Research Paper Index

Research Paper no. 9 2008–09

The potential for renewable energy to provide baseload power in Australia

Contents

List of tables

Table 1: Brief description of some zero to low concentration, low temperature solar thermal technologies
Table 2: Brief description of some high concentration, high temperature solar thermal technologies
Table 3: Summary of key features for alternative renewable resources for electricity generation
Table 4: Summary of renewable energy technologies and their suitability to produce continuous/reliable power

List of figures

Figure 1: Load curve for Victorian electricity grid
Figure 2: Greenhouse gas emissions from various energy sources
Figure 3: CO2 emissions from a coal-fired power plant with and without carbon capture and storage
Figure 4: Cost ranges for electricity generation from various sources

Acknowledgements

This paper was reviewed by Mike Roarty, Gerry Morvell, Peter Yeend, Bill McCormick, Richard Webb, Les Neilson, Julie Styles and Roger Beckmann, all of whom made many useful suggestions to improve its balance and coverage. Gerry was able to provide valuable insights into the workings of the National Energy Market; helped inform me on the nuances surrounding the claims and counter-claims of the supremacy of fossil fuels in electricity generation; and offered conservative counsel on some of the more ambitious claims put forward by supporters of the emerging technologies in the renewable energy generation sector. Others provided comments which have improved the coverage of economic, technical and political issues as well as the readability and presentation of the paper. Thank you all.

Glossary of abbreviations and technical terms

Introduction

Most of Australia’s electricity is generated from coal-fired power stations. The role of renewable energy in present and future energy scenarios is commonly portrayed as marginal owing to the perception that it is often generated in remote areas distant from major centres; and that it is mostly intermittent in nature and cannot deliver a reliable and continuous level of power to match continuous demand, or ‘baseload’. However, not everyone agrees with these perceptions about renewable sources. The conception that renewables are unsuitable for providing baseload power is termed by some ‘The Baseload Fallacy’.[1] Those who hold this view claim that some renewables are indeed able to produce reliable continuous power. They suggest that more use can be made of the similar profiles of diurnal output levels from solar-based renewables and the daily electricity demand curve; and that integration of a distributed system utilising a variety of renewable energy sources will have the capacity to provide reliable power on a continuous basis.

This paper investigates the degree to which renewable sources of generation can deliver power, including baseload power. Technological developments which may influence this availability are also briefly reviewed.

As coal will remain the world’s main feedstock for electrical energy into the foreseeable future, the prospect of increasing the efficiency of energy production from coal, and the reduction of CO₂ emissions, is also examined.

Defining baseload power

Baseload is the term commonly used to describe the amount of electricity demand required on a continuous basis, i.e. 24 hours a day all year round, to power continuous industrial processes, and essential services such as traffic lights, hospitals etc. Baseload represents the minimum continuous level of demand in a grid system, and thus requires reliable supply sources without the risk of output dropping below the baseload level.

The demand for electricity fluctuates during the day and from season to season. Periods of demand above baseload are designated intermediate and peak load (Figure 1).

In some quarters, the terms baseload, intermediate and peak load have been applied on the supply side of the energy market to describe power stations with characteristics claimed to most efficiently deliver base, intermediate and peak demand. For example, coal-fired power stations are sometimes described as baseload stations owing to low cost generation, efficiency and safety at set outputs. Typically these plants are large, provide most of the power used by a grid, and are slow to fire up and cool down. More responsive types of power plants such as combined cycle plants or combustion turbines, which produce electricity at a higher unit cost, are termed peak load plants. These can be brought into action at short notice, to respond to sudden increases in demand. A baseload generator on the other hand takes a day or more to reach an efficient operating state and is less able to vary output to match demand. Whilst a smaller gas-fired plant may be more energy-efficient in terms of energy produced per unit of carbon, a larger coal-fired plant is able to produce power at a lower unit cost because of the economy of scale, even though it is less energy-efficient in terms of converting chemical energy to electricity.

Figure 1: Load curve for Victorian electricity grid

Shown here is the typical power demand (or load) by time of day, in summer and winter, with contributions from baseload, intermediate, and peak load generation. Baseload is about 5100 MWe; total capacity must allow for at least 50 per cent more than this, with intermediate load normally supplied by gas-fired plant, and peak loads typically supplied by hydro and gas turbines. Source: Uranium Information Centre, http://www.uic.com.au/nip37.htm, accessed on 25 June 2008.

Total annual demand for the eastern Australian States is divided almost equally between the peak and offpeak periods, but only 9 per cent of the peak period electricity consumption is generated using peak load technologies – i.e. 91 per cent of all electricity consumption above baseload requirements was generated using black and brown coal.

In order to reduce the degree of fluctuation between high and low demand, lower pricing through ‘off-peak’ electricity rates (mainly for domestic hot water) is used to move some daytime demand to lower demand periods. This helps to even out the diurnal demand curve, but also reflects inefficiencies in baseload technologies which have limited capacity to ramp production (and inputs) up or down to match demand fluctuations. This strategy has been criticised for moving consumers to inherently less efficient use of electricity and for artificially inflating the baseload requirement.[2] There may be a prima facie case for improved overall efficiency by bringing the Australian electrical generation mix between conventional inflexible baseload systems (i.e. coal), and more flexible systems such as gas, hydro and renewables, closer to the 50:50 ratio ‘rule of thumb’.

Why baseload is misleading as a supply-side term

The observation that supposed baseload coal-fired power stations supply 91 per cent of all electricity consumed above base load requirements underlines the fact that the term baseload has no relevance in discussion of the supply of electricity. Assessment of the viability of electricity supplied from any source needs to be conducted in terms of the essential requirements for reliable and continuous power, with flexibility of output to match diurnal and seasonal fluctuations in demand.

