Flicking the switch

Is the announcement of an eastern seaboard electric car project Australia's get out of jail card for its liquid fuel supply dilemma?
The answer is probably no, but it could be part of a suite of ways to tackle the problem, one of the big ones of the next decade.

The size of the issue was concisely described by Energy Minister Martin Ferguson earlier this year: "With only about eight years of known oil reserves remaining, Australia is looking down the barrel of a $27 billion trade deficit in oil and condensate by 2015."

That's a near-quadrupling of net negative trade in liquid fuels inside seven years.

The petroleum industry, apart from arguing the need for greater incentives to encourage oil exploration, is keen to see natural gas play a big role in future domestic transport fuel supply. Its enthusiasm is supported by the fact that the gas-to-liquids industry is up and running overseas, producing good quality diesel, and attracting significant sales premiums over conventional fuel.

The miners see this as a real opportunity, too. A multi-billion dollar development is envisaged using Victoria's brown coal – and a tiny first step, using black coal, is proposed in Queensland by Linc Energy, gasifying the fuel underground and producing five barrels a day of diesel in a demonstration project.

All such developments are confronted by carbon charge policies, opposition from environmental activists and the sheer difficulty of climbing the finance cliff face in a credit blizzard.

Enter Better Place founder Shai Agassi, supported by Macquarie Capital Group and AGL Energy, with a plan to build an electric vehicle network, apparently starting in Victoria.

Leaving aside the small problem of finding $1 billion to finance the concept, an exercise they hope will benefit from the Rudd Government's $500 million green car innovation fund, the trio see the use of renewable energy as a critical plus factor in meeting the required demand for power.

AGL is pledged to provide the electricity needed from wind farms and other sources.

This raises some obvious questions about electricity supply and demand – to which, it is pleasing to report, AGL media manager Andrew Scannell had some ready answers.

He tells me that an average car in Melbourne would be expected to use about eight kilowatt hours per day on a 60 kilometre round trip to work, creating consumption of 2,400 kWh a year on the basis of 300 driving days.

According to Scannell, if there are a million electric cars a year on the road by 2020, the total annual power demand will be 2,400 gigawatt hours. Allowing for average capacity factors for wind generation, and with Victoria and South Australia expected to see the large bulk of new investment driven by an enlarged renewable energy target, this throws up a supply requirement of between 900 and 1000 megawatts. This represents only about a twelfth of the capacity required by the proposed Rudd renewable energy target and a building rate of one middle-sized wind farm a year over the decade.

Scannell says the figures are indicative only and AGL will be working with Better Place to forecast renewable energy requirements as the popularity of the vehicles increases.

On this basis, providing public refuelling points will be a larger initial challenge than meeting the generation demand. An idea of the refuelling need can be gained from Better Place's more advanced plans in Israel – there it is proposing to erect up to 500,000 recharging points to service about a fifth of the vehicles on the road in Australia. It will build 125 stations where motorists will be able to exchange depleted batteries, an essential service for anyone driving longer distances than the urban commute. Servicing a million cars in eastern Australia would require about 250,000 recharging points.

AGL says the Better Place batteries will require eight hours to be fully charged, although, of course, they would be rarely depleted in the urban environment.

One of the big arguments will be over who builds the roadside battery replacement infrastructure. Better Plan, which has a partnership with Renault-Nissan based on the company's eMegane vehicle, wants to do it, citing the way initial mobile phone operators built infrastructure to enable mass consumer acceptance, but rival carmakers are understandably sceptical about allowing Agassi a first-mover monopoly.

Apart from revenue to be gained by success in eastern Australia, the big reward for Agassi and his partners would be the value of the example in selling the concept to the much more populous west coast of North America.

The joint venturers have set a target of 2012 for completion of the first stage of the Australian project, focussed on Melbourne and Sydney and the region between. They have plans for Perth, too.

Given the obvious potential of the development, Agassi can be forgiven for being excited, but one piece of hype should be probably be given a swift exit from his repertoire. "Who knows," he told Scientific American, promoting the need for support from Canberra, "maybe some Australian city will become the Detroit of the 21st Century." Give us a break, mate.

Keith Orchison, director of consultancy Coolibah Pty Ltd and editor of Powering Australia yearbook, was chief executive of two national energy associations from 1980 to 2003. He was made a Member of the Order of Australia for services to the energy industry in 2004.