State's wind farms help debunk a few myths
· by: Giles Parkinson, Greenchip
· From: The Australian
· March 16, 2012 12:00AM
Source: The Australian
IS wind energy as useless as its critics say it is? Is it really so expensive and ineffective that its emissions abatement is achieved at 10 times the cost of gas-fired generation?
That was the conclusion of a British study sponsored by the Global Warming Policy Foundation, chaired by former Conservative chancellor and noted climate sceptic Nigel Lawson. Wind power upsets a few people, not least the climate sceptics who simply can't comprehend its utility.
But reports such as Lawson's are also a red rag to the bull of the wind industry itself, which sees itself as cost-competitive with fossil fuels in most Western countries and as a major contributor to the task of reducing greenhouse emissions.
But rather than consider the merits of the arguments of the anti-wind lobby versus the pro-wind lobby and to set aside the debate about visual amenity and noise, it's probably most worthwhile to consider what the Australian Energy Market Operator, the organisation responsible for co-ordinating the contributions of various energy sources and for keeping the lights on, has to say about the matter.
It should go a long way to settling the fears. While Lawson's report was based on a hypothetical case unique to Britain, Australia can draw on real-life experience in South Australia. And it serves to debunk a few myths: wind does not need like-for-like back-up, or anything near it. It does achieve abatement, it does displace fossil fuel generation, and it is not anywhere near as expensive as some claim. The AEMO says wind accounts for more than 20 per cent of SA's electricity consumption, making it the second largest in percentage terms in the world after Denmark, and the highest on a per capita basis.
It had 1150MW of capacity in 2010-11, growing to 1203MW with the anticipated completion of the Hallett 5 wind farm late last year. Interestingly, wind accounted for 20 per cent of nameplate capacity (installed capacity) and the same percentage of production.
As the accompanying graph shows, most of that wind capacity and production has come in the past five years.
The AEMO data shows that very little peaking gas plant has been built during that period -- 200MW versus 760MW of wind -- and this has been built almost exclusively to deal with rising peak demand, which has grown by more than 350MW over the period (and by 40 per cent over the last decade).
And although wind is highly intermittent -- it contributed as little as 60MW in some peaks and as much as 873MW in others -- the amount of peaking gas generation used over the period has actually fallen in the past five years, from 501 gigawatt hour to 325GWh, despite the increased capacity and the rising peak demand.
Overall, the use of locally sourced coal and gas-fired generation (both baseload and peaking) has declined, and the state has been a lot less reliant on imported energy from Victoria's brown-coal generators.
In some years, that need has been totally eliminated. The overall share of coal-fired generation has fallen to 32 per cent from 42 per cent in 2003 and gas to 47 per cent from 57 per cent. It met its 20 per cent target three years ahead of its own schedule and nine years ahead of the federal mandate. Far from causing a 10-fold increase in prices, AEMO reports that in 2010-11 wholesale electricity prices in the state averaged $34/MWh, their lowest since the National Electricity Market began more than a decade ago. During the same period, emissions have been reduced from 0.72 tonnes of CO2 to 0.55t/CO2.
The biggest losers in this, in terms of displaced capacity and slumping wholesale energy costs, and therefore earnings, have been the Victorian coal-fired generators, which is why they have lobbied hard against expanded renewable energy targets, and for upgrading the interconnector between the two states.
The AEMO data shows that SA's imports of electricity have fallen sharply, but its exports (mostly wind) have increased dramatically.
The cost of "firming" wind is estimated at 0.66c/MWh, less than 2 per cent of the retail energy cost in SA, and less than in NSW, which has negligible amounts of wind generation.
Firming refers to the need to have other power sources on standby to support the grid and provide power in case of interruptions.
AGL Energy, which owns both wind farms and brown coal-fired generators, said in an analysis of the SA wind deployment that the "hidden costs" of wind, such as firming, were negligible. There is, however, some debate about how far SA's wind capacity can grow without an upgrade to links to other states. The state's target for 2020 is 33 per cent renewable energy. Some suggest more than mid-20s penetration will be problematic. Linking with the wider grid is the key.
A recent International Energy Agency analysis of Denmark found that the country could go as high as 63 per cent wind penetration, using existing flexible resources to balance supply. It benefits from being able to import and export from neighbouring grids in Scandinavia and Germany.
"The report concluded that power systems have a greater capacity to handle variable renewable electricity (wind, solar, tidal and wave power) than commonly believed," the IEA said.
There was no doubt that wind energy could be challenging to incorporate, but it could be done. Interconnection, however, was critically important.
Denmark plans to lift the share of wind to 50 per cent by 2000. By 2050 it expects to be free of fossil-fuel energy sources, altogether.
As recently as the early 1990s, it sourced around 90 per cent of its electricity from fossil fuel sources. Because it still relies on fossil fuel sources for around half of its energy, its emissions per capita are above the OECD average.
Retail electricity costs are high, caused by taxes that account for 60 per cent of its cost, but industrial users enjoy some of the lowest rates within the EU, the IEA says.
Bright outlook
ROSS Edwards, the head of business development and one who is in charge of new gas and renewable projects at TRUenergy, says any new peaking plant built in Australia over the coming decade will essentially be for meeting peak demand, not for acting as a back-up to wind.
TRUenergy will need to build or commission about 2500MW of renewable energy capacity over the next eight years to meets its obligations under the 20 per cent renewable energy target.
Most of this will come from wind, he says, although solar PV (photovoltaic) will likely come into the equation in the second half of the decade.
Edwards echoes recent comments by Origin Energy chief Grant King, who believes there is no need for baseload power generation for the rest of the decade, with the possible exception of Queensland, and that most investment will be in wind to meet the MRET, and in open-cycle gas to meet the peak demand.
Isn't the open-cycle gas being deployed to match the intermittency for wind, Greenchip asked. "No, it's really to match peak demand," Edwards said.
The good news for the renewable developers is that Edwards predicts TRUenergy will be back in the market, building its own wind farms or writing contracts for third parties, by the end of the year.
The company's first project, the 120MW Stoney Gap wind project in the Clare Valley in South Australia, was likely to be ready for final investment decision this year, and TRUenergy would likely need a couple of such projects a year to meet its commitments. Edwards says that while wind will dominate the MRET in the next few years, it is possible that solar PV will become cost-competitive in the latter half of the decade, particularly as costs of panels and modules continue to fall.
TRUenergy is hopeful that it will succeed with its proposed 150MW Mallee Solar Farm project in the recalled Solar Flagships tender, and says it has proposed a substantial reduction in costs.