This is in fact the basis of the Australian National Electricity Market (NEM), where all power supplied to the market contributes to forecast demand.[3] The National Electricity Market Management Company (NEMMCO) forecasts demand at five minute intervals for every day of the year and generators are able to ‘bid-in’ to provide electricity to the network. As these forecasts are available to all market players, generators can, and do, plan and vary supply to take advantage of best prices. NEMMCO does however have rules to ensure supplies are maintained at all times and that gaming for high prices does not distort the market

All electricity, irrespective of source, contributes to both base and peak demand. Those generators that claim to be ‘peak loaders’ are also in fact making statements about sending their electricity to the market when the demand – and prices – are high; they could generate and send power whenever they like. Equally the popular belief about ‘inflexibility’ of coal fired power generation to provide peak power is not true. Although coal fired boilers need to be maintained at relatively constant operating temperatures and are therefore operated on a continuous basis, the production of steam and generation of electricity can be, and is, varied so that power generators can provide power to the market to take advantage of higher prices during peak periods – hence the provision of 91 per cent of eastern Australia’s intermediate and peak demand being met by coal. Coal-fired generators have always maintained capacity to meet peak demand – and forecasting in the NEM has made this more effective.

Further debate about sources of electricity generation should therefore focus on reliability, continuity and flexibility of generation, within the context of the competitive bidding formulation of the NEM. The term baseload does not appropriately encapsulate the relevant issues.

Australia’s current and projected electricity needs

In 2005-06 Australia's power stations produced 257 terawatt hours (TWh) of electricity (243 TWh public supply plus 12 TWh for off-grid producers), and output is growing at about 3.3 per cent per annum.[4] Of this gross amount, about 18 TWh is used by the power stations themselves, leaving 237 TWh actually sent out (net production). A further 17 TWh is lost in high voltage transmission and 9 to10 more in energy sector consumption, leaving 210 TWh for final consumption (or 187 TWh apart from aluminium production).[5]

Demand is projected to rise to 415 TWh by 2029-30, an average annual growth of 2 per cent.[6] This projection accounts for policy measures in operation in 2007, but not for the current Government’s proposed emissions trading scheme or increased renewable energy target.

Current and projected mix of resource inputs for electricity generation

In 2005-06, 54.5 per cent of total electricity production was from black coal, 21.1 per cent from brown coal, 15.0 per cent from gas, 1.8 per cent from oil, and 7.6 per cent from renewables. Of the renewable power, 82 per cent was from hydro and the balance roughly equally divided between biomass and wind.[7] All baseload power was sourced from black and brown coal. Whilst gas, oil and hydro are significant contributors to intermediate and peak requirements, black and brown coal power is also used because total generating capacity from intermediate and peak generators is less than intermediate and peak power demand.

Using a ‘business as usual’ scenario, ABARE in 2007 predicted little change in the relative shares of electricity generated from fossil fuels and renewables through to 2029-30: wind, biogas and biomass were expected to account for most of the increase in electricity generation from renewable sources.

This modelling suggests that without external stimulation, future growth in the proportion of renewably sourced energy in Australia is likely to be slow. However, continued growth in the sector should be motivated by increases in fossil fuel prices and expansion of the Renewable Energy Target scheme (RET) announced in the May 2008 Budget with a target of 20 per cent share of renewable energy in Australia's electricity supply by 2020. The RET will guarantee a market for renewable energy by setting a target of 45,000 GWh of renewable electricity by 2020. Renewable electricity generation is expected to increase mainly in regional areas, and the relative cost of technologies is expected to become more competitive as the scale of their deployment increases. The government is providing funding in partnership with Australian industry to stimulate technology development across the sector, including photovoltaics, solar thermal, and hot fractured rock development. The RET will be phased out between 2020 and 2030, as Australia's proposed emissions trading scheme matures.[8]

Estimates of the possible growth of non-hydro renewables range from 23 per cent to 41 per cent of the electricity generation market by 2050, dependent upon modelling of different geopolitical scenarios relating to greenhouse gas abatement programs, and whether or not CO₂ geosequestration is commercially applied.[9]

Non-renewable sources of electricity supply

World wide, the non-renewable resources of black and brown coal and uranium have evolved as the principal feed for electricity generation, generally owing to their ready availability, available technology, and relatively low cost of electricity generated. In some countries where the resources are available, renewables have developed into locally significant energy sources for continuous supply, including hydro, geothermal, biomass and wind. However, these installations are generally not at the same scale as coal and nuclear, which dominate particularly in the more heavily industrialised countries.

In the past, the choice of electricity generation technology was largely based on availability and cost. However, concerns related to global warming and climate change, and the large role played in greenhouse gas emissions by hydrocarbon-fuelled power generation, demand that in the future, environmental costs are factored in to the decision-making process. Low emissions will become a key performance indicator.

Coal

Coal is an extremely important fuel and will remain so in the near to medium term. Around 27 per cent of global primary energy needs are met by coal and 42 per cent of electricity is generated from coal. About 70 per cent of world steel production depends on black coal feedstock. Coal is the world's most abundant and widely distributed fossil fuel source. The US Energy Information Administration expects a 65 per cent increase in its use from 2005 to 2030.[10]

Although in Australia coal-burning is used overwhelmingly (93 per cent) for electricity generation, globally, the picture is a little different. Of the 11 billion tonnes of carbon dioxide emitted by coal-burning around the world each year, about 67 per cent comes from the use of coal in power generation. Therefore, coal-fired power generation accounts for about 27 per cent of the world total CO₂ emissions of around 27 billion tonnes.[11]

In 2004, coal burning in Australia produced about 200 million tonnes (Mt) of CO₂ equivalent emissions, or about 35 per cent of the nation’s total greenhouse gas emissions. About 180 Mt came from electricity generation plants, with the rest from steelworks, alumina plants and cement works.[12] Australia has one of the world’s highest percentages of electricity generation from coal, after Poland and South Africa.[13]

The present dominance of coal-fired electricity in Australia and its low cost make it clear that, under existing policy settings, coal will continue to be the principal feed for electricity in Australia for the foreseeable future.

