Article by Chris Uhlmann, courtesy of Sky News
19.11.2024
Australia is in the middle of an energy revolution.
The Albanese Government wants over 80 per cent of electricity to be generated by wind, solar and hydro power in the next six years.
That’s over double what it is now.
And both major parties have committed to cutting carbon emissions to net zero by 2050.
It all comes wrapped in a guarantee of a greener – and cheaper – future.
But will it be?
If the cost blows out, who pays?
If the lights go out, who will be responsible?
And the rush to net zero goes well beyond reengineering the electricity grid to reach into every aspect of our lives.
So a team from Sky News Australia set out to look at the task ahead and to ask, what is the real cost of net zero?
The system operator
The journey began in an interview with the chief executive of the Australian Energy Market Operator, Daniel Westerman. His organisation has been tasked with mapping out the pathway to building a grid where the dominant form of generation moves from coal to wind and solar.
We concentrated on the National Electricity Market, which is the eastern grid that runs from Cooktown in far North Queensland all the way to Port Lincoln west of Adelaide. It also crosses the Bass Strait to Tasmania. Along the way it connects 85 per cent of the nation’s population to generators in five states, linked by 40,000 kilometres of transmission lines.
Mr Westerman says gas will be essential to ensure the reliability of the grid – to 2050 and beyond – as the cost of trying to cover long periods of low wind and solar generation without it would be prohibitive.
“We will have batteries, we’ll have pumped hydro,” Westerman says. “But we’ll have times like we’ve seen earlier this year where there’s not much wind and there’s not much sun, and the gas fired power stations are really required to back up the reliability of the grid. They’re there as the ultimate backstop.”
As coal retires, 15 gigawatts of gas will be needed for the eastern grid to operate securely to 2050 and beyond. This is not just a little bit of gas, it’s enough to power 15 million homes. As a future grid dominated by wind and solar generation cannot form a reliable electricity system without gas, the fossil fuel’s role is more backbone than backstop.
The reason for this is that unreliable energy gatherers, like wind and solar, cannot form a 24/7 electricity grid without being connected to a complex and expensive life support system of batteries and pumped hydro. Those won’t work at scale during long wind droughts, so the system can’t function reliably without something that burns fuel to generate electricity. There are two options, coal and gas. And new coal is forbidden.
Let’s underline this point: the government plan to build a weather dependent grid won’t work without gas and will be much more expensive if we can’t get enough of it.
So, we went in search of gas.
The gas guru
In Perth we met Meg O’Neill, chief executive of Woodside, the company that began liquified natural gas exports from Western Australia. Woodside also owns half of the Bass Strait joint venture which supplies domestic gas to NSW and Victoria, but it is running dry.
The gas shortage on the east coast is, in part, a direct result of the Victorian Government’s decision to ban onshore gas exploration in that state for a decade. It has now lifted the ban, as the reality of the technical limitations of wind and solar finally dawn.
This, late conversion, has come a little too late.
“It’s hard to make a long-term investment decision when you have 10 years of history saying you’re not welcome,” Ms O’Neill says.
The company is doing what it can to keep the gas flowing and the lights on.
“So there’s things that we’re doing, you know, trying to just squeeze as much gas out of the fields as we possibly can to maximise recovery. You know, that’s good for us as a business. It’s good for the state as our customers. But to do anything more material, you know, it’s a five plus year lead time.”
Ms O’Neill is also a chemical engineer by training. She points out that the journey to net zero goes well beyond just retooling the electricity grid because fossil fuel is buried in all aspects of our built environment.
“It’s in our clothing, it’s in the furniture we’re in, it’s in our cars. It’s, it’s in our cell phones. Um, it’s a feedstock to so many products and I, I think most people just don’t understand, uh, how oil and gas is part of everything we do in our modern life. And what’s being proposed is to ramp that back dramatically in the upcoming 25 years.”
The chocolate maker
Most of us never stop to consider how the world actually works. How things are made. How fossil fuel is so deeply embedded in our built environment that we never actually see it.
Take chocolate.
The ovens and boilers that make Cadbury’s Freddo frogs run on gas.
Cabdury is owned by Mondelēz International and its Australian president is Darren O’Brien.
“Yeah, it’s not something that logically comes to mind,” Mr O’Brien says. “But certainly in a lot of food manufacturing environments steam and hot water are critical requirements. To be able to do that, you normally have boilers because you need to get to 90 degrees or more, and boilers are most efficiently run and in most environments these days are run on gas.”
