By Heidi Lee, CEO, Beyond Zero Emissions
The Australian Energy Market Operator’s recent Electricity Statement of Opportunities report notes: “Forecasts of energy consumption and maximum demand are higher in some NEM regions, driven by projected electrification of households and businesses, and forecast expansion of industrial facilities.” This projection of increased energy demand, combined with industries electrifying, puts pressure on the grid to find new ways to do more-with-less. With Australia now at a critical point in the energy transition, Beyond Zero Emissions’ (BZE) research points to establishing Renewable Energy Industrial Precincts (REIPs) as the key to industrial demand management and a successful future energy mix.
REIPs are a proposal for clusters of manufacturers to be powered by 100 per cent renewable energy. In this proposal, participating facilities are connected to embedded networks of supporting infrastructure, such electricity, green hydrogen, batteries, electrolysers and industrial-temperature steam, and cooperate to both manage peak demand within the REIP and also to access the most competitive prices for grid energy. BZE research shows that REIPs can provide affordable renewable energy to existing heavy industries, attract new businesses, and foster innovation and collaboration to grow a resilient manufacturing sector in Australia. Increasing demand for green exports and transition minerals, such as graphite, lithium and cobalt, could increase by over 500 per cent by 2050 to meet the growing demand for clean energy technologies, as described in our Export Powerhouse report. Customers for these growth commodities demand low or zero-emissions products and this can be met by Electrifying Industry using a range of commercially available technologies. Australia’s Safeguard Mechanism applies to 200+ of highest-emitting facilities, around 43 per cent of these are important manufacturing facilities, and all are required to reduce net emissions by around five per cent each year.
This is progress in the right direction, but moving far too slowly for Australian businesses to maintain a global competitive edge in a rapidly decarbonising world. In order to accelerate the energy transition for industries, a clustered, coordinated approach is needed and this approach must be cognisant of efficient installation and use of critical shared infrastructure as well as other land use and social acceptance issues.
Why Renewable Energy Industrial Precincts?
REIPs are a solution for decarbonising energy-intensive, hard-to-abate heavy industries (e.g. steel and aluminium production). REIPs relieve pressure on the grid through providing the physical infrastructure that connects facilities in clusters and enables heavy industry to further optimise their process energy requirements through coordination within this cluster.
BZE recently commissioned ACIL Allen to quantify the basic economies of scale efficiencies that can be achieved through a coordinated approach to the delivery of electricity transmission and dedicated green hydrogen pipelines to Safeguard facility clusters in Kwinana and Gladstone – generating billions of dollars to theeconomy, attracting new investments and speeding up decarbonisation.
The findings show the importance of grouping the energy-intensive, high energy demand industries so we can build consolidated infrastructure to get the energy to them, instead of through disparate pieces of infrastructure to many separate facilities. We will be able to meet demand in a more efficient and cost-effective way, not to mention also give clean manufacturing a big boost.
The research modelled REIP infrastructure in Gladstone, Queensland. By clustering Safeguard Mechanism facilities with other industries that coordinate and cluster their energy use, it could generate an additional 206 full-time equivalent jobs, $2.4 billion in real economic output and nearly $600 million in government revenue by 2050. This is in contrast to industrial users going it alone. Cost savings based on the modelling vary based on scale and distance:
- For green hydrogen pipelines ranging from 100 to 250km,coordinated systems can reduce capital costs by 48 to 62 per cent when compared to parallel pipelines with equivalent capacity. This can result in savings of nearly $500 million for a 250km pipeline with a 250TJ/day capacity.
- When replacing five transmission lines, each with a capacity of 100MW, with a single line capable of 500MW, the costs are reduced by almost three-quarters for both 100 and 250km distances. Similarly, replacing five 500MW capacity lines with a single 2.5GW capacity line results in a cost reduction of over two-thirds.
We need to act now and act fast
At present, four out of the 14 proposed REIP locations (Gladstone, Kwinana/ South-West WA, Hunter, and Bell Bay) account for nearly 25 per cent of the total safeguard emissions. By funding REIPs, we can create jobs and flow on benefits for the entire community, in addition to reducing emissions.
Green commodities made with renewable energy (e.g. in REIPs) have greater potential to fetch higher prices and are increasingly in demand, especially as global demand for cleantech rises. Australia has the potential to grow a new green export mix worth $333 billion per annum, almost triple the value of existing fossil fuel exports. These new green export industries will meet surging demand for zero-carbon products, such as green steel, renewable hydrogen and ammonia, green aluminium and critical minerals that will dominate global economic growth this century. To solidify Australia’s position as a renewable energy export powerhouse in the global race to zero emissions, and to realise the benefits to demand management that REIPs would bring, we need:
1. A governance framework for coordinated investment in industrial decarbonisation, essential for achieving the benefits of the Renewable Energy Industrial Precinct model.
2. Prioritisation of energy transmission infrastructure: gear early investment towards energy infrastructure that bridges the gap between energy generators and industrial energy users as described in BZE’s National Supergrid report.
3. Network upgrades for industrial decarbonisation: targeted investment in electricity network enhancements, including transmission, distribution, and storage.
4. The Safeguard Transformation Scheme to prioritise and or provide dedicated funding to facilities that coordinate the buildout of energy transmission infrastructure.
But while we go full steam ahead towards laying the foundations for Australia to become a green exports powerhouse, it is important to take the time and consideration necessary to get the planning right. Effective infrastructure planning for REIPs must take into account social acceptance needs such as early community engagement, nature-positive land use planning, First Nations land rights, and benefits to communities including land holders.
At this critical time in the energy transition and against the backdrop of the growing global market for green exports, Australia needs the benefits that the REIP model would bring, if successfully implemented. Officially establishing a national or state-based REIPs program can drive economic growth and accelerate the efficient deployment of renewable energy generation and transmission.
By clustering and coordinating the large renewable energy demands of industrial users, we will be able to meet energy demand in a more efficient and cost-effective way, while supporting and growing clean manufacturing. In that process, if we ensure that REIP planning has maximum social acceptance and nature-positive outcomes, we can reduce industrial emissions faster, fairer and with greater benefits to communities.