Solar Grid Parity For Australia By 2020 As Renewables Surge

Power, pollution and global warming. Three phrases which typically are the roots of the tradeoff between clean and affordable energy throughout the world. According to the accounting and energy firm EY Global Advisory though, it appears Australia is on track to not only find that balance, but do so a year faster than expected through the Paris Agreement. How are they managing such a feat? Well, let’s take a look.

A Quick Overview of Australian Energy

Australia has long been known for several things: Barbeque, every creature being lethal, and some glorious coral reefs, but until recently, power has not been among them. At time of writing, the primary method by which most Australians get power is through coal-fueled power plants at rather high prices; more than double than what many citizens would find in the United States. Despite the high cost, coal makes up around 60% of the power market, with all other sources coming in at below 10%. Seems like the country is very far from having solar energy equal to coal-fired power, doesn’t it? There are still several factors to consider before dismissing the claim they will reach solar power parity with coal in 2020.

First, we must consider cost. As mentioned earlier, coal has become expensive, and economics, like in everything else, has a major role in the coal and energy markets. Earlier this year, the price of Australian Coal as it shipped overseas absolutely skyrocketed, from around $70 per ton in early may to over $95 currently, which has led to the net export of more coal out of the country than in, which has helped domestic producers of the fuel, as has China’s recent legislation that makes it a less powerful coal producer, and increasing market demand by reducing overall supply. This economic boom to Austrailia has been further increased by a consolidation of many of the coal producers within the country to allow for uniform (often higher) bid prices that bring further profit in, but also make coal as a resource much more expensive fuel to use domestically, which turns those who are looking for frugal energy to renewables, such as Solar Energy Panels.

To further encourage this transition, while coal is being exported on the whole, there has been a net influx of solar panel and green technology components. Companies such as JinkoSolar have noticed the great potential the Australian market has for green energy, and have jumped on the photovoltaic bandwagon, hard. Founding a domestic side subsidy, this company has set up a full delivery service and is current housing enough modules to produce around 5 MW in the Brisbane and Gold Coast regions alone. This has only been encouraged by the Zero Carbon Australia 2020 plan, which is hoping to create an economy without the use of carbon fuels, which in turn has increased residential demand substantially including the demand for 5kw solar systems.

Lastly, we have to look at the price of improvement versus replacement of energy sources. Nearly a year ago, both the Resource Minister (Matthew Canavan) and Josh Frydenberg, the Energy and Environment Minister, advocated for the improvement of coal power plants to use so-called “ultra clean” coal, which would have reduced pollution emissions by about 1/4th for the low, low cost of $62 Billion. Now to most economists, this would seem like a deal, however researchers at the University of Melbourne’s Climate and Energy College found a far better arrangement. It would appear that replacing coal power plans with solar and wind power plants would reduce pollutants by 65%, and cost roughly half the previous amount. Despite protests from both Canavan and Frydenberg (as well as their conservative party), it would appear that Australia’s government and people have made their choice and are intent on implementing it far ahead of time.

The Paris Agreement, and Sydney’s Energy Dreams

One of the biggest influencers besides economic impact on Australia for adopting solar energy, the Paris Agreement (which the United States disavowed, and was a topic of the article HERE) has been seen as a major motivator for the country to be one of the cleanest in the international community. To accomplish the goal of a carbon neutral, or even negative country, Sydney and the states that make up Australia have put forth several goals. In a report titled “Meeting Australia’s Paris greenhouse commitment at zero net cost” by Blakers, Stocks and Lu, the following are established:

The cheapest method by which Australia could reach emissions target is not through repair, but full scale of replacement of coal plants with both wind and solar power. This will result in a waste reduction from not only 441 Megatons of CO2 a year (the original goal by 2030) but instead an incredibly low 66 Megatons a year. As of current year, Australia makes that much greenhouse emission waste through their electric grid in about 40 days.

Balancing and storage capabilities for power will ensure that there is never an energy deficit, which is currently possible through large battery systems that can hold up to 350 Gigawatt-hours worth of energy at any time, which can be supplemented by additional storage systems and hydroelectric capabilities.

The cost must remain low for renewable energy. The current wholesale price of electricity within Australia is estimated as anywhere between $70 to $100 per megawatt hour, depending on state. Due to both a drop of the price of building PV and Wind energy sources (around 20-40% estimated by 2025) as well as reduced fuel consumption, the cost of energy could drop to $25 per Megawatt hour. This gradual reduction in price should bring the whole of Australia to parity by 2020, with a likely energy renewable take-over by 2030.

An increase in resilience in renewable energy, and a decrease of coal dependence. One of the biggest concerns with renewable energy has been the potential for mass failures. To handle these issues, it is planned that Australia creates a redundancy system with multiple fail-safes, and secondary reserve systems that make them as capable of handling failures as the current coal system. Speaking of coal systems, it’s planned that coal power plants, starting with Liddell, will be closing their doors by 2022, with many of the other plants closing by 2030 (up to 20 years earlier than initially expected), which will only improve parity, adherence to the Paris Agreement, and making Australia a far cleaner country.

Parity and Beyond: The Future of Energy for Australia

To quote the head of EY Global’s power development and utility department “For those in the industry that still believe that [green energy technology] we see now will never be technically and economically equal to traditional energy solutions they should reconsider their thinking.” This statement is slowly being proven true by both residential adherents and larger municipal partners in clean energy, as a study from the Union Bank of Switzerland has shown. Stating that solar technology is already effective and cheap, the study estimates a potential $20 Billion could be invested by individual households to go “green grid” or wholly off the grid in the next few years. These billions could easily be recouped in savings within years, making it a positive investment for thousands across Australia, who on the whole has already gone to solar power with a majority of states already gaining parity as of 2015. It would seem that Australia’s environmentally friendly energy trade will be a shining beacon to the world at large, and an example of how a coal dependent country can become among the cleanest anywhere.