#1Australian Govemment Australian Renewable Energy Agency Renewable energy technology and the future; driving the long-term transformation to a clean energy technology economy in Queensland Queensland Energy 2013 20 February 2013 www.arena.gov.au#2Summary . • • . . • The Australian Renewable Energy Landscape Policy drivers Price and non-price barriers and challenges to build investor confidence ARENA strategy and investment plan Opportunities through ARENA ☐ Building skills and capacity Driving renewable energy deployment in regional and remote locations Investment highlights in Queensland Australian Government Australian Renewable Energy Agency www.arena.gov.au 2.#31. The Australian Renewable Energy Landscape Australian Government Australian Renewable Energy Agency www.arena.gov.au 3.#4Renewables in Australia's energy mix 100% Australian Electricity Generation 2009-10 renewable 9% gas 15% bioenergy 11% brown coal 23% wind 25% hydro 63% black coal 52% 0% Electricity Generation Australian Government Australian Renewable Energy Agency Renewable Electricity Generation Source: ABARES, Australian Energy Statistics (2011) - solar pv 1% www.arena.gov.au 4.#5Installed capacity 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Australia's renewable energy mix 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Installation year Source: CCA Discussion Paper Oct 2012 Australian Government Australian Renewable Energy Agency Other Bagasse Landfill Gas Solar Wood Waste Wind Hydro www.arena.gov.au 5.#6Location of renewable energy capacity Bagasse Landfill methane Solar A Hydro *Wind Sewage methane Other Australian Government Australian Renewable Energy Agency Cocos Island Source: BREE (2012) Energy in Australia 2012 King Island- -Flinders Island www.arena.gov.au 6.#7Capacity of renewable energy generation in Australia (in 2010) Solar Hydro Wind Bioenergy Solar PV thermal Geothermal Wave Total MW MW MW MW MW MW MW MW NSW 4 677 234 166 328 5408 Tas 2316 142 5 8 0 2471 Vic 803 432 113 152 0 0.2 1.500 Qld 669 12 429 256 0.1 1.366 SA 41151 20 130 0 0 1305 WA 30 204 33 141 0.1 408 ACT 0 19 25 NT 0 0 7 Australia 8 501 2 175 a Includes small-scale Solar PV. 772 1041 3 0.1 0.3 12 492 Australian Government Australian Renewable Energy Agency Source: Clean Energy Council 2011, Clean Energy Australia Report 2011 www.arena.gov.au 7.#8Towards secure, reliable and cost-effective supply in Qld- the framework Customer Market Government Potential medium-term and long-term objectives Encourage equitable access to secure, reliable, cost-effective and sustainable electricity supply for Queenslanders to meet their economic and lifestyle requirements. Empower the customer with greater control, choice and cost outcomes. Facilitate a competitive market that encourages innovation to drive greater efficiencies. Optimise private sector participation and investment in the sector over the long term. Provide a stable regulatory and policy framework that minimises unnecessary market intervention. Support the needs of customers by ensuring adequate protections are in place, while providing equitable, targeted concession arrangements that are cost- effective for government. Renewable Opportunity PV / Wind forecast to be amongst lowest cost in 30 year time frame. Distributed generation and consumer choice opportunity. Globally private sector investor driven with high percentage of spend local to deployment. Clean generation Encourage environmental responsibility to mitigate any adverse effects from the electricity supply sector. Australian Government Australian Renewable Energy Agency Source: The 30 Year Electricity Strategy Directions Paper, Queensland Department of Energy and Water Supply www.arena.gov.au 8.#9Compared to major solar markets, Australia is sunny Hawaii (USA) Photovoltaic Solar Resource The United States of America, Spain and Germany Australian Government Australian Renewable Energy Agency Mainland USA Spain 130° 150° 120° Annual Average Solar Radiation DARWIN PERTH Megajoules/m2 per day 12 18 13 19 Alaska (USA) 20 600 21 Existing solar power > 100 kW 100-300 kW 300-600 kW 1000 kW 1000-2000 kW 16 22 Transmission lines ADELAIDE MELBOURNE HOBART SYDNEY 750 km BRISBANE 30- AERA 10.1 Germany NREL www.arena.gov.au 9.#102. Policy drivers Australian Government Australian Renewable Energy Agency www.arena.gov.au 10.#11Australia's emissions (Mt CO₂-e) Australia's targets - projected growth in emissions and the abatement challenge 700 650 600 550 500 Actual emissions 450 400 350 1990 1995 2000 Australian Government Australian Renewable Energy Agency 2000 level 2005 2010 22% above 2000 level Projected emissions Abatement task in 2020 2015 Source: Treasury modelling, 2011 (medium global action scenario) 15% below 2000 level 15% below 2000 level 25% below 2000 level 2020 www.arena.gov.au 11.