the country provided a significant boost in hydro electricity. The increased capacity of wind power across the country also helped to boost generation. Although solar power still makes a relatively small contribution to the energy mix in Australia, the uptake of the technology has grown rapidly in 2010.

The renewable energy projects operational at the beginning of October 2010 will produce enough energy to power the equivalent of more than three million average Australian households.

This year hydro electricity accounted for over 60 per cent of the renewable energy generated in Australia, making rainfall one of the strongest determinants of the country’s clean energy generation. Wind power made a growing contribution (23 per cent) followed by bioenergy (12 per cent) and solar photovoltaic (PV) power (2 per cent).

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Renewable Energy Year in Review

Household clean energy technologies

The clean energy success story of 2010 was household solar power. There was more solar power added to the grid between January and October this year than the sum total of every other calendar year in the history of the Australian solar industry. And there is now more than ten times the amount of solar power installed than at the end of 2008.

Governments of all levels have vastly underestimated the Australian public’s appetite for solar power over the past 18 months – and for the uptake of systems under a range of different incentives. In the absence of an emissions trading scheme, everyday Australians are investing in solar power to respond to climate change and to combat rising electricity bills. At the beginning of October this year 301 megawatts (MW) of solar power systems had been installed on Australian rooftops, the equivalent of a peak load power plant.

Along with the Federal Government’s Solar Credits program, the various state solar schemes helped to drive the rapid installation of solar, as seen in the graph below.

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Large-scale renewable energy projects

Industrial scale renewable energy grew modestly in 2010 compared with previous years. Seventeen new large-scale renewable energy power plants became operational this year, adding 210 MW of generating capacity to the national electricity grid. This figure is down significantly on 2009, when clean energy projects totalling approximately 993 MW came online. At the beginning of October 2010 there were 332 large-scale clean energy power plants (larger than 100 kW) in Australia.

The three largest new projects operational in 2010 were wind farms. Wind power is likely to be the dominant technology during the early years of the national 20 per cent Renewable Energy Target. It is currently the least expensive form of renewable energy and has a proven track record of being rolled out on a large scale. Policy and investment uncertainty played a major role in the drop in new projects in 2010 compared with the year before. The success of household renewable energy such as solar power and solar hot water in 2009 led to an oversupply of renewable energy certificates (RECs). These commodities bridge the gap between black energy and green energy and their price is impacted by supply and demand. With a glut of RECs in the market, the price remained low.

For large-scale projects this REC price is critical. Combined with the financial crisis, the situation made it extremely difficult for developers to secure financing. The priority for the Clean Energy Council until mid-2010 was the reform of the national Renewable Energy Target. The Federal Government’s decision to split the scheme into large and small technologies was supported by both sides of politics and will be effective from 1 January 2011. It should go a significant way towards returning some stability and supporting renewable energy investment in Australia.

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Major projects under construction

There were 11 new clean energy projects under construction as at October this year. Together these power plants will add 1045 MW of new clean energy capacity to the national electricity market. Almost all of this new capacity will come from seven wind projects, with the 420 MW Macarthur wind farm in western Victoria easily the largest of those underway. If completed in its current form it will be the largest in Australia.

Renewable Energy Jobs

Current employment

It is estimated there are currently 8085 full time jobs in the Australian renewable energy industry.

The employment figures listed below are those directly involved with construction, installation, operations and maintenance activities associated with clean energy generation. They do not include sales, administration, management and other staff associated with the ongoing running of a business. An example of the flow-on employment can be found in the solar hot water (SHW) industry, which employs an estimated total of 6000 people across distribution, sales and installation.

The number of accredited solar PV installers across the country has tripled in the last 18 months to just under 3000, but not all of these are full time solar installers – many will alternate between mainstream electrical contracting and solar installations.

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Employment by state

The highest number of employees in the renewable energy industry is in NSW. The decades-old Snowy Mountains Hydro-electric Scheme is still a major employer and producer of renewable energy.

In Queensland, bioenergy such as bagasse generation from sugar cane waste provided the majority of the employment, while most jobs in Victoria came from its wind sector. The comparatively large number of people directly employed in Tasmania compared to much larger states shows the strength of Tasmania’s renewable energy sector.

