With rising energy prices and potential gas shortages, 2017 has seen a continued focus on issues such as renewables, sustainability, the east-coast gas supply and the transition away from the Clean Energy Target. As 2017 comes to a close, we reflect on the biggest projects, challenges and changes that have taken place in the Australian energy industry over the last 12 months.
Australia has seen some of the largest renewable energy projects in the country take shape in 2017 with Queensland leading the charge in energy investments. The $1.05 billion Kidston renewable energy hub in Queensland addresses the nation-wide transition towards a low-carbon economy and the resulting need for large-scale energy storage. In 2017 the project proceeded into stage two and stage one has generated its first revenue. Upon its proposed 2020 completion, the Kidston energy hub will comprise of three large-scale projects; a 50MW solar project (stage one), a 250MW pumped hydro storage project, and an integrated 270MW solar project (stage two).
Construction started on the $150 million Kennedy Energy Park in Queensland after the construction contract was won by a consortium between Vestas and Quanta Services. The project will comprise a 15 megawatt (MW) solar photovoltaic plant, 43.2MW wind plant and 2MW/4MWh of battery storage. The project will also lay the foundations for a planned much larger second phase, called ‘Big Kennedy’, a $2 billion 1200MW solar and wind farm, due to begin construction in 2019.
In South Australia, the world’s largest lithium ion battery was turned on ahead of schedule after the State Government made an agreement with Tesla CEO, Elon Musk, who committed to deliver the battery within 100 days of the agreement being signed. The battery was finished in November 2017 ahead of its 100-day deadline. As a result the 100MW/129MWh battery places South Australia at the forefront of global energy storage technology. The battery will operate at all times providing stability services for renewable energy, and will be available to provide emergency backup power if a shortfall in energy is predicted. Mr Musk said the project is a great example to the rest of the world of what can be done.
Following the statewide blackout in South Australia in 2016, the COAG Energy Council agreed to an independent review of the national electricity market to take stock of its current security and reliability and to provide advice to governments on a coordinated national reform blueprint.
The expert panel undertaking the review was chaired by Australia’s Chief Scientist, Dr Alan Finkel, with the final report – Independent Review into the Future Security of the National Electricity Market released in June 2017.
The report recommended 50 actions to create a reliable and affordable energy system, and supported practical steps to address climate change and modernise our electricity grid. Australian energy ministers agreed to implement all but one recommendation from the report. The recommendation that was not immediately agreed upon was the implementation of a Clean Energy Target (CET).
In October 2017, the Federal Government decided not to adopt Dr Finkel’s CET recommendation and signed off on its new plan which replaces it with a National Energy Guarantee (NEG).This decision created debate within the energy industry about the best way to move forward.
The CET would have mandated that a certain percentage of power be generated from gas and renewable energy. Under the new policy, renewable energy will make up 40 per cent of the nation’s power mix by 2030.
A paper and expert analysis released from the Climate Council stated, “While limited information is currently available, the details available indicate the National Energy Guarantee (NEG) supports the continued reliance of Australia’s aging coal and gas power stations, while also restricting the uptake of new renewable energy such as solar and wind.”
The Climate Council’s report further states, “The NEG has the potential to hold Australia back, increasing the potential for our country to fall further behind the rest of the world, as other nations transition to clean, affordable and renewable energy and storage technology.”
Federal Minister for the Environment and Energy, Josh Frydenberg, said that the NEG guarantee builds on existing energy policy and levels the playing field.
“It is truly technology-neutral, offering a future for investment in whatever technology the market needs – solar, wind, coal, gas, batteries or pumped storage,” Mr Frydenberg said.
“Coal, gas, hydro and biomass will be rewarded for their dispatchability while wind, solar and hydro will be recognised as lower emissions technologies but will no longer be subsidised.”
In response to industry feedback, COAG Energy Council decided to undergo further design work on the NEG to be developed by the Electricity Supply Board (ESB) who will report back to the COAG Energy Council by April 2018.
The year ahead
There has been an increased focus in 2017 on pumped hydro investments as seen in projects like the Kidston energy hub and the multi-billion dollar Snowy Hydro 2.0. Furthermore, an Australian Renewable Energy Agency (ARENA) funded study located 22,000 potential pumped hydro storage site across Australia which was followed by the announcement of another two feasibility studies to expand two hydroelectric power stations and explore the potential to develop significant pumped hydro energy storage in Tasmania. This focus will likely continue and strengthen in the coming years.
CSIRO conducted a study in May 2017 that found wave energy could provide a viable contribution to Australia’s future energy mix. Following the release of the data, Carnegie Clean Energy announced project design and development activities on the $15.75 million Albany Wave Energy Project in Western Australia. Wave Swell Energy has also installed a trial 200 kW wave energy device on the eastern side of King Island, prior to the installation of a full-sized one megawatt version on the west coast of the island. Combined, these strides towards exploring the opportunities in wave energy could spark the beginning of new investments in the field.
Another potential energy source being explored that could offer more investment potential in 2018 is offshore wind farms. A partnership between Offshore Energy and Copenhagen Infrastructure Partners will develop Australia’s first offshore wind farm located off the south coast of Gippsland, Victoria. The site is located 10-25km off the coast in the Bass Strait and has a total expected capacity of up to 2,000MW.
With Queensland committing to their Powering Queensland’s Future plan which includes a commitment to at least 50 per cent renewables by 2030 and up to $50 million and other support for a new concentrating solar thermal power plant, the state is likely to continue to man the helm of renewable energy projects for the foreseeable future.
In March 2018, ACIL Allen, in conjunction with GHD, are expected to complete a pre-feasibility study on the West-East Gas Pipeline which may inform a full feasibility study to test the viability of constructing a natural gas pipeline to provide additional gas supplies and increase competition in the east coast gas market.
Following from a year of policy uncertainty and large strides in innovation, we can expect 2018 to see a continued focus on clean and renewable energy, and the exploration of solutions to create the most sustainable energy future for Australia.