Renewables the leader in clean energy investments in Australia

It is never easy following Australia’s energy policies. The prime minister considers coal the new clean energy. It’s not obvious to most EiD readers. Kane Thornton, chief executive of the Clean Energy Council, writes on the Australian Financial Review website that renewables will still be in the lead. The issues raised in Australia will rise again in the US as the new Administration also champions coal.

 

Renewables will win the race for energy investment dollars

Prime Minister Malcolm Turnbull has drawn up the 2017 political battlelines on energy policy, declaring that coal is the new clean energy. Yet while the government has rightly emphasised that the public want affordable, reliable and increasingly clean power, voters aren’t mugs.

“Clean coal” was once a marketing term used by the coal industry to talk about carbon capture and storage – as the name suggests, a technology that was supposed to take the carbon emissions produced by power plants and store it somewhere deep underground. The idea hasn’t taken off because it’s complex, not to mention damned expensive. Now people are being asked to believe the term applies to all new coal plants.

But new-for-old replacement of our coal power plants doesn’t make sense for a variety of reasons. One of these is that the market has spoken: renewable energy is already the lowest-cost form of new electricity generation available in this country. Analysis by Bloomberg New Energy Finance released this month showed new wind and solar are already much cheaper than any form of new coal. And while presenting coal as the new clean energy might play out well with Cory Bernardi and friends, even the most efficient new coal technology produces at least twice the emissions of gas. Overall it isn’t much cleaner than the old coal plants, which would be more at home in the old Soviet Union than in modern Australia. No amount of political brawling – or waving lumps of coal around in Parliament – is going to change the cold hard facts. The people whose opinions count the most are the investors who have to find the money to build new coal power stations. It raises red flags when Australia’s biggest energy companies – AGL, Origin Energy and EnergyAustralia – remain focused on renewable energy because new coal simply doesn’t stack up. All the talk about changing the rules of the Clean Energy Finance Corporation (CEFC) to allow it to lend on coal power is a distraction. The CEFC operates as a bank. If you borrow from it you need to pay the money back, and the risk involved with funding coal technology makes it highly unlikely that investors will turn up. This month a coalition of unlikely bedfellows, including business and energy peak bodies, the cement and aluminium industries, and social welfare groups, called on our political parties to stop the partisan bickering. Cooperation is becoming increasingly critical to solve the crippling energy and climate policy uncertainty, which is holding up the modernisation of our energy system.

The one bright light in this mess is the unprecedented level of investment in renewable energy occurring around the country. The wind and solar projects that will go to construction this year add up to more than $5.6 billion of investment, almost 3150 direct jobs and more than 2500 MW of new power capacity. It represents the biggest program of works for renewables since the end of the Snowy hydro scheme more than 50 years ago. This is “Jobs and Growth” writ large.

The investment has been underpinned by the Renewable Energy Target (RET), along with support from some states and territories. By 2030 it will have leveraged about $50 billion for new energy generation, large and small, since the policy was first introduced by the Howard government in 2001. And let this sink in: that is more private investment in energy generation than during any other period in Australian history. Our old coal-fired power plants cost a bomb when they were built decades ago, but governments and taxpayers mostly picked up the tab. Many have been sold on to private operators who are now just paying for fuel and maintenance. The energy solutions to deliver a reliable, affordable and clean energy system are here now, through renewable energy and battery storage. If we aren’t replacing our old coal-fired power stations with these technologies, we are locking in much higher-cost energy sources for the long haul.

As the Chief Scientist Alan Finkel has made clear, our energy system can integrate much higher levels of renewable energy with a few regulatory and engineering tweaks. The work he is leading in reviewing the National Electricity Market is long overdue and should recommend important changes to modernise our system. And as the PM rightly highlighted this month, battery storage is developing very quickly and will also play an important role in supporting a secure energy supply with much more renewable energy.

Investors are charging back into the renewable energy sector following several years of destabilisation under the Abbott government. The danger is that the politicisation of energy policy, the lack of long-term policy settings beyond 2020 and distractions such as “clean” coal could risk blowing a golden opportunity.

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