Executive Summary
Australia has the opportunity to become the first 100% renewable, 100% reliable, lowest cost energy, and zero emissions country in the world. Prof Ross Garnaut’s concepts are affirmed and extended.
Australia has vast areas of cheap outback land with intense sunlight for solar renewable electricity. PNG has enormous reliable hydroelectric potential and NZ has large potential. Neither has a market or a means to access it. An old technology has been updated and advanced. High Voltage Direct Current (HVDC) cable is available now and is in effect a new technology. It connects sources of electricity and markets over long distances without the loss of power of AC transmission.
Now Australia has the opportunity to bring together its low-cost renewable energy with reliable hydroelectricity before its coal-fired power stations are decommissioned. Renewable electricity would decarbonise most sources of Australian emissions.
Australian electricity demand will increase rapidly as renewable electricity cost declines. It will supply its own expanding market and develop an Australian comparative advantage in exporting low-cost reliable electricity to countries with less access to renewable energy.
There is no need to consider nuclear power as Australia would be completely renewable without any residual waste.
Australia should adopt (long distance) hydrogen powered vehicles derived from the world’s lowest cost renewable and reliable electricity, instead of (short distance) battery powered vehicles to avoid the problem of disposal of millions of batteries after their five-year (or even 10-year) life expires. Australia would supply all its demand for low-cost hydrogen and export large quantities.
The economics make sense. The economic benefits are as great as the environmental advantages.
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Australian Energy and Prosperity: Profit and Jobs from Zero Emissions
Context
Australia had amongst the cheapest electricity in the world pre-GFC. Now it has amongst the most expensive in the world. Australia had ample low-cost natural gas on the east coast. Now it is scarce and very expensive.
What are the consequences? First, consumers have lost confidence and trust in government as their electricity and gas bills doubled, while their wages rose more slowly post-GFC than pre-GFC. Second, business is suffering the pervasive effects of higher costs and struggles to adapt. Some businesses have not survived; many are thinking of closing, particularly high energy intensive businesses like aluminium smelting; few in energy intensive businesses are prepared to invest for growth. Third, the economy in general has been affected by higher energy prices combined with long standing high Australian wages that reduce Australia’s international competitiveness. Lack of business investment has curtailed annual productivity improvement which has slowed annual wage growth. The Australian economy is under- performing its historic potential growth rate. Uncertainty is so great that few investors have an appetite for investing in the energy industry at present. To top it off, 1.2 million families fear that they face electricity blackouts in the heat of summer.
New insights
In contrast, Professor Ross Garnaut has foreshadowed Australian zero electricity emissions and Australia becoming the world’s leading source of low-cost electricity. In an article “Three routes to becoming the world’s post-carbon superpower” (AFR 4.11.19), and in his book Superpower: Australia’s Low-Carbon Opportunity Prof Garnaut explains the way Australia can take advantage of its high incidence of sunlight and empty spaces together with new technology and Australian entrepreneurship. He sees Australian electricity demand increasing by 200% in the next 10 years or so to meet the needs for low cost, energy-intensive mineral processing here for export of metals to the many countries with fewer renewable energy resources.
Prof Garnaut sees three main areas on which to focus: processing energy intensive minerals for export; producing hydrogen for export; and the international transmission of electricity using advanced technology High Voltage Direct Current (HVDC) cables. These are enhanced by economic factors: the declining relative cost of renewable energy since renewables have high capital equipment costs only, in an era of very low interest rates (they have no ongoing cost of raw materials like oil, coal and gas); and the cost of renewable capital equipment declining with increasing volume.
Australia already has one of the highest renewable energy installations in the world, wind and solar, at around 22% of its total electricity supply. It will double and grow towards 100% and will cut the cost of electricity much further. There is, however, the problem of reliability of renewable supply when there is no wind or sun. The troubled solution at present is continued use of coal-fired and gas-fired generation, which are reliable but at the cost of undesirably large greenhouse gas emissions. Large numbers of commercial sized batteries would have to provide much of the reliability. This technology is young and battery life is only about a decade so far. There remains the reliability issue at present. Secure fossil fuel still supplies a large proportion of Australian electricity but produces about a third of total emissions.
Decommissioning of coal-fired power stations
When all coal-fired power stations are decommissioned in the next 10 to 15 years, the electricity supply will become 100% renewable. This does not mean, however, that total capacity of renewables to meet 100% of demand would be 100%. It seems that to be reliable during the day, there would have to be 200% to 300% capacity of volatile renewables to meet 100% of daytime demand and to recharge the 100% capacity of batteries for 100% of night-time demand. Probably, battery capacity of 120% to 130% would be needed to cover potential shortages of recharge during the day, plus some pumped hydro, for full reliability and no blackouts. It means excessive investment in renewables to ensure reliability.
