The Renewable Future

The reason I was in Barangaroo was because of the presentation by Cambridge Clean Energy to its shareholders. Yes, I’m a shareholder there, so you can take what I say from here as being a vested interest in their enterprise. I won’t go so far as advising people to buy their shares, and frankly that would be against some law some place so I’m explicitly saying, don’t listen to me, do your own research.

I do however want to relate some interesting things that came up in the presentation.

  1. Solar power is heading down to about 3c per kilowatt-hour. It wasn’t that long ago that it was sitting at 30c per kWh. The problem with solar remains that it is tied to daylight and therefore not around the clock, but if you pair it with batteries, you at least get to be around the clock. To that end, CCE have been working on their solar energy and batteries. The bigger take home message was that renewables are getting so cheap the fossil fuel industry is going to have trouble staying in energy generation. at 3c/kWh, solar pretty much matches an established coal fire station. When you factor in how cheaply a solar plant can be established compared to a new coal fire station, the more effective returns are going to come from solar farms. This is why coal is agitating as much as it is, trying to handicap the race in their favour, but there are other reasons why coal fire will be forced out of the market in the near future.
  2. Coal fire stations are built on the assumption that the spoke-and-radial distribution pattern of the tent and poles for transmitting the power. In places like Western Australia, the tent and poles can go for hundreds of kilometres to supply remote communities, and their power supply is not that great. When they put in micro-grids based on solar panels, diesel and batteries, the micro-grids outperform the transmitted power from the big power stations. You’ll be hearing more about these micro-grids because they form a large part of solving these kinds of power issues.
  3. Wave energy hasn’t come off the CCE focus. The combination of technology CCE offers includes Wave where they have some cutting edge technology, and it turns out islands make for great target markets because on islands, land comes at a premium, and putting on vast solar farms aren’t always optimal. Also, islands tend to have great wave resources. CCE are targeting 10c/kWh for their wave generators.
  4. Finance is surprisingly abundant for renewable energy projects. There are vast amounts of money sitting with the IMF and the AIB waiting to be invested in renewable energy projects. The problem is that they’re not geared for the smaller scales of micro-grids. Around the world, there is great scope to organise finance to move over to renewables. On the one hand the move to renewables is happening fast, but on the other, the great funds are finding it hard to get to the right projects.

These were some of the more surprising points raised at the meeting. While the situation in South Australia and the whole Elon Musk/Tesla thing has been in the news lately, but when the problem gets broken down, CCE probably has a better inside track to winning a portion of the tender South Australia put out. There were 91 applicants, of whom 80 probably have no practical foundation. The other 11 or so is probably where the competition is going to be, but given that diversifying the risk would be the priority, the 100megawatt-hours of storage the South Australian government asked for will likely get broken up. That is to say, if the future of power generation is going to be renewables driven,and being able to supply remote communities in a sparsely populated land, the solution is not going to be one block of 100MWH to supply the entire state, but many strategically placed hubs made up of micro-grids that makeup the 100MWH storage capacity for which the state is asking.

While the SA tender has been widely publicised, Victoria has also put out a tender for 100MWH battery storage. This was originally 20MWH, but the state government upped the figure to 100MWh in the wake of the publicity surrounding the South Australian tender. Queensland is also in the headlines going with solar farms, so inevitably they will likely put out a similar sized tender in the near future, and NSW won’t be far behind. Once these battery storage projects are in place, it’s going to be hard to argue to subsidise the fossil fuel power generation and the poles-and-lines distribution model. Even without the ETS coming into play, the wide scale renewable power generation is coming to Australia.