Australia faces community and regulatory hurdles in renewable energy push

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A fence is seen in front of wind turbines which are part of the Infigen Energy Capital wind farm located in the hills surrounding Lake George near the Australian capital of Canberra, Australia February 21, 2018. REUTERS/David Gray/File Photo

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  • A$78 billion in new transmission lines needed
  • Projects face rising labor and steel costs
  • New rules are needed to pilot recurring relief projects

MELBOURNE, June 7 (Reuters) – Australia’s plans to overhaul its strained power grid are coming up against community protests that threaten to slow investment in wind and solar farms needed to replace coal-fired power generation at retirement over the next 25 years.

The industry must raise awareness of the benefits to communities, offer incentives to encourage the development of back-up renewable energy solutions and accelerate projects to meet rising costs, industry executives and regulators said on Tuesday. energy.

The challenges come as Australia suffers from a shortage of electricity and gas due to coal power outages and coal supply issues which have highlighted the need for a faster transition but carefully managed towards cleaner energy.

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The country’s new Labor government plans to provide A$20 billion ($14.4 billion) in cheap finance to unlock a further A$58 billion in private investment to build 10,000 kilometers of transmission lines to the areas where wind and solar farms are being built.

The new transmission will be needed for the 140 gigawatts (GW) of renewable generation that the energy market operator estimates the market will have by 2050 – about nine times the renewable capacity in the market today.

However, the first new transmission project in 30 years – the Western Victoria Transmission Network Project – proposed by AusNet, is facing protests from farmers.

“What we are seeing is that local communities are upset, that their concerns have not been heard soon enough,” said Daniel Westerman, chief executive of the Australian Energy Market Operator, at the Australian Energy conference. Week.

Another company, Transgrid, which is looking to build the VNI West project to boost transmission between the states of Victoria and New South Wales, has stressed the need to pace what will be several years of construction on transmission projects.

“We are entering a period of many labor and material supply constraints,” said Transgrid chief executive Brett Redman.

“Until we’re built, a lot of these grid-scale renewables can’t be built.”

Another major obstacle is the slow process for approval of transmission projects, in which regulators determine whether a project should go ahead and how much of its costs can be passed on in tariffs.

While several projects have been proposed, only one, the A$3.5 billion Marinus Link project between the island of Tasmania and the mainland, has been approved so far.

To back up all new renewable capacity, 60 GW of so-called firming capacity, three times the standby capacity on the market today, will be needed when the sun is not shining and the wind is not blowing.

To encourage the development of this capacity hardening, regulators and industry agree that a “capacity market” is needed, which would reward those who have electricity available for dispatch at all times.

Recommendations by regulators last year for a capacity market faced opposition from those who see it as extending the life of fossil fuels, currently the main source of backup for renewables.

“A capacity mechanism is a critical part of ensuring we have enough investment in dispatchable capacity…to keep the lights on, to keep prices low and to support the energy transition,” said Clare Savage, chair of the Australian energy regulator.

($1 = 1.3914 Australian dollars)

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Editing by Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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