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The Queensland Government is committed to achieving a 50% renewable energy target (RET) by 2030. According to the Australian Energy Market Operator (AEMO), Queensland’s RET is “measured against Queensland energy consumption, including renewable distributed energy resources (DER)”.

Many analysts and commentators believe that this target will not be reached. The most recent Green Energy Markets forecast expects Queensland’s renewable energy consumption to fall short by 20.8 percentage points at current rates – i.e. renewable energy is projected to only reach around 30% of electricity consumption by 2030.

But from another angle, the situation looks much more optimistic. The AEMO indicates that there are currently over 15,000 megawatts (MW) of large-scale wind, hydro, biomass and solar projects in the pipeline.

Source: AEMO

Although the electricity generation capacity of these renewable projects outweighs Queensland’s current demand for energy, departure from fossil fuels is still a long way off. This is largely due to the high cost of battery storage – according to GEM, “batteries haven’t yet dropped enough in cost to represent a viable commercial option”. Renewables rely on installed battery capacity to handle night-time energy demand and ensure energy reliability in the face of inconsistent weather patterns. This means that uptake in renewable energy is, to a certain extent, capped by battery storage instalments.

It is also worth noting that a substantial proportion of these proposed projects were intended for the Powering Queensland Plan’s 400 MW reverse auction – i.e. Government (buyer) announced it was willing to invest in up to 400 MW of renewable energy capacity and waited on prospective sellers to lodge prices – which received 6000 MW and 9000 MW in energy storage and renewable energy proposals, respectively.

Despite a low carbon emissions reduction target at the federal level – maintaining the 2015 Paris Accord target of 26-28% – the Australian Government’s Large-Scale Renewable Energy Target (LSRET) has been responsible for much of the states’ renewable energy projects. Since, January 2016, the LSRET has been responsible for 7,265 MW in operating capacity, and a further 5,954 MW in firmly announced capacity around Australia.

Output vs capacity

Before moving on, it is important to distinguish between electricity generation (typically measured in gigawatts per hour) and electricity generation capacity (typically measured in megawatts).

Electricity generation refers to the amount of electricity produced, whereas generation capacity refers to the maximum output an electricity generator can produce when running at full blast.  For example, if a 100 MW capacity generator runs at half capacity for one hour it would produce 50 MWh of electricity. While a megawatt is simply a unit amount of instantaneous electrical power, a megawatt-hour adds an element of time to the usage of electrical power.

There are often differences between actual electricity generation and electricity generation capacity. Indeed, the Queensland Renewable Energy Expert Panel (QREEP) recognised that:

Adopting a target based of 50% renewable output may deliver approximately 54% renewable energy generating capacity by 2030.

Capacity factors

The reliance on “block energy” producers, such as coal generators, can be understood through the capacity factor metric. The capacity factor of an electricity generator is the ratio between its actual electrical generation and uppermost generation capacity over a given time period.

According to the Australian Energy Council, in 2015-16 the capacity factor of coal generators in Queensland was 54.9%. In 2017, Green Energy Markets found that solar panels in Queensland were operating at an average capacity factor of around 23%. In other words, the average disparity between coal and solar electricity generation is large, and coal provides a more consistent flow of energy.

What is required?

Referencing AEMO forecasts of Queensland electricity consumption, approximately 28,033 GWh of generation capacity will have to be derived from renewable energy sources by 2030 to achieve the 50% RET. This would require around 70% of the currently proposed renewable energy projects to proceed, which will most likely not happen.

In preliminary modelling stages, we were able to reproduce the Green Energy Market forecast of 29% by assuming 50% approval rates. But even this figure may prove to be unreasonably optimistic.

Source: Adept Economics

Despite the high approval rate required, there is always the possibility of a further surge in renewable energy investment over the 2020s. Advances in solar, wind and hydro technology have significantly lowered the cost of renewable energy, which could encourage further developments over the medium to long term.

Conclusion

In 2018, Tasmania reached an impressive 95.9% renewable energy consumption and South Australia crossed the halfway mark. At 9.5% renewable electricity consumption, Queensland is lagging behind all other states in Australia.

Source: Clean Energy Council

However, the Sunshine State is showing undeniable progress in achieving its RET. The Courier Mail recently identified a $5 billion spending splurge on renewable electricity projects. In a Clean Energy Council report, Queensland was even referred to as the “renewable energy construction capital of Australia”.

The Climate Council have even shown that the seeds of this investment are beginning to sprout; Queensland now has the highest proportion of solar households and the largest number of renewable energy projects currently under construction.

If the Palaszczuk Government wishes to reach its 2030 RET, it will require a significant renewable energy uptake over the next decade. Importantly, the transition to more renewable energy sources will also rely on large technological advancements, particularly in battery technology, owing to the intermittent nature of renewable energy generation.

This article was prepared by Ben Scott, Research Assistant, and Gene Tunny, Director, of Adept Economics. Please get in touch with any questions or comments to ben.scott@adepteconomics.com.au.