Ross Garnaut is currently in the course of giving a series of six lectures on the climate and energy transition in Australia, hosted by the Melbourne Energy Institute. In his third lecture, he focused on the decarbonisation of the electricity sector, looking at its impacts on grid security, reliability and electricity costs.
Not only did Garnaut assert that Australia could be powered by 100% “intermittent” renewables by the early 2030s, with a cheaper and more reliable grid than we have today, but that the decarbonisation of the Australian economy represented “the foundation for Australia’s emergence as a superpower of the post-carbon world economy.”
“I have no doubt,” Garnaut said in his lecture, “that intermittent renewables could meet 100% of Australia’s electricity requirements by the 2030s, with high degrees of security and reliability, and at wholesale prices much lower than any experienced in Australia over the past decade”.
The decarbonisation of the Australia electricity sector is especially important because it is the pathway to exponential emissions cuts throughout other sectors, particularly transport and industry, amounting accumulatively to 70% of Australian emissions. Looking forward, Garnaut finds that the strongest growth in renewable energy generation is expected to be solar PV, both utility scale and on the rooftop. This is to say that solar PV is the key to Australia’s energy transition and indeed the pivot in the potential future tale of our economic development.
Garnaut’s lectures build upon the comparative results of two major modelling periods (2008, 2018). At the beginning it was expected that the move to renewables would come at significant cost, as Garnaut put it, “you don’t get free lunches in economics”. “But as it turned out, when renewable energy expanded it tended to reduce wholesale power costs”. By 2011 the cost of PV/MW had already dropped at a rate far greater than expected, and the trend has continued.
Garnaut cited the work of even conservative estimators like the Electric Power Research Institute, which concur with the trends of the Australian Energy Market Operator and Garnaut’s own modelling. And of course the actual cost of solar (represented by the yellow of ‘Current PPA’s) is far below all estimates.
The reasons for the fall of solar PV prices according to Garnaut is “a triumph for climate policy… Each time the cumulative production doubled, the price went down by 24 per cent for the last 38 years…with no signs of deceleration.” This steep learning curve, Garnaut says, was made possible by climate policy among free-trading partners in Europe during the early years of the century. Garnaut pointed to Germany specifically, but didn’t fail to mention Britain, France, and the EU as a trading bloc in itself. These open markets for renewables drove innovation both in Europe and in Australia. The policies “generated a demand…creating opportunities for manufacturing anywhere in the world.”
Garnaut’s analysis continued that the remaining obstacles to renewable adoption are neither technological or economic, but largely political.
Of course, domestic conditions also played their part in the dramatic success of renewables over recent decades. One particular such condition was the “dramatic increases in the costs of fossil energy in Australia”. When Garnaut did his original modelling, “there was quite a cost in shifting from established coal generation to solar energy. By 2019, the total cost of solar (both the capital cost and operating cost) are on par with the operating cost of coal alone.”
By 2025, said Garnaut, “on rather conservative assumptions” that parity will dissolve as the cost of solar continues to drop rapidly. Unless our government intervenes “deliberately to promote investment in coal,” says Garnaut, “there is unlikely to be new investment. This is a very big change in the Australian outlook from 2008.”