20.10.2015 : David van Bergen

Uncovering the RET

With Australia having the honour of becoming the first developed nation to cut its Renewable Energy Target (RET), at a time when the rest of the world accelerates investment in new and established renewable technologies, let’s delve a little deeper into what this really means.

Necessity is the mother of all inventions. New technologies are continually being developed, commercialised, and implemented as a means of saving time, money and improving safety. Sometimes new technologies can be stigmatised and blacklisted, seen as unsafe and dangerous to those not across their complex technical development. This was indeed true for the motor car and the distribution of electricity itself, yet over time, they became accepted and integrated into everyday life. As is often the case, new technologies replace those that are tired, inefficient, and outdated, as they had once done the same to their predecessors – that is, if they existed.

The global energy market is currently undergoing such a transformation. The necessity this time is reducing the emission of greenhouse gases from sources such as coal and gas by encouraging the generation of electricity from sustainable and renewable sources. In Australia, the Renewable Energy Target (RET) is the scheme that underpins this transformation. The recent reduction of the RET, which gave Australia the honour of becoming the first developed nation to cut its target, coincided with the release of a new report by Bloomberg New Energy Finance that predicts $US3.7 trillion will be spent globally on solar technology over the next 20 years. Some $US2.2 trillion of this will be spent on rooftop panels and battery storage systems alone. With Australia seemingly discouraging future investment, and the social-economic opportunities that comes with it, let’s take a closer look at the RET, the technologies that it promotes, and some of the pitfalls in the scheme.

What is the RET?

Simply put, the RET is an Australian Government scheme designed to ensure that by 2020, at least 20 per cent of Australia’s electricity comes from renewable sources. This is to also encourage the development and introduction of new, clean energy technologies to transform Australia’s energy mix into one that is less reliant on burning fossil fuels.

The target was legislated in 2001 by John Howard’s coalition government and subsequently strengthened by Labor in 2009 to deliver the equivalent of 20 per cent of Australia’s electricity. This was calculated at the time as being 41,000 gigawatt hours (GWh) of electricity. In June this year, after fierce political debate, the target was reduced to 33,000 gigawatt hours (GWh) while the burning of native wood waste as a possible fuel source was also included as part of the deal.

How does the scheme work?

Since January 2011, the RET scheme has operated in two parts - the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET). Each scheme uses renewable energy certificates as a tradable currency where each megawatt hour (MWh) of electricity, generated by an accredited supplier, results in the creation of one certificate. These certificates are purchased by wholesale electricity entities, including retailers, to meet their renewable energy obligations, which have been set by regulation each year. They do this by surrendering their purchased certificates to the Clean Energy Regulator (CER), which is an independent statutory authority that manages the operation of the RET scheme in accordance with the RET legislation. The CER was established in 2012 under the Clean Energy Regulator Act 2011.

Small-scale Renewable Energy Scheme (SRES): This is an uncapped scheme designed to encourage the installation of small-scale renewables such as solar hot water heating and solar photovoltaic panels into everyday households. Those that purchase these systems generally assign the right to create their renewable energy certificates to an agent in return for a lower price. All certificates are created upfront for the expected power generation of the asset over its lifetime.

Large-scale Renewable Energy Target (LRET): This scheme is capped at 33,000 gigawatt hours (GWh) and provides financial incentive for the establishment of renewable energy power stations such as solar farms, wind farms, and hydroelectric stations. Certificates are created based on the amount of renewable electricity produced.

In both schemes, the CER uses an online registry system called the Renewable Energy Certificates (REC) Registry to enable the creation, registration, transfer, and surrendering of certificates. If a liable entity does not surrender enough certificates, they will have to pay a renewable energy shortfall charge.

Are there shortfalls within the RET?