Challenges faced by the coal-fired energy sector

Three challenges face the coal-fired energy sector, each of which has ramifications for its market share in Australia’s future energy mix.

Suitability as a source of intermediate and peak power

Large coal-fired power stations are relatively inflexible in their power output, which means that there is limited ability to vary output to match short-term demand fluctuations, such as the diurnal variations evident in Figure 1. Pricing mechanisms such as off-peak power have been used to smooth out the diurnal demand curve and so reduce the cost inefficiencies inherent in generating electricity in excess of demand. Responses to the availability of cheaper electricity have been mainly the heating of hot water during the night, and extension of industrial activity beyond normal 0800 – 1700 hr activity.

In contrast, output from solar power and to a lesser extent wind power, tends to emulate the diurnal demand curve and offers a potentially less distorted match between energy supply and intermediate and peak load demand.

Improved efficiency

Extraction of energy from coal by burning only releases about 30 per cent of the coal’s intrinsic chemical energy,[14] and so it would appear that there is potential to develop more effective ways of generating power from coal. Greater energy productivity would reduce the amount of coal required and hence improve cost-efficiency and reduce CO₂ and the production of other wastes – utilising so-called ‘clean coal technology’. Research is being conducted into improving the thermal efficiency of power stations, and pre-combustion separation of feedstock components to reduce emissions.[15]

Greenhouse emissions

Conventional coal-powered plants have the highest greenhouse gas emissions of all power generation technologies (Figure 2), which compares emissions on a life-cycle basis. This includes, for example, emissions produced during extraction, processing and transport, such as venting of CO₂ at the head of natural gas wells. However, Australia’s National Greenhouse Gas Inventory in 2006 found that coal mining and handling accounted for two-thirds of Australia’s so-called fugitive emissions (inadvertent emissions), with oil and gas production, processing and distribution accounting for the rest.[16] Worldwide, coal generates about twice the CO₂ emissions of gas, despite having a similar share in the world energy supply. World average emissions are 919 and 389 grams per kWh of electricity and heat production from coal and gas, respectively. Australia emits 990 grams of CO₂ per kWh of electricity and heat production from coal, and 627 grams per kWh from gas.[17]

‘Clean coal’ technologies promise to substantially decrease the level of greenhouse gas emissions, but resultant levels would still be about 10 to 100 times higher than for renewables (Figure 2; note that emissions from renewable energy power generation depend on the source of energy used in its production and operation – theoretically if this is also a renewable energy source the total emissions should be near zero, excepting situations such as emissions from drowned vegetation caused by construction of hydro systems).

There are small scale projects in operation and under development that capture CO₂ for commercial applications. An example is the Victor Smorgon Group project in Victoria where CO₂ is stripped from flue gases and used in an algal bioreactor; the algal mass is dewatered then processed to produce biofuel.[18] For the emissions from coal to be addressed adequately, however, much larger scale technologies are needed to capture CO₂ and isolate it from the environment (carbon capture and storage or ‘CCS’ technology). Much effort is being focused on geosequestration, that is the injection of liquefied CO₂ into geological traps such as exhausted gas and oil wells after capture and transport from the emission source.

Figure 2: Greenhouse gas emissions from various energy sources

Shown here is a comparison of greenhouse gas emissions from fossil fuel and renewable energy sources. The bottom bar – ‘conventional’ – is present-day coal fired generation. Source: Australian Coal Association, ‘Comparing greenhouse gas emissions from different energy sources’, A Summary of Findings Stage One of the Coal in a Sustainable Society Project. http://www.australiancoal.com.au/Pubs/CISS%20Summary.pdf, accessed on 25 June 2008.

The practical application of geosequestration to achieve meaningful CO₂ reductions appears to be several decades away.[19] The first Australian field trial for CO₂ sequestration commenced on 2 April 2008: in which 100,000 tonnes of CO₂ is being compressed and transported by pipeline to the Otway Basin in Victoria, to be injected into a depleted gas reservoir 2 km underground.[20] If successfully demonstrated, commercialisation of CO₂ capture and storage is unlikely to commence until about 2020.[21] Some commentators suggest that the cost of developing and demonstrating the technology will be ‘several billion dollars over 5 – 10 years’ and beyond Australia’s capacity to fund.[22] In this context it is pertinent to observe that the USA’s ‘Futurgen’ project, which aimed to develop and demonstrate the feasibility of commercialising carbon capture and storage, was mothballed in early 2008 as a consequence of cost which had tripled to $US1.8 billion. However, the Australian Government considers CCS to be one of the cornerstones of its approach to reducing CO₂ emissions, and recently announced plans for a $100 million international carbon capture and storage institute to be hosted by Australia.[23]

The development, infrastructure and operational costs of CCS are expected to increase the overall cost of electricity by 25 – 50 per cent, to between 4.5 and 10 c/kWh.[24] Modelling of the capacity for CCS to cut emissions from coal-fired electricity generation between 1999 and 2100 in Australia suggests that:[25]

