Australian news, and some related international items

AGL Energy says there’ll be a shift from coal directly to large-scale wind and solar.

AGL kills idea of gas as transition fuel: wind, solar + storage cheaper, REneweconomy, By Sophie Vorrath on 2 May 2017  Australia’s largest integrated energy company, AGL Energy, says Australia’s transition away from a coal power dominated national grid to low-carbon generation will largely bypass “baseload” gas, and instead shift straight to large-scale wind and solar.

As politicians and the gas lobby expend considerable energy over the need to guarantee supply of gas, the company founded some 180 years ago as The Australian Gas Light Co, says the combination of wind and solar and battery storage is already cheaper than new gas generators.

“The energy transition we have all been anticipating will skip ‘big baseload gas’ as a major component of the NEM’s base-load generation and instead largely be a case of moving from ‘big coal’ to ‘big renewables’,” AGL CFO Brett Redman says in a presentation to the Macquarie Australia Conference in Sydney on Tuesday.

The frank prediction – which flies in the face of Prime Minister Malcolm Turnbull’s plan to subsidise the delivery of more gas into Australia’s electricity market – is based on the now fairly well accepted economic view that gas power will continue up the cost curve, making it less and less competitive with large-scale solar and wind.

Redman says that based on AGL’s latest analysis, the levelised cost of wind generation is currently at about $A65/MWh and the equivalent cost of solar is about is around $75/MWh.

And while that cost increases to about $100/MWh for wind and $125/MWh for solar when you add gas peaking to balance the renewables output, it still beats the cost of using gas outright, for baseload generation.

Indeed, according to AGL, the price of new baseload gas sits at between $100-$130/MWh – and “that’s not including a carbon cost,” Redman adds. And wind and solar costs, along with battery storage, continue to fall dramatically.

“On these numbers, it’s easy to see how, in an environment where the cost of renewables is falling and the gas price is high, a long-term investment case for baseload gas might not stack up,” Redman told the conference.

“In Australia, this points to gas having a near-term role to continue to firm renewables via gas peakers – but not being the lowest cost replacement for baseload coal,” he added.

“The market already demonstrates this view.”

And indeed it does. As more an more of the world’s big investment dollars – including from Macquarie Group itself – are poured into large-scale renewable energy projects, fewer and fewer are being invested in new gas and coal, despite the Australian federal government’s best efforts to counter that trend.

And that view is also demonstrated in the prices of deals being done. As we reported here, Tony Concannon – the former head of the now-retired Hazelwood coal power station, and current head of Reach Solar Energy – cites a quote given to the company for a large solar farm (100MW) with a significant amount of battery storage.

 “Reach received estimates in late December 2016 for solar PV and energy storage (40MWh to 100MWh) which translated into a tariff between $110/MWh to $130/ MWh,” Concannon wrote.

“This is already competitive with gas-fired CCGT and costs are expected to reduce further.”

But where AGL’s view of the not-too distant future NEM differs from others is in the division between “big renewables” and distributed energy resources like rooftop solar and storage…..


May 3, 2017 - Posted by | AUSTRALIA - NATIONAL, energy

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