Renewables can't be stopped: ARENA head

ARENA CEO Ivor Frischknecht says by 2030 it is possible to imagine an Australia where most new energy generation comes from distributed solar panels, both large and small scale, developed at half the cost of today, in a grid that is no longer weighed down by concerns of baseload generation.

Haydn Black

Speaking at the Disruption and the Energy Industry Conference in New York earlier this week, Frischknecht said large-scale solar photovoltaic generation is gaining ground in Australia, as AGL’s Nyngan solar farm showed, ARENA’s vision wasn’t just a utopian dream, but something that was rapidly becoming reality.

Earlier this week ARENA and the Clean Energy Finance Corporation agreed to make available $350 million to help develop 4-10 more Nyngan-scale projects.

“The goal is to reduce the cost of large-scale solar in Australia,” Frischknecht said in New York.

“The winning projects will need to meet a $135/MWh LCOE [levelised cost of electricity] threshold. After that, it’s largely based on how much grant is needed – the less, the more likely to win.”

The levelised cost of electricity is a measure of a power source which attempts to compare different methods of electricity generation on a comparable basis that accounts for average total cost to build and operate a power-generating asset over its lifetime divided by the total power output of the asset over that lifetime.

Frischknecht said ARENA could do little about the cost of imported solar modules or inverters, but it could chip away at other areas because most of the costs are local: the cost of cables, brackets, frames and piles, and the cost of construction and finance.

Some solar projects have 30% contingency margins in the construction budget.

“Last year we crunched some numbers. We realised that the difference in financing costs between a mature technology such as wind, and a less mature one, such as large-scale solar, can amount to a quarter of the total project costs,” he said.

“That’s just the difference in finance costs. It’s caused by being less familiar with solar. That’s among the finance community, and among off-takers.”

He said solar had the power to disrupt older, dirtier fossil fuels with cleaner, more diverse, and just as reliable generative capacity.

“The increasing penetration of renewables, particularly solar, can’t be stopped,” he said.

He admits there are issues, with many renewables intermittent generators, that coal is cheaper, and that there are technical, business and regulatory changes needed to the frameworks around generation, but said there were no longer any show-stoppers.

“Technically, renewables will work. ARENA is putting a lot of effort into developing and demonstrating solutions,” he said.

Loads can be managed as most use of electricity doesn’t have to be used immediately, and non-electrical energy such as heat or fuels, can be stored relatively easily.

One of ARENA’s five investment priorities is replacing gas with renewable process heat.

Frischknecht said the grid of the future, with so much local generation so close to demand, means Australia may not need as much transmission capacity or it may need more, to bring the wind from South Australia to market and the solar from inland areas to the coast.

“Peaks will be much more regional. Will AEMO operate a market at many more nodes, or will networks continue to deal with these increasingly local issues, as they do today?” he said.

ARENA predicts that many households and businesses may become battery owners, and participate in the markets or provide network support, given intermittent supply.

That’s happening at the small scale, with a small town of Yackandandah in Victoria aiming to become completely renewable by 2022.

Since the decision was taken in 2014 So far, one third of the houses in the town have solar panels and many buildings have been retrofitted for energy efficiency.

The combination has reduced electricity bills to one quarters of what they were.

“It’s a similar story for Newstead in Victoria, Byron Bay on the NSW north coast and Uralla near Armadale, which are all plotting their way to 100% renewable energy by 2022,” he said.

“There are other similar stories across Australia, of networks forming to help communities transition to renewable energy. This is happening at a local level and solar allows this work to result in real projects relatively easily and quickly.”

Big business hasn’t embraced solar as quickly, because generation isn’t a key business for other sectors, but a number of miners are embracing big solar to offset diesel costs, and he believes as Australia develops its own solar PV manufacturing base it will become even more attractive.

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