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The Clean Energy Finance Corporation has rejected the Federal Government's claims that high renewable energy targets are a recipe for blackouts, telling an inquiry that "high levels of renewable penetration are technically feasible and consistent with maintaining energy security".
Failing to invest now in renewable energy and storage will actually push up electricity prices for consumers, the CEFC argued.
"If ageing coal-fired generation capacity is withdrawn before new renewable energy capacity is available to meet the shortfall, prices are likely to be higher and more volatile," it noted.
"To facilitate a smooth transition to a high-renewables system and avoid price spikes, policies should support early investment in renewables to prepare in advance for coal capacity withdrawals."
The Clean Energy Finance Corporation was established by Parliament in 2012 to increase the flow of finance into the clean energy sector and assist in reducing carbon dioxide emissions.
Its submission to chief scientist Alan Finkel's review of the future security of the energy grid directly contradicts the claims of the Federal Government that investment in "clean coal" is needed to produce reliable "baseload" power for the grid.
The CEFC also argued that gas-fired electricity will be too expensive.
Its submission comes as the Government seeks to change the CEFC's mandate to enable it to invest in so-called "clean coal", and as the gas industry pushes to have its technology placed under the CEFC's mandate.
"New fossil-fuel generation in Australia would be unlikely to find private sector finance at an acceptable cost," its submission noted.
"While the range of cost estimates for new coal-fired generation capacity are broadly comparable with new renewable energy capacity (excluding any cost for carbon emissions), negative investor perceptions mean that new investment in coal-fired capacity would be unlikely to be financed by Australian or international capital markets.
"Investors perceive that new fossil-fuel generation capacity has carbon risk, which is the risk that a new asset would be stranded if a future government were to adopt tighter emissions constraints.
"Further, there is arguably no longer a social licence for new coal-fired power stations in Australia.
"While there are several proposals in the market for new gas-fired generators in Australia, our observations indicate that it is challenging to find long-term domestic gas supply agreements to support new investment.
"Gas prices are expected to rise significantly further in real terms over the next 15 years as international demand increasingly determines Australian domestic gas prices through LNG exports."
Carbon Capture and Storage (CCS) will not be viable in time to help Australia meet the targets for emissions reduction it agreed to at the 2015 Paris Accord, CEFC argued, pointing out that there is only one coal-fired power station in the world using CCS technology - to pump oil to the surface for "enhanced oil recovery".
By contrast, the CEFC argued, renewable energy combined with renewable electricity storage can "transform the electricity sector".
Its submission argued:
- Technology costs for renewables and storage are continuing to decline
- Energy storage will play an important role in an electricity system with high renewables penetration
- Biomass can deliver baseload renewable energy using established technology
In recent months the Government has mounted a political attack on Labor states and the federal Opposition for supporting high renewable energy targets arguing, despite official reports finding to the contrary, that reliance on intermittent renewable energy caused blackouts in South Australia.
The CEFC acknowledged that the transmission network needs to be strengthened to accommodate higher levels of renewable energy supply, but it cited a large number of studies that show that integrating a high level of renewable energy is achievable.
"Investment in strengthening transmission interconnections between regions will help balance supply and demand, reduce price volatility, promote access to least-cost renewable energy resources and boost system redundancy in a grid with high renewables penetration," it added.
Better "demand management" is important to boost the resilience of the system and reduce electricity costs, the CEFC argued, calling for more incentives to encourage households and businesses to change the times at which they use power and reduce peak demand through voluntary load reduction.
Meanwhile, a new study has cast doubt on the ability of trees in Australia to offset carbon emissions
The study by scientists at the Western Sydney University found common Australian trees are unable to store as much carbon as previously thought.
Published in the Nature Climate Change journal, the research found that Australia's iconic Eucalyptus forests do not have sufficient nutrients in the soil to enable them to grow and take advantage of extra carbon dioxide in the atmosphere.
The authors say the findings have significant implications for climate change models that assume rising carbon dioxide will fertilise trees and result in more growth and capture of carbon dioxide from the air.
Topics: alternative-energy, emissions-trading, energy, environment, australia