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The Background
"There's no energy shortage,
there's no energy crisis, there's a
crisis of ignorance."
Dr. R. Buckminster Fuller
Solar, geothermal and wind are rapidly falling in price. The compounding effects of innovation and experience are bringing these technologies to price
competitiveness. Carbon capture and storage has no similar potential. It's still unproven and it has limited price reduction potential. Further, coal just
doesn't have the scale of solar, geothermal and wind. This is critical.
"Animal spirits" in the marketplace are already sensing the dynamics. The result has been major announcements in the area of renewable energy,
particularly wind, geothermal and solar. As a result, Australia may soon start seeing the investments needed to satisfy 25% of the nation's electricity
needs by 2020 from renewable energy sources like solar, geothermal, wind and biomass.
Worley Parsons
Worley Parsons is a major, publicly-listed engineering company. It has Australia's largest mining companies as clients. It is investigating the feasibility
of rolling out 34 250MW parabolic trough concentrating solar power plants around Australia by 2020. That's 8,500 Megawatts (MWs) of capacity
totalling 25 Terawatthours (TWh) Gwhs of electricity. That would amount to 7% of Australia's 2020 forecast of 344 TWhs of electricity demand.
Chief Executive,
BHP
Wind, Biomass
The Business Council of Australia (BCA) estimates Australia can handle 2,500MWs (18.6 Twhs) of biomass energy generating capacity and 7,500MWs of
"Concentrating solar power is a wind. Assuming both are achieved by 2020, it would mean that Australia could be satisfying 24% of its electricity demand from solar, geothermal,
wind and biomass alone by that year.
well-proven and demonstrated
technology, with over 100 years of
accumulated operating experience
since 1984."
"Power Generation Options For
Australia,"
Cooperative Center for Coal in
Sustainable Development
Prices
Geodynamics, Australia's leading geothermal energy company, estimates it can eventually generate hot dry rock geothermal energy for 4.4c per kwh.
That's on a par with natural gas without carbon capture and storage.
Meanwhile, the US National Renewable Energy Laboratory estimates that parabolic trough concentrating solar power is on a downward price path
that will reduce its cost to about US4c/kwh by 2020. At the current pace of rollout of this technology worldwide, it's likely this price forecast may prove
conservative, and the 4c/kwh level could be reached by 2015 if not sooner.
2020
10-year
MWs
MWs
Growth Rate
50
50
2,000
300
2,250
8,500
7,500
2,500
46%
67%
14%
24%
Post
Post 2020
2030
Growth
Growth
Rate
Rate
15%
15%
20%
15%
20%
15%
5%
2%
Sources: Worley Parsons, Australian Geothermal Energy Group, US NREL, TREC estimates and others
Concentrating solar power, geothermal and wind should be aggressively built out in Australia between now and 2020 and current coal-fired
capacity should be idled at the rate of five percent per year with natural gas used as a 'bridge' energy source.
Under this scenario, the graph below shows that the proportion of natural gas in the nation's electricity supply would rapidly swell to meet the energy gap
created by falling amounts of coal fired power. The second graph below indicates that the percentage of natural gas power in the national electricity system
would rise to 35% before renewables begin contributing large amounts of power to the grid.
Gas would comprise up to 35% of national generating capacity during the transition
period.
Source: Desertec Australia
A 'dash for gas' between now and 2020 will drastically reduce Australia's
greenhouse gas emissions
Source: ABARE
Source: Desertec-Austraila
Between now and 2020, experts believe the geothermal and concentrating solar power industries can expand by 45-67% per year, while wind
may expand more slowly due to short-term grid constraints. After 2020 onwards, concentrating solar power and geothermal's growth rates can be
expected to fall back to 20% per year as they grow larger in size, while wind's expansion may accelerate due to vanishing grid constraints thanks to new
infrastructure spending. After 2030, wind and geothermal can be expected to expand at slightly slower rates due to technical uncertainties, while
concentrating solar power continues to expand rapidly.
Geothermal
CSP
Wind
Biomass
2010
MWs
50
50
2,000
300
Post 2030
Growth Rate
10%
20%
15%
2%
Sources: Worley Parsons, Australian Geothermal Energy Group, US NREL, TREC estimates and others
Around 2030, geothermal would enter the export mix after it surpasses the 25% domestic energy threshold. By 2039, Australia could be generating
nearly 3,000 Twhs of low-emission electricity, six times its domestic electricity needs.
