New Role of Coal in the Future Energy Mix Greg Everett 23 June 2017
Issues addressed 1. What is the market telling us? 2. What does that mean for coal in the shorter term? 3. Firming up renewables 4. Does coal fit and how / where? 5. What do the alternatives really look like, and what are the implications? 6. System security considerations 7. Who is asking What does the long term vision actually cost?
What is the market telling us? Price signals Median price difference
What is the market telling us? Capacity
What is the market telling us? Energy
What is the market telling us? Sterilising primary energy SA Northern Power Station (520MW) X NSW Wallerawang Power Station X (1000MW) VIC Hazelwood Power Station (1600MW) X
Short term for coal
$/MWh nominal But you re ignoring carbon 120.00 NSW Spot Projection with Carbon 100.00 80.00 60.00 40.00 20.00-2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 Independent 1 (with carbon) FY18 FY19 FY20 FY21 Black coal GWh 109,299 105,388 102,570 98,375 Brown coal GWh 36,895 35,854 35,538 35,154
MW RET and Proposed Projects 16,000 Projection of NEM Renewables * Confirmed renewable projects 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Wind Large Scale Solar Source: Clean Energy Council * Includes scheduled renewables only (excludes rooftop PV and early wind developments)
MW Output Where does coal fit? Cost to Serve 100MW Load using New Solar and Existing Gas Generation 120 100 80 60 Plant Solar (LRMC) Gas 1 (gas cost - existing plant) Total Cost to Serve * Cost $69/MWh $88/MWh $82/MWh 40 * VWA cost. Does not include overheads, maintenance or capital returns 1 Gas cost of $8/GJ 20 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Half Hour in Calendar Day 100MW Solar Gas Plant Total
MW Output Where does coal fit? Cost to Serve 100MW Load using New Solar and Existing Coal Generation 120 100 80 60 Plant Solar (LRMC) Black Coal (coal cost - existing plant) Total Cost to Serve * Cost $69/MWh $42/MWh $50/MWh 40 20 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Half Hour in Calendar Day 100MW Solar Coal Total Plant Solar (LRMC) Black Coal (coal cost - existing plant) Total Cost to Serve * Cost $69/MWh $60/MWh $63/MWh * VWA cost. Does not include overheads, maintenance or capital returns.
What do the alternatives really look like? Gas is the transition fuel High electricity prices and SA government non-intervention to bring back Pelican Pt drove gas generation higher
Gas is the transition fuel? Coal Generation Gas Generation Source: Finkel Review Jacob s Report
MWh What do the alternatives really look like? Cost for 100% renewables with battery storage Wind + Solar + Battery used to serve a system load shape (NSW, max 100MW) Technical Summary Cost Solar Capacity (MW) 52 $104,000,000 Wind Capacity (MW) 236 $424,800,000 Battery Storage Capacity (MWh) 3,740 Battery Power (MW) 177 $860,200,000 Total Combined 288 $1,389,000,000 Total Renewable Gen (GWh) 891 Total Demand (GWh) 521 Spilled Renewable Gen (GWh) 370 Spilled %age 42% 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - Battery Storage Level Energy Cost: $360/MWh
EPIA System Cost Assessment implications for industry System Small rooftop PV with batteries Large PV with gas generation backup Large wind turbines with gas generation backup Large wind turbines with pumped hydro Levelised Cost of Dispatchable Energy $600-12000/MWh $135-250/MWh $125-150/MWh $175-350/MWh Source: EPIA The full system costs of integrating intermittent renewables reliably results in energy costs that are unsustainably high for industry
System Security Considerations Alan Finkel looks at renewables caps for states AFR 12/1/17 Competition Blockers 5 minute settlements Notice to close? Uncertainty to build firming capacity Gas availability and price Coal Enablers Possibly inertia payments Flexibility (turbine bypass) Control of / access to primary energy Capacity withdrawal
What does the vision cost? Many studies consider the cost of electricity with up to 100% renewables make material assumptions about technology developments at the end of the period, and fuel costs / availability through the transition Sporadic criticism that Australia has a renewable energy policy, but not an energy policy Energy Users are raising a bigger contextual question Doesn t energy policy needs to be informed by industry policy? What industries will close out, how will we prepare for that, and what else do we move into? What energy requirement ensues? Or what do we keep, how do we keep them in Australia and competitive, and what mechanisms do we use? What energy requirement ensues?