australia's great renewable energy opportunity · web viewintegration between both renewable...
TRANSCRIPT
All Energy Conference 2012Greg Bourne – Chair ARENA
Thank you for your welcome. I am delighted to be here today in
my official capacity as ARENA’s inaugural Chair.
I would like to acknowledge the Kulin nation on whose land we
have the privilege of meeting today and to pay my respects to
their Elders past and present.
My objective today is to give you an overview of where
ARENA is at in its short life and where we are heading over the
next few months. And to share with you ARENA’s excitement
at Australia’s renewable energy opportunity.
1
We are at an interesting point in ARENA’s life.
ARENA needs to finalise and publish its inaugural general
funding strategy or as the Board think about it – our near term
investment strategy. The Board has been exploring the complexity of our broad
agenda and we are close to solidifying our thinking on what we
believe our near term investments ought to be.
And although we have not quite finished formulating and
clarifying the next steps, we have decades of renewable energy
research and thinking to draw upon.
It is only year one; quarter two for ARENA but fortunately
Australia’s progress in renewable energy is well advanced and
we can draw on and we want to do justice to this knowledge and
history.
Greg Bourne – Chair
Before I go on, I’d like to provide a brief introduction for those
of you that may not have met me.
I am a long time champion for renewable energy and I
understand the challenges that new technologies face in moving
from the desktop to the market.
2
I have held a variety of positions, including as Special Adviser
on Energy and Transport to the Prime Minister in the UK
through to, more recently a director of Carnegie Wave Energy.
I spent many years with BP exploring for and producing oil and
gas and quite a few years at home in Australia where BP had a
fantastic solar business.
I was also the CEO of the World Wildlife Fund Australia from
2004 to 2010.
One thing that I have observed during all of these positions is
the passion and determination that the renewable energy sector
has for its work and for delivering a sustainable energy future
for everyone.
My experience to date has given me a great overview of the
history of renewable energy development. This background has
also made me an optimist. Let’s think about where we have
come from.
As Michael Fraser, CEO of AGL, reminded us at the recent
Clean Energy Conference, 150 years ago lighting in Sydney
Harbour was supplied with whale oil.
3
So in the same way we have moved from burning whale oil,
candles and kerosene, through to electric powered tungsten
lighting and on to compact fluorescents and LED more recently,
we will move from burning wood for heat, then coal and gas and
on to using a broad range of renewables for heating, cooling and
electricity.
These aren’t clichés but reflect the real rate of technological
progress in my lifetime… well... except the whale oil part.
So where are we now?
As we know, Australia’s energy sector is highly dynamic. There
4
are many questions to ask and investigate and, yes, many
opportunities to progress.
In recent years, we have seen the launch of the Clean Energy
Futures package, including a price on carbon. The Australian
Government has also been progressing its Energy White Paper
and my participation on the Paper’s reference group has been
beneficial – hopefully in both directions!
One of the trends I’ve been closely watching is the recent
decline in Australian electricity demand, not predicted, projected
or wanted by energy suppliers, but certainly expected at some
stage by those who look more holistically at energy,
environmental and social aspects of the system.
We need more data to understand this trend. What are the major
causal factors and are their trends predictable? Is it that energy
market reform has enabled better demand side management?
Or, is it the age of energy efficiency? Or, have the changes to
Australia’s economic outlook and the reduction of
manufacturing’s consumption permanently impacted demand?
Or, is it the significant uptake of photovoltaic’s on Australian
rooftops?
5
Most likely it is all of these factors and more.
Photovoltaic panels have rapidly decreased in price through
improvements in supply chain and competition in global
manufacturing.
The Australian Energy Market Operator’s (AEMO’s) 2012
report on National Electricity Forecasting sees the impact of
rooftop PV installations is expected to partially offset the need
for increased conventional electricity generation in Australia.
In fact, AEMO considers that by 2021, rooftop PV will increase
to 7,558 GWhr, which equates to 3.4 per cent of annual energy
generation.
Although this highlights a positive change for renewables in
Australia, we have also faced some real roadblocks.
Several large-scale solar projects have struggled to find market
support and some geothermal energy projects have experienced
much higher drilling costs and complexities than they would
have liked. There are no quick fixes in the energy world – but
then there never were – just hard graft.
The Bureau of Resources and Energy Economics (BREE) also
6
forecasts that gas and diesel prices are projected to increase
steeply in coming years. Certainly there will be downward blips
but the long run trend is inexorable.
Although demand has been decreasing overall in Australia,
certain regions of Australia have seen energy consumption
increase and the need for more electricity generation.
AEMO and BREE both attribute this increase primarily to large
mining projects and growth in regional and remote areas.
There is an increasing awareness of the cost of power and of
transmission and distribution within these regions and
potentially there may be opportunities for more distributed
generation.
So, given this complex picture: what can ARENA contribute?
7
We potentially have a very open agenda and one of our
challenges will be to find the balance between focusing on the
right priorities and doing justice to a complex area.
We have around $1.8 billion of uncommitted funding, and are in
the unique position in having our funding locked in legislation.
As an organisation with legislated funding certainty to 2020,
ARENA can provide long-term commitment to the development
of projects and initiatives within the renewable energy sector.
As ARENA begins to play its part in Australia’s clean energy
future; amongst the range of other government initiative and
measures; the Clean Energy Finance Corporation stand out.
Clean Energy Finance Corporation
A way to think of ARENA and the CEFC is as teammates in a
hurdle relay race. Sometimes ARENA is carrying the baton
alone in its track. At other times we are running together in the
changeover. Eventually the CEFC runs to the finish line of full
commercialisation. The complementarity is striking. There are
many barriers to hurdle on the track from desktop to
commercialisation. Falling at the last hurdle with the winning
post in sight is something none of us want.
