Least cost pathways to a low carbon electricity system for Australia

Key Question Being Explored in This Insight:

How can we design a cost-effective, reliable low-carbon energy system by 2050 while balancing renewables, emissions, and infrastructure upgrades?

View the page of: Roger Dargaville

Institution: Monash University

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How can we design a cost-effective, reliable low-carbon energy system by 2050 while balancing renewables, emissions, and infrastructure upgrades?

Image courtesy of interviewee. December 10, 2024

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This video discusses the challenges Australia faces in transitioning to a renewable energy system. Unlike countries with abundant hydro, nuclear, or geothermal resources, Australia primarily relies on wind and solar energy, which are dependent on weather conditions. Despite solar panels being effective, the intermittent nature of solar and wind energy presents significant challenges for maintaining a steady power supply.

Australia's current hydro power capacity of about 8 gigawatts is insufficient to meet its average demand of 25 gigawatts. To achieve a high penetration of renewables or low fossil fuel use, careful planning in balancing renewable sources and developing storage technologies is essential. This video explains the importance of optimizing the placement of wind and solar installations, accounting for transmission capacity to connect remote resources to population centers effectively.

As aging coal-fired power stations retire, Australia must ramp up the deployment of renewables to meet electricity demand, aiming for net-zero emissions by 2040 or 2035. This video involves not just increasing wind and solar capacity but also developing energy storage solutions, such as batteries and pumped hydro, to manage supply variability.

The discussion indicates that while a 100% renewable energy system is technically feasible, a mix that includes a small percentage of gas-fired power may provide a more economically viable solution by reducing the need for extensive storage infrastructure. This video highlights the need for policymakers to recognize both the technical and economic considerations in accelerating the transition to a renewable energy future in Australia.

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Here are five key points from the video regarding Australia's renewable energy challenges and strategies:

1. **Resource Limitations for Renewable Energy**: Australia faces unique challenges in transitioning to a renewable energy system due to limited resources compared to countries with high availability of renewable energy sources like hydro, nuclear, or geothermal power. The primary renewable resources available in Australia are wind and solar energy, both of which have intermittency issues—solar energy is not available at night, and wind energy fluctuates.

2. **Need for Effective Energy Storage and Balance**: To achieve a high penetration of renewable energy, Australia must invest in advanced storage technologies, such as batteries and pumped hydro. These systems are crucial for balancing supply and demand, particularly during periods when solar or wind energy is insufficient to meet needs. The aging coal-fired power fleet exacerbates this challenge, necessitating timely deployment of renewable and storage capacity.

3. **Increase in Renewable Energy Installation Rates**: Currently, Australia is building about 1-2 gigawatts of wind and 4 gigawatts of solar power annually. To reach net-zero emissions by 2040 or meet the government’s target of 2035, this rate must significantly increase. Achieving net-zero by 2050 while phasing out fossil fuels demands a more aggressive installation schedule for renewables and corresponding balancing technologies.

4. **Optimizing Energy Resource Locations**: The potential for renewable energy generation varies by location, and a strategy that accounts for geographic differences in solar and wind availability is vital. While certain areas may have high solar inputs, they are remote from population centers. An optimal balance must be calculated between resource quality and transmission costs to ensure efficient energy distribution.

5. **Consideration of Mixed Energy Sources**: While transitioning to 100% renewable energy is technically feasible with sufficient storage, the economic benefits of maintaining a small percentage of gas-fired generation might provide a better balance for system reliability. This approach acknowledges the necessity of backup resources to cover rare high-demand periods that renewables alone might struggle to meet.

These points encapsulate the complexities Australia faces as it aims to transition to a more sustainable energy system while ensuring reliability and efficiency.

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Here are some key quotes from the video:

1. **On Australia's Energy Challenge**:
"In Australia, we've got a particularly big challenge because we don't have some of the resources that other countries... do have very low amounts of fossil fuel or very high penetrations of renewable."

2. **Comparison with Other Countries**:
"Countries like Switzerland, Sweden, Iceland, New Zealand... have very high availability of either hydro power or nuclear power, or even geothermal energy."

3. **Potential of Solar Energy**:
"Solar panels are one of the most amazing pieces of technology that we've developed in the last a hundred years because you've got no moving parts, making electricity directly."

4. **Limitations of Renewables**:
"The really big challenge... is that when the sun isn't shining, you don't have any power."

5. **Hydropower Capacity**:
"We've got a little bit of hydro power, about eight gigawatts, out of a system that has an average demand of 25 gigawatts."

6. **Need for Clever Solutions**:
"We are going to have to be very clever with how we balance the renewables and build storage technologies."