#12Australian Government support for renewable energy technology development TECHNOLOGY PUSH MARKET PULL RESEARCH DEVELOPMENT DEMONSTRATION DEPLOYMENT Pilot Scale Commercial Scale Supported Commercial Competitive Commercial Clean Technology Innovation Program (AusIndustry) ARC Discovery, Linkage and CoEs for Universities Australian Government Australian Renewable Energy Agency ARENA Carbon Farming Initiative State-based incentives i.e. Fits Renewable Energy Target Carbon pricing mechanisms CEFC www.arena.gov.au 12.#13Funding technology through the development process COMMERCIAL DEBT VENTURE CAPITAL CLEAN ENERGY FINANCE CORPORATION 100% COMMERCIAL EQUITY PROPORTION OF FUNDING COST OF SOLUTION/ PROJECT RESEARCH RESEARCH ARENA AND OTHER GRANTS Australian Government Australian Renewable Energy Agency PROJECT EQUITY COMMERCIALISATION COMMERCIALISATION www.arena.gov.au 13.#144. Price and non-price barriers and challenges to build investor confidence Australian Government Australian Renewable Energy Agency www.arena.gov.au 14.#15Progress across the full set of costs is required to increase commercial viability and deployment LCOE Drivers Finance Channel Local Margins PV LCOE now <$200MWHr 0,1 Single crystal, evaporated contacts Screen printed metal Wire saws Other Hardware, Civils, Install, Land, O&M costs 70-80% of employment in these areas $5.00 1978 Installed Cost of Electricity S/kWh $0.50 Textured mono Aluminum BSF Cumulative production GigaWp 10 100 1,000 7% Global Generation from PV Cast multi Point contact mono Passivating SN iso-texture multi $0.20 Today Retail Natural Gas Electricity Global Grid Parity 2015 costs Wholesale Coal Electricity $0.05 2020 Solar Device Technology IP key value Source: Professor Emanuel Sachs, Massachusetts Institute of Technology Assumes annual production growth of 35% and an 18% learning curve. PV costs based on 18% capacity factor and 7% decounte Australian Government Australian Renewable Energy Agency www.arena.gov.au 15.#16Innovation chain - key challenges -TECHNOLOGY PUSH -MARKET PULL IMPACT Deployment Competitive Commercial Research Development Demonstration Pilot Scale Commercial Scale Supported Commercial Imagining Incubating Demonstrating Promoting Sustaining Proving it Works Higher Efficiency Lower Cost Materials & Components Thermal & Chemical Storage Control Strategies - Demand side management, resource forecasting Securing Capital Lower Technology Risk Proof of Cost Supply Chain Development System Integration - improving capacity factors & Yields Manufacturing Process Improvement O&M track record Proving cash flows Project Finance & Revenue Certainty Maximising NPV Forecasting, storage, PPA terms Capturing PPA value in uncertain markets - carbon, regulation, ownership structures etc Cost of ownership, permitting, social acceptance, skills availability etc Australian Government Australian Renewable Energy Agency www.arena.gov.au 16.#17Unlocking the capital Commercial viability . Upfront costs vs. long-term revenues Highly sensitive to cost of finance Bankable PPAs at market value Technology risk (CSP) • . Long-term nature of R&D Funding the cost of proving its "bankability" Market Policy stability Variation between jurisdictions People and skills Australian Government Australian Renewable Energy Agency $$$ Debt & Equity Technology Risk Market Commercial Cash postive after 18 years 15% IRR over 30 years www.arena.gov.au 17.#18Levelised energy costs in 2030 LCOE ($/MWh) 400 350 300 250 200 150 100 50 D kgCo₂e/MWh 1200 1000 800 600 400 200 D Supercritical PC (Black Coal) Supercritical PC (Black Coal) with CCS IGCC plant (Brown Coal) Supercritical PC (Black Coal) -SWIS scale IGCC plant (Brown Coal) with CCS IGCC plant (Black Coal) with CCS Direct Injection Coal Engine Oxy-combustion supercritical PC (Black Coal) Supercritical PC (Brown Coal) Oxy-combustion supercritical PC (Black Coal) with CCS IGCC plant based (Black Coal) CCS retrofit to existing CCGT Supercritical PC with CCS (Brown Coal) CCS retrofit to exist. subcritical PC (Brown Coal) CCS Retrofit to existing subcritical PC (Black Coal) CCGT CCGT (SWIS) CCGT with CCS OCGT Solar thermal - central receiver (no storage) thermal-linear fresnel (with storag Solar thermparabolic trough (no stone) Solar thermal central receiver (with storage) Solar thermal parabolic thith storage) So Integrated solar combined cycle (IS) Sola thermal compact linear fresnel (no storage Solar/coal hy rid Solar Photovoltaic (PV)- non-tracking Solar Photovoltaic (PV) Single axi tracking Solar Photovoltaic (PV)-dual axis tracking Wave/Ocean Wind onshore Wind offshore Australian Government Australian Renewable Energy Agency Source: BREE, Australian Energy Technologies Assessment 2012 www.arena.gov.au Nuclear (SMR) Landfill gas power plant Nuclear (GW Scale (WR) Sugar cane waste power plant Geothermal - hot rock (EGS) Geothermal - hot sedimentary aquifer (HSA) Other biomass waste power plant (e.g. wood) 18.#194. ARENA's Strategy and Investment Plan Australian Government Australian Renewable Energy Agency www.arena.gov.au 19.#20The basics $3.2 billion in funding Increasing the Supply of Renewable Energy Improving the Competitiveness of Renewable Energy Technologies Australian Government Australian Renewable Energy Agency www.arena.gov.au 20.