In an important week for Australia’s energy industry, Bruce Mountain of the Victoria Energy Policy Center perhaps summed it up best.
“I think it’s a turning point,” Professor Mountain told ABC radio.
He was commenting on the decision by AGL, Australia’s leading electricity supplier, to close its Loy Yang A coal-fired power station by 2035, leaving the fuel entirely.
With a capacity of 2200 megawatts, Loy Yang A is Victoria’s largest single generator and also its newest coal plant, technically not due to shut down until the mid-2040s.
While Professor Mountain was talking specifically about Loy Yang A, he could just as easily have been talking about any number of the seismic shifts that had taken place in recent days.
Rising levels of renewable energy have turned the business model of coal power in Australia on its head. (Four Corners: Louie Eroglu ACS)
Everywhere, it seemed, the overwrought transition from coal power to renewables was on display.
The transition “in full swing”
First, Daniel Andrews’ Victorian government unveiled the country’s biggest energy storage target yet, promising to install 6.3 gigawatts over 13 years, or enough, it claimed, to powering half of the state’s current energy-intensive homes.
A day later, Queensland Premier Annastacia Palaszczuk announced the Sunshine State would run out of coal-fired power in an identical timeframe, again well ahead of schedule.
The schedule was announced as part of a major overhaul of the state’s energy system that would include building giant pumped hydro projects and big licks of renewable energy.
Finally, on Thursday, AGL dropped its own bombshell by revealing that it would bring forward the closure of Loy Yang A by ten years.
To replace that capacity, the company said it would invest $20 billion in technologies such as wind and solar farms, as well as storage.
For Professor Mountain, the AGL decision in particular was a “watershed moment”.
University of Victoria researcher Bruce Mountain says this week has marked a turning point in the transition. (ABC News)
“It’s (Loy Yang A) Victoria’s biggest generator by far,” Professor Mountain said.
“Essentially, the biggest player has retired.
“It’s the beginning of the real transition that we can put until today.”
In calling this week a turning point, Professor Mountain and others also brought into sharp focus the urgent nature of the task at hand: building all the kit needed to keep the lights on before coal runs out for good.
Turning the grid “on its head”
It’s a job that requires not just the new generation to replace coal, but all the poles and wires needed to connect those new sources, along with the vast amounts of short-, medium-, and long-term storage to provide backup. .
To that extent, the clock has officially gone forward.
Tony Wood of the Grattan Institute, a think-tank, said there was reason to hope Australia could “get it right” with the transition, but warned the road would be full of mistakes.
Wood said Australia needed to completely rebuild its electricity system in just a decade, a challenge that would be Herculean at the best of times.
Adding to the complexity, he said the work had to be done when demand for materials and workers were already in short supply around the world.
“We know we’re already way behind where we need to be,” Wood said.
“We need to fundamentally convert this electricity [system] mind now…mostly in the next 10 years, if not the next 15 or 20.
Victoria has big plans for offshore wind farms, but global supplies of labor and materials are tight. (Provided by: Star of South)
“This is very, very hard.
“The amount of things that need to be built is huge and will require very significant people and physical resources and we already know that these systems are under stress in every other part of our lives.
“Aligning all of this requires incredible coordination and cooperation between industry, government, the community and the organizations that actually manage the energy system.”
According to Mr. Wood, not managing the rebuild properly could put Australia’s goals for the transition to renewable energy at risk.
“We have to do better than we are now because if not, there will be threats,” he said.
“We’re either going to miss emissions targets or end up with higher prices or blackouts.”
Consumers “must be central”
As if to underline the point, on Thursday the Australian energy regulator noted that energy affordability was fast emerging as the biggest challenge to the transition.
Australian Energy Regulator chair Clare Savage says energy affordability is a growing concern. (ABC News: Amy Bainbridge)
In a report, the watchdog said a “perfect storm” of conditions had pushed wholesale electricity prices up from relatively low levels in early 2021 to record highs this year.
AER president Clare Savage said households were continuing to install rooftop solar in record volumes, but many customers were struggling to cope with rising energy prices.
“Energy prices are rising in an environment where consumers are already facing higher costs of living,” Savage said.
“We saw record wholesale energy prices in July, but grid costs are also likely to rise as inflation and rising cost of capital affect the cost of grid investments being made will need to support an orderly decarbonisation of the energy system.
“Consumers need to feel confident that Australia’s transitioning energy market is working for them.
“And we’re focused on doing everything we can to make that happen.”
Professor Mountain said there was little doubt about the size and scope of the renovation needed for the electricity system.
The Queensland Government has announced big plans for hydro pumping in the Sunshine State. (ABC News: Dominic Schwartz)
But after a week in which governments and industry appeared to be leaning towards the challenge, he said he was more optimistic that Australia could grasp the nettle.
“I think I’m getting more and more confident,” he said.
“Certainly in Victoria, I think the fundamental policy platforms have been built on storage, offshore wind, onshore wind and solar and solar on homes and businesses.
“Now I think it’s about really building on the foundations so the government can run quickly.”