Leadership for outcome focussed energy policy

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What makes good energy policy? How do we lead for change? Here's my presentation to the Young Professionals Congress 2013 of the American Nuclear Society. I review Australia's current position in electricity generation and draw lessons on policy and technology; examine the policy failure of artificial constraints of nuclear; demonstrate the just-barely possible task of decarbonising by 2050, and provide my lessons for leaders in energy.

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Leadership for outcome focussed energy policy

  1. 1. Leadership for outcome focussed energy policy Lessons from Australia: Successes, constraints, and cold hard realities Ben Heard ANS Young Professionals Congress 10 November 2013 ben.heard@thinkclimateconsulting.com.au www.decarbonisesa.com @BenThinkClimate FB: Decarbonise SA
  2. 2. About me
  3. 3. Signs of Progress • Australia and India will begin negotiations for the sale of Australian uranium to the subcontinent this month (March 7 2013) • We need abundant, reliable power. Why not nuclear? (Alan Finkel, Chair of ATSE 28 October 2013 • Agreement a boost for NSW uranium mining (Oct 3 2013) • (Liberal) MP calls for rethink on nuclear power (November 4 2013) • Labor MPs urge rethink on nuclear power (22 October 2013)
  4. 4. Presentation layout • Welcome to Australian Energy – The NEM – The mix • Renewable success – Wind (Renewable Energy Target) – Solar PV • Nuclear constraint • Fossil Reality • Lessons for leadership
  5. 5. Welcome to Australian Energy • Australia: – – – Is the world’s 6th largest country (geographically), over 7.5 million km2 Has 23.1 million people (2013), ranked 53rd in size globally. Has GDP per capita of $44,000 (9th -12th highest, depending on source), roughly on par with Canada and somewhat less than USA I am here
  6. 6. The National Electricity Market (NEM) Geographically largest interconnected grid in the world. Covers 90% of Australian electricity supply Most Aussies are here
  7. 7. We suck slightly less than you
  8. 8. Wait... actually we suck slightly more
  9. 9. Old King Coal... Source: Origin Energy
  10. 10. ...is a cheap and plentiful old bastard down under 2.2 time entire domestic coal sector. Way to go us!
  11. 11. Renewable Success
  12. 12. Strong growth in Wind Red is South Australia. Smaller state, major producer Source: McArdle 2013
  13. 13. South Australian Wind- growing contribution Source: AEMO 2012 Wind generation has increased at the expense of Interconnector (coal) and Coal
  14. 14. South Australian GHG emissions falling Source: AEMO 2012 Wind has worked! Be in no doubt. However...
  15. 15. South Australia relying more on interconnection Source: AEMO 2012 ...economic success is dependent on interconnection to import and export from and to larger market. NEM has been like SA’s battery, and...
  16. 16. NEM wide wind is very low Source: Origin 2012 ...recall, rest of the NEM has hardly any wind (yet). High system costs are yet to be incurred, however negative price events and drop in wholesale average is hurting baseload suppliers... Which is good because they are coal, but bad because we still need baseload suppliers...
  17. 17. Variability remains an issue 51,000 MWh daily NEM-wide maximum Source: McArdle 2013 ...which is obvious when you look at daily performance... As little as 50% that amount may be provided
  18. 18. Incidences of low output may find a floor Source: McArdle 2013 ... And half-hourly periods of low output.
  19. 19. These are not arguments for constraint •Planning •Honesty •Realism •...does not make one “anti wind”
  20. 20. Wind: the policy “How?” • Renewable Energy Target: 20% generation from renewable sources by 2020 • Retailers must acquire 1 certificate per MWh of mandated clean energy • Market sets price according to best technology (which is wind and hydro generation from existing generators above established baseline) • Certificates around $35 per MWh (have ranged from $10-$60). • LCOE difference between wind and market average
  21. 21. Wind: How much $? • From 2011-2020, the scheme will require retailers to purchase certificates with a total value of approx $20.2 bn in 2012 money (Source: Heard 2013, pretty rough please don’t quote me yet) and attract $18.7 billion in investment (SKM 2012). • From 2011-2020 the scheme will increase annual output of clean energy by 30,600 GWh per annum. Most of the new energy will be wind • Is this good value compared to nuclear?
  22. 22. Compare $18.7 billion Wind Nuclear GWh per annum 30.6 24.6 (@ $6,000 kW installed, 90% CF) Scale Small, incremental additions Large additions Legal in AU Yes No Intermittent Yes No Additional system costs TBC, expect high TBC expect low Lifespan 25 years 60 years From a climate perspective I can only argue for both
