Australia may be ahead of the pack in adoption of new technology but we have be aware on how the rest of the world is travelling, an expert panel at the Clean Energy Summit concluded.
- Kobad Bhavnagri (chair), global head of special projects, Bloomberg New Energy Finance
- Chris Twomey, senior investment manager, Elliott Green Power
- Sheri Hickok, general manager global product development, GE Renewable Energy
- Tim Buckley, director, Institute for Energy Economics and Financial Analysis
- Mark Leslie, managing director Asia Pacific, Fluence
The planets are nearing alignment and the conditions for investment in clean energy are improving quickly. Costs of wind, solar and – in particular – storage have fallen and are predicted to keep doing so, rendering thermal generation a poor choice for investors. Financiers have been slow to favour renewables, said Tim Buckley of the Institute for Energy Economics and Financial Analysis, but things are starting to move as technology, economics and policy overlap to guide the financial markets.
“When they move, they stampede,” he said. “They might be a pack of sheep, but they will stampede as a pack of sheep.”
Buckley has counted 116 globally significant financial institutions that have policies to exit coal. “We are starting to see that snowball geographically … it’s not just Europe; the three largest banks in South-East Asia moved [this year]. When one moves, they all move.” The trend is yet to hit the United States.
Sheri Hickok of GE Renewable Energy, visiting from Chicago, agreed that the industry is at a point where the economics are overshadowing policy. “The technology is demonstrating that without the policy behind it we can drag LCOE [levelized cost of energy] to a point where it’s competitive on its own.” When a nation the size of Denmark relies on wind for more than 40% of demand, for example, we know the technology works. “It can be done. The question is, when is the tipping point?”
Willing and able
There’s plenty of work to do, said Chris Twomey of Elliott Green Power. Wind and solar are nearing their limits of dispatch in some countries, so work is needed in developing storage at scale. The transition will include peaks and troughs, he said, but the market is “willing and able” to come up with solutions. Wayward government intervention is a risk in every market, whether the result is overinvestment or underinvestment, as is “overexuberance” in new technology that skews decision-making. Rapid growth hasn’t yet been tempered with consolidation, he said. “A lot of efficiencies can be gained in various markets in Australia.”
The incumbents have the most to lose, of course, and Buckley suspects lobbyists will be busy pouring doubt into the minds of consumers who, as Hickok said earlier, “are very intelligent people who want to do the right thing but don’t really have a clue about what’s available.” Buckley cited a “blood batteries” campaign which targets lithium-ion storage. Second on his biggest-risk list is China. Yes, the world‘s most populous nation is absolutely committed to decarbonising its economy, but the Communist Party’s Belt Road Initiative of infrastructure projects around the world “is all about exporting surplus redundant capacity,” he said.
China is the world’s number one in hydro, nuclear, wind, electric vehicles, batteries – and coal. “They are fuel-agnostic,” Buckley said. The Middle Kingdom may be the world’s number one investor in renewables domestically, but that only means they have excess coal-fired capacity.
The joy of wind and solar
No-one should expect extravagant falls in offtake prices for renewables, Twomey said, but better outcomes might instead be wrung from improvements to technology. “We don’t think solar necessarily can go down in cost,” he said, but adoption of bifacial panels and improvements in software and forecasting systems could lead to additional returns. “There is a lot of opportunity to do things better,” he said. “The joy of wind and solar is every extra dollar in revenue is a dollar to your bottom line.”
Around the world, Buckley is watching how India expects to meet Prime Minister Modi’s target of 523GW of renewables by 2030, which some say would require 136GWh of storage. “[Currently] their biggest battery is 10MW, and it was installed three months ago,” he said, before predicting the nation of 1.4 billion might be looking at improving connectivity to neighbours in the Bay of Bengal to overcome issues around firming. “How has Germany done it today? International grid connectivity. How would India do it? Grid connectivity to Bhutan, Nepal, Bangladesh, Sri Lanka, Myanmar.”
Germany has mandated 1.3GW of storage to address the imbalance between wind generation in the north of the country and load in the south, said Leslie of Fluence, and offset the requirement for more transmission. “In most markets most of the issues are first appearing in the transmission line,” he said.
Interconnection is a great way to manage supply and demand risk, Twomey said, “and I think we need to explore that analysis … and say, are we better off spending a billion dollars on more storage or on better interconnection between places where there is significant supply and getting that to where the demand is?”
As for Australia-led growth, Buckley firmly suggested the Australian Renewable Energy Agency’s expertise in supporting clean energy technology should be put to use in the fast-growing South-East Asia region, with funding from the Clean Energy Finance Corporation. With a nod of approval from Bhavnagri, the crowd put their hands together in a round of applause.