RET distorts energy market, leaves grid vulnerable: Wood Mackenzie

The Renewable Energy Target is distorting the structure of Australia’s energy market and is leaving the grid vulnerable to intermittency and inefficiency, a leading consultancy has warned.

A study by international group Wood Mackenzie has found that the battery storage technology that is key to solving the intermittency issues associated with renewable energy is still a decade away from competing with other traditional sources of power, complicating the picture for governments attempting to tackle the issue.

The RET, under which Australia is aiming to generate 23.5 per cent of its energy from renewable sources by 2020, has come under heavy fire from industry over the past week.

Glencore’s most senior Australian executive, Peter Freyberg, called for the RET to be abandoned while Fortescue Metals Group chief executive Nev Power said the scheme was “past its use-by date”.

Critics have said the RET disproportionately incentivises the development of new renewables sources without due consideration to how the grid can cope with associated intermittency.

South Australia recently announced plans for a new Tesla battery facility to help it avoid further repeats of recent power outages, but the plan has been derided as a “distraction” that would not even deliver enough power to get the state through an episode of Ninja Warrior.

Wood Mackenzie analyst Saul Kavonic told The Australian that the RET and associated Large-scale Generation Certificates had supported a more rapid build-up of renewables, imposing intermittency costs on the rest of the grid and reducing the economic viability of existing dispatchable power generation

“This rapid renewables build-up has occurred before the necessary market design changes and ancillary investment has been made to deal with renewables intermittency, and now policymakers and the (Australian Energy Market Operator) are playing catch-up to restore stability,” Mr Kavonic said.

He said while the price trends for battery storage was rosy for the longer term, and would ultimately help free up gas for industrial use once they became more economically viable, they were currently around 50 per cent more expensive than traditional options such as gas.

“The Tesla battery is only a small drop into the ocean and will only provide at most a few per cent of South Australia’s peak loads and only for a little over an hour,” he said.

“So you need to build something much larger than that to actually deal with the peak loads or you need to change the market design so it incentivises the gas back-up to be there.”

The falling price trends in batteries also supported the case for other states to wait until they commit to their own storage facilities in order to get a better “bang for their buck” later.

“There is no shortage of people who can read the trends and see the green energy future of a decentralised and optimised energy grid fed by sun, wind and batteries. But amid the ideology and a vision for the future, we can lose sight of how we are going to transition there securely,” Mr Kavonic said.

“When it comes to energy security, jobs, livelihoods and lives are on the line.”

Originally posted on the Australian.  Full article by Paul Garvey HERE.



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