  23. 23. Place outcomes ahead of ideology and tribalism Wind: NIMBY issues, hated by the right, demonised by some nuclear advocates Constraint will reduce near-term clean energy investment and proven GHG reduction Nuclear: Illegal, hated by the left, demonised by most renewable advocates Constraint will reduce long-term clean energy investment and proven GHG reduction, lock in high technology and system costs, continued dependence on fossil baseload and back-up, and high reliance on political consensus for climate change action
  24. 24. Solar PV – Spike in systems Source: Origin Energy Subject to changing and significant subsidies since 2008: •Cash rebates •Feed-in tariffs •RECs, then REC multiples •Industry grants (50% cost) for large scale systems (99 kW) plus RECs This has intersected with plunging system prices to create an unstable boom
  25. 25. Solar PV – Spike in capacity Source: Data by DataMarket. Chart by Mike Sandford 2012
  26. 26. Solar PV – System impact Revenue gap Peak unchanged Mike Sandford 2012
  27. 27. Nuclear Constraint Australia’s Environment and Biodiveristy Conservation Act (1999) Section 140: • 140A No approval for certain nuclear installations – The Minister must not approve an action consisting of or involving the construction or operation of any of the following nuclear installations: (a) (b) (c) (d) a nuclear fuel fabrication plant; a nuclear power plant; an enrichment plant; a reprocessing facility.
  28. 28. National GHG emissions since 1999 What success does not look like
  29. 29. Cold hard reality: growth has kicked clean energy’s tail
  30. 30. Cold hard reality: growth has kicked clean energy’s tail We have a lot of work to do. We need plentiful, cheap, clean energy instead of plentiful, cheap dirty energy. History has invalidated other ways of thinking about this problem.
  31. 31. How fast can we add energy? Source: Russell 2013
  32. 32. Can Australia decarbonise by 2050? Assuming rapid wind growth to 2025, then rapid nuclear growth, we need to add clean energy at close to the fastest ever rate per capita, globally, for 25 years straight!!!
  33. 33. The answer is maybe • It CANNOT be done without a plan • A sensible plan MUST be formed in national (global) interest so MUST strive for bi-partisan support • A sensible plan CANNOT proceed on ideological or whimsical favouring or disfavouring of technologies • In Australia I contend that the most sensible plan with the strongest evidence-based backing would – facilitate continued rapid, near-term growth in wind and (to a much lesser extent) solar PV – Prepare for rapid rollout of nuclear power generation. It will be essential no matter what – Maintain an environment of support for baseload-suitable renewables like solar thermal with storage, enhanced geothermal and biomass with well-targeted support for R&D • Political durability is critically required
  34. 34. Creating political durability Clean technology neutrality Political power/consensus
  35. 35. Creating political durability Clean technology cost-effectiveness Political power/consensus
  36. 36. Lessons for Leadership • YOU will probably not end up “powerful” per se • You can be influential for powerful people. Aim for that. If power comes, so be it • Independence from a foundation of strong values is a ferocious weapon of change • Occupy the middle and pull both sides forward • Call bad policy, loudly. Be VERY sparing in criticisms of people • Conduct yourself as though change for the better is inevitable... You would just like it sooner not later • Reward every opportunity with a calculated risk. Safe is useless, forgettable, no one will thank you, and the opportunities will stop coming • Who are you upsetting? If the answer is no one, you need to try harder • You do not need everyone...which is fortunate, as you are not going to get them • Be more likeable than the other guys (with thanks to Suzy Hobbs-Baker)
  37. 37. More “and”, less “but” • “And” is the antidote to extremism – Nuclear power is very safe/ but and new reactors are even safer – Renewables will deliver more energy in future but/and we can’t meet this challenge without nuclear power – Wind power has successfully cut emissions in South Australia but/and connection to the NEM has been vital for stability – A solar PV system is a great option for the South Australian home-owner but/and they are causing real difficulties in the electricity market – Nuclear power is our best value option for clean energy and it is too expensive • “And” – Sets you apart as capable of accommodating complexity and seemingly competing truths, – Reinforces your independence – Builds bridges
  38. 38. Conclusion Ben Heard ben.heard@thinkclimateconsulting.com.au www.decarbonisesa.com @BenThinkClimate FB: Decarbonise SA

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