Gas-fired power stations would also be decommissioned as they still produce half the quantity of emissions of coal-fired and far more than zero renewable/hydro.
Future requirements
The population of Australia is projected to double in the next 5 decades or so, i.e. 5m people in the next decade and +2m in the next 5 years. This would require electricity supply to double in 5 decades for normal present-day usage. Future usage may intensify, e.g. more air conditioning and refrigeration for global warming, requiring greater supply, though greater efficiency may limit it. More electricity may be needed for seawater desalination for water supply of the larger population. Electrification of transport would require more electricity to be generated. Much more electricity is needed in total, which must be reliable. This does not take account of more demand for electricity for processing minerals for export, or for restoration of manufacturing industry, or for increased production and exports from the proposed Australian east coast mega-region and settlement strategy to create higher growth and regional jobs. (Please see web site www.veryfasttrain.com.au )
Foundational opportunity
Australia is favoured by its location. It is less than 100km from PNG across the Torres Strait. PNG is the potential source of vast amounts of hydroelectricity. It could replace all Australian gas and coal-fired generation and decarbonise electricity. PNG has high mountains that have a 400-inch annual rainfall. This means that dams in PNG are one tenth the size (10 times smaller) than needed in an Australian 40-inch rainfall mountainous area for the same power generation. Small PNG dams are far cheaper and generate cheaper electricity than other hydros. Their head of water for generation can be high. Hydroelectric generators have a life of many decades. (Australia has a 400-inch rainfall around McKay, but it is probably unsuitable for hydroelectricity at scale or it would have been built already.)
HVDC cable technology transforms the practicality of PNG hydroelectricity for Australia. It transmits electricity long distance without the high 30% or so loss of power of AC transmission. It makes possible collection of cheap electricity from many PNG dams and hydroelectricity generators into one HVDC cable connected to Australia. This trunkline cable would be the backbone of a DC delivery network from PNG to Melbourne, Adelaide and Tasmania. At towns, cities and major cities along the way, lower cost DC would be transformed into AC for connection to the domestic electricity grid. It would secure Australian renewable electricity supply permanently, sustainably and free of carbon. Design of the Australian grid is under discussion at present and should accommodate HVDC cables and PNG hydroelectricity.
Huge investment in large solar farms in remote areas has suddenly evaporated in 2019 on the discovery that the present AC transmission lines to connect the farms to the grid when built would lose some 30% of solar revenue through loss of power on the long AC transmission lines to cities. The solution is to build HVDC connection lines. The question arises of present loss of power from existing long-distance AC interstate connectors between Queensland, NSW, Victoria and SA. Today, maybe the power from one or more existing coal-fired stations is required solely to replace this power loss. Again, the solution is a HVDC north/south trunk line and network to supply cheaper renewable electricity. The savings from virtually no power loss and cheaper electricity would go towards the cost of building the HVDC network. Decommissioning these unneeded coal-fired stations would cut emissions substantially.
The HVDC network would extend spur lines for long distances east/west from the north/south backbone to gather power from large, remote, high sunlight incidence, low cost solar farms in inland Queensland, NSW, Victoria and South Australia and when transformed connect them to the domestic AC electricity grid. HVDC would not only collect electricity from remote areas, it would supply existing remote mines and industrial areas, such as Weipa, Mt Isa, Broken Hill, Olympic Dam, Gladstone, Tomargo, Portland, Bell Bay, Wollongong, Whyalla and new mining and more metal processing centres, possibly in north Queensland, with cheap, reliable renewable power.
A low-cost, simple PNG hydro unit may be cheaper than a new, complicated, super high-tech coal-fired power plant with carbon capture and sequestration that reduces its net electricity generation by some 30% to pump the captured co₂ emissions deep underground. It is also simpler, cheaper and quicker to build than a small nuclear power plant.
Ultimately, this means that Australia can decarbonise its electricity quickly and replace all its coal-fired generators to be powered by cheap reliable PNG hydroelectricity. Combined with renewables, Australia would have a huge source of low cost, reliable and sustainable electrical energy to drive the economy and to export.
