It has taken a while, but it seems to have finally dawned on the federal coalition government that low-cost solar energy represents an unsurpassed economic opportunity for Australia and delivers what it says will be “the world’s lowest cost of pure electricity.”
As RenewEconomy reported last week, the Australian government is now aiming for a solar cost of $ 15 / MWh, about a third of the current price, and has added solar energy as a new sixth key element in its recently updated technology roadmap.
It hardly needed to add the word “clean” to its description, because as the International Energy Agency recognizes, solar energy provides the cheapest electricity ever produced.
And it is encouraging that the federal government is now realizing the massive resource it has at its disposal and its importance in delivering other key technologies such as renewable hydrogen, low cost and green manufacturing and reducing emissions in the rest of the economy. If only it would adjust its goals accordingly.
Details of the $ 15 / MWh target have been quietly released in the government’s latest version of its technology roadmap, put together with the help of former chief researcher Alan Finkel and a number of experts, including the chairmen of AEMO, ARENA and CEFC, and the head of Macquarie Bank and other.
“Achieving $ 15 per MWh for solar power generation can help deliver the world’s cheapest clean electricity, enabling Australian producers and businesses to remain competitive and support the wider economy,” the document said.
“Solar energy production at $ 15 per MWh would accelerate Australia’s ability to meet the target of pure hydrogen traction on production below $ 2 per kg and increase our competitiveness in the hydrogen export markets.
“It would also support cost-effective low-emission steel and aluminum production and direct air collection of CO₂ (a new technology).”
The document talks about a two-pronged approach to achieving what it describes as a 30-30-30 goal – to achieve 30 percent module efficiency and a cost of 30 cents per. installed watts in 2030.
The first tip continues Australia’s excellent record in solar cell technology, and it looks like ARENA, which was instrumental in lowering the cost of large-scale solar energy in its early years by supporting the first large solar farms, will play a key role here.
And it also seeks to support large-scale rollouts of solar energy, recognizing that scale is the key to efficiency and cost reductions.
“The annual solar radiation in Australia is the highest per square meter in the world, and we have a significant land mass that is suitable for large-scale solar energy development and proximity to large and growing markets,” it reads.
It does not mention any projects specifically, but thoughts immediately go to the Sun Cable project, which with up to 20GW would be by far the largest in the world, and which has the backing of billionaires Mike Cannon-Brookes and Andrew Forrest.
Other massive solar projects have also been proposed, including the 50GW Western Hydrogen Hub, and the 26GW Asia Renewable Energy Hub in Pilbara, both proposed by CWP Global and Intercontinental, both combining solar and wind.
Forrest, which has its own ambitions for hundreds of gigawatts of renewable energy driving renewable hydrogen production, also hopes to build a 1GW photovoltaic plant in Queensland, though his choice of thin-film solar energy over monocrystalline technology has surprised some.
Interestingly, the government’s technology roadmap makes this observation about these two energy sources: “Achieving this stretch target will result in reductions in the cost of solar energy reductions in wind energy, which improves a source of Australian comparative advantage.”
The document recognizes that a high penetration of “ultra-low cost solar energy” into the grid will also require the successful implementation of other priority technologies, infrastructure and market reforms, including energy storage, the digital grid and recognition of the importance of transmission capacity.
However, it insists that “Australia’s existing thermal generation fleet will continue to play an important role in meeting customer and network reinforcement needs.” Many will disagree.
However, the push for ultra-low-cost solar energy requires something else – a low cost of capital. And right now, the big investors in renewable energy are saying that the cost of capital is higher than it should be because of the uncertainty in government policies and market rules, and the lack of clear mandates and goals.
In an interview in last week’s episode of the Energy Insiders podcast, Cannon-Brookes needs some clarity about attracting investment. The greater the perceived risk, the higher the cost of capital.
“It’s having a stable policy, having clear milestones and goals and plans, (it) enables everyone to invest capital towards these opportunities and to plan for these transitions. And again, we have no more stability to bet on. as a company, ”Cannon-Brookes said.
“Finance is what we need to take the current technologies and roll them out on a much faster scale. In fact, it’s far more important to get the financial equation correct than the technology equation, especially if we’re thinking of inventing new technologies, right?
“If you took the price of solar energy right up to the reductions you’ll get over the next 20 years, you’d probably be pretty close, regardless of whether you spend $ 1 of state money on technological R&D.
“But if you can finance it, reduce the cost of implementation, that’s what will help us roll it out faster. We need to change the basic capex / opex equation for renewable energy or pretty much any of this. technology.
“And it does not matter if it is household or business or production or grid level, proper financing of these things and getting a cost of capital in the right places will be what leads to them getting us the benefits of these things.”
Giles Parkinson is the founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and the founder / editor of the EV-focused The Driven. Giles has been a journalist for 40 years and is a former business and deputy editor of the Australian Financial Review.