Q&A: Infigen Energy's Miles George - Part 2

In part two of an interview with Climate Spectator, Infigen's Miles George discusses:

-- Why ARENA should fund solar;

-- The chances of the election playing into the timing of solar build;

-- Off-grid activity;

-- The anti-wind farm movement; and

-- The value of the RET.

Part one can be found here.

Why ARENA should fund solar

TE: With the Capital solar farm, what is the pitch to ARENA on why that project is a worthwhile thing for government funds to go into considering we've already got another large scale solar project that AGL has been awarded under the Solar Flagships and there are also a number of other solar PV installations going up all around the country at much smaller scale. What's the appeal there for ARENA to want to fund that particular project?

MG: After the Solar Flagships process, as you said, there was one project nominated to receive funding under that scheme (AGL). There were three other bidders; ourselves, Pacific Hydro and another (EnergyAustralia). The fourth one has… it's dropped out. But at the end of the Solar Flagships process the minister for energy commended two of the underbidders, if you like, for that process were very worthy, ours and Pacific Hydro's, and he referred them to ARENA for consideration for that reason. 

So, the idea in particular in relation to our project was how different is that we are looking at integrating that solar project with our wind farm dispatch. We're also including a demonstration facility which is now under construction that among other things, is looking at different opportunities for scheduling solar PV output into the NEM. So we'll be registered on the NEM for that demonstration facility as we would be for Capital solar. 

It's really a way of trying to see what benefits can we get by integrating the two sources of electricity which, as you would know, have a very different diurnal profile, potentially together with some battery storage. So we're including some battery storage research as part of the demonstration facility.

I think they're the key things and those features are not a feature of the AGL project that won funding in round one of Solar Flagships. But it's also worth noting that that Solar Flagships proposal is not due to be built still for quite some time. 

So, one of the perhaps unusual characteristics of that submission, the winning one, was that it actually didn't involve building anything until next year sometime. So, the idea was these two smaller projects, ours and Pacific Hydro's, was ‘well, we can get something up perhaps more immediately as well'. As you'd be aware, the general objective is to demonstrate the effectiveness of utility scale solar PV on the basis that continuing decline of the panel prices means that solar PV is probably going to be… in utility scale, but certainly large scale, is going to be a feature of our generation mix. If not a significant feature in five years, then certainly in 10 years. It's really sort of trying to get experience with that.

Could the election play into timing of solar build?

TE: Can I just ask on the timing, if the government were to give you the go ahead and sign all the necessary agreements to your satisfaction, how fast do you think you guys could get that Capital solar project to a point where it's starting to produce power to the grid?

MG: Oh I think within a year... We don't know how long it will take to conclude arrangements with ARENA. I think we gave a rough guide previously that it might take six months to do that, so it could be 18 months from now you could have generation… assuming, as you say, that we reached agreement with ARENA and we then entered the construction phase.

TE: Right, okay. Do you see it at all being possible that you could be breaking ground with Julia Gillard before the next election?

MG: That's a bit of a loaded question. It's just too hard to say really, Tristan. I mean, I put that as remote really. Our timing is not driven by the election timing of course, so it'll happen depending on how we go with ARENA and then following any agreement with ARENA of course there's a number of things we need to finalise, but the ARENA part of it is their grant funding. 

There are a number of other things we would need to do in the pre-construction phase, including debt financing, so I think it's probably unrealistic that we would be turning a sod before September, but it's not impossible.

Off-grid activity?

TE: Okay. In terms of solar PV, beyond the Capital project, are there any other projects in the pipeline, in particular in the off-grid space?

MG: Not in off-grid, although that's an area that we're looking at in smaller scale than 35 megawatts of course, but we do have other sites. Apart from the Capital solar site, we have an approved site at Manildra. We also have an approved site at Moree, but given other projects going around in that area, that's probably unlikely to go ahead now, but these are approved solar sites I'm talking about.  So, we have one approved at Manildra and one approved at Nyngan.

TE: Yes. And I presume that Solar Flagships was some kind of impetus for those projects, but that it now seems ARENA's appetite after this initial round with the legacy of Solar Flagships may not necessarily be there. It'll be focused on off-grid. Can you see that these projects could be commercial at all in the future with just LGCs and the electricity price?

