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Australia could be left behind in energy stakes

Australia risks being left in the dark ages if it doesn’t start taking energy reforms seriously and begin implementing strategies that will secure Australia’s energy future, according to Australia’s chief scientist Alan Finkel.

Finkel made the observation at a keynote address at the National Press Club this week where he warned that energy generators, wholesalers and retailers need to futureproof the supply.

One the back of his recently released report on the energy sector, Blueprint for the future, he said a key to securing the supply is understanding the number of technological disruptions that need to be taken into consideration by the market as consumer demand patterns change.

“One technological disruption is that ever cheaper wind and large scale solar, even without subsidies, are dominating investor interest,” he said. “Investors prefer wind and solar because they are now cheaper to build than traditional generation such as hydro and coal. Investors also like wind and solar because they can be rolled out in small steps, say 100 megawatts at a time.

“A second disruption is the nearly two million rooftop solar generators that householders have installed. The electrical load curve and the generation mix now ramp rapidly up and down during the day to the extent that it becomes difficult for slow-responding baseload generation to cope. The market into which coal generation operates has been forever changed.”

A third disruption is just beginning, he said, delivered courtesy of stunning improvements in battery capacity and cost. This is a grassroots revolution. It’s driven by billions of people wanting their smart phones and laptop computers to last longer between charges.

“To meet that market pull, global manufacturers have invested massively to improve the performance and lower the price of rechargeable batteries,” he said. “Re-purposing these batteries has enabled manufacturers to configure grid scale batteries. These are now being installed internationally at a level and cost that were unimaginable five years ago.

A fourth technological disruption results from the fast evolving digital technologies that dominate our lives. Digital technologies are poised to enhance our electricity system, allowing it to flexibly accommodate millions of distributed rooftop solar generators, two-way current flows and the connection of microgrids.
“The final disruption is that homeowners are becoming market participants,” said Finkel. “Empowered by friendly software, they are keeping tabs on their own power generation, storage, demand management and electric heat-pump heating.”

While Finkel was at pains to point out the system is not broken, the energy sector – along with both state and local governments – need to start thinking ahead about the country’s energy needs, and not keep their heads buried in the sand that it will be business as usual over the next decade.

“[Our energy needs] are at a critical turning point,” he said. “We must improve on what we have. Globally, policy makers and market bodies understand that the key driver of that change – technology – cannot be reversed.

“When we met our counterparts overseas, the thing that made the biggest impact on me was the long-term policy certainty in other countries, which enables them to efficiently plan for the energy transition.

“It is clear they are ahead of us. For example, Ireland has a multi-year program, Delivering a Secure, Sustainable Electricity System, to actively integrate renewables into the power system. The United States has the Quadrennial Energy Review, to enable the modernisation and transformation of the electricity system. And New York has the Reforming the Energy Vision strategy, which establishes targets for emissions reductions, renewable generation and energy efficiency in buildings. These examples illustrate the need for us to adopt a more proactive approach in Australia.”

The Review not only stipulated that the market had to think outside traditional spheres of generation. However, he also said fossils fuels were not to be taken out of the mix.

“Reliability, security, lowest cost, and reduced atmospheric emissions are the critically important outcomes,” said Finkel.

“The generation mix is an input. The exact mix of coal, gas, solar, wind and hydro is not important as long as the outcomes are met. To minimise future price increases we will need a diverse energy mix, including fossil fuels.”

Finkel believes if Australia doesn’t act now, its energy future will be less secure, more unreliable and potentially costly. He reiterated the point by stating that even though scientists use the term, business as usual when modelling in a specific way, there is actually no such thing because the system is dynamically evolving.

“The past is gone,” he said. “To preserve a stable system at lowest cost we need to embrace that future. Embrace. Not race. Move too slowly and we will miss out on what the future offers. Move too quickly and we put at risk the stability and affordability of our electricity system.”


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