Can renewables solve the energy price crisis?

A solar plant in Spain.
Friday, July 21, 2017

There is no genuine reason why Australia cannot have 100% renewable electricity in less than a decade, at sharply reduced prices.

In May a vice-president of Sempra Energy, one of the largest utility firms in the US, caused a stir by stating flatly that there was no longer any technical obstacle to powering California with 100% renewables.

“We now have the ability to control the grid twenty times faster than you can blink your eye. The technology has been resolved. How fast do you want to get to 100%? That can be done today.”

What about bringing down prices? Here we need to revisit the fact that most of Australia’s fossil-fuelled generating capacity is past its design life. Maintenance-intensive and prone to costly breakdowns, it badly needs replacing.

Doing this with renewables will be decisively cheaper. That is the message of a February study by a team at the Australian National University under Professor of Engineering Andrew Blakers.

Positing the future cost of solar photovoltaic and wind energy at $50 per megawatt-hour (MWh), the team concluded that the “levelised cost of energy” (LCOE) over the lifetime of a balanced, 100% renewable energy system (including storage) would be around $75/MWh. For comparison, the LCOE of electricity from new supercritical black coal plants was estimated last year at $80/MWh.

The assumptions embodied in the ANU study were deliberately cautious and real life is already outstripping them. Recent unsubsidised price contracts for delivered renewable energy include $40/MWh for a wind farm in Morocco and $33.90/MWh for solar photovoltaic in Dubai.

For energy storage, the ANU study proposes the well-tested technology of “pumped hydro”. This is impressively cheap and its virtues are listed as including excellent inertial energy, spinning reserve, rapid start, black start capability, voltage regulation and frequency control. Australia has numerous good sites for off-river and seawater pumped hydro.

Still greater system security is provided by a combination of pumped hydro with battery storage. Using modern software, utility-scale batteries can be switched into the grid in milliseconds. A recent Bloomberg report states that lithium-ion batteries are expected to fall in price by more than 70% by 2030.

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