Sustainable Development
Renewable energy and demand management

The business-as-usual approach to power supply is no longer sustainable. The vast majority of the electricity supply in Queensland is provided by coal-fired power stations. Coal is one of the worst greenhouse gas creating fuels, contributing hugely to climate change. The last projections prepared by the Australian Greenhouse Office [note 1] show energy generation emissions account for more than 50% of all Australian emissions, estimated to be 306m t Co2-e [note 2] by 2010. This was projected to grow to 361m t Co2-e by 2020 based upon policies implemented in 2006.

The development of the Powerlink proposal connecting the Sunshine Coast to the Central Queensland coal fired power stations provides the minimum potential to quintuple electricity consumption in the Sunshine Coast area. Powerlink’s own figures are for a 30% increase in electricity demand over the next seven years, and up to 100% in the next 20 years. Using Powerlink’s own demand forecasts it is estimated that by 2020 they will be facilitating the increase in annual greenhouse gas emissions of more than 400,000 t Co2-e in the Sunshine Coast area alone, an estimated 59% increase on 2008 levels.

"Considering the urgent recommendation of several agencies of the United Nations that nations must take immediate action to reduce the emission of greenhouse gases, it is negligent to assume that the current methods of power generation and distribution will be environmentally and economically viable in as little as ten to fifteen years time." [note 3]

Things have changed significantly in the past 18 months. A snapshot of the key changes:

• Recognition across the political spectrum that an emissions trading scheme must be adopted. The Federal Government is due to deliver by June 2008 a report on the economic impacts of climate change policies and interim emission reduction targets to reach the stated aim of reducing emissions by 60% of 2000 levels by 2050.
• Emissions trading to be introduced by 2010.
• Mandatory renewable energy target of 20% adopted by 2020, meaning that 20% of all electricity sold must come from renewable sources by 2020 – this is not cleaner sources such as nuclear, clean coal or gas, but real renewable sources such as wind, solar, geo-thermal etc.
• Australia’s commitment to the Kyoto Protocol and start of negotiations for the post-Kyoto period from 2012, in which Australia now participates.
• The Queensland Government has set up the Climate Change Council to advise on climate change matters in the state.
• Many local government entities in our state aim to reduce greenhouse gases as part of their development objectives and pursue multiple initiatives; e.g. Brisbane City Council will only purchase green energy within three years, of the former councils making up the Sunshine Coast Regional Council, Maroochy Council were investigating energy efficient street lighting and Noosa Council’s infrastructure development plans noted that "water and energy are used efficiently in an attempt to minimise greenhouse gas emissions and ensure the sustained supply of resources." [note 4] We will be lobbying council to continue with these initiatives.

These significant policy changes which impact the electricity generation and distribution industries have not been factored into the plans of Energex or Powerlink and have been given little weight in the publicly available information.

The forecast information published and provided as justification for the investment in network infrastructure can be summarised as follows: [note 5]

• In the last 40 years electricity demand in the region has grown by around 500%
• ...forecasts indicate electricity demand will grow by about 30% over the next seven years, and by as much as 100% in the next 20 years
• Queensland Government forecasts indicate the population of the whole area is expected to grow by 1.8% per annum over the next 10 years
• The average household today consumes 70% more electricity than a mere 10 years ago!

The Powerlink / Energex energy demand forecasts take little or no account of the following:

• The impact of the recent change in Federal Government policies (emissions trading system 2010), mandatory renewable energy target of 20% by 2020, interim emission caps to meet the long-term goal of emission reduction of 60% by 2050 (recommendations due in June 2008) and the signing of the Kyoto Protocol;
• Targets for the reduction of energy demand through their demand management programs. Energex further state that "The attractiveness of demand management waned in the late 1990s due to energy market reforms and the creation of the National Electricity Market." [note 6]
• A significant role for other sources of energy in their planning and forecasting;
• Proactive management of the future demand and supply of electricity in Queensland through the investigation of potentially cheaper methods. Powerlink have chosen instead to leave it to individuals, as illustrated by their statement "The responsibility for whether households use more or less electricity rests with individuals – it’s a personal choice." [note 5]

The cost to the end user, spread across all users, is that Powerlink and Energex, between them are now spending or planning to spend $5.3bn (Energex $2.71bn and Powerlink $2.6bn) from 2005-2012. This significantly understates the cost of provision of electricity, by breaking up the costs of provision into smaller discrete chunks, where the external factors are excluded and one part of the community subsidises another section of it. The true total cost of the energy generated and supplied to the end customers needs to take many factors into consideration including:

• Cost of fossil fuel used in energy generation
• Cost of water used in energy generation
• Cost of infrastructure (required for energy generation and transmission)
• Cost of carbon emissions (as a result of emission trading from 2010 onwards)
• Cost of acquiring easements
• Devaluation of indirectly affected property and business values (for which there is no direct compensation)
• Additional adaptation costs of responding to climate change events, such as storm surge, extreme weather events, less rainfall, economic impact on environmental tourism (eg Barrier Reef) and living in a warmer climate
• Environmental damage (flora / fauna / scenic amenity)

When the total costs of the proposals are added, imagine what this level of investment could purchase in terms of the alternatives (renewable energy and demand management initiatives).

