Energy Insights

EECON 2023 discusses solving the challenges of the Net Zero transition

You would think that Australia, with abundant energy resources in numerous sizes, shapes, and colours, would be in a position to set the pace internationally, and in at least one area – distributed rooftop PV – we appear to be doing so. But – are we leading the way or are we making a strategic error which will impose an energy cost burden on Australia as a whole? Are some households installing generating capacity which will be (or already is) surplus to demand? Where should we stop and what market signals are in place to discourage inefficient investment? AEMC have also been pondering the same questions and I suspect that some of the potential solutions (eg. curtailment) will not be popular.

And most importantly, are there other solutions which will offer a lower cost path to Net Zero over time? The answer to that may be “yes”. Certainly some considerable operating flexibility can be introduced if intermittent renewable energy sources are reinforced by storage capacity. But any suggestion that this takes us all the way to Net Zero on the lowest cost path should be strongly challenged. For a start, the grid will always need a source of synchronous capacity to remain stable – and using pumped hydro to provide this may be a strongly sub-optimal use of that resource.

I also note with some curiosity the recent claims regarding renewables automatically placing Australia on the lowest cost path for energy in future. This seems to be backed by the low unit cost of solar and wind compared to other alternatives. All good and true, just so long as $B’s in new transmission investments are used as the base case for all scenarios, and the unknown investment in distribution systems to facilitate the connection of greater and greater amounts of rooftop solar is also ignored. Surely there must be a pathway that includes the more efficient utilisation of sunk investments in transmission and distribution including existing transmission connections?

So… it is important to think in terms of NET zero. In some scenarios, we will achieve Net Zero by the continued (minimal) use of carbon-emitting energy sources which can be offset through a market mechanism or “de-carbonised” by carbon capture and storage – both of which present some problems I need not elaborate upon. Or perhaps synchronous capacity can be provided by a non-carbon emitting energy source – nuclear – but for that to occur some political and legal constraints need to be removed immediately. But protracted debates on nuclear must not be used as a politically-based surrogate for postponing action.

What Australia desperately needs is a de-politicised multi-partisan energy strategy. But in my judgement the likelihood of that occurring is…. Net Zero. But organisations such as EESA can at least attempt to educate the debate.

At EECON2023 we will be discussing a wide range of options for Australia’s Net Zero future. I expect there will be some very lively debate between the proponents of different solutions but all of them acknowledge the importance of reducing and minimising Australia’s carbon footprint. I cordially invite you to attend and contribute to this vital national discussion with an open mind and a willingness to challenge your assumptions.