7. **Wind and Solar Optimization**:
"The computer algorithm looks to be specific in the wind power output, to optimize the best combination of wind and solar across the continent."

8. **Transition from Fossil Fuels**:
"We're not just building a renewable energy system. We're starting... from mostly fossil fuel and gradually going through a transition where we've gotta get to a hundred percent renewables."

9. **Aging Coal Fleet**:
"Our coal fired fleet is aging... about two thirds of the existing fleet will retire in the next 10 years."

10. **Renewable Energy Goals**:
"If we keep on that trajectory... we will more or less get to the stage where we have enough renewables by 2050... we'd really like to be net zero by 2040 or even earlier."

11. **Storage Technology Challenge**:
"The storage technologies are really lagging behind."

12. **Balancing Renewable Resources**:
"The model looks at the quality of renewable energy resource versus the cost of connecting that into the grid."

13. **Interconnection Needs**:
"We do take into account how much transmission capacity we need, especially along the main north south trunk."

14. **Technical Feasibility of 100% Renewables**:
"If you have enough energy storage in the mix, we can show that 100% renewables is technically feasible."

15. **Economic Considerations**:
"A scenario with about two or 3% gas fired electricity generation actually probably makes more sense to still keep the system balanced."

These quotes capture the essence of the challenges and opportunities facing Australia's transition to a renewable energy system.

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In Australia, we've got a particularly big challenge

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because we don't have some of the resources

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that other countries that do have very low, amounts

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of fossil fuel or very high, penetrations of renewable.

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So if you look at countries like Switzerland, Sweden,

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Iceland, New Zealand, they have, very high availability

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of either hydro power or nuclear power,

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or even geothermal energy.

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And these are all low carbon dispatchable energy sources

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that you can control the output of.

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In Australia, the primary renewables that we have available

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to us are wind and solar, which are terrific resources,

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especially solar energy.

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Uh, solar panels are, one of the most amazing pieces

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of technology that we've developed,

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in the last a hundred years

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because you've got no moving parts,

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making electricity directly.

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But the really big challenge, of course, is

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that when the sun isn't shining, you don't have any power.

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And likewise for your wind turbines,

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when the wind isn't blowing,

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you don't have any power output.

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To design a very high penetration renewable low carbon

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energy system is going to have a lot of challenges.

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We've got a little bit of hydro power,

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about eight gigawatts, out of a system

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that has an average demand of 25 gigawatts.

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So it's, it's medium,

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but not enough to, to meet all

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of the demand, not by a long way.

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We are going to have to be very clever with

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how we balance the renewables

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and build storage technologies to get to

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that very low penetration of fossil fuel

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or high penetration renewables.

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We look at time series of availability of wind

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and solar at a very large number of potential locations

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for wind and solar plant,

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throughout primarily the east coast of Australia where most

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of the population lives.

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And the basic premise is that

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as the weather patterns move across the continent,

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you'll get different amounts of wind power,

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available at different locations at different times.

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Solar varies, a bit depending on how cloudy it is,

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but solar doesn't vary nearly as much as wind

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because of course it's sunny during the day.

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It's dark at night and that doesn't ever change.

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But the wind patterns can change dramatically

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and they're actually quite structured such that if it's,

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not windy in one part of the country,

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it's probably windy somewhere else.

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And, and we can be more specific

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than just saying somewhere else.

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We can say it's actually windier in this location

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when it's not windy here.

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So we look for these correlations in the data sets

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where in fact the computer algorithm looks

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for the correlations or the lack of correlation

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to be specific in the wind power output, to

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optimize the best combination of wind

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and solar across the continent.

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Taking into account that if you want to access

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wind resources and solar resources in more remote locations,

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you have to build more transmission capacity. So

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Taking all of these things into account, it calculates

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for us the least cost combination of wind,

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solar transmission capacity,

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and then very importantly, the storage that we need to get

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through the periods when even with, even with that,

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distributed combination of wind

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and solar, you don't have enough power in the

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system to meet demand.

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One of the big challenges

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of this transition is we're not just building a renew

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renewable energy system.

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We're starting from,

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our initial starting point is pretty close to,

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mostly fossil fuel and, and,

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and gradually going through a transition

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where we've gotta get to a hundred percent renewables

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or close to it and keep the lights on

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through the entire transition.

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So, we've got this challenge that,

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our coal fired fleet is aging.

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Um, we've already seen, seven

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or eight gigawatts of coal fired power stations retire

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in the last couple years.

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And about, two thirds

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of the existing fleet will retire in the next 10 years.

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So as they retire, we have to be bringing enough wind

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and solar and storage online in time to, to,

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to keep the, the lights on

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and keep, keep, me meeting demand.

