Reading the draft report issued to the Department of Climate
Change (the client) on 28 March 2013 provides a different take.
In essence, they are saying that technically it is possible,
but a lot of the costs were not included, they weren’t even sure about all the included
costs, and they don’t even know if all the technology is viable.
The most interesting bits are the exclusions – in particular
land acquisition costs (5000 km) and distribution system augmentation.
Land acquisition costs are important, but less of an issue
than distribution system augmentation.
For example, the study assumes that a large amount of the
power will come from rooftop solar PV. This is will require some seriously
expensive distribution system augmentations, as well as spare capacity/back up,
etc. Just think on how much our electricity bills are going up at the moment
due to so called ‘gold plating’ of the distribution network. Multiply that by
an order of magnitude or two and you get that these costs will be high.
To be fair to the AEMO team, it makes sense to exclude
distribution as it would be exceedingly difficult to scope out, let alone
estimate those costs. It is one of those how long is a piece of string
exercises, probably years in the making.
However, for a real understanding of the transition we need
to talk about the entire energy system, not an isolated part of it.
Such a comprehensive future study should take the transition
path, transition costs, plus the opportunity costs of retiring old cost
effective but polluting fleet compared to forecast carbon prices. Don’t forget
storage costs for time shifting renewable generation to provide peak load
either.
And, don’t forget global warming too. For example, as it
gets hotter we will rely on air conditioning more and more, meaning that the
peak load capacity of the transmission and distribution system may actually go
up – even with all the demand side participation measures mentioned.
In other words, the study is saying, yes, it’s technically
possible with a lot of caveats, but we really don’t know how much it will cost
or if the technology is viable or how we could actually do it.
It is a good start, unfortunately, too many journalists and
pro-renewable punters have been reading what they want into the headlines.
I work on renewable projects and will push the technology
wherever I can. However, my fear is that with the misleading cheerleading
surrounding reports such as these we end up avoiding the real and difficult conversations
we need to have in order to go to a carbon reduced future by jumping on the
bandwagon with every bit of good news for renewable.
Just to keep you happy, please find a few extracts from the
Draft Executive Summary (dated 28 March 2013)
AEMO state the following in the introduction in the
Executive Summary Document:
Given its exploratory nature, this study should be regarded as a further contribution to the broader understanding of renewable energy. The findings are tightly linked to the underlying assumptions and the constraints within which the study was carried out. Any changes to the inputs, assumptions and underlying sensitivities would result in considerably different outcomes.\
1. The results indicate that a 100 per cent renewable system is likely to require much higher capacity reserves than a conventional power system. It is anticipated that generation with a nameplate capacity of over twice the maximum customer demand could be required. This results from the prevalence of intermittent technologies such as photovoltaic (PV), wind and wave, which operate at lower capacity factors than other technologies less dominant in the forecast generation mix.
2. The modelling suggests that considerable bioenergy could be required in all four cases modelled, however this may present some challenges. Much of the included biomass has competing uses, and this study assumes that this resource can be managed to provide the energy required. In addition, while CSIRO believe that biomass is a feasible renewable fuel , expert opinion on this issue is divided.
3. The costs presented are hypothetical; they are based on technology costs projected well into the future, and do not consider transitional factors to arrive at the anticipated cost reductions. Under the assumptions modelled, and recognising the limitations of the modelling, the hypothetical cost of a 100 per cent renewable power system is estimated to be at least $219 to $332 billion, depending on scenario. In practice, the final figure would be higher, as transition to a renewable power system would occur gradually, with the system being constructed progressively. It would not be entirely built using costs which assume the full learning technology curves, but at the costs applicable at the time.
It is important to note that the cost estimates provided in this study do not include any analysis of costs associated with the following:
1. Land acquisition requirements. The processes for the acquisition of up to 5,000 square kilometres of land could prove challenging and expensive.
2. Distribution network augmentation. The growth in rooftop PV and demand side participation (DSP) would require upgrades to the existing distribution networks.
3. Stranded assets. While this study has not considered the transition path, there are likely to be stranded assets both in generation and transmission as a result of the move to a 100 per cent renewable future.
Costs for each of these elements are likely to be significant.
This report is not to be considered as AEMO’s view of a likely future, nor does it express AEMO’s opinion of the viability of achieving 100 per cent renewable electricity supply.
Note: I work as a project and energy economist with companies and governments on geosequestration,wind, geothermal, hydro, wave, transmission networks, coal seam gas, coal,and more. The views expressed in this blog are solely my own and do not represent the views of any organisation that I do work for.
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