• Distance between sources and sinks will limit its economic feasibility in NSW and SA;
• Emissions will ultimately continue to grow under business-as-usual growth of the electricity industry with ‘added-on’ geosequestration (Figure 3);
• Unless the efficiency of CO₂ carbon capture and storage is close to 100% in each of the capture, transport and storage stages, long term reduction in annual emissions from geosequestration may happen only if the annual growth in coal-fired generation between now and 2100 is reduced to significantly less than that predicted to occur between the present and 2020; and
• Whilst geosequestration may help in achieving longer-term emissions abatement, it is unlikely to be able to deliver the desired level of abatement without substantial assistance from energy efficiency, gas-fired generation and renewables.[26] 

Figure 3: CO2 emissions from a coal-fired power plant with and without carbon capture and storage

Nuclear

Presently, 439 nuclear reactors operating in 30 countries have an installed capacity of about 370 GWe. In 2006, they generated 2,658 TWh, which is 16 per cent of world electricity production.[27] The number of reactors under construction (33, with 26.8 GWe capacity), planned (94, with 101.6 GWe capacity) and proposed (222, with 193.1 GWe capacity), clearly indicate strong growth in the nuclear power sector. The majority of this growth reflects strong economic development (e.g. China alone accounts for more than one third of the planned and proposed reactors), but the desire to reduce greenhouse gas emissions is another reason – for example, there are new nuclear reactors slated for developed countries such as Japan and the USA.

Owing to Australia’s endowment in black and brown coal and the relatively cheap cost of electricity from coal-fired power stations, the use of uranium for electricity has until recently not been on the domestic agenda. However, recent concern over approaches to lowering Australia’s CO₂ emissions has led to considerable debate on this issue – notably the House of Representatives Standing Committee on Industry and Resources report ‘Australia’s uranium – Greenhouse friendly fuel for an energy hungry world’[28] and the ‘Switkowski report’ for the Department of Prime Minister and Cabinet.[29] Both reports make a case for introducing nuclear energy into Australia, mainly to mitigate greenhouse gas emissions in the future. Nuclear power would be 20-50 per cent more expensive than coal without CO₂ pricing, but roughly equivalent with ‘low to moderate’ pricing of CO₂ emissions (See Figure 4). The Switkowski report describes nuclear power as ‘the least-cost low-emission technology that can provide baseload power and which is well established.’

Current disadvantages of nuclear power include investment and financing risks, long construction times compared with most other electricity-generating technologies, persistently negative perceptions, especially regarding the safety of nuclear waste disposal, and a possibility of accidents releasing harmful radiation. There is also a need to provide specialist regulatory agencies and detailed safety regimes. Opponents of nuclear energy consider that the full environmental costs, and the cost of disposal of high-level radioactive waste, are not factored into the claimed low cost of nuclear-sourced electricity. They also cite concerns over the danger of transporting either radioactive waste or nuclear fuel, the potential for long-term human health effects and ecosystem damage following accidental release of radioactive material from the power plant, and deliberate targeting of nuclear facilities by rogue elements.

Renewable energy sources for power generation

A wide range of technologies offer potential for energy generation from renewable resources. These include hydro power, biomass, wind power, solar power (photovoltaics and solar thermal), ocean energy, tidal power, and geothermal. Background information was recently gathered on these renewable resources by the House of Representatives Standing Committee on Industry and Resources.[30]

Key characteristics of the renewable energy sources reviewed in this paper are described here and summarised in Table 3.

Hydro power is a long-standing source of electricity generation using renewable energy, but its role in meeting demand for clean energy is severely limited by lack of suitable new sites for dam construction; community resistance to land flooding; and concerns that climate change may reduce flows and thus reduce the certainty of future energy supply. Worldwide, in response to these limiting factors, there is a move toward development of mini-hydro power systems that are applicable in smaller rivers and more distributed locations. In a recent innovation, a mini-hydro project has been developed in Victoria to utilise the energy in an existing water pressure reduction station between the mains and distribution water pipe systems.[31]

In Australia, hydro power is being used increasingly to meet peak load requirements owing to its inherent flexibility. Australia has about 100 hydroelectric power stations with 7,050 MW capacity providing about 16,000 GWh annually. A further 310 MW are either under construction or planned.[32]

Biomass as an energy source involves two different methods: burning vegetative material, and burning biogas (methane) produced by the breakdown of organic matter. Australia has about 808 MW of electricity generation capacity in total from biomass sources. Growth in this sector, together with wind power, is expected to account for most of Australia’s increase in electricity generation from renewable sources to 2030.[33] Bagasse – a by-product of sugar production – has been used in Queensland and northern NSW for 50 years for commercial power generation, contributing about 1 per cent of Australia’s electrical generation. Small amounts of energy are also produced by burning wood waste at some timber mills. Vegetative matter can be grown specifically to be burned directly to produce energy, or to make biofuels, but this is considered environmentally and economically inefficient as it would supplant other, more high-value forms of agriculture such as plantation timber or food cropping.

Biomass as biogas entails harvesting methane from the breakdown of organic material – principally human or animal sewerage, municipal rubbish, and waste from food processing. Installed capacity for biogas electricity production in Australia was 175 MW in 2006, having grown at around 78 per cent per year since 1995. Most of the capacity is at sewage treatment plants, which are considered highly cost-effective. Methane-powered generators at rubbish tips can provide dividends to authorities to offset garbage collection and disposal costs, and if operated at sufficient scale – such as at the Woodlawn Bioreactor near Canberra (utilising Sydney’s garbage) – can be commercially profitable. Improved waste management and incentives are required to reduce the cost of the electricity from as high as $80/MWh currently, to $50/MWh, in order to improve competitiveness.

Whilst the Australian Business Council for sustainable Energy (BCSE) has suggested that biomass electricity could increase to 10-17 per cent of Australia’s total electricity consumption by 2020, environmental and food equity concerns arising from a trend to increased agricultural production for bioenergy could limit this growth to utilisation of waste agricultural and forestry products, which may require further technological advances to increase energy conversion efficiency. Parallel development of biomass production for electricity generation, and biofuel production for petroleum substitution, would offer greater certainty to the agricultural sector.

