I met, this morning, with Muriel Watt, at the School of Photovoltaic and Renewable Energy Engineering, UNSW, for a quick discussion on some of the history of the renewable energy sector in Australia. She spoke of the road travelled by Australia, which has been vastly different to that in South Africa with very different drivers, and has helped me to get a better understanding of what the current energy picture in Australia looks like.
Renewables have been around in Australia for a while, with hydro in Tasmania and the snowy mountains and solar and wind systems installed in remote locations. It makes sense in a country this size, with towns and utilities so dispersed, for solar to be the preferred option for telecoms infrastructure, rail power etc. The concept of renewables is therefore not a new one.
In the early 1990’s, the only grid tied rules and regulations in place were for large scale power stations. Early on, effort was put into developing the necessary standards relating to grid connection and guidelines on contractual arrangements (taken up by most utilities). This helped, from early on, to reduce some of the softer, transactional costs associated with installing distributed renewables particularly when compared to other countries, like the USA.
Small scale solar
With this supportive policy in place, or under development, the initial solar PV priority was on building integrated PV, where it was foreseen that there would be the creation of a standardised module, suitable for local application. (For various reasons this has not been successful, and most systems installed are rooftop PV.)
Initially about an upfront grant was established for solar systems with a payment/MW for each system. At up to A$8/MW, this represented a significant contribution for solar systems. This was replaced by a ‘deemed’ energy payment for small scale systems, for an operational life of 15 years. For a specific location, dependent on the available solar irradiance, for each installation there would be a forecasted amount of energy that would be generated, and an upfront payment would be made accordingly, in an effective grant. This was implemented to reduce transactional costs associated with monitoring and verification.
Simultaneously, some states were implementing feed in tariffs. This meant that some systems were accessing the deemed energy payment and a feed in tariff.
It is within this context that the global financial crisis hit globally. Countries that had been previously investing in solar were no longer prioritising it, meaning that there was extra components/modules available. China also started to ramp up on module production. This, together with Australia’s currency being very strong against the dollar, meant that solar prices started to plummet locally, and there was a massive increase in demand for solar PV systems as a result.
This peaked in 2012, and state governments were the first to start to panic. Feed in tariff agreements represented commitments to pay a premium for each unit of energy generated by a solar PV system. Some of these agreements extended for 25 years. Others (like in New South Wales), had agreements which had a higher premium, but were for a shorter period (say 7 years). Some are still offering feed in tariffs, but the scheme is being reviewed.
This massive boom in solar has resulted in a significant installation base, supporting local job creation.
Large scale renewables
In parallel to the small scale incentive scheme, the renewable energy target (RET) was established to promote the uptake of renewables. This mandated that utilities or retailers had to source a percentage of their overall generation from renewable energy sources. This would then be verified and they would be issued with a generation certificate for each MW of power generated. They could then sell these certificates on the open market. There is no guaranteed power for renewable energy and a lot of utilities have opted to generate their own renewable energy power. There is therefore a lot of risk on large scale project developers to invest in a project, where there is no guarantee that power will be purchased.
This target is also being reviewed.
The ACT government has initiated a reverse auction scheme, which guarantees the purchase of electricity from renewable energy generators, for a 20 year power purchase agreement. This has a cap of allocated capacity, which developers bid for, and projects are selected based on price. This means that the tariff payable for each kWh of electricity produced is lower, but the sale is certain. I’ll be meeting with people to discuss this programme specifically – more on this later, but it seems that this programme would have a lot of similarities with South Africa’s REIPPP Programme.
The political landscape in Australia is very interesting. Already I have had a number of indications that the coal lobby is incredibly strong and blatant, with heavy handed influence in government and vested interests at play. There is concern that a major shift in political commitments or priorities will impact the local market, and affect the number of viable local jobs. Given that Australia is a regional centre of excellence in small scale solar PV, it would seem a real waste if this sector was not seen as an asset. As Muriel indicates, she is teaching capable, energetic and talented young people, who may not have a job to go to when they leave university. She is confident, however, that the renewable energy sector will survive the ups and downs and changes in government.
I’ll also be looking into this more during my time here.
Thank you to Muriel for your time.
Muriel teaches in renewable energy policy and life cycle analysis of energy systems in the Centre for Photovoltaic Engineering at UNSW where she has worked since 1992.