The new Grattan Institute report "No quick fix for Australia’s future energy challenge" contains misleading comparisons, flawed analysis and glaring omissions on the vital energy issues confronting Australia.
Firstly the report makes a misleading comparison between the cost of wholesale fossil fuel electricity and the cost of solar photovoltaic electricity which currently competes in the retail electricity market.
We do not expect Coles and Woolworths in their customer facing supermarkets to compete with the prices at the Footscray Wholesale Fruit and Veg market or with grocery wholesaler Metcash. It is completely misleading for the Grattan Institute to ignore the differences between the wholesale and retail markets.
Rooftop Solar photovoltaic has halved in price in the last 24 months. This is a staggering cost reduction and is in stark comparison to rapidly increasing gas prices. And what's more, solar prices will continue to fall if support is reduced in a sustainable manner.
Secondly, the report claims that there are no viable energy storage options for renewable energy.
It ignores solar thermal (Molten Salt Power Towers with integrated thermal storage tanks) that is already commercially deployed in baseload, intermediate and peaking configurations in Spain and under construction at a number of sites in the US. This technology is commercially available, off the shelf and ready for deployment in Australia. Rapid cost reductions have been projected by the International Energy Agency, the US Department of Energy and others.
Furthermore, Renault-Nissan's CEO is claiming that its Li-On battery technology, which can be used with Solar Photovoltaic, could be as low as $190 per kilowatt hour by 2014.
Thirdly, the report recommends the "elimination" of Feed-in-Tariffs in Australia. Feed-in-Tariffs do not distort the market as suggested by the Grattan Institute and are more effective than a carbon price in deployment of appropriate renewable energy technologies. If Feed in Tariffs were “eliminated”, as suggested by the Grattan Institute, Australia would lose one of only two very successful significant scale zero carbon policies. Last year the Feed-in-Tariffs achieved over $5 billion dollars in new energy investment, more than was spent on any other source.
The Feed-in-Tariffs have also achieved significant lowering of the country's wholesale electricity costs and real reduction in carbon emissions as well as driving down the cost of future installations of the technology through the Merit Order Effect as outlined by the University of Melbourne Energy Institute.
Further to the above three points, it is unreasonable to assert that mapping of renewable resources is the major requirement for renewable deployment – we know where the good wind and sun is, the Bureau of Meteorology has quality data going back decades and this is cross-checked with private and public satellite data. The solar and wind industries are ready to deploy and know where the best resource is, but they need the government to legislate for transmission network extensions to reach it along with the only viable policy option for the job which is the Feed-in-Tariff.
Geothermal and CCS are not, as claimed by the report, natural advantages to Australia. CCS is not a natural advantage to anyone, as it has never been demonstrated anywhere post- or pre-combustion with coal fired or gas fired electricity generation, and many experts around the world agree that it never will.
Geothermal in Australia is a sub-standard form known as ‘enhanced’ geothermal. Those countries which have a natural advantage in geothermal such as New Zealand, US, Iceland etc have conventional geothermal resources. Enhanced geothermal resources such as those found in Australia are highly speculative and will likely never be proven.
For the Grattan Institute to suggest nuclear power as being viable in this country is ridiculous, to say the least. Areva the world's biggest nuclear power plant technology company, has just announced a further year of delays for its Gen III nuclear reactor in Finland.
This is on top of the fact that it is already five years late and after the project has gone $4 billion over costs and forced the exit of the world's 2nd biggest power technology company Siemens as a partner. Areva, now desperate to improve its fortunes, has bought the solar company Ausra and Wind company Multibrid. As Areva has realized, solar and wind projects on the other hand have reliable 2-5 year project timelines, guaranteed output, reliable costs and very little technical risk.
The Grattan Institute’s report fails to acknowledge that in the near term (probable within 3-4 years) solar will be competitive in the market, and in the meantime should be supported by Feed-in-Tariffs. It fails to acknowledge the commercial reality of baseload solar thermal plants that include storage. It fails to acknowledge that Feed-in-Tariffs have been the most successful policy mechanism for reducing technology costs and carbon abatement demonstrated anywhere in the world to date.
The Institute’s fascination with fossil gas (coal seam gas, shale gas and conventional gas) is consistent with the position of Tony Wood's (Grattan, Program Director Energy) former employer Origin Energy, which is set for windfall profits if it can achieve its aims to develop massive coal seam gas resources across the eastern seaboard and is consistent with lead Grattan funder BHP Billiton's business interests which include massive shale gas operations in the US and conventional oil and gas plays in Australia.
Matthew Wright is executive director of Beyond Zero Emissions.