Australia's power generators ill-equipped to cope with carbon limits, says ex-Origin executive

Australia’s electricity generators are largely obsolete and likely future curbs on carbon emissions mean they will probably be replaced by solar and wind energy plants, a former senior executive at one of the nation’s biggest fossil fuel-based power companies said.

Andrew Stock, who ran the bulk of Origin Energy’s generators for more than a decade before leaving the company two years ago, said Australia’s electricity energy is ageing and inefficient by world standards, with the average plant about three decades old.

Since a new plant needs financing over decades, it is unlikely banks would back any new coal-fired generators without taking into account future needs to cut greenhouse gas emissions, Mr Stock said

"It would be a very risky proposition to build new coal-fired power plants in Australia without thinking about what you’re going to do about emissions," said Mr Stock, who is now a climate councillor and a director of solar company Silex and the Clean Energy Finance Corp.

The Climate Council report, released on Tuesday, said Australia produces more carbon emissions per unit of electricity than almost any other developed nation. The carbon intensity exceeds even China – often cited for its dirty plants – and is double the Organisation for Economic Co-operation and Development average.

New large scale power plants are being tendered in the US for about $80 a megawatt-hour, while wind farms are being built for $80-$100 MW/h. By contrast, new coal plants are costing $85-$120 MW/h – even without the potential bill to sequester emissions that

The report comes as the government’s hand-picked panel reviews the Renewable Energy Target for 2020. The clean energy industry fears the panel will recommend a weakening or scrapping of the goal, potentially cruelling large-scale investment prospects for years to come if accepted by the Abbott government.

Mr Stock’s former boss, Origin chief executive Grant King, has been among the most outspoken critics of renewable energy, including solar photovoltaic panels.

"These are marginal fuels, free-riding on the system," he said last year. "Once that free ride is over, they will have to pay their way and that will result in increased costs."

Mr King also said that "electricity cannot be stored like water – it is a use it or lose it commodity because of intermittency". His comments, however, are losing currency as battery costs halve every two years or less.

Resistance

The Climate Council report said incumbent players largely ignored the threat of PV posed to their business models and profits – but will now step up efforts to delay or block further take-up. Almost one-in-four households in South Australia and Queensland now have solar panels.

"This will manifest itself in all manner of activity – lobbying regulators to change network pricing structures, lobbying politicians to inhibit or lower the price for buy-back of surplus PV-power generated, lobbying through the media against renewables, and so forth," the report said.

"However, given that this is a global market for a global industry, the cost reduction forces are unstoppable as a virtuous cycle of ever-lowering costs encouraging ever widening uptake continues to expand markets, add manufacturing capacity and cost reducing innovation and scale.

"What’s happening with PV in particular, and what will happen with batteries is a global trend."

Mr Stock said residents in states, such as NSW and Queensland, where governments plan to sell off poles and wires should be told of any guarantees, which might limit future take-up of solar or other renewables, that buyers of such assets are given.

"If they’re going to have to meet [those guarantees], taxpayers ought to have a say," he said.

The story Australia's power generators ill-equipped to cope with carbon limits, says ex-Origin executive first appeared on The Sydney Morning Herald.

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