The Least Cost Planning (LCP) Approach originated in the electricity industry in the US in the 1980’s [note 7] and has been applied to the water and transport sectors in Australia. The principle of LCP is that customers do not actually need electricity; instead they require the services that are provided by this commodity. In the case of electricity, these services include warming and cooling houses, lighting, refrigeration and so on. The UK Government’s recent Energy White Paper proposes that "...a transformation" is required "in the way suppliers view their relationship with the end consumer, helping their customers save energy, by shifting their focus to the provision of energy services, rather than simply selling units of energy." [note 8] Energex states in its annual plan that it "has significant non-financial incentives to develop its demand management capability...". A shift in attitude and incentives in the Queensland electricity industry is clearly needed. Clear targets and financial incentives are required to move the energy companies and thereby the State Government away from its revenue addiction of selling more energy.

The LCP approach recognises that energy services can be provided either by increasing the supply of electricity through new power stations and transmission infrastructure, or, by increasing the efficiency of electricity use. Electricity can be used more efficiently in a number of ways including, for example: replacing existing electrical equipment with more efficient types of equipment, reducing wasteful usage, including street lighting, public education programs, regulation, building code changes and distributed renewable power generation. By following this approach the optimal mix of investment is made before expensive and long-term infrastructure projects are undertaken.

Demand management consists of analysing and identifying the drivers of demand, the main uses of power and the policies for reducing or stabilising energy demand. Listed below are examples of demand management programs:

• Installation of smart meters and variable pricing for different times of day (estimated 10-15% saving) [note 9]
• In California, the peak period pricing reduced peak period demand on critical days by more than 13%. [note 10]
• Different tariffs for air conditioners (user pays approach)
• User education on wasteful energy practices
• Provision of energy efficient light bulbs
• Provision of energy efficient appliances / phasing out of energy intensive appliances
• Minimum appliance standards
• Provision of incentives (rebates / feed in tariffs) for uptake of solar photovoltaic (PV) and solar hot water
• Improving the thermal ratings of buildings

Previous implementations by governments of the programs listed above, advice from energy auditors and independent analysis suggest that many businesses and households can save 10–30% on their energy costs without reducing productivity or comfort levels. [note 11]

In the Brisbane area consumption of water has been slashed by 56% by a combination of public awareness campaign and regulation. Why are the power companies so reluctant to save the end consumers money and start taking proactive action now?

The main sources of alternative renewable energy are accessible through mature and available technologies. The recent announcement of Federal Government’s Mandatory Renewable Energy Target of 20% by 2020 should provide a significant boost to this sector and encourage investment. Since external environmental costs are not currently factored into fossil fuel based power generation the renewable energy alternatives appear to be more expensive than conventional energy generation. In a well structured emissions trading system this should change, enabling more investment in renewable technologies and providing economies of scale for the following technologies to be competitively priced:

• Wind power
• Solar hot water
• Solar electrcity (PV)
• Hydro
• Wave power (immature)
• Geothermal (immature)

Wind power is the cheapest of the alternative energy sources at present. "Over the past 20 years or so, wind power has been the fastest growing energy technology in the world, growing at over 25% per year on average." [note 12] Germany has the highest wind power capacity in the world with 18,428 MW. The UK has recently announced a project to build 7,000 offshore wind turbines to provide power for the bulk of domestic households by 2020. In Australia there are a few wind turbines in operation (for example, Albany / Esperance / Atherton Tablelands). Wind farms also provide more local employment than coal fired power stations. Wind farms in Australia in 2002 had 40-50% Australian content and created 2-3 times as many local jobs per KWh generated as coal power. [note 13]

Wind farms are more efficient than coal-fired power stations and are the cleanest source of energy. Communities must, however, contend with the fact that large wind turbines will change the nature of the landscape. The potential for wind power in Queensland is significant, but is better suited to the southern states of Australia.

