The Energy Policy Context for the Australian Energy Technology Assessment Drew Clarke Secretary, Department of Resources, Energy and Tourism Australian National University 30 October 2012
Outline I Energy Policy - drivers and opportunities II Electricity Markets - prices, demand and investment III Gas Markets - reserves, production and consumption IV Australian Energy Technology
Australian Energy Policy Key Variables Market drivers Price Security Energy Opportunities Sustained economic growth Higher standard of living Healthier environment Environment Policy drivers
Energy White Paper: Priorities Strengthening the resilience of Australia s energy policy framework Reinvigorating the energy market reform agenda (markets and energy productivity Developing Australia s critical energy resources particularly gas Accelerating clean energy outcomes
II. Electricity Markets
Electricity price, 1981/82 to 2011/12 300 (index, 1989/90=100) 250 200 Residential CPI Business 150 100 Index 1989 90 50 1981 82 1986 87 1991 92 1996 97 2001 02 2006 07 2011 12 Source: BREE; ABS
Australia s Projected Electricity Demand: NEFR 2012 vs ESOO 2011 Annual Energy
NEM Peak vs Average Demand Growth 2005-11 ENA 2012, AEMO 2011, AEMC 2012
NEM generation capacity by fuel 2000 and 2012
NEM Generation Development Combined cycle gas turbine Open cycle gas turbine Engine (gas fuelled) Black coal Biomass Geothermal Hydro Solar Wind Publicly announced 2,950 11,720 17 3,270 273 525 40 1,228 13,427 Advanced 3 Committed 21 60 608
III. Gas Markets
Australia s Gas Resources 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 tcm 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 conventional gas coal seam gas
Australian Gas Consumption Consumption by Sector, 2009-10 Source: BREE 2012, AES Table C
Australia s Gas Balance to 2035
Australian LNG Production Capacity
World Unconventional Gas Outlook 2035: Ten Largest Producers in the Golden Rules Case
IV. Australian Energy Technology
World energy-related CO 2 emissions abatement Source: IEA, WEO 2011
Global investment in renewables Source: Bloomberg New Energy Finance (2011)
Australian Government support for renewable energy technology development
Australian Renewable Energy Agency
Australian Government funding in CCS Major government funding support flows from: CCS Flagships program ($1.7 billion) National Low Emissions Coal Initiative ($370 million), established in 2008 National CO 2 Infrastructure Plan ($61 million) Global CCS Institute ($315 million) Australian Government funding is aimed at providing the framework and investment support needed to accelerate the development and deployment of CCS.
Large Scale Integrated CCS Projects Source: GCCSI, 2012
AETA 2012 Timelines Project initiated on 4 October 2011 to assess LCOE for 40 different technologies by state (and some cases sub-state) for 2012, 2020, 2030, 2040 and 2050. Work undertaken jointly with AEMO (Stage I). WorleyParsons (WP) has been primary contractor to deliver component costs and LCOE. WP sub-contracted ACILTasman to provide fuel costs and CSIRO provided use of its learning rate model for long-term cost projections. Release of AETA Report and AETA Model 31 July 2012.
Levelised Cost of Electricity (LCOE) LCOE n I = t = 1 n t t = 1 + M (1 + r E t t (1 + r + ) ) t t F t
Key Assumptions AETA was developed to be consistent with the Australian Energy Market Operator s (AEMO) National Transmission Network Development Plan (NTNDP), and its planning scenario. Key assumptions include: (1) economic growth of 2.5%; (2) $23/tonne CO2-e leading to a 5% reduction in CO2 by 2020, and 80 % by 2050; (3) AUD moving to peak of 1.13 USD/AUD by 2016-17 and low of 0.86 USD/AUD by 2031-32. Capital costs are provided on the basis of an Nth-of-a-kind (NOAK) plant in Australia and at a utility-scale.
AETA Technologies 40 electricity technologies evaluated: Coal-based (14 options with different fuels & technologies) Gas-based (CCGT with various options) Solar-thermal (CLFR, parabolic trough, central receiver) Solar-thermal hybrid (solar-coal & integrated solar combined cycle) Photovoltaic (fixed and tracking) Wind (on-shore and off-shore) Wave (reaction point absorber) Biomass (landfill, sugarcane & other) Geothermal (HSA and EGS) Nuclear (Generation III)
AETA Common Technology Parameters Common Technology Cost Forecast Data Common Escalation Factors USER INPUT Year 2012 2020 2025 2030 2040 2050 Units O&M Escalation rate 150% 150% 150% 150% 150% 150% % of CPI Carbon Price 23.0 32.2 43.2 57.6 97.0 143.4 $/t CO2 Carbon Price Modifier (% of core price) 100% 100% 100% 100% 100% 100% O&M Improvement Rate 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
AETA: Specific Technology Parameters 16. Combined cycle plant burning natural gas (CCGT) Basis: Single F Class gas turbine Inputs Value Base Value Units Capital cost construction profile Plant Capacity (Net) 374 374 MW Year 1 Year 2 Year 3 Year 4 Year 5 Plant Capacity Factor 83 83 % 60% 40% Thermal Efficiency 49.5 49.5 % Base: 60% 40% Auxiliary Load 12 12 MW 0 0 1 1 1 1 1 1 1 Emissions 368 368 kgco 2 e/mwh (Net) Capital Cost Forecast Summary ($/kw) 2012 2020 2025 2030 2040 2050 % Emissions captured 0 0.0 % North Queensland 1167 1185 1189 1203 1211 1243 First Year available for construction 2012 2012 South Queensland 1139 1157 1161 1174 1183 1214 2012 Overnight Capital Cost 1062 1062 $/kw NSW (including ACT) 1089 1105 1109 1122 1130 1160 Fixed O&M cost 10000 10000 Variable O&M cost 4 4 Local equipment and commodity split 18 18 International Equipment split 56 56 Labour split 26 26 $/MW/ye ar Vic 1043 1059 1063 1075 1083 1111 $/MWh sent out Tas 993 1008 1011 1023 1031 1058 % of Capex SA 1097 1114 1118 1131 1139 1169 % of Capex Northern Territory 1134 1152 1156 1169 1178 1209 % of Capex SWIS (WA) 1135 1153 1157 1170 1179 1210 Discount Rate 10 10 % Pilbara (WA) 1194 1212 1216 1230 1239 1272 Amortisation Period (Life of Plant) 30 30 years
Australian Energy Technology Assessment 2012 (for 2030)
Australian Energy Policy Key Variables Market drivers Price Security Energy Opportunities Sustained economic growth Higher standard of living Healthier environment Environment Policy drivers