Why is it so bloody hard to bring a Renewable Energy Project to Fruition?
Sustainable Energy Now hosted three senior energy executives to answer this question. Together, they represented the entire spectrum of the energy industry with combined experience in utilities; commercial project development; system planning and engineering; and leading-edge renewables development.
Geoff Glazier, Managing Partner at Merz, Richard Winter, General Counsel and Company Secretary, Solar River Project and Rod Hayes, Chairman of Balance Group, gave their views and answered audience questions in an open, challenging, and positive session moderated by Sustainable Energy Now. It was revealed that there were no commercial sized Renewable Energy (“RE”) projects in development or construction in the SWIS (Southwest Interconnected System), the equivalent in Perth of the NEM in Eastern Australia..
In addition to the shocking status, the biggest take away from the discussion was that there is an absence of a commercial structure that supports new energy. So, even though there are investors and funds available, being unable to forecast how much energy would be allowed to be input to the system stops any investment.
How can you enter an energy provision contract with Aldi, for example, if you do not know how much energy you are going to be allowed to sell to Aldi in future years? If you do not know how much energy you will be able to sell, how do you know how much revenue you will generate? It is impossible.
What has brought about the current situation?
It was noted that rather than rules changing to make it easier to add clean RE into the system, the opposite has happened, making it harder. Contracts and rules have changed from just a few years ago when you could at least forecast how much energy you would be allowed to be paid for.
The SWIS market is now the opposite of countries which offer clear conditions of investment, the ability to provide steady energy supply and be paid for it. After all the complaints about intermittent energy supply from RE, even steady energy supply is not guaranteed to be allowed to be transmitted in the current system, and rules can change any time, destroying investments. Participants noted that no sensible RE investors want to participate in such a system.
Right now, Western Australia provides no support and has no plan to bring RE onto the SWIS system.
While it may seem like RE is just being forced to compete on a level playing field, unlike the current energy providers, new energy providers have no idea how long the current rules will last for them and have no idea how much energy they can sell. The system absolutely supports current electrical generation, no matter what emissions may be and no matter what costs may rise to in the future. So, the recipients of electricity supply on the SWIS, from monopoly supplier Synergy, cannot choose cleaner power and are stuck with any increase in fossil fuel costs as has been happening.
In addition to the above, new energy applications are not exactly fast tracked. The slow progress of network connection applications and agreements often means that offtake commitments have lapsed before construction can begin. It is no surprise then that WA is not attracting the elite RE providers in the world to set up an office.
While it was agreed that a carbon price is an obvious missing factor, the current rules are a more subtle way of making sure RE projects do not go ahead in WA in 2021.
It was noted that, though it’s easy to understand the drive to ensure that the system must keep the lights on, in a climate emergency, other drivers should also influence the challenge of connecting renewable generating assets.
Sustainable Energy Now has been watching as the transition to RE is generating masses of well-paid highly skilled jobs in the rest of the world. To have that occur in WA needs a commitment to a transition and changes to the underlying laws and rules which support that.
The result of the current position, having undermined RE, rather than enabled it, is that the next commercial RE project is many years away. Getting big projects up and running does not happen overnight.