Wind power Total installed wind capacity in Australia is currently 817 MW, and has grown strongly in recent years (by 109 MW in 2006). This rate of growth has been assisted to a significant degree (and greater than other renewable technologies owing to wind’s relatively more advanced ‘technology ready’ status) through the setting of Mandatory Renewable Energy Targets by Australian governments. About 2,500 GWh is generated annually.[34] The wind energy industry suggests that another 10,000 MW could be installed in Australia, providing up to 10 per cent of the country’s electricity needs. Costs and efficiencies are improving, particularly as the size of rotors and turbines increases. The IEA anticipates that wind power technology will continue to improve and capital costs will decline with larger volumes of turbines produced. The trend towards larger rotors and taller towers is expected to continue, improving performance and reducing the unit cost of electricity. In the past 15 years costs have halved to about $70/MWh and could drop to about $40–$45/MWh by 2020. At the best sites, wind may become competitive with the cheapest fossil fuel resources by 2010. While the generating costs in good sites are quite close to the cost of conventional technologies, additional costs to cope with intermittency and grid integration tend to increase the generating cost of wind substantially.

Australia is not particularly well-endowed with sites for wind farms, and development tends to be restricted to southern regions, which is where the windiest locations are. In addition, the ‘NIMBY’ (‘not in my backyard’) syndrome has caused some proposals for wind farms not to proceed. The risk of bird deaths has affected the final siting of some projects, and required special monitoring and mitigation procedures which appear to have reduced the general level of concern.

Wind can contribute to small community off-grid systems, as well as supporting remote end-of-grid consumers by improving stability and reducing transmission loss. The ultimate share of the national electricity market supplied by wind may be constrained by the wind’s intermittence, site limitations, and issues related to grid connection. Options for managing intermittency of power supply include reserve power plants; interconnection with other grid inputs; distributed generation; matching demand to the intermittent supply; and electricity storage. As the market penetration by wind power increases, the impacts of intermittency on the NEM will become more apparent and will require technical compensation. These costs are likely to be imposed on the wind generator, thereby increasing the cost of wind energy, reducing its competitiveness against other less intermittent sources, and ultimately capping wind’s market share. Therefore, growth beyond about 20 per cent of the market share may require major advances in management of distributed and intermittent power sources, such as developing reliable wind forecasting ability to pre-empt the effects of intermittency of supply; and by making the grid more flexible in its receipt of intermittent power.[35] The latter approach, i.e. development of an ‘intelligent grid’, will also be applicable to other intermittent renewable energy sources such as solar and tidal.

Photovoltaic (PV) technology transforms the energy of sunlight (solar photons) into direct electric current using semiconductor materials. The basic unit of this technology is a PV or solar cell. When photons enter the PV cell, electrons in the semiconductor material are freed, generating direct electric current. Solar cells are made from a variety of materials and come in different designs. The most important PV cells are crystalline silicon and thin films, including amorphous silicon.[36]

The amount of energy that can be produced is directly dependent on the intensity of available sunshine and the angle at which solar PV cells are oriented. PV cells are still capable of producing electricity even in temperate winter conditions and during cloudy weather, albeit at a reduced rate. Obviously, however, the cells will not work at night. Most current photovoltaic power is decentralised, being generated on rooftops to power individual buildings.

PV is an attractive option in areas of abundant sunshine such as in Australia, and may play a useful role in meeting peak consumption associated with the use of air conditioning systems. In remote areas it can also be a cost-effective option. Most non-rooftop Australian installations are in remote areas (such as Kings Canyon and Hermannsburg in the NT), where peak output tends to match peak demand owing to the use of air conditioning in the hotter parts of the day.

Installed capacity grew by 24 per cent in 2005 to 60.6 MW.[37] Most of this (86 per cent) is off-grid, but growth in grid-connected installations is very strong (154 per cent in 2005). PV rebates and feed-in tariff developments are likely to sustain and possibly strengthen this trend. The current rebate of $8000 for PV installations in homes, schools and community use buildings under current and previous versions of the Australian Government Solar Homes and Communities Plan has substantially increased the number of small-scale installations, even though the payback period with the rebate is 10-20 years.

PV is reliable and low maintenance, albeit predictably non-constant over a 24-hour cycle. It is readily adaptable and scaleable, from stand-alone (off-grid) systems where back-up is generally required commonly in the form of a diesel generator; to grid-connected systems where excess electricity production can be sold into the grid, and there is no requirement for storage or back-up systems; and utility-scale systems.

PV installations are almost all roof-mounted systems at the domestic scale. However, the longer term commercial potential is considerable provided capital cost can be brought down. In California, 250 MW of PV panels are being installed on six million square metres of industrial roof space, in a $1 billion initiative announced in March 2008. Technologies are also under development to better integrate PV into building architecture, including modular rooftop PV systems, the development of a solar PV rooftop tile, and solar PV wall panels.[38]

Whilst it is unlikely that PV technology for off-roof utility-scale generation will become price-competitive for another twenty years,[39] significant technological advances are being made: a grid-connected 154 MW HCPV plant (Heliostat Concentrator Photo Voltaics) being constructed in country Victoria promises improved efficiency and reduced cost of electricity generated (see box). The $420 million project has received $125 million in government grants, and will incorporate hydrogen production and storage technology to facilitate 24 hour electricity production.[40] Manufacturing cost of PV cells will be brought down by advances such as ‘SLIVER technology’, where the amount of silicon required is substantially reduced.[41]

Future policy frameworks including subsidies, and variations in the level of feed-in tariffs, could significantly influence the uptake of PV and the size of its contribution to the NEM. If technology delivers a substantial reduction in capital cost, then PV may develop into a significant contender for generation into the grid, particularly from building-integrated installations.