8
One of the opportunities we will have in working together is to
complement CEFC’s provision of debt and equity to provide
market side support. We could well be involved in funding the
same project, with ARENA providing innovative grants.
We may also work together to drive projects and technology
through the length of the innovation chain.
In the case of a specific project, ARENA may fund the riskier
portion of a near-commercial technology, while the CEFC
provides lower risk assistance to build new generation.
One of the outcomes that we both want to achieve is to improve
9
the bankability, including the perception of the bankability of
renewable technology.
General Funding Strategy
This brings me to developing our first General Funding
Strategy. We will be outlining our priorities in a General
Funding Strategy (the Strategy) that will be released in the
coming weeks.
We have held a range of consultations to date, including a
National Forum in Melbourne a few months ago, which I’m
sure, a number of people here attended. We also had visits to
10
WA, Queensland and the Northern Territory. As part of the
development of the strategy we received many submissions.
Given this is the first year of our operations; the funding
strategy will be a high-level document. It will not pick a hit list
of technologies with attributed funding.
I know it will disappoint some people that the funding strategy
won’t lock down every detail, answer every question or address
their specific interests that may have been raised in consultation.
So while your specific issue may not be in the strategy, rest
assured we will consider the details of submissions received in
designing and developing programs.
We can’t guarantee all our projects will be successful, but both
successes and failures help improve knowledge of renewable
energy technologies and business models in domestic and
international investor communities.
ARENA will focus on solutions that are best suited to
Australia’s needs and may choose to focus on these solutions at
their varying development stages over the coming years,
increasing Australia’s diversity of renewable energy supply.
11
ARENA is not likely to invest in specific technologies unless
such investment is capable of translating to renewable energy
for Australians.
While I can’t share all the details of the ARENA funding
Strategy at this point, I would like to talk through a few key
points under consideration by the Board.
Increasing diversity of supply:
The Renewable Energy Target is providing a growing supply of
renewable energy largely wind-based generation and ARENA
will want to find ways to increase diversification over the next
few years.
12
Promoting knowledge sharing and working collaboratively:
The 2011 National Transmission Network Development Plan
developed by AEMO estimated around $120 billion will be
needed over the next 20 years to upgrade Australia's energy
generation, transmission and distribution networks.
It is humbling to think the scale of transformation we are
embarking on. ARENA is only a piece of the solution and we
will actively work with all stakeholders as this transformation
takes place. We will support industry and research institutions to
share knowledge and fill knowledge gaps.
Providing local demonstration projects
We will work to ensure that projects we support not only have a
local demonstration effect but that replication possibilities
become a reality once the demonstration has been shown to
work. Integration between both renewable energy sources and
fossil fuels will remain a big challenge. This also may be an area
where ARENA can offer a lot of value.
Long term commitment:
As mentioned previously we have an agenda that runs until at
least 2020 and with that certainty comes the opportunity to
invest strategically.
13
REGIONAL WORK
One area I would like to go into a bit more detail is our
commitment to working in regional and remote areas. There are
a couple of reasons for this focus.
A key reason is the development of remote power is of specific
national interest to Australia. Undertaking renewable energy
demonstration-level projects may help reduce the risks for
investors in renewable energy technologies.
The off-grid environment would be ideal to test the integration
of one or more sources of renewable energy with or without gas
or diesel generation in a range of climatic conditions.
Such projects could provide valuable data on the reliability of
different combinations of energy sources and drive development
of storage technologies.
This could help reduce local fuel costs, avoid emissions from
fossil fuel use and ultimately give local communities greater
energy security.
In BREE’s 2011 Australian Energy Projects Report, it states that
the fastest growing consumer of primary energy out to 2034-35
will be the mining sector, with average growth of 5.2 per cent a
14
year expected over the projection period.
At the state level, Western Australia, the Northern Territory and
Queensland are expected to exhibit the highest growth in
primary energy consumption.
These regions are expected to achieve higher economic growth
relative to other states, based on the large contribution of the
mining sector and the high degree of export orientation.
In Western Australia, much of this demand is concentrated in
the Midwest and Pilbara regions of WA.
From ARENA’s perspective, we can see that renewable energy
could either partially or completely displace on-site or isolated
grid diesel generation. This could involve either pv or wind
technology, used as a stand alone power source or hybridised
with either diesel or gas.
Isolated grids also provide a useful platform to trial grid
integration and storage technologies, which will be vital to wide
scale deployment of renewables and allow generators to capture
value by selling to the market when demand is greatest.
Although the mining sector may be the fastest growing
15
consumer of primary energy, Northern Territory, Queensland,
Western Australia have communities that can also benefit from
renewable energy supply. For these communities, renewable
energy can help improve quality of life and enable greater local
economic activity.
Furthermore, geographically diverse sites in Queensland,
ranging from island communities to desert outstations, provide
an array of test sites that could substantially increase knowledge
regarding supplying renewable energy in challenging
conditions.
ARENA has already received some interest in integrating
renewable energy projects in community and site power
generation planning and is keen to hear from companies with an
interest in the sector.
Next steps
16
So, briefly, following the release of our general funding strategy
in the coming weeks, we will conclude the evaluations of and
recommend decisions for large scale solar projects referred to us
by the Minister and continue the process of integration of the
ASI with ARENA. Then we will release and consult on the
development of our new programs.
In closing, I’d like to reiterate our door, inbox and phone line
are always open. We look forward to working with you as we
take advantage of this great renewable energy opportunity.
Thank you
17