By 2040, global investment in solar and wind-power generation will surpass US$10 trillion. With glorious sunshine and notorious wind, WA should be part of the renewable-energy charge. Economists, however, are worried that out-dated policy is stalling innovation 鈥� and building a tier of ‘energy poverty’.
Stormy conversations about Australia鈥檚 energy future have been dominating national politics, particularly since June, when Chief Scientist Alan Finkel handed over the major into the National Energy Market (NEM).
All the talk, however, is in the eastern states, where stakeholders have been debating 鈥榬enewables鈥� versus 鈥榬eliables鈥�, and industry鈥檚 need for clarity. For months the media speculated about the government鈥檚 snub to Dr Finkel鈥檚 50th and final recommendation 鈥� a clean energy target (CET), which to some coalition MPs was as noxious as an emissions trading scheme. Then, in mid-October, Prime Minister Turnbull sought to resolve the CET calamity by proposing a ‘National Energy Guarantee鈥� intended to improve supply reliability, with an emissions 鈥榠ntensity鈥� scheme to reduce CO2 emissions and meet Australia鈥檚 pledge to the on climate change.
Now, stakeholders are waiting on modelling outcomes that support predictions of better reliability and affordability. Many in the renewables industry, however, are already convinced the emissions scheme will further repress investment in energy innovation. And for the climate-change sceptics, new titles and acronyms haven鈥檛 dispelled the whiff of an emissions trading scheme and carbon tax. Altogether, ambiguities and partisan politics have been choking progress like dirty brown coal dust.
The warming and cooling demand for gas
But why is WA disconnected from the commotion 鈥� are we still sitting cosy on our big cushion of natural gas? WA鈥檚 access to gas-fired power does reduce our vulnerability to power failures, but we鈥檙e also less relevant because the National Electricity Market (NEM) has never included WA. Instead, we have a 鈥榃holesale Energy Market鈥� that comprises three government-owned corporations (, , ) in the electricity supply chain.
A recent report by the , titled , is a timely study of WA鈥檚 energy sector and its readiness for 鈥榯he energy revolution鈥�. One consequence of the state鈥檚 capacity for gas-fired power is that our energy network 鈥� although just as knotty as the NEM 鈥� has developed in isolation. In the past 25 years, WA鈥檚 power consumption has almost doubled and gas has surpassed coal as our main energy source. Unlike other states that have predominantly coal-fired power generation, WA hasn鈥檛 experienced a burning need to establish large-scale renewable energy projects 鈥� or production targets.
Reflecting this, electricity supplier Synergy has announced it will soon retire several coal- and gas-generation assets; nevertheless, the State Government鈥檚 2017 budget contained no major renewable energy projects, only a regional power station with 鈥渢he ability to accommodate contributions from distributed energy sources鈥�. WA鈥檚 road to renewables is not looking smooth, as report co-author explains.
“WA is still to take substantial action and lags when it comes to investment in large-scale renewable projects. The state currently has only one such project 鈥� a 20 megawatt solar farm at Emu Downs with a project value of $50 million,” according to Cassells.
鈥淥ther states and territories have set themselves proactive policies, including renewable energy targets to reduce their carbon footprint and contribute to Australia鈥檚 emissions reduction target.鈥�
Sunny side up 鈥� but not for all
Of course, what we do have in common with the rest of the nation is debate about energy affordability. In WA, those who鈥檝e invested upfront in rooftop solar are able to mitigate rising electricity charges, such as the one delivered in the latest state budget. However, the statistics for rooftop solar in WA reveal a major gap in energy policy, explains Cassell鈥檚 colleague and report co-author, .
鈥淟ow-income households are far less likely to have access to solar PV, either because they can鈥檛 make the initial capital outlay or because they rent,鈥� he says. 鈥淭here鈥檚 no incentive for landlords to install solar PV, so it鈥檚 rare for rental properties to have solar-generated energy.鈥�
In fact, data behind the report shows that most of WA鈥檚 renewable energy is generated by solar PV in mid-to-high socioeconomic areas. Low-income households are clearly blocked from both contributing to and benefiting from solar-energy uptake.