#21General Funding Strategy GENERAL PRINCIPLES COMPLEMENTARITY CONFIDENCE BUILDING DIVERSITY ALONG THE WHOLE INNOVATION CHAIN RESEARCH (basic and applied) DEVELOPMENT DEMONSTRATION COMMERCIALISATION INVESTMENT PLAN STRATEGIC INITIATIVES Australian Government Australian Renewable Energy Agency SUPPORTING INITIATIVES COMPLEMENTARY INITIATIVES www.arena.gov.au 21#22Investment Plan STRATEGIC INITIATIVES are larger in scope and scale and typically fund market- oriented, near commercial, demand pull projects SUPPORTING INITIATIVES more limited in scope and address specific roadblocks to the success of a strategic initiative COMPLEMENTARY INITIATIVES provide ARENA with the flexibility to do those things necessary to fulfil all of its functions • Regional Australia's Renewables Deploying utility scale renewable energy • Removing roadblocks for regional and remote renewable energy . Building Australia's next generation solar •Supporting High value Australian Renewable Energy knowledge (SHARE) •Continuing programs such as ERP and REVCF Australian Government Australian Renewable Energy Agency www.arena.gov.au 22.#234. Opportunities through ARENA Australian Government Australian Renewable Energy Agency www.arena.gov.au 23.#24Current Opportunities Current funding opportunities. through ARENA: •$126 million Emerging Renewables program •$200 million Southern Cross Renewable Energy Fund Coming up: PhD Scholarships and Postdoctoral Fellowships •Regional Australia's Renewables program Australian Government Australian Renewable Energy Agency www.arena.gov.au 24#25Regional Australia's Renewables Size At least 50 MW of renewable energy capacity installed by 2020 PROPOSED OUTCOMES 2x 10 MW or more renewable energy + systems by 2018 Industry 1MW or more Type of Support Grants capital / or revenue subsidy Location Off-grid or fringe-of-grid of projects Australian Government Australian Renewable Energy Agency Community 100kW 1MW Roadblocks removed. Trained operators of renewables Roadblocks No size Grants capital subsidy Grants project costs - Off-grid Focus on - system issues, demand management, control systems, storage optimisation etc www.arena.gov.au 25.#26Regional Australia's Renewables - Consultation Process ARENA Consultation Paper Consultation sessions Brisbane, Melbourne, Perth, Karratha, Darwin and Cairns Australian Government Australian Renewable Energy Agency 53 written submissions received from technology developers, industry and community groups Program Design www.arena.gov.au 26.#275. Investment highlights Australian Government Australian Renewable Energy Agency www.arena.gov.au 27..#28$650 million in investments Carnegie Australian Government Australian Renewable Energy Agency www.arena.gov.au 28.#29CS Energy Kogan Creek Solar Boost Project Australian Government Australian Renewable Energy Agency $34.9m funding for $104.9m project •The project will be the world's largest solar integration with a coal fired power station. ⚫44 MW solar thermal addition to the existing 750MW Kogan Creek Power Station in South West Queensland. ⚫AREVA Solar's CLFR technology. •30 hectare solar field. •Operational in 2013. www.arena.gov.au 29.#30Solar Energy Management (SEM) system for utilities CSIRO, Ergon Energy, GWA Group $0.2m funding for $0.6m project Combines CSIRO's thermally-driven residential desiccant solar cooling technology with a novel SEM system and natural gas-powered back-up to Load (kW) 2005 5.000 4000 1,000 Daily Peak Demand at End of Calendar Year Christmas Day New Year's Day 2005-2006 2004-2007 2.000 2007-2008 2008-2009 2009-2010 Can Limit LOOD D 70 24 310 2101 reduce peak electrical consumption from the grid with certainty while providing continuous operation of air-conditioning. The SEM technology will be tested in 3 residential buildings to verify its ability to address grid stability issues and test customer acceptance as "winx3" for the consumers and utilities. Utility Network Call Recirculated air Electrical Air- Fresh conditioning Thermally activated conditioning air Calable gas backup hot water Solar heat E Australian Government Australian Renewable Energy Agency www.arena.gov.au 30.#31• Increasing the skills and capacity of the solar sector • . ARENA supports 50 PhD Scholars and Postdoctoral Fellows at universities across Australia Supporting a career pathway for the next generation of solar leaders Building the capacity of the solar sector for Australia to maintain its global leadership position in the R&D space Dr Xiaojing Hao says her Postdoctoral Fellowship has allowed her to take a lead role in setting up a new group at UNSW dedicated to developing terrawatt level applications of PV using CZTS thin film solar cells Australian Government Australian Renewable Energy Agency www.arena.gov.au 31.#32Summary Market drivers for renewable deployment maturing. Technology globally and locally progressing through the commercialisation process. Opportunities in the near term in Regional Australia. ARENA Funding strategy in place with programs open and under development. Australian Government Australian Renewable Energy Agency www.arena.gov.au 32.