2020 employment

By 2020 it is expected that the number of full time employees will have grown to around 55,000 with the largest increase being attributed to growth in the solar photovoltaic and wind sectors.

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Electricity Prices

The amount of electricity needed in Australia is projected to grow by nearly 50 per cent between now and 2030. Australia needs to spend at least $100 billion during the next decade to replace ageing transmission infrastructure and keep up with the increase in peak demand from the use of energy-intensive appliances such as air conditioners and flat-screen televisions.

Electricity prices in New South Wales and Queensland are projected to increase by up to two thirds by 2015 so that our increasing energy demands can be met. This additional investment in poles and wires is the primary driver behind the increase in electricity prices. Using energy more efficiently is therefore critical.

Many Australian households face price increases of 40 per cent or more over the next three years to pay for multi-billion dollar network upgrades. Tens of billions of dollars are projected to be spent on poles and wires by 2015 due to under-investment in the network dating back two decades.

By comparison, the cost of delivering renewable energy to Australia will be much smaller. Analysis for the Clean Energy Council by ROAM Consulting found that the 20 per cent Renewable Energy Target will lead to a modest rise in electricity prices. It should represent no more than six per cent of the household electricity bill by 2020.

The average Australian household currently spends around three per cent of their disposable income on electricity bills.

Federal Government Initiatives

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Renewables

Connecting Renewables Initiative – $1 billion

The Government has committed to $1 billion over 10 years to be set aside to connect Australia’s rich renewable resources to Australian homes.

The new $1 billion Connecting Renewables initiative will bring more renewable energy into the national grid earlier. It will support the enhanced Renewable Energy Target and help deliver on the Government’s commitment to 20 per cent of Australia’s electricity supply coming from renewable sources by 2020.

The first $100 million under this program will be invested over four years. Funding will be drawn from the $650 million Renewable Energy Future Fund.

Emerging Renewables – $40 million

The Government will invest an additional $40 million in emerging renewable energy technologies through the new Emerging Renewables program.

The $40 million cost of this initiative has already been provided for in the Federal Budget through the Renewable Energy Future Fund.

The program will benefit renewable energy technologies like wave and geothermal energy.

Renewable Energy Venture Capital Fund – $100 million

The new fund will make critical early-stage equity investments that leverage private funds to support the commercialisation of emerging renewable technologies, for instance in geothermal, solar, wave and bioenergy technologies.

The Australian Centre for Renewable Energy will work with financial institutions to develop structured renewable energy products to help overcome this hurdle.

Funding will be provided through the $650 million Renewable Energy Future Fund.

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Energy efficiency

Tax Breaks for Green Buildings

From 1 July 2011, businesses that undertake capital works to improve the energy efficiency of their existing buildings – from 2 stars or lower to 4 stars or higher – will be able to apply for a one-off bonus tax deduction. This incentive will enable businesses to claim a bonus tax deduction of 50 per cent of the cost of the eligible assets or capital works.

The total cost of this package is $180 million over the forward estimates, and around $1.0 billion out to 2018-19. Funding over the forward estimates has already been provided for in the Budget through the Renewable Energy Future Fund.

National Energy-Saving Scheme

The Federal Government will work with the state governments to obligate energy retail companies to either fully fund or help to replace inefficient appliances in households.

The scheme will force energy companies to find energy savings by making people’s homes more efficient. It is expected companies would provide incentives to families to reduce their consumption, such as installing power saving appliances for them, which the companies could then count toward their mandatory energy efficient targets.

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Federal Government Initiatives

Carbon

Low Carbon Communities

The Government will provide $80 million to support local councils and communities to cut pollution and reduce their energy costs through energy efficient upgrades to street lighting, community facilities and council buildings.

The initiative will also assist communities to reduce pollution through investment in cogeneration facilities or energy efficient upgrades to community sites such as stadiums, education facilities, town halls or nursing homes.

Multi-Party Climate Change Committee

The committee will explore options for the implementation of a carbon price and will help to build consensus on how Australia will tackle the challenge of climate change.

