Alan Finkel report: Winners and losers
Prime Minister Malcolm Turnbull asked chief scientist Alan Finkel how to ensure the stability of the energy system at a time of increasing intermittent renewable inputs; on affordability; and finally on emissions reduction.
- A clean energy target to drive investment and reduce emissions;
- All generators required to give three years' notice of closure;
- A system-wide grd plan to inform network investment decisions;
- Regional security and reliability assessments;
- An Energy Security Board to provide system-wide oversight;
- Stronger energy market regulators.
What the report says the future grid will look like:
- Declining coal-fired generation over the next three decades;
- Reduced emissions as ageing coal-fired generation retires;
- Declining demand due to distributed generation (such as rooftop solar photovoltaic) and increased energy efficiency;
- Increased investment in large, medium and small-scale variable renewable electricity generation capacity and microgrids;
- Increased investment in dispatchable generation and storage at grid-scale in response to high levels of renewable penetration;
- Big data and the internet-of-things will drive innovation and create new business opportunities.
- Wind and solar power developers get an extension of the Renewable Energy Target, under which the target was scheduled to top out at 33,000 gigawatt hours in 2020. They also get full certificates for each MWh they supply. They are also required to include battery storage with new projects to offset some of their intermittency, which would increase their cost but also their energy output and revenue.
- Battery developers such as Lyon Group, ZEN Energy and Tesla are clear winners from the storage mandate;
- Energy management software groups such as Reposit Power and Greensync will get a boost from incentives for "demand response" of "behind the meter" energy - solar panels, batteries, smart thermostats on energy hungry pool pumps and air conditioners, electric vehicle chargers - which can supply power back to the grid at times of extreme demand and help to avoid blackouts;
- Pumped hydro developers will also benefit, although suitable geography is scarce and they take longer to get up;
- Gas plant investors get an incentive they previously didn't have before. They can get half a certificate if they emit about 380kg CO2 per MWh, the standard for combined cycle gas turbine plant running consistently. But they are still battling very high gas prices, and peaking plants emit more CO2 because they are constantly switching on and off, which means they could get a smaller certificate;
- Existing coal plants They aren't priced out of the market in the way they would be under an emissions intensity scheme or other carbon price;
- Gas users Petrochemicals and other manufacturers will welcome Finkel's sharp message to Victoria about the onshore gas moratorium in that state. But relief could be years away and this could be too little too late;
- Consumers will be financially rewarded if they agree to manage their demand and share their resources such as solar panels and battery storage. Prices for all consumers, not just those who own solar panels or batteries, will be lower than they would otherwise be;
- Big investors The market operator will publish a non-binding register of intended generator closures to signal investment opportunities and provide community awareness;
- Regulators The existing market bodies – the Australian Energy Market Commission, the Australian Energy Regulator and the Australian Energy Market Operator– will be resourced, strengthened and made more effective through coordination provided by the Energy Security Board;
- Coal There are no incentives for new coal power plants unless they are using carbon capture and storage;
- New gas and renewable generators will have obligations to ensure adequate dispatchable capacity is present in all regions to ensure consumer demand for electricity is met;
- Transmission network service providers will be required to provide and maintain a sufficient level of supply to prevent blackouts.
Wednesday, June 14, 2017
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