RenewEconomy - Giles Parkinson
The man behind the world’s first hybrid project combining wind, solar
and battery storage says Australia will become uncompetitive if it
maintains an electricity grid based around coal and gas in 2030.
Roger Price, the CEO of Windlab, which is about to begin construction of the first stage of the Kennedy Energy Park in north Queensland,
says renewables will beat even existing coal-fired generators in both
cost and flexibility within the next few years, and could replace
thermal generation if the policy settings allow it.
In a wide-ranging interview on RenewEconomy’s Energy Insiders podcast,
Price says the industry is disappointed by the federal government’s
proposed National Energy Guarantee, describing it as a “fourth choice”
scheme that will create uncertainty and push up prices in the next 12-18
months.
“The industry is disappointed,” Price says. “We’ve been through this a
number of times. It’s creating another period of short-term uncertainty
… that we have to deal with. It doesn’t help investor confidence, and
it doesn’t help short-term activity in the industry.”
Price, whose newly listed company
has projects in Australia, north America and Africa, says there are
enormous amounts of capital focused on renewable energy around the
world, indicated by this week’s purchase of a $5 billion wind and solar portfolio by US and Asia investment giants.
“The world has decided – whether they be Chinese, European, or
American investors – to shift to renewables,” Price says. “All Australia
risks doing is passing up opportunity to attract that capital and the
opportunity to transition the network to a clean future.
“A thermal-based network in 2030 will be fundamentally uncompetitive
with the rest of the world.” The Coalition’s NEG envisages that
two-thirds of Australia’s electricity supply will come from coal and gas
in 2030.
Windlab this week reached financial close of the Kennedy project, and
will begin construction within a few days of the 43MW of wind, 15MW of
solar, and 4MWh of battery storage, using Tesla technology for the
latter.
It’s a world first combination behind one single connection, Price
says, but even more impressive is “Big Kennedy”, a 1200MW project
featuring both wind and solar, and storage, which Price says could
deliver much of the region’s “dispatchable” power needs when completed.
Here is a summary of the interview:
On renewables:
“Solar pricing will fall to $US20/MWh by 2030, and wind will not be
far behind,” Price says. So renewables will be “fundamentally cost
competitive, even with existing brown coal.”
Windlab began as a CSIRO research unit that specialised in finding
good wind resources. Price says the capacity factors of the company’s
new wind projects in Victoria – Coonooer Bridge and the nearly completed
Kiata – were “well over” 45 per cent.
Kennedy first stage was 45 per cent and “Big Kennedy” would be
between 45 and 50 per cent. “That is the expectation of the modern wind
resource,” he said.
Price says “the cost of renewables has dropped to the point where our
modeling suggests that we could build our own connection into
Townsville, as long as Big Kennedy was more than 600MW.”
On ‘baseload’:
“A lot of people talk about ‘baseload’. What we really want is
low-cost energy that is able to meet network demand. And that is what we
are demonstrating with low-cost renewables.”
On the proposal for a new coal generator in north Queensland, which
is supported by the conservative parties, Price said: “I’ve yet to find
anyone who understands how the network operates who thinks that is the
case (that we need a new coal generator). Even the Energy Security
Council, a lobby group for fossil fuel generators, agrees.
“Queensland has the largest penetration of coal in the NEM (National
Electricity Market),” and the newest fleet. “You can’t run a network on
90 per cent coal. It’s just not flexible enough. I don’t know what a new
coal generator would do. It could be built, but might never operate.”
On the National Energy Guarantee:
Price is one of a growing number of people who were initially
hopeful about the NEG, but who now see it as potentially erecting
barriers to renewables, protecting coal, locking in dominance of
incumbents, pushing up prices and failing to meet emissions targets.
Price said it not a policy, or even a plan. Just an idea to have one.
“It’s very frustrating,” Price says. “The way I think about the next
couple of years is as follows; we will have another debate, more
discussion, more finger pointing over the next 12 months, then a policy
framework running into the 2019 election. Then, who knows?
“It’s difficult to see a federal government of either colour resolving this issue anytime soon.”
On Kennedy and “Big Kennedy”
Kennedy will be the first time anywhere in world that wind, solar and
storage is put together behind one connection point. With more storage,
say 15-18MWh – something that could be added as costs come down, “it
would do a very good job of meeting demand on a network basis.”
It could also keep the lights on in nearby Hughenden and Julia Creek in the case of a network outage elsewhere.
“Big Kennedy” which will be 1200MW of wind, solar and storage, will
likely be mostly wind, because of all the other solar projects being
built in Queensland.
The cost will be low enough that with a minimum 600MW it could
justify its own transmission line to Townsville, but it is hopeful that
the Queensland government commits to a new line that will pick up other
projects like Genex and Forsyth to bring in more grid resilience and
more efficiency.
Indeed, he says that Kennedy could enable the government to cut the
cost of the $600 million Consumer Service Obligation (which guarantees
the same price for regional customers as Brisbane and the south-east
corner) by 10 per cent – a saving of $60 million a year on that metric
alone.
On storage and dispatchable power
Price says storage does not need to be co-located with wind and solar
plants, and might be better placed near the point of demand, and is
concerned that policies should reflect and allow that.
“We are building Kennedy as stand alone hybrid behind one connection
point. You don’t need storage near the generation source. You may be
better off putting it near the demand centres.
“That means that projects like Kennedy can be done in a virtual
sense, with generation in one place and storage in another,” he says,
adding it is important that rules and policies allow that to happen.
“Most technical experts suggest it is best to put it close to demand
rather than generation.”
The role of the states
Price says the uncertainty around the NEG and federal policy means
that the renewable energy industry will continue to rely on state-based
initiatives. “Those states which are progressive and looking at how to
evolve networks over the next 10-15 years are the places where
investment will continue.
“It is interesting in the ESB (Energy Security Board) letter (to the
federal government), that maps out the National energy plan, it does
talk about states putting in their own targets and goals.”
This could allow states to have their own mechanisms. In any case ,
if a number of states “get on with it, we will see by early next decade
that those states have fundamentally benefited from it.”
On the future:
“There is little we can do (about the cost of) gas, but we can build
renewables … and renewable energy is putting downward pressure on
prices, and that is only going to continue.”
Price said “hopefully we can get through” the politics and the
electioneering, “and get down, as one famous politicians likes to say,
to economics and engineering. And then the answer will become
self-evident.”
Podcast
You can hear the full Energy Insiders Podcast episode with Windlab’s Roger Price below.
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