While the RET is in place to reduce the emission of greenhouse gases, and encourage the development and introduction of clean energy technologies, the wind and solar technologies that have been implemented thus far, operate at low capacity factors. The capacity factor of a particular piece of plant is the ratio of the actual output to its potential output over a period of time. As both wind and solar are intermittent sources, on average they operate well below their rated capacity. This shortfall requires backup baseload generation to be available in the electricity grid in order for customers to be continuously supplied.

Unfortunately, the electricity grid doesn’t operate like a battery that can store and discharge energy generated by renewable sources when the conditions are right. Electricity demand and supply must be matched at all times, day or night, 365 days a year. While battery technology is rapidly being developed and improved, there is still some way before this technology will be implemented on a large-scale. Back in reality, baseload electricity generation is provided in Australia by means of coal, gas, and hydro. Given the limited supply of water in Australia, open cycle gas turbines – which have quick start up times – are used to provide backup baseload generation to renewable technologies. The problem with this approach is that open cycle gas turbines produce greenhouse gases through the burning of natural gas, and are much less efficient then combined cycle gas turbines, which have longer start up times that limit their operation in this application.

Analysing the emissions impact of a combined wind, solar, and open cycle gas turbine system is dependent on the energy mix in the system. As previously noted by Dr Robert Barr, a former Engineers Australia Electrical Engineer of the Year, more greenhouse gas emissions have been created since the introduction of this energy mix than if this new technology was not implemented at all. This is something that seems to have been overlooked in the RET discussion. The driving force behind the scheme is the reduction of greenhouse gas emissions. It is possible that emission levels may actually be higher with the introduction and subsequent backup of solar and wind technologies with open cycle gas turbines over the utilisation of combined cycle gas turbine technologies. This in itself needs further study, though the possibility is yet to be disproved. Placing the investment benefits of wind and solar technologies aside, as a supporter of reducing greenhouse gas emissions, I find this deeply disturbing.

Is there another way to lower greenhouse gases?

Rarely does a problem only have one solution. It is hard to imagine an alternative technology to solar and wind generation that can provide a safe, secure, low emission and low-cost baseload generation of electricity. It’s even harder to imagine that one already exists in which Australia operates a world class leading research and innovation centre. So why aren’t we using this new technology?

For one, it is prohibited by complex and overlapping State and Federal regulations, which effectively sees this blacklisted, yet it is used around the world to safely generate base load electricity. Nuclear generation has been around for decades. The latest advancement is known as Small Modular Reactors (SMRs) which are decentralised, natural convection cooled nuclear power stations that can be incrementally installed to suit increasing electricity demands. Together with its high capacity factor, low emission levels, and ability to be installed in existing brownfield sites to re-use existing infrastructure, this is the ideal replacement for Australia’s existing high emission baseload generation, and perfect complement to the wind and solar technologies being installed as part of the RET.

While this all sounds too good to be true, it is unlikely that this new technology will be utilised unless there is a policy shift for replacing the existing high emission baseload generation. Until this occurs, Australia will continue to rely on fossil fuels as its primary source of baseload generation. The incentive to change just isn’t there.

Conclusion

The Australian Government has committed to the reduction of greenhouse gas emissions and the generation of electricity from sustainable and renewable sources through the RET. Until large-scale, low cost energy storage techniques are commercially viable, it would make sense to utilise SMRs as a form of safe, secure, low emission and low-cost baseload of electricity. While some may point out that government regulations will need to change, and appropriate policies adopted to encourage the replacement of existing high emission baseload generators, let’s just remember that community beliefs hold governments to account.

This is where you can play a part. By raising awareness of this issue with your family, friends, and colleagues, you can start the conversation to help change perceptions. It’s only through healthy discussions and education that the real facts can be understood. Until this occurs, Australia will continue to rely on fossil fuels as its primary source of baseload generation. There is no incentive to change, so why invest in new technologies? This all seems strange, as isn’t that the purpose of the RET?

