Energy 2.0
In the past two months we’ve heard two announcements from our federal leaders on the solution to our energy woes. The first was so-called “clean coal” — the technology which significantly reduces emissions from the burning of coal for energy when compared to conventional coal power plants. Whilst the current emissions reductions from “clean coal” are significant, it’s a fair bet that over the 40 year life of a new coal power station those reductions will quickly become less impressive. What’s more, we’re then left paying off a very expensive asset which won’t significantly help us reach the climate goals we’ve agreed to. Financiers understand this which is why several banks explained the economic challenges of investing in new coal are insurmountable. The carbon risk is simply too great.
Someone in Canberra must have been listening because a month later we were informed of the next panacea — a $2 billion expansion of the Snowy Hydro Scheme. What’s the problem with that? It’s clean! It’ll create jobs! This is true on the surface but PM Turnbull’s plan to use pumped hydro as a “big battery” will actually serve to prolong the life of coal power stations (because cheaper coal-fired power will be used to pump water up the hill to be used later) and there are much more cost-effective ways of creating jobs in the energy sector than hydro projects. Just last month, Fortune reported on a U.S. Department of Energy study which showed that in 2016, “more Americans work in solar than at natural gas or coal power plants.”
Someone in Canberra must have been listening because a month later we were informed of the next panacea — a $2 billion expansion of the Snowy Hydro Scheme.
But perhaps the most concerning aspect of Snowy Hydro 2.0 is that hydro, in a country which goes through decade long cycles of drought, is fraught. Most dams are regulated because we also get our drinking water from them so in drought years our expensive Snowy Hydro 2.0 system will be standing idle to protect our water supply.
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In recognition of the need for significant reform, last year the Council of Australian Governments (COAG) commissioned Australia’s Chief Scientist, Dr Alan Finkel, to produce an Independent Review into the Future Security of the National Electricity Market (NEM). A preliminary report was released in December which showed a comprehensive and in-depth analysis of the issues our energy system is facing and clean coal technologies are mentioned only once, with no judgement made on its future viability. Hydro technologies are discussed in some detail but again, no mention of future expansion needed. The full report is expected to be released mid-2017 and we will watch on with interest. But considering Dr Finkel was appointed by the Commonwealth, I’m surprised the Turnbull government didn’t wait to hear the final outcome of his Review before announcing plans to support clean coal and Snowy Hydro 2.0.
I’m surprised the Turnbull government didn’t wait to hear the final outcome of the Finkel Review before announcing plans to support clean coal and Snowy Hydro 2.0
The Review is investigating all facets of the energy ecosystem with consideration of public submissions to boot. Indeed more than 350 submissions were received (including one from Nexergy). Consideration of public submissions is important because as with many other industries, the energy sector is currently being disrupted by a consumer-led distributed energy revolution. Australians are leading this revolution, with 1.6 million of us having already made the investment in rooftop solar and more than 80% of those are considering buying a battery. Indeed, by 2040, Bloomberg New Energy Finance forecasts that 36% of Australia’s capacity will be in the form of solar and batteries in consumers’ homes or “behind-the-meter”.
The rooftop solar boom caught many off-guard, which appears to have been a worthy lesson because there’s now plenty of hype around batteries and we can expect similar uptake as economies of scale bring the cost curve of energy storage technologies down.
The Finkel Review Panel is particularly interested in the consumer perspective which is why we’re excited to be contributing to a roundtable with Dr Finkel in Canberra next week, along with other startups and industry representatives. We hope that the conversation will centre on the potential of customer-owned distributed energy resources (DER) to fortify our energy system. That potential is both technical and economic since DER operated in an equitable way — one which rewards prosumers for the use of their system — can also provide power quality services and lead to a much more resilient grid.
And that’s one reason why Nexergy is developing a local energy trading platform that integrates DER into the current grid in a way which bridges the gap between utilities and consumers. But how do we get there? I’ve spoken about the need for market reforms required to effectively integrate DER into the NEM but we also need effective policy. By keeping the lines of communication open between industry, consumers and regulators we can get there.
By keeping the lines of communication open between industry, consumers and regulators we can get there.
That’s why I was excited to attend the launch of Energy Lab last night, Australia’s first dedicated cleantech startup accelerator. In addition to seed funding and mentorship, the startups in the Energy Lab accelerator will also get access to energy policy experts to assist in testing and validating their products in protected “sand-pits” of experimentation. What better way to guide reforms than to prove out potential solutions!
The policy challenges we’re facing are real and we’re all grappling with what the best solution is. It will certainly be very exciting to see how the startup ecosystem evolves to show alternatives to pseudo-green solutions and expensive infrastructure projects. There simply is no “magic arrow” solution and that’s why we’re looking forward to contributing to the discussion in Canberra next week.
Posted by: Darius Salgo, CEO of Nexergy.