HVDC cables
Two companies are investigating export of renewable electricity to Singapore by 3800km undersea HVDC cables. This is considered a stretch but not infeasible by world leading ABB, the Swiss/Swedish power/engineering company. China commissioned a domestic 3293km HVDC cable in 2019, reported to cost $A8.6b (probably more than the distance from PNG mountains to Adelaide). HVDC cables collect energy from offshore wind farms today. There are already three HVDC cables operating in Australia. HVDC cable technology has been improved. (AFR 28.10.19 and 30.10.19)
PNG
The Australian Government would have to negotiate agreement for suitable conditions and royalties for hydropower with the PNG Government. There are issues of heightened mutual national security/defence, if Australia is to become dependent on PNG for its electricity security. PNG would not be required to fund the project, but it may be wise if it had large enough “skin in the game” (paid in, not a gift) to ensure continued cooperation. The project is so big, it would provide large royalties and provide such national security that foreign interference would not be attractive or tolerated by PNG.
PNG would have to agree not to connect the Australian hydro scheme to any other facility that might be built to export electricity elsewhere, to Indonesia for instance, though HVDC cables make export to other countries possible. Australia would not want another country outbidding it for its PNG hydroelectricity and endangering its energy security for which it would depend on PNG.
More opportunities
Australian based companies, with the aid of the Government, would build the PNG hydro schemes and the HVDC cable network in Australia. Great experience would be gained in planning and construction inthe region and conditions. The Australian Government could negotiate with Indonesia to build an east/west HVDC cable connecting the archipelago and to build hydro schemes in Indonesia connected to this trunk HVDC cable.
Indonesia and Asia generally are rather renewable electricity poor. The sun is often over-cast, wind can be at extremes and land is densely populated. Potentially, Australia has abundant cheap renewable electricity, more than most other countries. Sun Cable Co is negotiating with Singapore to supply renewable electricity by a 3800km undersea HVDC cable from Darwin. The Asian Renewable Energy Hub is considering the same from the Pilbara. Neither is reliable. A high capacity Australian east/west HVDC cable from the north/south trunkline from PNG would give them reliability and 24/7 supply.
There is opportunity for a new industry of HVDC cable manufacturing in Australia for domestic and overseas markets that creates more jobs here.
Ships carrying commercial size batteries could be charged in Darwin, sail to Japan and South Korea where they would be discharged to batteries on shore. The ships would return to Darwin for recharging and continue to cycle north and south. This export electricity would be renewable and reliable in batteries. Electricity would be exported further than by HVDC cable.
There are two other potential developments. Hydrogen produced by water electrolysis using cheap renewable energy is being investigated to produce steel from iron ore in blast furnaces, instead of reduction by coal producing large emissions. (Steelmaking produces 7% of world emissions.) There is a scheme in the NT to produce hydrogen for export by ship from Darwin to the potentially large markets for transport fuel and industrial applications in Japan and South Korea. There are plans for huge solar and wind farms in these two areas of Australia for electricity export to Singapore and for hydrogen exports. They have low cost energy but do not have reliability. The Australian east/west HVDC cable extension from the north/south trunkline to these areas would give them 24/7 reliability for operations at lower cost and larger scale when they are developed.
Australia could build HVDC cables from NT and the Pilbara to Indonesia to export low cost renewable energy that would reduce the net cost of domestic electricity in Indonesia from its hydro schemes. There could be agreement for joint export of reliable renewable electricity from Indonesia and Australia to nearby countries such as Singapore, Malaysia, Viet Nam, Thailand and maybe the Philippines. Australia would have access to an enormous electricity market in time. In the nearer term, Australia may focus more on increasing its exports of cheaper renewables and PNG hydroelectricity in the form of processed metals that are value added and are competitively priced than on exporting its raw electricity.
Undersea HVDC cables open-up the way for import of hydroelectricity from NZ. High mountains in NZ and high rainfall (though probably not 400-inches) would be major new sources of hydroelectricity connected to the Australian north/south HVDC trunkline.
There is the opportunity for a four-nation agreement to collaborate on exporting electricity to Asia from Australia, PNG, Indonesia and NZ. Australia would increase the market far beyond its landmass by exporting its low-cost electricity, both directly and indirectly in metal, and by gaining cooperation of the other three nations to enlarge it further by adding their exports to Australian exports to neighbours. This would reduce and spread the risk.
Low cost electricity would lift the prosperity of all the countries involve (suppliers and consumers). Some local coal-fired power plants could be decommissioned. It would add to peace as countries would be reluctant to endanger their reliance on essential imported (and exported) energy.