About the Author

David van Bergen

Senior Power Engineer

David is a Chartered Professional Engineer within Beca’s Protection and Control team. He has worked on the design and implementation of protection systems for electrical networks ranging from 6.6kV to 500kV. Outside of work, David is a keen bike rider and has been involved in numerous cycling events. He is a member of Bicycle Network and a proud supporter of the Amy Gillett Foundation.

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What Do You Think?

ADD A COMMENT
Toby Schlank · 26/09/2015 2:50:18 p.m.
That was very informative, David. Thank you.

David Van Bergen · 23/09/2015 3:34:30 p.m.
A lot can be learnt from the past, though it shouldn’t necessarily dictate our future. It’s a tribute to the regulations of the nuclear industry that this information is available. It would be interesting to know the number of incidents for coal fired power stations that have occurred across the globe.

Australia’s low emission future should consider the full complement of technologies available. Like Andrew Page mentioned in one of the other comments: sound engineering judgement that informs the public should underpin the strategies that are set in the future.

David Van Bergen · 23/09/2015 3:33:31 p.m.
That’s very true about the nuclear technology from the 1960’s – 1970’s. As with solar and wind technology, incredible advancements can be made over a relatively short time period. Small Modular Reactors (SMRs) is such an advancement. These can become a valuable contributor to baseload supply as they have the ability to adjust their outputs up and down at typically 10%/min (NuScale) to respond to variations in the grid caused by intermittent renewable energy sources. Many SMRs are also designed to be multipurpose and have the ability to be used for desalination or to supply process heat. Throw in their natural convection cooling and the ability to be located in land, then suddenly you have an emission free and very compatible partner for renewable energy generation.

Germany’s shift from nuclear generation isn’t purely for the reason of its incompatibility with renewable energy. As you allude to, there are also social and political reasons behind this change. Germany operates a vastly different network to Australia. Australia has the World’s longest interconnected grid system at over 5,000 km in length and has the added title of contributing more CO2 emissions per capita than any other country in the world. With Victoria the highest contributor at 1.35 kg CO2 emissions per kWh (ESC Victoria 2014), change will need to take place.

Florin Dumitru · 22/09/2015 6:35:00 p.m.
... or like Fukushima... or for more detailed info check this list: https://en.wikipedia.org/wiki/List_of_nuclear_power_accidents_by_country

Kudos to Germany moving away from nuclear power!

IAN HOULDER · 22/09/2015 3:49:13 p.m.
Great article, David and probably only the start of the conversation.
I think as engineers we can all understand the necessity of getting away from the non-sustainable energy system and embracing new technology or even existing but less acceptable technology. However, the issue appears to have become a political football with political parties trying to score points with broad claims and statements. The latest one being the Labor Party claiming to be able to deliver 50% renewable energy targets by 2030. Is this really an achievable target given there is still no clear pathway in this area or just another attempt to bluff the public into thinking they are a better advocate for sustainable energy.

I think that this whole issue needs to be taken off the table from an election perspective and bi-partisan agreements reached that are achievable regardless of who wins the next election. While the debate revolves around who will pay no progress will be made. Labor will claim the working families are being targeted in Liberal schemes and Liberals will claim business is being constrained by Labor schemes therefore thwarting industry growth and jobs. Too much politics and not enough common sense, what is the solution to what seems like an endless argument.

Eric Wolters · 21/09/2015 11:14:48 a.m.
I am a fan of nuclear as a clean source of power, but because it takes days to start up and shut down, it doesn't complement intermittent renewable power generation very well. This is why Germany is shutting down its nuclear plants and building more coal plants. There is also the hurdle of public opinion to overcome with Fukushima still a raw memory.

Thus I think we are stuck with fossil fuelled generation for a while yet. You can't displace it all with solar or wind. The best we can do is find the optimum balance of central fossil, central renewable and behind-the-meter solar generation that minimises CO2 emissions while maintaining grid security - at an acceptable cost. The RET, on its own, can't achieve that balance. We need some strong leadership and some nerds.