Solar thermal technologies (STT) concentrate solar radiation on to a receiver, where it is converted into heat, which can then boil a liquid to produce steam to drive turbines. STT is suitable for large-scale electricity generation and there are a number of technology options available, although they are at different stages of deployment and development. STT can be split into two groups:

• zero to low concentration, low temperature solar thermal technologies (see Table 1), such as solar chimneys, solar ponds and solar water heaters; and
• high concentration, high temperature solar thermal technologies (see Table 2), such as parabolic troughs, central receivers (‘power towers’), parabolic dishes, Fresnel collectors, and multi-tower solar arrays.

Solar thermal energy is emerging as a cost-competitive source of electrical power, especially because it can combine beneficially with current energy sources such as coal power generation. In 2002, costs were predicted to become equal to coal-fired generation once global capacity reached 5,000 MW, by around 2013.[42] The IEA’s current estimate of the time to achieve cost-competitiveness is more conservative, at 2030.

Table 1: Brief description of some zero to low concentration, low temperature solar thermal technologies

Table 2: Brief description of some high concentration, high temperature solar thermal technologies

In 2004, electricity generation from solar thermal power cost between US$85 and $135 per MWh, which is two to three times higher than the cost of conventional energy sources. Barriers to uptake include the high up-front cost of equipment to collect and store solar energy, the need for large collecting areas, and intermittence. The capacity to generate high temperatures provides the potential for hydrogen production as a method for storing energy for use in producing continuous energy supply; hydrogen also provides the possibility for energy use beyond the stationary electricity sector (see discussion on energy storage below).

Whilst the intermittency of solar energy (i.e. PV and solar thermal) is sometimes used as a basis to argue against its potential for supplanting energy from hydrocarbons, it is worth noting that in summer the diurnal fluctuation in solar power output approximately parallels demand associated with airconditioning. Demand tends to occur later in the day due to temperature peaking in mid to late afternoon as well as the concurrent demand of office and home airconditioning systems in the late afternoon and early evening as workers return home.

Current costs of solar thermal systems are the lowest of any solar technology, but more expensive than hydro, wind and biomass. By 2015, technological improvements should reduce cost to US$50/MWh, which would make it one of the lowest cost renewables able to service peak load and, provided adequate thermal energy storage systems can be developed, baseload power demand.[43]

Ocean energy can be tapped from a range of sources including tides, waves, marine currents, thermal layering, and salt gradients.[44] Systems to harness this energy are largely at the research and development (R&D) and pre-commercial stage of development. France, Canada, China, Russia and Norway operate tidal power stations, and there is a commercial wave power plant in the United Kingdom. The IEA estimates that by 2030 world ocean energy generation could amount to about 12 TWh, or 0.1 per cent of total energy generation. Only two of these sources are being investigated for development in Australia – tides and waves.

Tidal power incurs relatively high capital costs, and construction times can be several years for larger projects. In addition, operation is intermittent with a relatively low load factor (22–35 per cent). Thus, although plant life can be very long, the high capital costs and long construction time have deterred the construction of large tidal schemes. The environmental impacts from the large scale excavations required during construction are a further impediment, as is the potential for significant and possibly permanent alteration of estuarine tidal dynamics.

Tidal energy was considered for the Derby region of WA. However, economic and environmental considerations made a gas-fired power station a more cost effective option in that case.[45] Tidal energy from a 5 MW tidal plant suited to local electricity requirements would have met 50 per cent of annual demand with the balance from diesel powered generators; the estimated cost of power was $410/MWh.

A tidal range of at least 5 m is considered necessary for large-scale installations. Australia’s best tidal energy resources are in the Kimberley region. However, given the high costs of transmitting the power to far-away metropolitan regions, the resource may only be suitable for local demand. A low probability role could be to generate hydrogen, if a hydrogen-based economy were to develop in the future.

Wave energy depends on wind speed, the distance over which the wind interacts with the water, and the duration of time for which the wind blows. Wave energy systems do not make use of waves as such, but rather the swell that occurs in deeper water or which can be captured by coastal installations. Currently in the world, only two wave power installations are operating as commercial-testing installations. The fact that there are many different concepts under investigation in various countries (e.g. Scotland, Portugal) suggests that the best technology has not yet been identified. The technology is relatively straightforward compared to most other renewable energy technologies, and is easily scaled up to match supply opportunities. An added bonus is the capability to co-generate desalinated water. Projected costs into the long term are the lowest amongst the renewables. Reliability is relatively high, although predictable periods of lower output would be associated with calm ocean conditions.

Wave power worldwide is a potentially large resource but is still in the R&D stage. It appears to have a fairly low priority for commercialisation or for research. Nevertheless, wave power holds promise for offshore installations with minimal environmental impact, and is able to be sited close to coastal settlements with little effect on access to or utilisation of the adjacent coast or sea. If the technology were to develop faster than anticipated, Australia has suitable coastline conditions in its southern regions, and local technological expertise. Two systems currently under trial in Australia are described in the boxes.

