Elsevier

Energy

Volume 101, 15 April 2016, Pages 621-628
Energy

Least cost, utility scale abatement from Australia's NEM (National Electricity Market). Part 2: Scenarios and policy implications

https://doi.org/10.1016/j.energy.2016.02.020Get rights and content

Highlights

  • Considers scenarios and policy implications for Australia's NEM (National Electricity Market).

  • An extended form of RPS (renewable portfolio standard) appears near optimal until roughly 2030.

  • For up to 80% abatement, the inclusion of nuclear achieves only marginal benefit by 2050.

  • CCS (Carbon capture and storage) does not appear competitive with current cost estimates.

Abstract

This paper is the second of a two part study that considers least cost, greenhouse gas abatement pathways for an electricity system. Part 1 of this study formulated a model for determining these abatement pathways, and applied this model to Australia's NEM (National Electricity Market) for a single reference scenario. Part 2 of this study applies this model to different scenarios and considers the policy implications. These include cases where nuclear power generation and CCS (carbon capture and storage) are implemented in Australia, which is presently not the case, as well as a more detailed examination of how an extended, RPS (renewable portfolio standard) might perform. The effect of future fuel costs and different discount rates are also examined.

Several results from this study are thought to be significant. Most importantly, this study suggests that Australia already has utility scale technologies, renewable and non-renewable resources, an electricity market design and an abatement policy that permit continued progress towards deep greenhouse gas abatement in its electricity sector. In particular, a RPS (renewable portfolio standard) appears to be close to optimal as a greenhouse gas abatement policy for Australia's electricity sector for at least the next 10–15 years.

Introduction

When considering the decarbonisation of electricity, all aspects of the policy and technology debates have their proponents and opponents. On policy, some advocate different forms of carbon price, whilst others argue for RPSs (renewable portfolio standards), reverse auctions, direct regulation or other measures [1], [2], [3]. There is also significant disagreement as to what our abatement targets should be. Some argue that, for high income countries at least, zero emission and/or completely renewable electricity is essential [4], [5], [6]. Others argue that since cheaper abatement is available internationally [7], [8] or in other domestic sectors [9], we should therefore target less abatement in electricity as part of an overall, more cost-effective approach.

Australia is a case study of such differing policy views. In 2014, our Federal Government became the first government in the world to remove a legislated price on carbon; legislation that had been in place for only two years. It has also recently completed a lengthy negotiation on its legislated RET (Renewable Energy Target), which is the domestic form of a RPS, whilst implementing its ‘Direct Action plan’, which is a form of reverse auction that will pay for abatement across the economy [2]. Finally, even though Australia has one of the world's largest proved economic reserves of uranium and is a large uranium exporter, it does not produce any electricity from nuclear energy.

The technology debate is no less charged or confusing. In particular, it is common to find advocacy of specific technologies without fully acknowledging the difficulties that they face. At utility scale, these technologies include the several forms of renewable generation, CCGTs (combined cycle gas turbines), nuclear, coal and gas with CCS (carbon capture and storage) and different forms of energy storage, to name only a few. Of course, no technology is without problems. Even though the direct CO2e emissions of CCGTs are significantly lower than those of coal plant, the fugitive emissions of methane from the well to the plant remain a topic of debate [10], [11]. Intermittent renewables can create problems of network and market performance [12], [13], [14], [15], [16]. Biomass and biogas often face issues of resource availability [17]. Whilst some argue that nuclear power is significantly safer than alternatives, the public's perception of its risks – rightly or wrongly – remains a major challenge to its future prospects [18], [19], [20]. More broadly, some of these technologies are deployed at a significant scale and have a known record of performance, whilst others do not. Whilst these latter technologies may be very deserving of support for further research, development and demonstration, it is important not to overstate the role that presently undeployed technologies will play, particularly since any new energy technology usually takes decades to reach significant levels of deployment [21], [22].

Following on from Part 1 of this study [23], this second part therefore considers different technology, financial and policy scenarios for achieving abatement from Australia's NEM (National Electricity Market). These include cases where nuclear power generation and CCS (carbon capture and storage) are implemented in Australia, which is presently not the case, as well as a more detailed examination of how an extended RPS might perform. The effect of future fuel costs and different discount rates are also examined. Policy implications arising from these scenarios for both the nearer (i.e. to roughly 2030) and the longer term (i.e. to 2050) are then discussed. As detailed in Part 1, all model inputs are from the most current, publicly available and authoritative Australian sources and the results presented are therefore intended to be transparently derived and both policy and technology neutral.

Section snippets

Method

The method used in this paper was presented in Part 1 of this study [23]. This includes use of a constrained LP (linear program) that minimises the net present costs of the new build and operating costs from 2015 to 2050 subject to numerous constraints.

