Australia has the potential to generate three-quarters of its energy supply from renewables within five years, but only if much-needed reforms are enacted swiftly.
Such changes would not only boost renewables’ capacity to light up Australia, they could stimulate economic growth and spark a jobs boom, according to one energy systems analyst.
In a long-awaited report, the Australian Energy Market Operator (AEMO) revealed the National Energy Market (NEM) already has the “technical capability” to provide 75 per cent of energy from wind and solar by 2025.
But AEMO managing director and CEO Audrey Zibelman said the operator’s forecasts could drop to as low as 50 per cent if the grid continues to operate with outdated “operating approaches and market frameworks”.
Among the AEMO’s recommendations include:
Introducing so-called “ahead” markets to give the AEMO a better understanding of what supply will be available at any given time
The creation of new market signals for key services including inertia, system strength and operating reserves. These services are currently provided by coal and gas-fired power stations, but will be stressed as fossil fuel plants are phased out
Guidelines for the nation’s main electricity grid to securely manage and increase visibility over rooftop solar systems, including the ability to remotely switch them off when necessary.
“There will be an economic cost of not acting,” Ms Zibelman said.
“[Our] study makes it clear that today’s operating approaches and market frameworks are becoming less effective as the NEM continues its transformation to world-leading levels of renewable generation.”
That world-leading renewables generation resulted in wind and solar contributing 26 per cent to the NEM’s supply over the past month and – in a number of five-minute intervals – provided more than 50 per cent of the nation’s energy.
But the grid’s capacity to incorporate more clean energy could be constrained by hurdles including a battery storage shortfall and transmission lines unable to cope with greater generation from distributed renewable energy sources.
The nation’s wind and solar capacity is expected to soar from 17 gigawatts last year to 27 gigawatts on the AEMO’s central estimates.
Regulation reforms could lead to jobs boom
Greg Bourne from the Climate Council told The New Daily reforms to energy market regulations have potential far beyond bolstering the grid for the AMEO’s 75 per cent prediction.
It could stimulate a post-coronavirus jobs boom, he said.
“Renewable energy, distributed generation and transmission lend themselves incredibly well to multiple worksites in multiple places,” Mr Bourne said.
“The multiplier effect surrounding jobs created from mining is used as an argument by incumbent [governments], but it can also be used quite legitimately for the employment generated if you install a large battery system, a pumped hydro system or a new transmission line from a renewable energy hub.”
Major transmission projects on the horizon include a $300 million 600 megawatt battery planned outside Geelong in Victoria, and a 50 per cent expansion of the Hornsdale Power Reserve (Tesla’s ‘big battery’) in South Australia.
University of Queensland Professor in Economics John Quiggin criticised the Australian Energy Market Commission (AEMC), which advises the government on energy policy, for stunting Australia’s “efficient” transition to renewables.
“The AEMC is essentially acting as if all the prices are right and are essentially discriminating against new connections in renewables in favour of coal and gas, when we should be getting away from them,” Professor Quiggin told The New Daily.
Uncertain supply is still a key issue
Energy Minister Angus Taylor on Thursday said although the report gushed over Australia’s capacity to embrace renewables, it highlighted the importance of fossil-fuel powered stations in times of uncertain supply.
“The AEMO study recognises solar and wind generation alone aren’t enough – minimum levels of inertia that is ordinarily provided by synchronous generation, such as a gas-fired power station, will be crucial,” Mr Taylor said in a statement.
Frontier Economics climate change head Matt Harris told The New Daily the greatest risk stemming from renewables’ increased market share is lowered system strength.
But recent policy developments at the state level could stimulate action on this front.
“As we’re seeing coal retire and we’re getting more renewables in the market, the volatility of prices should go up and that volatility should be a signal for more flexible capacity, from peak gas or batteries,” Mr Harris said.
“The challenge now for states that have implemented targets (Victoria and Queensland have 50 per cent renewables targets by 2030) is that if they’re going to grow that share due to policy, they have to back those renewables in."