Andrew Page · 18/09/2015 4:16:49 p.m.
A helpful survey David, on RET and some of its unintended side effects. It underlines the need for renewable energy strategies to be well thought out and not just the result of political agendas. I suspect the public view of nuclear may be slightly more tolerant in Australia than here in New Zealand. In any case it should be underpinned by sound engineering judgement informing the public.

David Van Bergen · 18/09/2015 1:38:59 p.m.
Hi Philip,
You raise some very interesting points. Economics is such a driving factor for governments. After all, it's economics and not engineering that rules this world! You also highlight one of the key stigmatisations that comes with nuclear energy. This is where education plays such an important role. Once perceptions are set, it takes at least a generation to change. This in itself takes considerable effort!

David Van Bergen · 18/09/2015 12:53:52 p.m.
Thank you Jonathan.

I very much agree with your comments. The RET platform was not designed for the specific reduction of carbon emissions but rather the introduction of new energy technologies. A 'Carbon Reduction Target' in one form or another would be the logical solution though whether this would progress through Parliament with some sort of bipartisan support remains to be seen. Such is the dire state of our political system.

Philip Rebula · 18/09/2015 11:48:47 a.m.
Nice article, David, I agree with many of your points. It's a shame that reducing emissions can lose the focus of the people and Government when the Australian economy is not going well. We need to change thought culture around this, as there is arguably much productivity that can come from focusing and improving on the initiatives you mention, which can create jobs and drive GDP as has happened in other countries around the world (Germany comes to mind). Nuclear power is definitely something this country should be looking into. We just need to rename it to something more 'people friendly' so that people don't immediately jump to thoughts of nuclear disasters like Chernobyl.

David Van Bergen · 18/09/2015 11:09:52 a.m.
Hi Eric,

Thank you for your feedback. There have certainly been a number of factors which have contributed to the stagnant nature of energy demand in Australia with the uptake of rooftop solar certainly one of the more prominent. The recent closure of energy intense manufacturing facilities in Victoria have also played a big part.

There are a number of solutions that Australia can implement with nuclear as a very possible option. The South Australia Royal Commission, which is looking into the life cycle of nuclear fuel, is the starting point in determining the feasibility of this option. One of the most important points to address here is where the leadership at the Federal Government level will come from. With (yet) another change in leadership, Australia is now led by an individual who once supported an emissions trading scheme rather then one that simply opposed it. Change might be closer than we think.

Jonathan Pecar · 18/09/2015 11:06:39 a.m.
Good article, Dave.

I think you raise quite a few good points and it does seem to me, as Eric pointed out, that the RET has had some unintended side effects. One which you have alluded to, but not addressed directly, is, in my opinion, the fact that the RET, while ostensibly intended to reduce greenhouse gas emissions, is intended to do so through renewable energy sources only. I feel that this means that even if nuclear, a clean and relatively sustainable energy source, were to be legalised, it would hinder the uptake of this as a fuel source. Even if an energy provider were operating 100% from nuclear fuel, producing zero operational carbon emissions, they would still be seen as failing to meet their renewable target.

Unfortunately I have no personal ability to enact any such change, but perhaps a better solution to the RET would be some kind of "Carbon Reduction Target" instead. This would also, one would imagine, close the gap in the RET whereby intermittent operation of various generation facilities act to oppose the carbon reduction which is intended to be achieved by renewables.

Eric Wolters · 17/09/2015 1:53:46 p.m.
Great article David, thank you. The RET system was well-intentioned but has clearly resulted in some unexpected side effects.

The huge uptake of rooftop solar in Australia is a good example. Behind-the-meter power displaces centrally-generated power. In some states Generators are shutting thermal plants down during the day that would otherwise run continuously. CCGTs and coal plants are not designed to run intermittently. The change in regime is threatening to make them uneconomic to run at all. But until Australia develops large scale energy storage, you still need them, because neither wind nor large scale solar are suitable for base load operation.

Do you or your readers have any ideas to address the conundrum?