Part 1 of this study [23] also listed the existing and new build generation and storage technologies that are included in the model. For the cases where nuclear generation is considered, it can only commence generation in 2025 or after. Nuclear

Results and discussion

Let us first consider the annual GHG (greenhouse gas) emissions from any electricity system My (t CO2e) expressed in terms of other parameters,My=Eya(1FEpyaEya)(FMpyFEpyfuel)(1η¯).

The first term on the right hand side shows the direct proportionality between annual demand – and therefore annual generation Ey – and annual GHG emissions. However, electricity demand is exogenous at the utility scale, and is therefore outside the scope of the present study.

The second term on the right hand

Conclusions

This paper is the second of a two part study that considers least cost, greenhouse gas abatement pathways for an electricity system. Part 1 of this study [23] presented a bottom up model for determining these abatement pathways, and applied this model to Australia's NEM (National Electricity Market) as an example. Part 2 of this study examined several different scenarios for achieving abatement from Australia's NEM. These included cases where nuclear power generation and CCS (carbon capture and

Acknowledgements

This research was supported by the Australian Renewable Energy Agency (agreement number 2489) and completed whilst the first author was on sabbatical in the Department of Mechanical and Aerospace Engineering at Princeton University. We also acknowledge Mr. Daniel Marshman and Mr. Avishai Lerner for checking the results presented.

References (37)

  • Emissions Reduction Fund Expert Reference Group (Australia)

    Australia, department of environment, emissions reduction fund white paper

    (2014)
  • L. Ruff

    The economic commonsense of pollution

  • Beyond Zero Emissions, Zero Carbon Australia 2020 Stationary Energy Report, 2011. URL...
  • J.-M. Burniaux et al.

    The economics of climate change mitigation, Paris

    (2009)
  • Wilder, Martijn, Curnow, Paul, The clean development mechanism, University of New South Wales Law Journal...
  • McKinsey

    An Australian cost curve for greenhouse gas reduction

    (2008)
  • N. Hultman et al.

    The greenhouse impact of unconventional gas for electricity generation

    Environ Res Lett

    (2011)
  • R.W. Howarth et al.

    Methane and the greenhouse-gas footprint of natural gas from shale formations

    Clim Change

    (2011)
  • Cited by (9)

    • Costs and potentials of reducing CO<inf>2</inf> emissions in China's transport sector: Findings from an energy system analysis

      2021, Energy
      Citation Excerpt :

      The Chinese government is paying close attention to affordable means for reducing carbon emissions, such as low carbon technology development, energy efficiency improvement, and demand side management [4]. From the perspective of a cost-benefit tradeoff, the marginal CO2 emissions abatement cost, which calculates the additional cost of per unit CO2 emission reductions, is an effective index to evaluate the competitiveness of alternative low-carbon technologies [5–7]. The cost-effective technology portfolio for reducing CO2 emissions would be affected by policy uncertainties [8].

    • Drivers and benefits of shared demand-side battery storage – an Australian case study

      2021, Energy Policy
      Citation Excerpt :

      EES is a flexible asset that can both ‘generate’ and ‘consume’ and as such poses particular challenges for optimization in terms of sizing (Appen et al., 2015; Carpinelli et al., 2014; Colmenar-Santos et al., 2019; Kani et al., 2018; Li, 2019; Martins et al., 2018; Ogunjuyigbe et al., 2016; Pflaum et al., 2017; Quoilin et al., 2016; Talent and Du, 2018; Truong et al., 2016; Weniger et al., 2014) and placement (Arif et al., 2013; Fortenbacher et al., 2017; Ogunjuyigbe et al., 2016; Zidar et al., 2016). Electricity networks are faced with multiple sources of uncertainty for network planning and new methods for networks' impact assessment (Arandian and Ardehali, 2017; Celli et al., 2004; Wolter et al., 2017), economic risk analysis (Arnold and Yildiz, 2015; Ioannou et al., 2017; Limpens and Jeanmart, 2018) and planning methodologies (Anderson et al., 2017; Brear et al., 2016; Jeppesen et al., 2016; Keck et al., 2019; Mill et al., 2016; van der Mei and Doomernik, 2017) are presented. A new method for placing EES in the LV network is proposed that achieves up to 61% cost reduction by deferring network upgrades (Roos et al., 2018).

    • Transition to sustainable energy generation in Australia: Interplay between coal, gas and renewables

      2019, Renewable Energy
      Citation Excerpt :

      The carbon pricing mechanism introduced in 2012, was revoked in 2014. Unlike European countries, both major parties have shown political positions against carbon pricing, as reported in Brear et al. [10] and Jeppesen et al. [11]. In 2015 the Government also reduced the Renewable Energy Target from 41,000 GWh per year to 33,000 GWh.

    View all citing articles on Scopus
    View full text