Annual Research Review 2019 - Panel session summary
Moderated by UQ Centre for Natural Gas Director, Professor Andrew Garnett, the panel session on the long energy transition to a low emissions future generated much interest by attendees. A summary of the discussion is below.
Georgy Mayo, Queensland Director of industry body APPEA, kick-started the panel discussion by describing the industry's journey as a process of continual improvement. She attributes push-back received by the industry in the early days as stemming from the lack of information at the time. "When we started, we didn't do enough to explain why we were there and what we were doing - and this created a vacuum. That vacuum was filled with a whole heap of information from a wide variety of sources who had vastly different knowledge levels. As a consequence, there was no quality control over the information which was getting out there - some was true, some was not.”
Georgy believes the lack of quality and reliable information during the industry's establishment has been a contributing factor to the very 'binary' conversation still prevalent in Australia today. She voiced concern that the lack of energy literacy needs to be addressed with priority to be able to solve the complex energy dilemma ahead. "We are not going to get solutions if people cannot understand that it's not as simple as either fossil fuels or renewables, regional or cities, domestic or export. We need to be inclusive. Binary conversations serve the particular agendas of particular groups." She says if she could go back in time and change anything, that it would be focussing on energy literacy. "There is still a massive gap in knowledge today - it's a decade-long conversation which should have started a decade ago. While we're starting to hear some initial discussion about the imperative for gas in the transition now, we still have a long way to go - but at least the conversation has started now."
Ian Langdon Commissioner and Chair of the Gasfields Commission said the impact of gas industry on the State's economic development has been quite staggering. He pointed to the amount of royalties taken often quoted as being around $178 million dollars or more. However, he urged people to get behind the numbers. "Even though that's a significant amount, when you pull it apart, that represents 10% of the operating budget of the Gold Coast Gold Coast Hospital & Health Service which I chair - so I'm not keen to get carried away with those particular big numbers. What I am more interested in, is that some $78 million has been paid directly to landowners in the past year alone. When you look at breaking that down - that's enough to service $1.5 billion of debt." He says that landowners and the farming community are largely living on debt so the millions of dollars being channelled direct to famers, has a real and tangible economic impact on Queensland's regional communities.
In response to a question on the impact of solar farms, Ian spoke about the excessive media interest generated when agricultural land is used for a non-agricultural purpose, especially when important irrigated land is redirected to trees - whether it be avocados or any other trees. “It is important to look at the amount of land in relation to the total amount of land available - and resist the temptation to get carried away by the negativity bought in by via the media, which in my experience can be blown out of all proportion. The same applies to the redirection of agricultural land for solar farming.”
Power and energy research expert, Prof Tapan Saha of the UQ School of Information Technology and Electrical Engineering highlighted the importance of cutting through the hype surrounding the Australian solar sector to ensure the technology could deliver on Australia's energy needs in the longer term. Solar power has experienced rapid growth in Australia. By 2018 there was reported to be some two million households with solar PV nationally (20%). Queensland has had strong take up with 34% of people installing rooftop solar PV. He discussed the broader issue of intermittency and its problematic impact on a stable and cost effective local distribution network. He also talked about the major part battery technology will need to play at household scale, but pointed out that the research does not support the increasingly popular view of solar as a complete solution. He talked about UQ's world class research program which has investigated the impact of solar on networks. He says that other solutions are needed to ensure coverage. "This is not a competition between gas and solar - the energy solution of the future will need to be a complementary combination of different sources of energies. Practically speaking, the research shows that you cannot have all intermittent systems - that is the bottom line."
Richard Jeffery, General Manager Commercial Strategy of Stanwell Corporation Limited provided insight into the issues around system load and the energy supply mix. He says that according to the recently published draft 2020 Integrated System Plan from the Australian Energy Market Operator (AEMO), which develops scenarios out to 2040, we can expect to see similar levels of dispatchable energy in the system moving forward, but that this will be provided in a very different way.
The biggest difference compared to today is that system-wide, we will probably see around 2 MW of non-dispatchable generation capacity for every MW of dispatchable energy generation capacity. This will be driven by significant overbuild of grid scale renewable projects alongside the development of large-scale pumped storage. This combination will allow storages to fill during periods of oversupply, ensuring that daily/seasonal fluctuations in renewable dispatch, wind droughts and cloudy/stormy seasons (where we don't get the expected levels of renewables dispatching into the grid) can be dealt with.
From a distributed assets perspective, we will see continued growth in storage and solar solutions on rooftops and businesses. Some control will be exercised over these distributed assets through the development of ‘virtual power plants’.
He says that one of the biggest challenges for this future system is that the National Electricity Market is an ‘Energy Only’ market. This means that the fixed and variable costs of generation are recovered through energy price only. For storage assets, this means that owners are reliant on price arbitrage and small amounts of system services to recover their costs. So, in order for storage to become commercial, you need some kind of alternative arrangement to be in place, to counter the issues of being paid only on the differential between pumping costs and dispatch price.
Looking at potential movements in installed capacity from a gas perspective, the draft 2020 Integrated System Plan indicates that there may be drop off in the contribution of combined cycle gas plant because, like coal, it needs to be online for the whole time, which will be increasingly challenging as renewable energy penetration continues to grow. The contribution of open cycle gas plants will probably remain around the same level, although they may be used in slightly different ways. The same can be said of ‘run of river’ hydro.
Looking at strategies to replace coal over the longer term, AEMO’s view represents a credible technical means of achieving emissions reduction with current technologies – through the heavy overbuild of renewables and large-scale energy storage facilities. But this will not be without its challenges.
Georgy Mayo then looked at the fast-paced and steep learning curve of the gas industry in Australia. She believes that by drawing on global experiences and those learnt closer to home during the industry's establishment in Queensland, the Australian natural gas industry is now recognised for making real inroads into developing closer relationships with landholders. She says that while we have been good at telling the economic stories around natural gas, we've not been good at telling other stories like gas' key role in the development of a sustainable renewables approach, or the outcomes the industry has delivered through its many cultural heritage surveys and ecological surveys. She pointed to the Great Artesian Basin, saying we have a better understanding of the basin now, than we would have if the industry hadn't arrived. "Take water for example, a lot of people don't know that 90% of our water goes back to farmers - we have not been good at telling that story." She maintains that we have an industry which is really smart. "It is full of highly talented geologists and engineers who are focussed on doing the job well, but just delivering is not enough anymore. People want transparency - they want to know what's going on and we need to get out and tell them the extent of what we have delivered. We also have a lot of potential learnings for any future new development projects in how to manage the impacts and maximise the benefits for the communities which host them." She pointed to key learnings to come from Kathy Witt's community indicators research, which would directly applicable and valuable to any new development project here or abroad.
The panel discussion ended with the risks ahead. One of the looming concerns flagged was the current void in the end-of-life policy for renewables - from waste management to rehabilitation. While policy has been developed for the mining and gas industries, which are well aware they must foot the bill for rehabilitation costs, requirements for renewables, such as solar, are yet to be developed. There was agreement that this is a very real concern and that development of robust regulatory measures should be prioritised. There was also discussion about the need to start thinking now about the end-of-life for items such as baseload plants as the market changes over the next 30 years. Replacement of old technology and the repurposing or disposal of legacy items was highlighted as a sizable upcoming challenge.
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