MG: Yeah, we do. Not in the near-term. Not in the next two or three years, but you know potentially in five years possibly.

It really depends of course on where the electricity price goes on the one hand, electricity plus LGC, and where panel prices go on the other hand. If they could get the panel price reduction that's been exhibited over the last three or four years, if it continues at even half the rate, that would definitely be a likely outcome.  So we think it's likely to have a real application in the generation mix in Australia, probably not though in the scale of the Solar Flagships 1 Proposal which was 150 megawatts. 

So we put our proposal together for that and we actually had three different sites because there's actually, as you would understand, there are actually problems putting 150 megawatt project in a remote place, whether it's wind or solar and I guess our view was that you can achieve the scale efficiencies in a utility scale solar plant at twenty, thirty, forty, fifty megawatts. You don't have to be 150 megawatts to demonstrate the scale efficiency and you'd probably get a better outcome in terms of… You know what marginal loss factor is? 

TE: Yes.

MG: The transmission loss factor that you're going to receive in being located in a remote part of the grid. So our view is that there is a future for the ten, twenty, thirty to fifty type megawatt type projects going ahead even if there's no ARENA funding or other funding, then even still in maybe five years' time those sorts of things will happen, in addition to the residential scale systems and probably the development of more commercial systems into 200 kilowatt sort of size, which I think to what you're referring to.

TE: Yeah, I think there's a multitude of different possible sizes that people might look at even into the megawatt scale I suppose depending on…

MG: Oh, absolutely. So, mining sites, for example, solar PV could well be competitive and is already in a lot of places with diesel fired generation, for example.

Anti-wind farm movement

TE: Just one last question. It seems to me that there's a lot more media focus on wind farms and their impact on the local environment. Are you finding it is becoming harder to develop projects… wind projects and get development approvals than what it was several years ago when you were running that business?

MG: Oh, that's absolutely right. You've had a culmination of increased state-based regulation, so the Victorian example is probably the most relevant, but New South Wales has also tightened up significantly the requirements for planning approvals for a wind farm. That's one factor.

And you've also had a very strong campaign, albeit by a very tiny group of people, against wind farms generally. I'm talking about the Waubra Foundation and Landscape Guardians and so on. So, there are the two fronts I guess, if you like, that have made it definitely more difficult. But I think both arguments are actually with science and I don't know if you've seen them, but there are two reports actually that have come out recently. One is from Acoustics Australia, a special issue they've just released on wind turbine noise, which completely discredits the idea that infrasound from wind farms is going to be a problem. In fact, what it says is that it wouldn't be detectable unless you had 250 times less than the perception threshold. 

And then there's a second study that's just also come out from the South Australian EPA. I don't know if it's got much press coverage, but it's called Infrasound Levels near Wind Farms.

TE: Don't worry. We covered it.

MG: Oh, you did. Right. Okay. I mean it just shows that the infrasound levels at a wind farm are potentially no different to anywhere else.

TE: The issue there though is clearly some politicians are hearing that this is an issue and whether they've evaluated the validity or not, a politician will respond to what they think are the concerns of their constituents, and these sorts of things can get away from you. And we've seen that with coal seam methane as well that they've got a whole swathe of additional constraints facing that sector, particularly in New South Wales, but also a wellspring of community resistance. 

How on earth do you manage something like that proactively such that it doesn't hinder your business, even though it might even be based on something completely without any kind of scientific basis?

MG: I guess the approach we're taking, and I think it's pretty much the same in the industry, but certainly the approach that Infigen takes is to try and get in front of people who are likely to be decision makers in the industry.

Whether it's at the state government, federal government level and try to get in front of them with the science. That's what we're doing. 

So, those two reports I mentioned, for example, we make sure that things like that get widely distributed. We talk about it, as I did with you, when we talk to Coalition MPs and others. We think it's just an education thing. It's absolutely clear that the science is totally in our favour, but, as you said, it's not always just about science; it's about the politics and community concerns. 