	The Government has provided seed funding for a trial of the CETO system in Fremantle. The motion of underwater balloons is used to pump seawater ashore under pressure to produce electricity via a turbine, or for desalination. The system is modular, with each balloon capable of generating 180 kW. A ‘wave farm’ of 300 units with 50 MW capacity would cover the area of 2 football fields and produce an average of 20 MW and about 50 GL of fresh water. Paul Skelton, ‘A Freshwater Solution’, Electrical Connection, 2007, p.32, http://www.ceto.com.au/news/2007/Electrical Connection_A_Freshwater_Solution_070904_2.pdf
		OceanLinx is a moored system in which wave energy is focussed in a confined chamber; the resulting airflow passes through a turbine to create electricity. A prototype unit is being installed at Port Kembla to produce enough power for 500 homes. It can also deliver 2000 L of desalinated water per day. The system requires deep water near the coast and can be integrated into coastal structures such as harbour breakwaters. Cost of electricity is estimated to be 5¢ per kWh. Sources: Energetech, ‘Energetech wave energy device permanently installed’, Media Update, 19 December 2006, http://www.energetech.com.au/attachments /MediaUpdate_Dec2006.pdf, accessed on 20 May 2008; Parkinson, ‘Swell ideas’, The Bulletin, 29 May 2007, p. 33; Oceanlinx, http://www.oceanlinx.com/overview.asp.

Geothermal energy sources originate from thermal energy trapped beneath and within the solid crust of the Earth. Theoretically, the total accessible resource base of geothermal energy to a depth of 5 km is over one million terawatt-years (TWa), but only an extremely small fraction of this total could ever be captured, even with advanced technology.[46]

Geothermal energy for electricity generation is cheap where it is easily accessible, but that tends to be in places that are volcanically active. In the longer term, tapping geothermal energy by pumping water into subterranean hot fractured rocks may become a useful source of renewable energy with wider availability. The IEA suggests that it is possible, with the full exploitation of opportunities, that geothermal energy could supply 5 per cent of global electricity by 2020.

There are two forms of geothermal energy resources in Australia – geothermal aquifer and geothermal ‘hot fractured rock’.

Geothermal aquifer: Australia has very limited geothermal aquifer resources – unlike the volcanically active regions of New Zealand which have been tapped as a source of geothermal energy for electricity generation since the late 1950s and currently provide an installed capacity of 444 MWe or 7 per cent of New Zealand's total installed capacity for electricity generation of about 5,000 MWe.

Australia’s best resources of conventional geothermal energy are in the Great Artesian Basin region, where many bores discharge water at high enough temperatures to operate heat engines. Two small-scale power plants utilise low temperature hot water to generate electricity for remote settlements, and a small geothermal power station is operating as a demonstration in Birdsville. As the resource is available only in central Australia it can supply only the very few towns located near the resource, where the total demand for power is about 20 MW. Present capacity is 18 MW and annual production about 43 MWh.[47]

Hot fractured rock (HFR) is rock (normally granite) at temperatures of 250ºC and higher, which occurs at depths of 3 to 5 km. This represents an enormous energy resource which can be tapped by pumping water into the HFR and extracting it as high pressure steam to run conventional steam turbine power equipment. The technology holds the promise of providing continuous power output. Preliminary work by Geoscience Australia suggests a potential HFR resource equivalent to 20 000 years of Australia’s energy use at 2005 levels - about 1.2 billion petajoules.[48] 

To develop this resource, boreholes need to be drilled into the HFR to facilitate the injection of water, which passes through fractures in the rock to extraction boreholes and returns to the surface as steam.[49] Success primarily depends on the ability to drill deep into hot hard rock. Current drilling technology limits geothermal extraction to 5 km – at this depth sufficiently high temperatures to make the process economically feasible occur only in ‘hot spots’ of above average temperature. Future development of drilling and extraction technologies is expected to expand the available geothermal resource.

Twenty-seven companies are exploring for geothermal energy resources over about 149 000 sq km in Australia. The Energy Supply Association of Australia suggests that 6.8 per cent (~ 5.5 GWe) of Australia’s base-load power could come from geothermal resources by 2030, at $50–$60 per MWh. Without the pricing of CO₂ emissions, this is considerably more expensive that many forms of conventional energy generation from coal and natural gas. Current drilling limitations may need to be overcome to allow widely distributed implementation. Remoteness of currently viable geothermal resources will require substantial investment in infrastructure to extend the grid, and will incur significant transmission losses using conventional 3-phase AC high tension lines. High voltage direct current transmission lines result in less energy loss, and are calculated to limit energy losses between remote NE South Australia and Port Augusta or Brisbane to around 5 per cent to 8 per cent respectively.[50] Alternatively, hydrogen generation on site may be a more cost-effective option to transport power to major centres. These additional costs may affect the market competitiveness of this technology.

Table 3: Summary of key features for alternative renewable resources for electricity generation

Notes:  ¹Australia’s total installed power generation capacity in 2006 was 51,000 MW; ² For comparison, coal $28-40; clean coal with carbon capture $52-105; gas $37-54; gas with carbon capture $52-94; nuclear $40-65 (Electric Power Research Institute. Review and comparison of recent studies for Australian electricity generation planning: Report for UMPNER. 21 November 2006) Symbols used in ‘Long term capacity’ column: = indicates capacity will stay about the same as 2020-30; + indicates probable further growth in capacity beyond 2030 –the more + the higher the prospects.

Cost of electricity from renewables versus coal and gas

Overall, the cost of electricity generated from renewables is significantly higher than for coal and gas. However this differential is markedly less when renewables are compared with the cost of coal and gas-based generation including carbon capture and storage (Table 3; Figure 4).

Figure 4: Cost ranges for electricity generation from various sources

Source: AREVA, Submission to the Garnaut Climate Change Review, 2008, http://www.garnautreview.org.au/CA25734E0016A131/WebObj/D0851413
GeneralSubmission-AREVAAustralia/$File/D08%2051413%20%20General
%20Submission%20-%20AREVA%20Australia.pdf, accessed on 16 September 2008.