The overarching concern of many economists is that low-income earners, who spend a much greater proportion of their household budget on energy than the average household, are at risk of 鈥榚nergy poverty鈥�, a significant portion will be behind-the-meter 鈥榗itizen鈥� networks, which raises another of Tarverdi鈥檚 concerns: the lack of new policy and regulatory frameworks to ensure equity in the exploitation of off-grid options.
Citizen utilities: 鈥楿ber鈥� energy?
The Australian Council of Social Service (ACOSS) has also warned about 鈥榚nergy stress鈥� and current regulatory systems. Community interest in so-called disruptive approaches for producing and distributing electricity through microgrids is surging, but without an informed regulatory system these innovations could actually increase energy costs for participating low-income households.
Research published by the national discusses the emergence of 鈥榗itizen-based power systems鈥� and their impact on supply utilities, and concludes that the traditional grid must adapt to accommodate distributed, bi-directional energy systems.
But under the current regulatory framework, distributed renewables are a double-edge sword, says Tarverdi. He fears the emergence of an under-regulated 鈥榰ber energy market鈥� in which households invest in microgrids partly to lower their long-term energy costs, but more so to profit from selling spare generated energy to neighbouring grid users.
Another risk is that the less affluent residents who are unable to leave the main grid are burdened with the increased proportional cost of maintaining the grid connection for all to use. Which has prompted , who leads the Bankwest 911爆料网 Economics Centre, to emphasise that as energy markets evolve, consumer protection is critical.
鈥淲ithout proactive policies we risk a two-tiered system favouring those that can afford energy innovations over those that can鈥檛,鈥� Duncan warns. 鈥淲A needs an energy system that gets power to the people at the right time and right place, at acceptable prices, using technologies that will power us well into the future.
鈥淟eadership and cooperation is needed to address the challenges, risks and policy issues to achieve this.鈥�
So how should WA be readying for the imminent energy revolution?
To start with, Duncan says, we need emissions-reduction policies and renewable energy targets, and the government should reconsider incentives for solar installations.
Victoria鈥檚 target is 40 per cent green energy generation by 2025, and the ACT is aiming for 100 percent renewables by 2020. Tarverdi makes the point that although the targets are ambitious, it鈥檚 the vision that triggers innovation. For example, advances in lithium-ion battery storage could offer WA a top opportunity to capitalise on its and invest in the development of new li-ion technologies.
Lights out for fossil fuels?
For large-scale renewable energy networks, storage will be the clincher. A key recommendation from the Finkel Review was that future renewable energy projects be able to produce dispatchable power 鈥� that is, to store and then release energy to accommodate demand fluctuation and the intermittent nature of renewable energy sources. The BCEC report also highlights the importance of adequate storage options, as well as balancing efficiencies in any conceivable future of large-scale renewables solutions. Efficient energy storage is a major global R&D mission that will certainly reach its goal; could it then be lights out for fossil fuels?
While technological advances and retail competition will continue to drive cost and performance improvements for solar/storage systems, Duncan believes that no single energy source will deliver a national panacea for lower energy costs, lower emissions and meeting our commitment to the Paris climate accord. The best strategy, he says, is to optimise and integrate current and emerging energy technologies, and carefully manage the market changes.
Regulation authorities are now getting the call to action. Western Power recently requested the amend a rule that prevents distribution businesses using individual power systems as an alternative to a grid connection, particularly in rural areas. The Commission accepted that, due to declining costs of solar PV and batteries, providing an off-grid supply can be cheaper than maintaining the power lines that link remote customers to the grid, but that 鈥渁 range of laws, rules and jurisdictional instruments is required to address these issues鈥�.
The 聽decision reflects the regulatory wilderness of Australian energy markets in transition, and the urgent need for continued research in this area. Certainly, the path is tangled, but clearly it鈥檚 time for Western Australia to join the mission and start navigating to a sustainable energy future.
