Issue 14 February 2006

Renewable energy power share to lessen

A new discussion paper published by the CoAG Ministerial Council on Energy expects Australian renewable energy generation to grow by 2.5 percent between 2000 and 2020, but forecasts that the renewables share of power consumption will fall from its current 9 percent to 8 percent by 2020.

The biggest single stumbling block to higher growth in renewable energy production is the Federal Government decision not to increase the parameters of the Mandatory Renewable Energy Target. The Government rejected the Tambling Inquiry recommenation in 2003 that the target be increased to 20,000 gigawatt hours a year by 2020.  The MCE discussion paper says development to fulfil the present MRET – which calls for 9,500 GWh of annual production by 2010, sustained at that level to 2020 – will be reached in 2008. "Without the stimulus that MRET provides to bridge the cost differential between renewable and conventional technologies, growth in renewable energy is predicted to decline after this time," it adds. The measure has stimulated more than a billion dollars in energy project investment to date, it notes.

The MCE puts the current cost of electricity generation from wind energy at $60 to $80 per megawatt hour compared with $31 to $30 per MWh for coal and $37 to $44 for combined cycle natural gas plant. It puts the cost of large gas turbine cogeneration at $40 to $50 per MWh.

The discussion paper says distributed generation had reached 1,765 MW in 2003 in the national electricity market on the southern and eastern seaboard and projects capacity in the NEM to reach 3,795 MW by 2020. It also notes that the Energy Supply Association in its latest annual statistical report recorded the total of embedded and non-grid generation capacity across the entire country as standing at 3,751 MW at 30 June 2004.

The MCE is seeking comment on the discussion paper -- Impediments to the Uptake of Renewable and Distributed Generation -- by 22 March.  In considering impediments itself, the MCE notes that:

The MCE comments that current regulatory arrangements within the NEM contain no clear rules for sharing network access where capacity is constrained. This is a potential issue for all forms of generation, it adds, but often arises for renewables developers, particularly wind farm operators, situated at the end of long network lines.

The discussion paper states that overcoming impediments to increased renewable and distributed generation will require steps to adequately address emerging technology issues, to enable both generation proponents and consumers to participate in the NEM effectively and efficiently, and to ensure that the NEM network is capable of managing increased levels of such operations in a cost-effective manner.

IPA attacks Victorian wind power subsidy

The Melbourne-based Institute of Public Affairs has attacked the Victorian Government's proposal to take steps to boost renewable energy to 10 percent of State electricity supply by the end of the decade.

IPA claims the effect of the Bracks Government proposal will be to impose up to $1.23 billion in extra taxes on Victorian consumers over 15 years (the time required for wind projects to recover capital outlays).

The Government is considering providing a measure in addition to MRET to stimulate renewable energy development.

Wind, says the IPA in a submission to the Victorian Government, would only "have the most trivial of market shares" in electricity consumption if it was not subsidised on favoured by regulatory requirements imposed on energy users.

IPA notes that NEMMCo projects the Victorian power load in 2009-10 will exceed 50,000 gigawatt hours (compared with 42,400 GWh in 2003-04). Under the proposed scheme, renewable energy will need to produce more than 5,000 GWh a year in Victoria by 2010, the Institute argues.

The Government's aim to facilitate development of 1,000 MW of wind energy in the State will require $2 billion in capital investment, it adds.

Petroleum production value soars

Adelaide-based consultancy EnergyQuest says Australian petroleum production grew strongly in 2005, increasing by 6.4 percent (over 2004 output) to 446 million barrels of oil equivalent -- and the value of this production increased industry revenue by 30 percent to $21.9 billion.

EnergyQuest head Graeme Bethune says the spurt in production volumes resulted from a 25 percent increase in liquid natural gas output on Western Australia's North-West Shelf and an 89 percent rise in coal seam gas production in Queensland and New South Wales.  "Australian LNG production is growing much faster than is generally realised," he adds. "Its growth alone last year was more than the total amount of gas consumed in NSW and the total volume exported in 2005 exceeded the total amount of gas consumed in the four eastern States for the first time."

Bethune's estimates have been compiled from a data base of nearly 200 petroleum company reports and provide the first detailed breakdown and analysis of Australian petroleum production by company, field, jurisdiction and product.

The EnergyQuest report also notes that Australian crude oil production was two million barrels lower in 2005 than 2004, falling to 125 million barrels.

Keith Orchison

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