targeting a less carbon intense energy future for australia

Peter Laver Vice-President

Academy of Technological Sciences and Engineering

Targeting a less carbon intense energy future for Australia

IEC 2011 Open Session Energy Efficiency and Renewable Technology

Thursday, 25th March 2010, 1.00pm

1. Australia faces a major challenge if it is to drastically reduce the carbon intensity of its energy sector.

2. Over 90% of electricity generation is hydrocarbon based, including nearly 80% from coal.

3. Currently government policy rules out nuclear power and hydro resources in a dry continent are already fully utilised.

4. Long distances between major consumers present an additional challenge for a distribution grid which includes intermittent generation sources.

Overview


• Australia consumes over 6,000 petajoules of energy annually.

• Australia produces over 18,000 petajoules which means allowing for oil imports nearly 70% of energy produced is exported.

• Energy exports are valued at around $80 billion per annum.

• Reducing CO2 emissions from coal is a national priority for the domestic power industry but also to maintain resources exports.

Energy Production, Consumption and Export


Carbon Capture & Storage

Image reference: CO2 CRC

PCC Pilot Plants

http://www.tarongenergy.com.au/


3.2. Sources of Geothermal Energy

Reference: Australian Geothermal Energy Association Inc. http://www.agea.org.au/geothermal-energy/about-geothermal-energy/

http://www.agea.org.au/geothermal-energy/about-geothermal-energy/








Department of Resources, Energy and Tourism Energy in Australia 2011 p13 http://www.ret.gov.au/energy/Documents/facts-stats-pubs/Energy-in-Australia-2011.pdf

Australian Energy Consumption by Source 1973 - 2009

http://www.ret.gov.au/energy/Documents/facts-stats-pubs/Energy-in-Australia-2011.pdf














Australian Energy Production by Source 1978 - 2009















Australian Energy Flows (Petajoules) 2008-09














Australian Electricity Generation by fuel 2008-09













• Significant focus on renewable energy with target of 20% by 2020 through renewable energy certificate (REC) scheme.

• Carbon tax being introduced but is a matter of political contention. Initial price $23 per tonne.

• Plan is to move the tax to an emissions trading scheme within 3 years of commencement.

• Tax aims at inducing investment in low carbon technology and energy efficiency.

• Tax proceeds used to compensate disadvantaged and, to an extent, stimulate investment.

• Electricity prices will rise substantially.

Current Energy Policy Elements


ATSE (2010) Low Carbon Energy Figure 5 p12

Australian wholesale electricity prices to 2050


• In the short term there is likely to be a substitution of coal by gas while longer term solutions are sought.

• Wind and solar will continue to expand with some dispute as to maximum practical levels for grid security but probably no more than 30% without major investments in storage.

• Development efforts will continue for hot rock geothermal and carbon capture and storage

• Costs and learning curves can be debated but will see power costs increase by a factor of 2-3 by 2050.

Future Energy Supply Scenarios



Levelised cost of electricity - 2020, 2030 & 2040 (ranked for 2040)

Technology Leaning Curves

0

0.2

0.4

0.6

0.8

1

1.2

2010 2015 2020 2025 2030

Capi

tal R

atio

PV

Wind

CST

Optimising the Energy Portfolio • ATSE has attempted to asses the future relative

attraction of different energy technologies given the wide variation in – – Levelised cost – Carbon price – REC value – Learning curves

• An Option Value can be calculated for each technology for a particular year, the higher values justifying more preliminary development expenditure.


Options Space Diagram



Options for different technologies - 2040

ATSE (2010) Low Carbon Energy Figure 12c p26


Options for gas based technologies showing trajectories from 2020 - 2040

ATSE (2010) Low Carbon Energy Figure 12c p26

Investing in Energy Technologies • The Option Value approach can only act as a guide to a

future technology portfolio. • The approach allows different assumptions and

scenarios to be compared. • Actual investment will be determined by site

considerations – location, transmission costs, environmental approvals, etc.

• Intermittent generation sources will need to factor in reserve spinning capacity and/or storage.

Conclusions • The challenge Australia faces in reducing its carbon

dioxide emissions is considerable, far greater than countries less reliant on fossil fuels and with nuclear power available.

• The historic competitive advantage the country has enjoyed from low energy costs will disappear.

• Large scale investment is required to develop and deploy the required new technologies.

• Ideally the proceeds from pricing carbon should be directed towards supporting the investment required to reduce emissions.