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So that puts a, an extra level of demand on or

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or complexity on, on the problem we are building

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around about one or two gigawatts of wind and four

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or so gigawatts of solar per year.

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Uh, if, if we keep on that trajectory

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or a little bit more, we will more

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or less get to the stage where we have enough renewables

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by 2050 to be, net zero,

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but that's not soon enough.

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So we, we do, we do need to ramp up the, the rate

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that we're building renewables dramatically

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'cause we'd really like to be, net zero

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by 2040 or even earlier.

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And 2035 is the government's target.

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Um, so I mean that's, that's what we, we hope to get to.

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So we do need to ramp up how much wind and solar we build,

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but the wind and solar is only part of the, the problem.

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What we also need is all the balancing technologies such

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as batteries or energy storage,

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whether it's lithium-ion batteries or pumped hydro storage

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or emerging technologies such as,

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molten salt storage or even cryogenic storage, which is one

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of the technologies, some of my team work on.

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Um, the, the storage technologies are really lagging behind.

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And so we, we need to work out what is the best mix

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of storage technologies, where do we build them?

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Um, what market dynamics do we need in place

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to incentivize building storage

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because it's not, a technology that we're, used

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to having in the market and we don't really have the right

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market incentives in place to ensure

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that the investors will build enough storage to, get us

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to that, that, stable system of,

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of high penetration renewables that we need to get

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to the model looks at, the,

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Uh, quality of renewable energy resource versus the cost

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of connecting that into the grid.

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So in Australia we have some amazing solar resources

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especially, but are a long way from the main population

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and load centers and you could connect them,

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but it would be very expensive to have a transmission line,

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built out to those, more remote areas in the,

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the, the desert areas.

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Or you can build your solar plant close

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to the population centers with a, a lesser solar resource,

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but a much cheaper transmission cost.

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And, and the model works out that that optimal balance

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and what we see is typically the model builds the,

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the solar, generation capacity quite close

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to the load centers, but

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because we want to be able

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to smooth out the variability in the wind power, especially,

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we need a really strong trunk line

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of transmission down the coast so

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that when it's windy in Queensland, we can use

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that power in Victoria and vice versa.

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So we do take into account

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how much transmission capacity we need,

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especially along the main north south trunk.

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And we do see significant increases in the capacity

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that we currently have, typically interconnections

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between states at the order of two

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or three gigawatts at the moment.

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And we see those being elevated up to

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around about 10 gigawatts in the future.

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In the model scenarios, at least what we're hoping

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that this, that the model shows to the policymakers is,

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well first of all, that the

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solution is technically feasible.

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That, that it is worth pursuing a,

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a a hundred percent renewable energy case.

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If you have enough, energy storage in the mix,

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we can show that 100% renewables is technically feasible,

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but from an the, the optimal economic outcome,

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a scenario with about two

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or 3% gas fired, electricity generation

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actually probably makes more sense

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because you don't need nearly as much storage technology

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to still keep the system balanced.

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And while some people might ideologically say, we,

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we must be a hundred percent renewables,

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when you think about it, the extra resources that will take

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to build enough batteries and pumped hydro

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and other technologies to ride

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through those very difficult days,

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when you just need a little bit of extra capacity

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that very rarely gets used.

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It's actually better to have a small carbon footprint

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that you can offset with, with other,

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other mechanisms than mining the lithium

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or pouring the concrete that's required

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to build the additional battery and pumped hydro storage.

Australia's Renewable Energy Challenges and Solutions

00:00:00 - In Australia, we've got a particularly big challenge because we don't have some of the resources that other countries that do have very low, amounts of fossil fuel or very high, penetrations of renewable. So if you look at countries like Switzerland, Sweden, Iceland, New Zealand, they have, very high availability of either hydro power or nuclear power, or even geothermal energy. And these are all low carbon dispatchable energy sources

00:00:33 - In Australia, the primary renewables that we have available to us are wind and solar, which are terrific resources, especially solar energy. solar panels are, one of the most amazing pieces of technology that we've developed, in the last a hundred years because you've got no moving parts, making electricity directly. But the really big challenge, of course, is that when the sun isn't shining, you don't have any power. And likewise for your wind turbines,

00:01:02 - you don't have any power output. To design a very high penetration renewable low carbon energy system is going to have a lot of challenges. We've got a little bit of hydro power, about eight gigawatts, out of a system that has an average demand of 25 gigawatts. So it's, it's medium, but not enough to, to meet all of the demand, not by a long way. We are going to have to be very clever with how we balance the renewables and build storage technologies to get to