The long run plan of the Albanese Government is that most users of industrial gas shift to electricity. Mr O’Brien says that is easier said than done.
“Electrification is certainly an attractive option, but it hasn’t been perfected. The technology, it’s certainly not as efficient, it doesn’t have the speed. So there’s still advances required to be able to electrify the boilers.
Then there is the cost, which business would have to bear and which would, ultimately, be passed on to consumers.
“I know when we look at the boilers, we start talking numbers in the tens of millions of dollars and that’s just at the one site down in Claremont.”
And the cost of energy is already crippling.
“Our energy prices in the last five years have gone up more than one third and our gas prices have doubled.” Mr O’Brien says “I know talking to all my peers across the manufacturing sector, energy is one of the key topics that they will talk to first.”
The reliability czar
In Washington is a man with a job that is unique in the world of electricity generation.
Jim Robb is chief executive and president of the North American Electric Reliability Corporation. Appointed by Congress his corporation oversees the reliability and security of the bulk power system across the entire interconnected American grid, which includes all of the United States and parts of Canada and Mexico.
He is dubious about the call to electrify everything.
“If we were to electrify everything that would mean we would have to quintuple the size of the electricity grid in North America,” Mr Robb says. “I just don’t see that happening.”
He notes that as wind and solar generation has grown across North America the systems have suffered challenges with integration.
“The grid we inherited from our grandfathers, with largely firm fuel supply, you knew within a high degree of confidence that a particular asset would be available to serve load at any point in time. Now we’ve moved towards a system that has much more uncertainty in fuel supply. In this case the fuel is the sunlight and wind. And those are both difficult to forecast at the level of precision that we need for the electric grid.”
His job is to make sure these technologies are matched with the existing system and is agnostic about the form of generation. His key concern is that electricity meets all of the demands its customers have for it.
“We clearly have been putting a very significant priority around carbon and the environmental footprint of those assets entirely appropriate given the implications of carbon in the atmosphere. But we’re now realising that, hey, we’re creating reliability issues for ourselves and we’re creating affordability issues as well. So… I believe we’re going to have to get those back in balance.”
Part of the problem with making the system affordable is technical difficulty, and breathtaking cost, of trying to cover wind and solar supply gaps with grid-scale storage.
“My personal view is that natural gas is going to play a very key role in the electric sector for a very long period of time. At least until we have a viable technology for long duration energy storage that can be scaled to the level of terawatts of capacity. Right now, we don’t have a technology that can do that in any sort of an affordable way at that kind of scale.”
The electricity man
In North Carolina, Michael Caravaggio, is a head of research and development at Electric Power Research Institute.
This not-for-profit body has spent 50 years leading the world in researching how to deliver “safer, more reliable, more affordable, more environmentally responsible electricity for society”.
Mr Caravaggio walked the Sky documentary team through the basics of electricity generation.
“We built our electricity systems around the world with essentially dispatchable technologies for matching frequency,” Mr Caravaggio said. “What do I mean? If you use more electricity I can give you more electricity. Use less, I can turn them down. With wind and solar it’s not like that. So the sun rises, that’s when we have electricity. The wind blows, that’s when we have electricity. Doesn’t care what you or I do in terms of that electricity. That’s a small problem when we build some wind and solar. But that becomes a bigger and bigger problem as these technologies scale.”
He says that decades of research at EPRI have underlined one thing, the need to have a blend of different generation sources.
“If you go too significant on any one technology, you’ve a lot of risk and a lot of incurred costs. If I want to go to higher and higher penetration because the issue with that generation grows bigger. The fact that the sun sets every night is not a problem if I have five per cent of my energy from solar. It is a significant issue if I get a hundred per cent of my energy from solar.”
He points out the limitations of grid-scale storage, saying there is no battery technology that can run a city like San Francisco for four or five days.
“When we’re talking about battery technology, we’re really looking at four, maybe ten hour technologies and they’re nowhere near size to run large metropolitan areas or regions for days on end.”
So, what do you do if you want to build a grid around on-again, off-again wind and solar energy gatherers?
“So what we’ve seen is that you need to manage those zero, those near zero output hours from wind and solar. They happen. Unfortunately they always happen. So you need essentially a 100 per cent backup for different periods to cover that need.”
Let’s underline that: 100 per cent backup.