Recent predictions suggest that the adoption of clean coal technology would see the cost of wholesale electricity rise by 50 per cent and the price to consumers go up by a quarter.[51] The cost of power from biomass, wind and wave power is already within the range of costs for coal generation with carbon capture and storage, and technological advances and upscaling promise to reduce these costs further.

The argument that renewable energy will necessarily cost more is weaker when the costs of reducing carbon emissions, and the advances and technological improvements in alternative energy generation are taken into account. Brad Page, CEO of the Energy Supply Association of Australia suggests: ‘If you were to have a 20 per cent renewable target by 2020 across the board for the whole of Australia, then you're probably going to add somewhere around 10 per cent to the production cost of electricity, so that would translate into, maybe, 4–6 per cent at the retail end.’ This increase would be above ‘business as usual’ coal generation costs without taking account of increased costs to the consumer of carbon capture and storage.

Limitations of renewable energy as suitable sources of reliable power

Critics of renewable energy as sources for baseload power base their point of view on cost, scale, location, and continuity of power output. The issues of cost and scale are interlinked, as unit costs will fall as the scale of installation grows. Research and development are focussing not only on technical issues such as the efficiency of power production, but also on the type and amount of material used in constructing the technology, which will bring down costs, especially in the photovoltaic field.

As technical design improves and operational experience is gained, the scale of installations is increasing. This is best evident in wind technology, where in the last decade generating capacity per turbine has roughly doubled to 3 MW linked to an increase in rotor diameter of 66 m, and the average aggregate capacity of wind farms has increased from typically around 50 MW to up to 140 MW (e.g. at the Woolnorth wind farm in Tasmania). Upscaling is anticipated across all renewable sources except geothermal aquifers. Dependent upon adequate solutions being identified for the drilling problems related to hot fractured rocks, there appear to be few impediments to the rapid expansion of this technology. Installations for several technologies are modular (e.g. wave systems, solar thermal, PV and wind), which means that upscaling is readily achievable.

The location and distribution of several renewable resources are relatively remote from main areas of energy use and from the NEM grid. However, systems can be constructed to solve this problem in much the same way that railways have been constructed to bring coal from remote mine sites and gas is piped from central Australia to the eastern seaboard. Developments suited to renewables are extensions to the grid, and conversion of thermal energy into transportable energy such as hydrogen transmission by pipeline. The range of renewables available in combination present a widely distributed number of feed-in points, such that wind farms along the southern coast, ocean power systems near main coastal centres, strategically positioned solar plants, and biomass plants in major agricultural areas can all feed into the common NEM grid.

This same distributed feed-in strategy from a variety of technologies positioned in different geographic areas experiencing different weather patterns at a point in time serves to moderate fluctuations in power inputs and reduce the strength of the argument that renewable power lacks certainty of supply and continuity. Indeed, some renewable sources of energy generation such as biomass and geothermal energy (also ocean thermal layering which is not being developed in Australia), are based on continuous inputs to generate power. Development of these technologies could substantially offset the limitations posed by those renewables which are based on discontinuous inputs, i.e. sunlight, wind, wave motion and tides.

There is however an issue with concentration of intermittent sources of supply on the network. Provided wind or any other intermittent source is disbursed across the grid the current system can cope with significantly more than is currently produced. Some problems can occur when there is too much concentration in one part of the grid. South Australia is one area where there is a very good wind resource but a relatively low load, which can produce bottlenecks into the national grid. Potential issues in this part of the grid have been subject to studies by the Australian and South Australian governments and have been effectively managed by NEMMCO without any adverse impacts on the NEM. 

Overall, there is no theoretical impediment to the use of renewable energy as a reliable power source. In practical terms renewable energy will not be available in sufficient quantity until its stage of development matures, the issue of scale is addressed, and pricing is acceptable. This analysis indicates that renewables could provide 20-30 per cent of Australia’s electricity capacity by 2030, dependent upon adequate support for continued research, development and demonstration. Pricing support may prove necessary to achieve targets. However it is worth noting that projections for the costs of electricity from ‘clean coal’ and gas which incorporate carbon capture are in the range of $52-$105 per MWh, which make the cost of energy from renewables relatively competitive (Table 3). The Intergovernmental Panel on Climate Change (IPCC) suggests that all renewable energy sources except solar electricity are already less expensive than the projected cost of coal-fired electricity incorporating capture and geosequestration of CO₂ emissions.[52] It is worth noting that carbon capture technology may not be demonstrated as a proven technology for about a decade, by which time significant advances are likely to have been made in the demonstration, application and upscaling of several renewable energy technologies.

Solutions to the intermittency issue

As mentioned above, several renewable energy sources depend on harnessing power from intermittent energy sources such as sunshine, wind and waves. Continuity of supply can be provided through:

• a mix of generating capacities to reduce reliance on daylight hours, sun, wind , or waves;
• incorporation of renewables in the mix which are not subject to intermittent energy, i.e. biomass and geothermal hot fractured rock;
• back-up generation utilising sources which can respond quickly to demand fluctuations and which are less polluting in CO₂ and other greenhouse gases than conventional coal technologies; and
• technologies to store excess energy to be used when primary generation does not match demand.

Technology mix: a range of possible mixes has been advanced incorporating renewable energy to combat increasing CO₂ emissions. For example, one model suggests that biofuels (28 per cent), wind (20 per cent), solar (5 per cent), and hydro (7 per cent) could supplement gas (30 per cent), black coal (9 per cent) and oil (1 per cent) to produce all of Australia’s electricity needs by 2040.[53] This model provides for the intermittency being offset by retention of significant gas generation in preference to coal, owing to its lower greenhouse gas emissions. As other renewable technologies are proven, such as geothermal hot dry rock energy, these can replace fossil fuel inputs into the energy mix.

Energy storage: Concern over the ability of renewables to displace signifi