With decarbonised electricity, Australia would become a world leader in renewable, hydroelectric energy and HVDC cables. It could consult and construct in other countries like India and Pakistan which have high mountains and rainfall for hydroelectric generation and need national distribution by HVDC cables. India and Indonesia are forecast to become the 3rd and 4th largest economies in the world by 2030. They will need much more electricity. Australia has enormous opportunities to grow with them through electricity supply and construction. It would grow its opportunities through closer relationships, mutual interest agreements and performance.
Job creation
Many more jobs would be created by electricity infrastructure construction, including HVDC cable and its manufacture, and new business application based on internationally competitive low-cost electricity, especially in northern Australia areas and towns. Construction of new low-cost regional cities on the HSR line connecting the east coast mega-region from Brisbane to Adelaide would create many more new regional jobs.
There would be no fear of loss of coal miners’ jobs because the coal destined for decommissioned coal-fired power stations would be exported instead, provided it is high quality. Miners would be absorbed eventually into new jobs being created. Power station operators would find jobs in construction and in new, cheap electricity businesses that will grow in towns along the east coast.
Financing decarbonisation and reliability
There are vast amounts of finance in the world seeking investment in productive projects, especially if they are green and lower cost than the alternatives. Although PNG hydro would be Australian Government led, the Government would not have to fund it. It could be kept off Government books. It could be a contingent liability, if there were a Government guarantee. The Government could underwrite the investment this way. Careful feasibility studies must be undertaken rapidly with a positive attitude of problem solving, so that negotiations can be completed without delay before the next economic crisis dries up finance for such crucial investments for Australia’s future.
Conclusions
Australia can escape from its present high cost electricity situation. There are serious opportunities. They must be investigated.
Prof Garnaut is right. Australia is blessed with vast resources of intense sunlight and large, remote low-cost areas in which to capture it. Australia can become the leading developed source of the cheapest reliable, renewable electricity in the world. Australia can supply the large increase in its domestic electricity demand. It can decarbonise its own electricity generation and much of its transport and industry. It can export large quantities of low-cost electricity directly and indirectly in the form of processed high energy intensive metals and hydrogen to high cost, renewable-poor countries, many nearby in Asia. Large export income from electricity would pay for more development of domestic production and decarbonisation.
The priority objective of these strategies and policies is to increase jobs during transition and after. The overarching objectives are: increase jobs, decrease energy prices and achieve zero emissions.
Australia should adopt hydrogen powered vehicles capable of long range, instead of short-range battery powered vehicles. This would avoid the problem of disposing of millions of expired batteries.
Fortunately, Australia is located close to enormous resources of hydroelectricity in PNG, NZ and Indonesia. This enables Australia to cut the Gordian Knott of renewable unreliability. It would make all Australian domestic and export electricity renewables reliable and low-cost. It would be the cheapest renewable energy in the world and a magnet for customers and entrepreneurs. Australia could decarbonise its economy with low-cost electricity that is 100% renewable and 100% reliable. It can contribute to decarbonising the world, particularly in the Asian region. It is an opportunity that offers many other business opportunities.
In addition, a decarbonised Australia would be a major tourist attraction. International companies wishing to become carbon neutral would set up or expand Australian operations. Australian manufacturing industry would grow on cheap power. Australia could become an Asian financial hub.
There would be no need for nuclear power. It is more expensive, more technically complicated and more time consuming than well-known renewable and hydroelectricity, which do not have nuclear waste disposal and decommissioning issues. There would be no need for gas or coal-fired power stations either.
Australia is large enough to enable electricity to be transmitted by HVDC from where the sun shines strongly to where it is temporarily lacking. Similarly, NZ winter rain hydro would complement PNG summer monsoon rain hydro. The HVDC network manager would balance the security of the variable supply of renewable with some battery storage, some pumped hydro and large volumes of hydro to ensure overall reliability. The HVDC network should be Government owned to prevent a recurrence of the recent difficulties.
Australia would no longer be just a quarry for the world. It
would become a world leading source of low-cost processed metals, electricity
and hydrogen. It would add value to exports; increase international
competitiveness and create a new Australian comparative advantage. The
four-nation agreement would secure and expand the market.
Government action on energy would reduce prices, raise Australian economic
growth, increase budget surpluses, lift interest rates, increase business
investment, raise wages and make available distribution of greater prosperity.
Zero emissions would raise Australia’s standing internationally, especially in
Asia and the Pacific. Energy transformation would restore the public’s
confidence and trust in Government.
PJK©9.1.2020
