Australia’s chief scientist Adam Finkel recently published a comprehensive report about the national energy sector. One of the key points was recommending a Clean Energy Target (CET) for the country, which would require all energy retailers to obtain a minimum percentage of their electricity from renewable sources. However, the Turnbull government has decided to follow a different approach, with a new policy that has both positive and negative aspects: the National Energy Guarantee (NEG).
The NEG was announced on Tuesday, October 17, and it builds on two main elements. There will still be an emissions reduction target, but just enough to meet the Paris Agreement – 25% less emissions by 2030 compared with 2005. In addition, the new policy will require utilities to keep a minimum percentage of dispatchable generation available. While this favors hydroelectricity and utility-scale battery systems, it will also allow coal and natural gas to stay in the game for the foreseeable future.
A Larger Market for Battery Storage
Of all emerging energy technologies, battery storage is the winner with the new energy policy. Utilities will be forced to keep a minimum percentage of dispatchable generation capacity, but using only coal and natural gas will be possible due to the emissions limit. Hydroelectricity is also an option, but it is only viable with the right site conditions. In other words, utilities will likely turn to battery storage to meet the percentage of dispatchable generation that cannot be covered with fossil fuels or hydroelectricity.
Large-scale batteries are already being installed in many parts of Australia. A 100 MW/129 MWh battery is being deployed by Tesla in South Australia, and a second unit rated at 30 MW/8 MWh will be deployed in the Yorke Peninsula.
In West Australia, two microgrid projects are under development, both of which include battery storage: a 3-MW microgrid for mining company GMA Garnet, and a 2-MW microgrid for the HMAS Stirling naval base. Solar power and batteries play a key role in both systems.
The Bad News: Renewable Subsidies End in 2020
The most negative aspect of the National Energy Guarantee is that renewable energy generation subsidies will be cut from 2020 onward. Most of the backlash against the NEG has been because of this decision, especially considering that Australia has the highest CO2 emissions per capita among G20 countries – 18,600 kg CO2 per capita per year, followed closely by Saudi Arabia, Canada and the USA.
However, solar photovoltaic systems are becoming more affordable each year and continue to break their own price records, both in terms of installed capacity and energy generation cost. Under the proposed changes there will be no more subsidies from 2020 onward, but solar power will also have become cheaper by then.
Solar Bay’s analysis concluded that unsubsidised behind the meter solar will be feasible for the majority of businesses by 2020, while subsidies would allow more businesses to benefit today, it’s only a matter of time for the numbers to stack up for everyone.