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 As is often the case, new technologies replace those that are tired, inefficient, and outdated, as they had once done the same to their predecessors – that is, if they existed.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.
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?