Mythbusting the Pro-renewables Press

I am pro-renewables. I am pro-alternative energy. I enjoy helping commercialise alternative energy technologies. But, I am increasingly annoyed with and bored by the pro-renewables press.

I started the year with a resolve to be constructive, not critical, but I can’t bite my tongue any more.

Here are a few of my comments based on working in renewables for the last ten years (and in case you think I am siding with fossil fuels, don’t worry, I am an equal opportunity critic – I have plenty more for them too. Today it is your turn.)

Myth 1 – We can go 100% renewables today. Well, technically it might just be possible, but this fairy tale is about as sensible and feasible as giving all the unemployed a Ferrari each. Voters care about affordability even more than they do about doing the right thing. Mind you, I’d quit my day job for a Ferrari…. vroom, vroom.

Myth 2 – Time of day pricing is the answer. Bullshit, bullshit, bullshit – I am calling you on this, it is simply a way of pumping up profits without changing the generation/transmission/distribution system.

A big part of the reason we have peak demand at the end of the day is that people come home from school and work, turn on the telly/computer etc., turn on the heater or air conditioner, start cooking dinner, etc.  In other words, all us naughty domestic consumers are ruining things by living our normal lives. But wait, instead of the government and the companies in the system changing what they do, let’s go and ask the consumer to completely change their habits. No problem, I’ll just eat dinner at 11 PM shall I? Tell the kids to do their homework at 4AM in the morning.  

And I really love commentators saying that pensioners should all go down to the local shops or library to enjoy air conditioning on hot days. You have to be effing kidding me.  Do you have any morals or sense of social justice at all? Fix the system – not the individuals.

Myth 3 – Hot rock geothermal is a valuable part of our future energy mix. Ummm…. No. Even conventional, shallow depth, plenty of water type geothermal isn’t working well globally. The economics of drilling wells 3 – 5 km deep using conventional oil and gas drilling technology are bad. Anecdotally, under the Howard Government regime South Australia wanted to be part of the renewables push so a few dollars were ponied up for geothermal, with the proviso that it is the mug punters who are paying up most of the money for the listed companies journey to discovering the obvious.

If you really want to impress in this space, please focus on reinventing drilling technology instead – that might actually lead to something other than emptying people’s wallets.

Myth 4 – Solar PV is the answer to everything. I used to love playing with solar cells when I was a small kid in the 70’s. I spent many an hour with a voltmeter and a solar cell working out how much I could get out of a cell and trying on different days at different times to achieve a new maximum. Nowadays I throw up in my mouth just a little every time I hear someone at a dinner party talking about what a great deal they got to install solar PV on their roof and how they get paid to generate electricity. Two things, it is everyone else paying you (you arsehole), and secondly, your system is helping stuff up the distribution system and, yes,  you should be charged more to connect to the network to export, you moral highgrounder you. You are generating electricity at a time when only your fridge is running, so you aren’t really saving the planet, and also the installation was probably so cheap that in about 7 years the whole lot will need replacing anyway.

I say no to more subsidies, yes to charging for energy export to cover changes to the network, and you won’t impress me as an industry until battery storage is cost effective and safe.

Myth 5 – Ocean power is the future. Actually, I genuinely believe it will be a big part of our future, but the current industry is not shaping up well. Here is a piece of advice, free of charge, to wave technology promoters. Please don’t try to build your wave energy farm where the waves are strongest. Yes, the elegant mathematics of your power generation equations show that you can maximise electricity production there, but what your elegant equations fail to show is the cost. High energy environments require formidably large, robust and expensive footings, your equipment won’t survive long and you will be very hard pressed to install your equipment in the week or two a year of calmer conditions.

A few other points. 

One, you are using ocean vessels and oil and gas ocean vessels to install and maintain your equipment: paying those bills will bankrupt you faster than any other service on the planet. This is also true for offshore wind.  The high cost is even worse in Australia than other countries and if you are looking for someone to blame please look to the Unions and their bloody minded idea of milking foreign oil and gas companies through high wages for offshore people. I am even thinking of taking up a job as a toilet cleaner on an offshore oil production platform just to enjoy the 6 figure salaries that have been negotiated.