Connecting to Asia
With increasing energy surpluses to export, Australia will need an export delivery mechanism. In the graphs below show, clockwise from upper left,
Asia's electricity, natural gas pipeline and telephone networks. The graph at the lower left shows how they form a backbone connecting Western Australia
to China, the region's largest economy and energy consumer. A largely-comprehensive utility grid already spans the Asian region, with Australia as
a notable outlier.
To the composite picture above should be added two very significant infrastructure projects. The first is China's large-scale buildout of High
Voltage Direct Current (HVDC) power lines to carry western hydropower to the country's eastern cities. The second is the Association of Southeast
Asian Nations (ASEAN) 'Trans-ASEAN Gas Pipeline' (TAGP).
Given that Australia has potentially huge supplies of renewable energy to offer after 2020, HVDC cables should be strung from the renewable energyrich Australian interior up to the existing Asian electricity grid. This could be done in one of two ways: either through connecting to the Indonesian grid
or through connecting directly to China by laying an HVDC cable across the South China Sea to Guangdong and interconnections with China's own
planned HVDC system. The capacity of HVDC cables is increasing all the time. This is driving down their cost. An HVDC connection to to China would
become a major economic asset to Australia.
Therefore, the potential exists for Australia to bundle HVDC and natural gas export infrastructure to complement infrastructure buildouts already
planned for Asia. This would immensely deepen trade and energy ties in the region and enhance regional energy security through a network that would
ultimately look something like the below.
Australia's power and gas lines could either intersect with the gas
networks and electricity grid of ASEAN or press on for bilateral trade
with China
Source: Desertec-Australia
The result would be an trans-Asian energy network with Australia as a key -- possibly dominant -- supplier. Naturally, the undertaking would be
ambitious. The subsea HVDC and natural gas pipelines would be the longest of their kind in the world. The infrastructure project would be among the
largest in the world. But Australia's huge energy resources, coupled with the pressing need for cost-effective Chinese carbon emission reductions
and the huge costs of climate inaction, make such a project highly sensible since it would provide long-lasting infrastructure ensuring regional energy
security and lower hemisphere greenhouse gas emissions.
Farsighted investment along these line is aleady being made overseas. Noway is the leader here. It has two projects of relevance: the 1,200-km
"Climate is one of the greatest
challenges of our time - and our Langeled subsea natural gas pipeline connecting Norway to England and the 580km, 700MW Norned HVDC cable connecting Norway to The
Netherlands.
response must be decisive. It
must also be delivered in a way
Source: ABB
Both projects are operations and delivering low emission energy (ie natural gas and hydro) to European countries without Norway's resources. To date,
Norway to date has not taken advantage of bundling infrastructure.
Another relevant project is Nord Stream, a proposed 1,200-kilometer subsea natural gas pipeline from Russian territory on the Baltic Sea directly to the
German market, bypassing Russia's prickly former Baltic State Warsaw Pact allies. While the motivation for Nord Stream is clearly political, it is being
considered seriously.
Instead of running all of the
worlds generators half the time
which is very inefficient we
are talking about running half the
worlds generators all the time
much more efficient.
Michael Powers,
Global Energy Network Institute
By connecting regional
electricity grids around the world
into a global network, it will be
possible to tap new renewable
resources and phase out our
worst polluting coal-fired power."
plants
Michael Powers,
Global Energy Network Institute
The reduced labor costs from bundling subsea natural gas pipelines and HVDC power lines, coupled with the carbon savings of avoiding
energy-intensive LNG compression could significantly 'push out' the 'crossover' point between natural gas pipelines and LNG. Assuming 25%
project savings through labor and 10-20% carbon emission cost reductions from avoiding LNG, the crossover point between pipeline and LNG could lie at
around 2,200 miles (3,666) kilometers. That's roughly the distance from Port Hedland to Guangdong, China through the South China Sea.
Similar projects are under active consideration in Europe. The UK has drawn up plans for a network of offshore wind turbines connected by an
offshore HVDC trunk connected both to the the UK and continental Europe. Japan is already considering something like this with its eco-rigs
plan.
