By Kirstin Crothers
The rise of renewable energy generation is one of the most exciting aspects of the transition. The renewable energy industry in Australia accounted for 32.5 per cent of Australia’s total electricity generation in 2021, representing an increase of almost 5 percentage points compared to 2020. We spoke to four experts about energy generation in the future energy system:
- Erin Coldham, Chief Development Officer, Star of the South
- Debby Blakey, Chief Executive Officer, HESTA
- Gordon Wymer, Chief Commercial Officer, Snowy Hydro
- Tim Nelson, Executive General Manager, Energy Markets, Iberdrola Australia
Renewables versus reliability of supply
Australian politicians are very wary of blackouts and act to shore up reliability, which can often work against intermittent renewables. The Australian National Electricity Market uses a reliability standard as the test of whether supply will adequately meet demand. Is there a path to a 100% renewable energy system without sacrificing reliability?
According to Erin Coldham, Chief Development Officer, Star of the South, the solution is diversity in power generation, “this means using a mix of different, complementary technologies like solar, onshore wind, offshore wind and storage across different geographic locations to ensure the right supply at the right times. This will drive the best value, while ensuring greater energy security and reliability.”
Policy as a to key investor confidence in new generation projects
Debby Blakey, Chief Executive Officer, HESTA is passionate about renewables and with $66 billion to invest, she has the power to make projects happen. But she is impatient with what she sees as the lack of a clear roadmap from the government. She says that abrupt and ad hoc policy changes make it difficult for investors to set long term transition strategies with confidence.
“Governments have an important role to help build investor confidence by providing policy certainty that can enable investment and reduce risk for investors, and to enable the large-scale investment needed for a green-led recovery.”
Debby says, “Certainty is vital when it comes to committing capital over the very long timeframes required for a renewable energy investment. At HESTA, our investments locally and abroad are in jurisdictions that offer predictable policy settings and long-term contract tenor.”
Erin agrees, saying “Ultimately, investors will always look for positive policy signals. A good example is the recent Victorian Government announcement regarding offshore wind targets – it helps us map our projects to a specific need and builds confidence, which also flows to the supply chain to drive better outcomes.”
Allowing transparent risk assessment for investors
Although Snowy Hydro’s latest generation project (the Kurri Kurri gas generator) is not renewable, Gordon Wymer, Chief Commercial Officer, Snowy Hydro raises a very similar complaint to Debby’s. He says the key to increasing investor confidence lies in removing the ‘roadblocks’ that complicate risk assessment. He believes that investors are good at pricing certainty and risks they can assess, mitigate or control.
Gordon says, “Generation projects are inherently difficult and complex, so the ability to sell their products into an utterly transparent market is crucial.” What gets in the way are the market interventions and ‘distortions’ of current regulatory regimes.
He states that it is necessary to abandon all synthetic or non-market-based mechanisms to maximise investor participation. Gordon is quite clear on what he would like to see swept away, “I'm looking at you, RERT, capacity "market" and (CMM).”
What format of energy will dominate in future?
Novelty generation projects like wave energy, radiation-free nuclear power or gravity ‘batteries’ grab the headlines, but proven technologies like wind and solar are likely to be the backbone of the future energy system. However, Tim Nelson, Executive General Manager, Energy Markets, Iberdrola Australia boldly predicts that the energy source that is most likely to dominate our future energy systems is green hydrogen.
Tim says, “Given the significant comparative advantage Australia has in relation to producing green hydrogen, it is strategically sensible to develop green hydrogen generation technology for our market.”
Staying the course
The Star of the South project started in November 2019, and the Offshore Electricity Infrastructure Bill only passed in November 2021, so the project still has a way to go.
Erin has this advice for undertaking new generation projects: “It can take a long time to develop, but thorough preparation, time and planning can help overcome these challenges. It is also critical to work with stakeholders and local communities, to ensure issues are understood at an early stage as you progress through the various phases of project development.”
“A positive mindset is always a good start!” she adds.
That sentiment seems to sum up the generation sector – there are issues to be overcome, but current successes and future achievements make the outlook bright.
Hear from Erin Coldham, Debby Blakey, Gordon Wymer, Tim Nelson and a host of energy leaders in the Generation 2.0 stream at Australian Energy Week.
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