What could buying 100% renewable energy* really mean?

ParisIt’s only a few short weeks before the Paris COP starts and many of our leaders will wing their way to the city of love. Let’s hope they channel some planet and whole-of-humanity love while they are there.

It should be no surprise then that the announcements are starting to trickle out. Expect a veritable flood by the first week in December. And what an exciting start – Jay Weatherill, Premier of South Australia will try to buy 100% renewable energy* to cover the State Government’s electricity purchases.

The government spends around $100m on electricity each year. Greenpower purchases by many Government sites would be costing around $50/MWh. For the economic benefits and innovation that the tender document requests, the government might be prepared to spend an extra $80/MWh like the ACT. With these numbers, 100% renewable energy represents $25m – $40m extra per year to be poured into a local energy economy, so I thought it worth spending some time on what this opportunity might mean.

The tender documents appear to be seeking a full retail electricity package while leaving space to understand alternatives, innovative options and changes to the way electricity is purchased. Supplying electricity whenever it is needed, collecting and submitting all the renewable energy certificates are part of the deal. Energy productivity is also part of the tender so some good energy efficiency will support the whole process.

It is not clear if the EOI will preference offers that can start in 1 years time (or two years for part of the contract) because that doesn’t leave an awful lot of time to actually build new solutions. Leaving aside the potential for practical limitations, the exciting part of the tender is that its outcomes are to be: employment opportunities, economic development, carbon neutral Adelaide – with service delivery and financial outcomes mentioned last.

What could we do?  oooooh so much, so much better – maybe I should start with some principles:

  • Let’s pick the low hanging fruit and make sure investments are always made in energy efficiency when available.
  • Let’s generate our energy as close to where we use it as practical – we can’t underestimate the energy savings and energy security that we can enhance with local supply.
  • Let’s support those who might otherwise miss out. If renewable energy can be subsidised by this EOI, let’s look at the low income sector to receive the subsidised energy.
  • Let’s empower the community to participate in this opportunity.
  • Let’s make sure this gives us a giant step toward a 100% renewable future for the whole state. Do the learning, tackle the barriers.

I’m also a big fan of the innovation and economic development opportunity and wrote about these in my transition for Port Augusta series. Basically I would like to see government using its procurement to try the new stuff – be it storage, microgrids or smart controls, and I would like to see businesses from across the energy spectrum collaborating, clustering and innovating.

So the ask is 481GWh. This is equivalent to:

govt energySA Water has a significant pumping load that appears not to be included in this tender. Of the rest, hospitals dominate with 24/7 care requirements. Schools and office buildings are also significant but with much lower operating hours. The 20,000 houses owned by the former Housing Trust are not included as tenants pay their own bills.

I mention the loads because [if I were king for a day] I would start by delivering energy efficiency. The Government has a target to improve its efficiency by a further 7% in the next 5 years but I am going to be bold and claim that you could achieve 10% in a shorter timeframe with a payback better than 5 years. What would it take? If we exclude SA Water we could aim for $5million per year in savings with an upfront investment of $25m. I would actually advocate for setting up a revolving fund of about $10m for the next decade and continuing to chip away at the opportunities.

SaShowgroundSolarThen I would install solar energy on as many buildings as possible. About one quarter of the load is in the city, probably with less land and roof access for solar in comparison with the load. But the other three quarters might be able to cover part of the load with their own roof space. I’m going to assume 30GWh could be covered by around 20MW of locally installed solar energy. To give you a sense of scale, the showgrounds system above is 1MW and remember with schools this load probably covers over 500 buildings. The average building would therefore install 40kW and need up to 400m2 of suitable roof space.

Where would the money come from? Even though the price of solar is dropping all the time, the investment bucket would need to allow $15,000 for every 10kW plus $7,000 for its renewable energy certificates (from solar choice). A cool $44million. This is where we start to get community involved. One of the popular trends in community energy is investing in the public buildings in your neighbourhood. It generates a modest, low risk return for investors and the ultimate beneficiary is the community when the site takes over its system and savings after 10 years or so.

Another consideration of this investment is how the load now presents to the electricity grid. One element of the tender is that the solutions should not adversely impact the electricity market. My view is that the electricity market will be better off over the longer term if we have good utilisation of the electricity infrastructure and power station investments. Solar energy on its own can worsen the utilisation of the grid if a site still demands energy at peak times after the sun has set. I would add a modest storage and demand management investment on each site to make best use of the incoming supply and to free up grid capacity for growth across the SA economy. The savings on network tariffs and the flexibility to chase the cheapest and greenest electricity in the wholesale market provides the business case to underpin this investment.

When we move off-site, the first place we should stop is the low-income sector. If Government is prepared to buy the RECS, cover the cost of finance (ie the interest) and take the investment risk, it could deliver cheaper energy and social benefits to the low income sector and improve the energy efficiency of our housing stock at the same time. This might cost 8 – 10 c/kWh instead of the 4c/kWh for the RECS alone but it is likely to be a very cost-effective method for delivering benefits directly to those who need it most. When these solar systems are delivering excess electricity to the system, it is likely that there will be government sites in operation and available to use the energy.

And now you have established the government load as a significant responsive load in the market with somewhere between 10 and 25% covered by onsite solar energy, or RECS purchased from the low income sector. We already have significant wind in the South Australian electricity market and the sites may be able to purchase strategically from surplus wind in the market. A nice touch to round off our portfolio, therefore, would be a baseload solar thermal powerstation, with maybe some pumped hydro storage from SA Water.

At a point in every proposal above there is an innovation and learning edge. With such a useful range of loads and sites to choose from, the State Government can provide an ideal laboratory for controlled experimentation and continuous improvement. This culture needs to pervade the tender.

*It has been pointed out to me that the tender is only for “low carbon” electricity. You can tell by my post that I think it ought to be 100% renewable electricity and the question I pose here is one that will need to be answered at some stage even if it is not as soon as I would like. ‘Low carbon’ raises some interesting concepts. Pelican Point is probably efficient enough – I’m less sure about Torrens Island and it would definitely rule out gas peaking plants and the interconnector. Renew Economy feels it is an invitation for utility scale storage and indeed I added that to my wishlist above.

The main difference between myself and many commentators on this issue is my faith in energy consumers to be part of the solution. This speaks to my background in industrial energy efficiency as much as anything. I know the technical solutions are available and can be financially viable. I would love to see those in energy supply get more hands-on experience in energy demand so that they too see the opportunities to share benefits with their customers.

**I didn’t spend hours on my figures here so if you find any calculation errors, please let me know.

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About Heather

I am an energy and climate change specialist with a background in industrial energy efficiency and climate change policy.
This entry was posted in Climate change policy, Community energy, Solar Energy and tagged , , , . Bookmark the permalink.

One Response to What could buying 100% renewable energy* really mean?

  1. Pingback: Update – Renewables for All project | changing weather by Heather Smith

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