Finally, a combined HVDC/natural gas pipeline system connecting Port Hedland to Asia fits well with other large investment proposals like 'Iron
Boomerang' and the development of Queensland coal seam methane resources. A gas pipeline and/or HVDC power lines strung alongside the
proposed Bowen, Queensland to Port Hedland, Western Australia 'Iron Boomerang' rail system could fill out a northern Australian pathway for energy
exports to Asia.
This, in turn, begs the question whether natural gas exports to China, South Korea and Japan are best handled through pipeline exports centered
at Port Hedland rather than through expensive, environmentally-questionable LNG trains in Gladstone, Queensland. Queensland's natural gas/
coal seam methane could be pumped to Port Hedland over a continental pipeline either for delivery to Asia through a gas pipeline, or by the 'gas-by-wire'
alternative of placing natural gas-fired electricity-generation plants around Port Hedland and pumping the electricity to Asia over high-voltage direct current
power lines rather than putting the natural gas through the pipeline system.
Australia is set to see huge increases in natural gas exports in coming years. This is sensible since the gas fetches higher prices overseas than in the
domestic market. Furthermore, natural gas is a key transition fuel for the next 10 years as renewable energy sources build up volume.
Source: EnergyQuest
The massive energy transfers that could occur between Australia and China between now and 2050 clearly argue in favor of big infrastructure to handle it.
If Australia follows the roadmap above, it could be providing China and/or the economies of Northeast Asia as much as 10,000 Twhs a year. That's enough
to satisfy more than a third of China's much enlarged energy needs expected in that year.
And with those kinds of transfers, a combination of gas pipeline and HVDC system would provide maximum flexibility for very high throughput.
By building both to handle such huge energy transfers, Australia reduces price risk by having a flexible delivery infrastructure that can adapt to changing
prices. As such, bundled infrastructure would be the 'low-risk' strategy, particularly since it would be complemented by existing LNG
infrastructure as a supplementary delivery method.
Source: "Electric Power Grid Connections in the APEC Region," APEC 2004
Nuclear Power
In a 2007 report, the pro-nuclear Howard government suggested building out 25,000MW of nuclear power capacity by 2050 (Ziggy Switkowski' only
spruiked for 6,000MW), claiming it would have a big impact on reducing carbon emissions.
However, even with 25,000MW of capacity, nuclear would only credibly contribute at the margin as the graph below shows. However, it could
forestall a buildout of nuclear capacity elsewhere in Asia, enhancing geopolitical stability, as would a pipeline infrastructure.
Source: IEA
Traditional mercator map view of the world Carbon emission-adjusted view of the world
Source: University of Sheffield
The plan above would help China meet the objectives laid out in the Garnaut Review, in which economically-developing China's greenhouse gas
emissions are allowed to rise on a per capita basis until they reach those of the greenhouse gas-reducing developed countries. At that point, China would
join the developed world in lowering per capita greenhouse gas emissions at the same rate. As it happens, Australia's exports of 'clean energy' to China
would occur around 2020, the same year China's per capita greenhouse gas emissions would meet those of the developing world, compelling China to
match reductions made in developing economies.
World energy supplies of coal, oil and natural gas are expected to decline
sharply in coming years
East Asia is vulnerable to natural gas and LNG supply disruptions through a closure of the
Straits of Malacca
Source: ASEAN Center for Energy, 2007
East Asia is similarly highly vulnerable to oil supply disruptions from shipping
Ross Garnaut's plan foresees coal-fired power as far as the eye can see.
Source: Chapter 20, Final Garnaut Review, page 19 in Acrobat, 485 in overall
report
DESERTEC's vision, by contrast, starts immediately winding down non-carbon capture equipped coal-fired power. The DESERTEC vision eliminates non-carbon capture coal-fired power by
2030 with renewables providing three quarters of Australia's electricity that year.
Desertec's plan
Another fundamental difference between Garnaut's vision of Australia's energy future and DESERTEC's is that Garnaut clings to the rather hopeless fiction that Australia's electricity
consumption will rise by only 1% per year going forward, resulting in a 250 Twh national demand by 2020. DESERTEC believes this is naive. DESERTEC believes future consumption in
Australia will rise as it has in the past at 2% per year, meaning 2020 demand of 343Twh and up to 800 Twhs by 2050. This is more in line with ABARE's estimates (see below).
Source: ABARE