Australia has a massive untapped potential for renewable energy generation. The solar radiation received by the country is enough to meet its energy demand 10,000 times, and this is before counting wind resources. Seeing this potential, a coalition of business leaders in the energy sector have proposed an ambitious project, the Asian Renewable Energy Hub (AREH).
AREH is simple to describe but enormous in scale: the plan is to install a 6-gigawatt renewable generation system combining photovoltaic arrays and wind turbines in West Australia, and then connecting it to Indonesia with a submarine cable. The transmission line will then extend throughout the archipelago and all the way to Singapore.
Australia and Indonesia have key resources that can complement each other: while Indonesia has low-cost labor but faces an imminent energy shortage, Australia has ample renewable resources but high wages. Once the AREH project is completed and operation, a stable energy supply can be secured for the region, where Indonesia provides excellent conditions for manufacturing processes that use plenty of human labor, while Australia is better suited for automation-intensive manufacturing.
The first stage of the project is expected to cost US$ 10 billion, but it is a reasonable price considering that the installed capacity is 6 GW (6,000 MW) and that the transmission line crosses the ocean. A project of this scale requires meticulous planning and a high-end design to be successful, so construction is expected to start until 2023, and full operation by 2029. The first stage of the project only interconnects Australia and Indonesia, but the plan is to reach continental Asia.
Such a project would have been considered science fiction just a couple decades ago, but technological development now makes it possible. The cost of solar and wind power is decreasing rapidly, with record low kWh prices in Saudi Arabia and Mexico, while marine transmission lines have been perfected thanks to many offshore wind power projects around the world. The ocean is no longer a barrier for large-scale power transmission infrastructure, and also consider that solar and wind power will be even cheaper by 2029.
To minimise costs, the plan is to manufacture all the equipment and components in Indonesia, benefiting from low-cost labor, and then shipping them to West Australia for installation. As a result, the AREH project will stimulate the regional economy even before it starts operating. It will also help build the technical know-how for future developments of similar scale.
Normally, solar and wind power must be complemented with battery storage to provide a stable energy output and to compensate for the normal variation of these resources. However, the AREH project is an exception: after two years surveying the West Australian coast, an exceptional site was found. Sunlight and wind complement each other very well, with strong winds during the early morning, evening and night, precisely when the availability of sunshine is limited. Energy storage is an excellent complement for any solar or wind power system, but this particular project is viable without it.