Optimizing Renewable Energy Resources in Australia

00:01:34 - or high penetration renewables. We look at time series of availability of wind and solar at a very large number of potential locations for wind and solar plant, throughout primarily the east coast of Australia where most of the population lives. And the basic premise is that as the weather patterns move across the continent, you'll get different amounts of wind power, available at different locations at different times. Solar varies, a bit depending on how cloudy it is,

00:02:07 - because of course it's sunny during the day. It's dark at night and that doesn't ever change. But the wind patterns can change dramatically and they're actually quite structured such that if it's, not windy in one part of the country, it's probably windy somewhere else. And, and we can be more specific than just saying somewhere else. We can say it's actually windier in this location when it's not windy here. So we look for these correlations in the data sets where in fact the computer algorithm looks

00:02:38 - to be specific in the wind power output, to optimize the best combination of wind and solar across the continent. Taking into account that if you want to access wind resources and solar resources in more remote locations, you have to build more transmission capacity. So Taking all of these things into account, it calculates for us the least cost combination of wind, solar transmission capacity,

Transitioning to 100% Renewables: Navigating Challenges Ahead

00:03:10 - through the periods when even with, even with that, distributed combination of wind and solar, you don't have enough power in the system to meet demand. One of the big challenges of this transition is we're not just building a renew renewable energy system. We're starting from, our initial starting point is pretty close to, mostly fossil fuel and, and, and gradually going through a transition where we've gotta get to a hundred percent renewables

00:03:40 - through the entire transition. So, we've got this challenge that, our coal fired fleet is aging. we've already seen, seven or eight gigawatts of coal fired power stations retire in the last couple years. And about, two thirds of the existing fleet will retire in the next 10 years. So as they retire, we have to be bringing enough wind and solar and storage online in time to, to,

00:04:09 - and keep, keep, me meeting demand. So that puts a, an extra level of demand on or or complexity on, on the problem we are building around about one or two gigawatts of wind and four or so gigawatts of solar per year. if, if we keep on that trajectory or a little bit more, we will more or less get to the stage where we have enough renewables by 2050 to be, net zero, but that's not soon enough.

Accelerating Towards Net Zero: The Need for Renewable and Storage Solutions

00:04:41 - that we're building renewables dramatically 'cause we'd really like to be, net zero by 2040 or even earlier. And 2035 is the government's target. so I mean that's, that's what we, we hope to get to. So we do need to ramp up how much wind and solar we build, but the wind and solar is only part of the, the problem. What we also need is all the balancing technologies such as batteries or energy storage, whether it's lithium-ion batteries or pumped hydro storage

00:05:13 - molten salt storage or even cryogenic storage, which is one of the technologies, some of my team work on. the, the storage technologies are really lagging behind. And so we, we need to work out what is the best mix of storage technologies, where do we build them? what market dynamics do we need in place to incentivize building storage because it's not, a technology that we're, used to having in the market and we don't really have the right

00:05:44 - that the investors will build enough storage to, get us to that, that, stable system of, of high penetration renewables that we need to get to the model looks at, the, quality of renewable energy resource versus the cost of connecting that into the grid. So in Australia we have some amazing solar resources especially, but are a long way from the main population and load centers and you could connect them,

Optimizing Solar Energy Placement and Transmission in Australia

00:06:16 - built out to those, more remote areas in the, the, the desert areas. Or you can build your solar plant close to the population centers with a, a lesser solar resource, but a much cheaper transmission cost. And, and the model works out that that optimal balance and what we see is typically the model builds the, the solar, generation capacity quite close to the load centers, but because we want to be able to smooth out the variability in the wind power, especially,

00:06:46 - of transmission down the coast so that when it's windy in Queensland, we can use that power in Victoria and vice versa. So we do take into account how much transmission capacity we need, especially along the main north south trunk. And we do see significant increases in the capacity that we currently have, typically interconnections between states at the order of two or three gigawatts at the moment. And we see those being elevated up to around about 10 gigawatts in the future. In the model scenarios, at least what we're hoping

00:07:18 - well first of all, that the solution is technically feasible. That, that it is worth pursuing a, a a hundred percent renewable energy case. If you have enough, energy storage in the mix, we can show that 100% renewables is technically feasible, but from an the, the optimal economic outcome, a scenario with about two or 3% gas fired, electricity generation actually probably makes more sense

Balancing Renewable Energy and Storage Solutions

00:07:49 - to still keep the system balanced. And while some people might ideologically say, we, we must be a hundred percent renewables, when you think about it, the extra resources that will take to build enough batteries and pumped hydro and other technologies to ride through those very difficult days, when you just need a little bit of extra capacity that very rarely gets used. It's actually better to have a small carbon footprint that you can offset with, with other, other mechanisms than mining the lithium

00:08:20 - to build the additional battery and pumped hydro storage.

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