Targeting a less carbon intense
energy future for Australia
Peter Laver
Vice-President
Academy of Technological Sciences and Engineering
IEC 2011 Open Session
Energy Efficiency and Renewable Technology
Overview
1. Australia faces a major challenge if it is to
drastically reduce the carbon intensity of its energy
sector.
Thursday, 25th March 2010, 1.00pm
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.
Energy Production, Consumption and Export
•
•
•
•
Australia consumes over 6,000 petajoules of
energy annually.
Australia produces over 18,000 petajoules which
Thursday, 25th March 2010, 1.00pm
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.
Carbon Capture & Storage
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Image reference: CO2 CRC
PCC Pilot Plants
3.2. Sources of Geothermal Energy
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Reference: Australian Geothermal Energy Association Inc.
http://www.agea.org.au/geothermal-energy/about-geothermal-energy/
Australian Energy Consumption by Source 1973 - 2009
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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 Production by Source 1978 - 2009
Thursday, 25th March 2010, 1.00pm
Department of Resources, Energy and Tourism Energy in Australia 2011 p1
http://www.ret.gov.au/energy/Documents/facts-stats-pubs/Energy-in-Australia-2011.pdf
Australian Energy Flows (Petajoules) 2008-09
Thursday, 25th March 2010, 1.00pm
Department of Resources, Energy and Tourism Energy in Australia 2011 p1
http://www.ret.gov.au/energy/Documents/facts-stats-pubs/Energy-in-Australia-2011.pdf
Australian Electricity Generation by fuel 2008-09
Thursday, 25th March 2010, 1.00pm
Department of Resources, Energy and Tourism Energy in Australia 2011 p21
http://www.ret.gov.au/energy/Documents/facts-stats-pubs/Energy-in-Australia-2011.pdf
Current Energy Policy Elements
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•
•
•
•
•
Significant focus on renewable energy with target
of 20% by 2020 through renewable energy
certificate (REC) scheme.
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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.
Australian wholesale electricity prices to 2050
ATSE (2010) Low Carbon
Energy
5 p12
Thursday, 25thFigure
March 2010, 1.00pm
Future Energy Supply Scenarios
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•
•
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In the short term there is likely to be a substitution
of coal by gas while longer term solutions are
sought.
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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.
Levelised cost of electricity - 2020, 2030 & 2040
(ranked for 2040)
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ATSE (2010) Low Carbon Energy Figure 6 p13
Technology Leaning Curves
1.2
1
Capital Ratio
0.8
PV
0.6
Wind
CST
0.4
0.2
0
2010
2015
2020
2025
2030
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
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ATSE (2010) Low Carbon Energy Figure 11 p23
Options for different technologies - 2040
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ATSE (2010) Low Carbon Energy Figure 12c p26
Options for gas based technologies
showing trajectories from 2020 - 2040
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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.