The Prime Minister chairs the committee, with the Deputy Prime Minister and Minister Combet (who will serve as co-Deputy Chair) also taking part. Senator Christine Milne (Australian Greens) will serve as co-Deputy Chair. The other committee members are Senator Bob Brown (Australian Greens), Mr Tony Windsor MP (Independent) and Mr Rob Oakeshott MP (Independent). The Government has also invited two representatives from the Coalition.

The committee is advised by a panel of four independent experts – Professor Ross Garnaut, Professor Will Steffen, Mr Rod Sims and Ms Patricia Faulkner. It is supported by a Secretaries’ Group comprising Secretaries of Departments involved in implementing climate change policy.

The committee will consult, negotiate and report to the Cabinet on agreed options through the Minister for Climate Change and Energy Efficiency.

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Climate Change Business Roundtable and Climate Change NGO Roundtable

The Business Roundtable brings together leaders from across the economy including the mining, transport, manufacturing, energy, retail and finance sectors. Clean Energy Council Chief Executive Matthew Warren has been included on the Business Roundtable to provide advice on climate change and the introduction of a carbon price.

The Non-Government Organisation (NGO) Roundtable includes leaders from across the community sector including unions, social services, environment groups and local government.

Both roundtables will are expected to meet regularly until the end of 2011 to discuss a range of issues in advance of their consideration at the Multi-Party Climate Change Committee. This will ensure that Government representatives on the committee have an accurate and current understanding of the business perspective on issues.

Tough emissions standards for new coal-fired power stations

The Government is consulting on legislation that would ensure all new coal-fired power stations:

– meet new best practice coal emissions standards
– are carbon capture and storage ready.

The new requirements would not impact upon existing plants. Planned investments which already have environmental approvals, and are determined by the energy market institutions as being sufficiently advanced in their regulatory approvals at the commencement of these standards, would also be exempt from them.

The new expanded Energy Efficiency Opportunities program will also require all existing generators, including all coal-fired power stations, to undertake regular assessments of their potential to save energy and report publicly on assessment outcomes.

Carbon Farming Initiative

The Government will open up new opportunities for Australian farmers and landholders to participate in lucrative international markets for carbon credits in a new Carbon Farming Initiative. Under the new scheme, the Government will help facilitate the sale of carbon credits on domestic and international markets.

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Bioenergy (11.5%)

The current installed capacity of the sector in Australia amounts to 767 MW, or 6.8 per cent of the total renewable capacity. Nearly two thirds of this capacity is from bagasse combustion in the sugar industry, with the second largest contributor being landfill gas.

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Geothermal (0.0002%)

Fifty-four companies have applied for over 400 tenements around Australia covering an area of over 430,000 square kilometers. The majority of these licence areas are in South Australia but the licence areas extend across the nation in all states and the Northern Territory. Exploration and proof of concept activities are expected to exceed AU$2.1 billion by 2014.

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Hydro Power (63.4%)

Existing hydro generation projects provide a solid foundation that will help Australia achieve its 20 per cent Renewable Energy Target.

Rainfall in key catchments has been the strongest influence on Australia’s annual renewable energy output since the Snowy Mountains Scheme was built in the mid-1900s.

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Photovoltaic Solar Panels (2.1%)

The total number of Australian households with solar panels has increased almost 10 times in less than two years.

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Large-scale Solar

The Australian Bureau of Agricultural and Resource Economics (ABARE) estimates solar energy use in Australia is projected to more than triple between 2007–08 and 2029–30, growing at an average rate of 5.9 per cent per year.

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Solar Water Heating (7.4%)

Solar water heating has proven to be an effective method for reducing Australia’s greenhouse gas emissions, while saving money and energy as well as helping stimulate domestic manufacturing businesses and create jobs.

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Wave and Tidal Energy (0.02%)

A CSIRO study this year found that if just 10 per cent of the wave energy from Australia’s southern coastline was harnessed, it would be enough to meet half of our current energy needs.

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Wind Power (22.9%)

Wind power is the lowest cost form of large-scale renewable energy generation and Australia has some of the best wind resources in the world.

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Energy Efficiency

Australia is the world’s 20th largest consumer of energy and 15th in terms of per capita energy use.