We're missing the forest for the trees

I'm not sure when we lost sight of the initial goal of emissions reductions, but we seem to be moving further away from it.

The New Daily published an article today, "The renewable energy rush is being held up by lack of federal policy". There are some things that point to the larger problem, and some that are a problem in themselves. Let's start with the larger problem. More renewables does not always equal emissions reductions. To a point, yes it does reduce emissions. But after we've exceeded a tipping point, the grid demands more services and the only way to increase the amount of renewables on the system is to increase the emissions by running the cheapest form of firming technology. For Australia, this is coal. For more on grid services, read this from AEMO and this from Gamma Energy Technology.

When we look at reducing the emissions of the power generation sector (remember, we started with this sector because it's supposed to be the easiest) a total systems cost approach is vital. Considering new build power generation is nearly always constructed to be part of an existing grid, the value that a technology can bring to a unique grid needs to be taken into consideration. The graph on the right shows that looking at LCOE on its own shows a skewed outlook, and picking one technology type to reduce emissions is inefficient. Additionally, trying to decarbonise the grid with just renewables will not get you very far. Deep decarbonisation needs an "all of the above" solution, using all low emissions technologies available to the grid planners and operators. Read here for more on System Cost of Replacement Energy, as mentioned in the graph.

The next issue is with cost metrics. The "cheapest" technology using an investment metric like LCOE will only give you a tiny portion of the actual cost, and it doesn't equal what the consumers will pay, either through utility bills or taxation. At the end of the day, someone has to pay for the complete system operating, and that someone is always the consumer.

Tony Wood from the Grattan Institute is bang on correct when he says there's a lack of political will to formalise an energy policy. We should get on with it and get behind the ESB, and not rely on each State. The States going it alone makes things awkward when they have jurisdiction over just a small part of a greater system. A coordinated approach is required, with everyone on the same page, doing their bit to work towards a carefully planned National target. Have a read of this report on the effect of each State's RET on the NEM.

My last point is on pumped hydro energy storage (PHES). It is awesome. It really is the best way to store energy for long term, seasonal demand. To say it is outdated is to say TV is outdated. It's been around for ages, so must be old? Or computers? And phones? Technology evolves and sometimes it evolves really well. I won't go into detail, but the same goes for thermal plant.

Batteries are great for within-day smoothing and load following, but they have their limitations. If you want something that you can rely on for when there's a long period of rain (like right now... I haven't seen the sun since last week) or when it's a cool, still week in winter like we get now and again across the south-east, you need PHES. Our analysis of Snowy 2.0 shows it not only reduces emissions at least cost, but it increases the utilisation of wind and solar across the NEM. Battery of the Nation in Tasmania also increases the output of their hydro and wind assets, and provides flexible, firm power to Victoria and South Australia.

When you look at the carbon intensity of electricity sectors in the regions above, the top three have big hydro facilities. Two of these have nuclear complimenting the hydro, and one has the good fortune of abundant geothermal. The extended whiskers for some regions indicate a need for a lot of backup power with a varying carbon footprint, such as open cycle gas. Pumped hydro is a definite winner when it comes to low emissions, firm, dispatchable power generation. The biggest hinderance to its deployment is geography.

I have said it many times, and I'll say it again. We need every low emissions technology and enabling technology we can get to reach net zero. The goal is emissions reductions. Don't lose sight of that.