Did you know? There are more solar hot water systems in sun-starved Austria than in our own sun-lavished country. [note 14] Solar hot water systems use very mature technology, are relatively inexpensive to install at a household level and are economically viable over their useful life; "Solar water heaters save up to $2,000 in energy bills and 25 tonnes of greenhouse gas over a 10-year lifetime." [note 15]

Hot water accounts for 27% of residential energy use, however solar hot water unit sales are only 5% of total hot water unit sales within Australia. Clearly, there is a significant increase in installations that could be made to reduce electricity demand in the short term with meaningful least cost planning being applied to the assessment. The phasing out of standard electric water heaters in Queensland should reduce future demand for energy. Energex state that "It is anticipated that the impact on the 2007/08 year will be negligible. The future impact will be assessed in 2007/08." [note 16] Once again regrettably, future contributions to reducing energy demand have been ignored in the forecasts put forward by Powerlink and Energex.

Solar electricity is one of the more expensive technologies at present when compared to coal-generated power. It is again, however one of the cleanest and will incur little in the way of carbon emissions penalties under the emissions trading scheme due to be introduced in 2010. There are two primary types of solar electricity:

• Solar Thermal Electricity (STE) concentrates sunlight using an array of collectors. The concentrated sunlight heats water to steam which then drives a turbine to generate electricity. STE is more suited to larger scale power station use and power generation in more remote and arid environments;
• Solar PV uses wafers of crystalline silicon strung together behind glass, to form a solar panel. PV panels are very reliable with lifetimes of 25 years plus and have a capacity factor rated at 15.8% along the eastern seaboard of Australia. The estimated future cost of electricity using solar PV is in the range of per kilowatt-hour (kWh). [note 17] This needs to compete with current prices in the range of 14c/kWh (without a carbon price). This is more suited to the higher density grid connected urban and rural residential areas of Australia, of which the Sunshine Coast is a prime example. Regulation and Government incentives will need to change to make solar more economically viable. Additional incentives (currently up to $8,000 rebate, now means tested and available only to households earning less than $100,000) such as premium feed-in tariffs and a price on carbon will make solar PV more competitive with conventional energy. With more than 50,000 residential properties in the northern Sunshine Coast, the available roof space would allow a significant number of PV cells to be installed and thereby a reduction in the power required from the traditional grid.

• Note 1 - "Tracking to the Kyoto target 2006", Australian Greenhouse Office [Back]
• Note 2 - T Co2-e means tonnes of carbon dioxide equivalents. All greenhouse gases are converted to a base of carbon dioxide for ease of consistent measurement. [Back]
• Note 3 - Submission to Powerlink ToR, Sunshine Coast Environment Council, December 2007 [Back]
• Note 4 - Community implications of Infrastructure and Services, The Noosa Plan 2006 [Back]
• Note 5 - Powerlink Project newsletter 3 December 2007 [Back]
• Note 6 - ENERGEX Annual Network Management Plan – 2007/08 to 2011/12, 16th Aug 2007 [Back]
• Note 7 - Mieir, Wright and Rosenfeld (1983) "Supplying Energy Through Greater Efficiency", University of California Press, Berkeley, CA. [Back]
• Note 8 - Meeting The Energy Challenge White Paper May 2007, Department of Trade and Industry, UK Government   [Back]
• Note 9 - http://www.carbontrust.co.uk/Publications/publicationdetail.htm?productid=CTC515   [Back]
• Note 10 - California’s Statewide Pricing Pilot, Charles River Associates, www.energetics.com/madri/pdfs/california_050405.pdf [Back]
• Note 11 - Securing Australia’s Energy Future, Office of Prime Minister and Cabinet, 2004 [Back]
• Note 12 - M. Diesendorf, p105, Greenhouse Solutions with Sustainable Energy 2007 UNSW Press [Back]
• Note 13 - MacGill, Watt and Passey: The economic Development Potential and Job Creation Potential of Renewable Energy, 2002 and Diesendorf, Comparison of Employment Potential of the coal and windpower industries, International Journal of Environment, Workplace and Employment, 2004 [Back]
• Note 14 - Queensland Conservation Council, http://www.qccqld.org.au/index.htm [Back]
• Note 15 - Energy Smart website, http://www.energysmart.com.au/les/DisplayPage.asp?PageID=47 [Back]
• Note 16 - ENERGEX Annual Network Management Plan – 2007/08 to 2011/12, 16th Aug 2007 [Back]
• Note 17 - M. Diesendorf, p165, Greenhouse Solutions with Sustainable Energy 2007 UNSW Press [Back]