Two, if it looks like a wind turbine then it is by definition a failed first generation technology: please go to an online course on fluid dynamics to bone up on why everyone else has moved past that.

Third, if you are trying to become a manufacturer of wave energy technology, please focus on that: some of you have been overtaken by construction types in order to suckle at the teat of government subsidies in the process of building a demonstration site – construction types hate R&D and hate manufacturing – it is in their DNA – you will not fare well.

Myth 6 – Conventional Power companies are run by satan worshipping capitalist running dogs. Nice try guys, but please come back to Earth. I have been working in conventional power companies for years and almost everyone is trying to do something in the renewable or sustainable space. Many of them have made more serious and noble efforts than your favourite plucky start ups. Overwhelmingly the attitude in conventional power is that the future is in other technologies, but they are constrained by voter attitudes, government oversight (both formal and in closed room shouting sessions), and electricity market pricing to stay with what they’ve got. So, instead of taking on the big boys, go cosy up to them instead. If you genuinely have the answer to the future energy needs of the planet, go sell it to the conventional power generators.

Myth 7 – Carbon pricing will fix everything. I have always considered this to be throwing out the baby with the bathwater. We already have direct action in the form of a renewable energy target (RET) and subsidies for solar. It is the most fashionable form of carbon abatement – it is also hideously expensive. However, it works somewhat. I am not sure that the Coalition’s Direct Action plan is workable or sensible – I am not advocating that. For me a turning point in my attitude towards government was the Building the Education Revolution. If we had spent twenty something billion on renewable energy instead of overpriced school halls we’d be a very long way down the track of cleaning up our carbon emissions. Basically, the government knows you prefer to worry about education and health, so they put in a tokenistic carbon price that doesn’t support renewables, and bumps up the costs for everything else in a competitive international market. Does not make sense (yet)!

Myth 8 – Innovation will save us. Ummm….. I work in innovation and I don’t often see much of it. It is there, and it warms the cockles of my heart to see it, and I will go into bat for you guys anytime. What I am not enjoying is the mandate of government programs to encourage innovation. The mandate is simple, if someone is brave enough to put up a new project, raise some capital and be bound to milestones for funding then they’ll be funded. Everyone know that the project has about a snowballs chance in hell of getting up and absolutely zero chance of innovating anything.  And worst of all, it is the biggest projects that get all the attention. Governments love the attention of being at the ribbon cutting/sod turning ceremony. What you don’t hear is that projects usually fail to meet milestones because when they finally engage companies to do the detailed design and construction they discover they were missing the odd zero or two on the end of their estimates. Government then recaptures these unspent funds and recycles them into the next program.

What does impress me are companies doing small scale demonstrations on incremental improvements to technology.  There are also a few really amazing technologies coming out of private sector/university collaborations which I’d love to tell you about, but can’t due to confidentiality. I am excited.

And also to set the record straight, I have been up to my little neck in cadging taxpayer funds and big company funds for alternative energy tech for amounts well in excess of $100 million – so I know the game very well.

I will save more mythbusting for future episodes.

Needless to say, I am genuinely excited about the future of renewables and the future of energy technology. It is an amazing space, and as pointed out in other blogs, with the rising global population and growing energy usage by all people, we are in for an amazing ride.

If you are building a windfarm in Australia then there is a very high chance that you are using a financial model that I built 11 years ago, or a derivative of it. I really do like renewables.

The future will involve a bit of everything – solar, wind, nuclear, gas, cleaner coal, more efficient energy  usage, electric cars, biofuels, bioengineering, and more. I love the future… let’s please focus on that rather than being a fan boy for only one idea or technology as it has led us as a nation to lose a decade focussing on the wrong technologies and companies.

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.

The AEMO 100% Renewable Study isn’t a green light to 100% Renewables

Reading some of the headlines about the viability of switching to 100% renewables in the 2030 to 2050 period, you could be forgiven for thinking that it is cost effective and imminent. That is not what the report says.

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.