So, we're trying to address it really at three levels; at the government level and then also at the local community level where we spend a lot of time, at the wind farm sites that we already have and also at prospective wind farm sites talking about these issues with the local communities. 

TE: And do you think it ends up working at all? Can you see that when you put this sort of stuff in front of people they have the potential to be reassured? Because I mean for some of these communities they might see some benefits indirectly through jobs, but if it's not on their land, then… and someone else is telling them that there's something dangerous, where's the incentive there for them to want to listen to you?

MG: Yeah. Generally speaking, I understand the thinking about, if it's not on their land, they don't get rent, but generally speaking, what we find in the local communities where we have wind farms is that that is actually not a big factor. 

What we tend to find is that farmers who don't have turbines, but their neighbours do are generally very supportive. Okay so they didn't have the necessary topography to get a turbine on their property, but they're generally supportive of the benefits for the local community. The issues that we have at our wind farm sites are generally nothing to do with the local people who are almost… well very strongly favour as a group. Where the problem comes is people who are bust in by the anti-movement that as you said, are spreading rumour and so on about health impacts that does frighten people.

You can see that in the public meetings that we hold where… We had one late last year where we had – I don't know – a hundred or something people show up at a community meeting and one of the first questions that the guy who was representing Infigen asked was ‘who lives within 10 kilometres of the proposed wind farm site' and it was about 20 per cent of the room, so all the rest of them are people who, for whatever reason, have made it their mission to oppose wind farms. 

A lot of those people you're never going to convince. It doesn't matter what the science says. But we think in the case of local communities… the people in the local communities we think they are already very largely supportive of wind farms – in our experience, for our wind farms. I accept it's not for all wind farms, but for ours.

And I think in the political sphere at the state and federal levels, I also accept that there are probably some politicians who you'll never convince, but I think there's a large majority who will accept the science and so that's the approach we're taking … to make sure we get the science out there and get in front of the politicians with the science and they will either accept the science or as I said, some of them, hopefully a small minority, will never be convinced even with the science.

TE: And you've got to try I suppose …

MG: Yeah, we do. And so we're happy to talk to people who we know are strongly anti-wind and tell them what the science says. We'll still talk to them and put the case, but you know if you get an irrational response, well there's not much you can do.

The value of the Renewable Energy Target

TE: Okay. Are there some other things, Miles, that you'd like Climate Spectator readers to know about?

MG: I think one of the things that I think is going to be a big subject of discussion, but possibly not during the election phase, but after the election phase and certainly leading into the 2014 climate change… or REC Review will be, what is the right percentage to have as a renewable percentage and… or the right number? 

As you know, the current legislation has a fixed 45,000 gigawatt hours per annum target and take away the 4,000 for small schemes; 41,000 for LGCs. There were some proposals, particularly put forward by gas-fired generators that we should reduce that target to a so-called ‘real 20 per cent' based on the AEMO latest forecast for 2020 demand.

I think you've had comments on this before, but the Climate Change Authority modelling that was done by SKM, looking at that exact scenario and what would be the impact if you reduced the 2020 target to say 27,000 gigawatt hours per annum – which is one interpretation of what a real twenty per cent might be – the SKM modelling showed firstly there would be essentially no generation build for the next five years at least. They said a reduction of somewhere around five or six thousand megawatts in a new build, so you know a large part of the new build renewables that are currently forecast would just be eliminated. 

Emissions would actually be higher of course in that scenario, but I think the most telling thing about it that I think we certainly would like to get out into the market is that the effect on retail level electricity prices would be minimal, and possibly even worse, so you might start to think ‘well that's kind of counterintuitive'. But the reason for it, there being really no cost savings for retail customers from changing to a reduced REC target, is the fact that increasing renewables penetration, which has zero or close to zero marginal costs to operate, actually reduces wholesale power prices. And you've seen that in South Australia where wholesale power prices have gone down substantially as a result of the level of clean energy penetration in that state. 

So, I guess one of the themes that we're going to be certainly trying to get out into the market, through whatever means we can, is a discussion of that point and just to try and make it clear that the idea that's been promoted by Origin, in particular, to cut the renewable energy target is actually going to lose our situation.