November 27, 2012
As is well known the national electricity market in Australia, has been based exclusively on a baseload/peakload scenario, where large generators provide the bulk of energy, and a whole bunch of flexible generators are added to meet “peak demand.” This has led to massive over-building (gold plating) of networks.
This energy system is being disrupted by renewables and reductions in energy consumption. However, there are lots of barriers to renewable energy sector growth, as Australia starts the process of decarbonising the grid and building a low carbon economy.
These include fossil fuel subsidies to the tune of over $10 billion a year. They also include Victoria, NSW and Queensland putting in place policies to hold back the development of renewable energy, such as cutting back on feed-in tariffs for residential solar photovoltaic generation (PV) and restrictions on the siting of windfarms. News Limited publications in Australia systematically misrepresent the decarbonising policy shift. The independent pricing regulators unable or unwilling to keep up with developments, and are continually out of the ball park on technology costs, and like to present rosy scenarios of conventional fuels (gas and coal).
The Australian fossil fuel electricity industry is under severe pressure from PV and wind, the implementation of energy efficiency measures, and falling demand. The industry is using captured state governments to attempt to keep PV out of the market place, and to block the transition from the current fossil fuel dominated energy systems. There is little in the way of big renewables in regional Australia.
There is an indifference to the consequences of business-as-usual emissions. Things are getting worse than predicted not better, and there is now a 25 per cent risk of exceeding six degrees of warming above pre-industrial levels. That means a different kind of earth system.
Business as usual in Australia means that if you wanted more power, you went and built another coal-fired power station. This is not so anymore. Nobody is building any new coal-fired power plants and there is decreasing domestic coal consumption. Coal is a sunset industry. Instead of renewables providing top-up power, the big power generators will become the backup, and they will need to be able to quickly ramp up production or turn it down. That means gas. King Coal has got 10-20 years.
On the other hand, decline or stagnation in domestic consumption does not equate with decline or stagnation in the industry as a whole. Growing coal exports to India and China will be the industry’s future. It is developing country demand that has driven annual global coal use up over the last decade. Australia's coal exports are increasing.