It is the end of the line for coal in Victoria after Victorian Prime Minister Dan Andrews announced plans this week for 95% renewable energy within 13 years. So far, the industrialized state is aiming for 50% by 2030.
But it’s also the end of the line for our sicklylargely privatized energy market. Public ownership is back in vogue – recognizing that the energy market cannot deliver the required transformation. The Andrews Labor government would bring back the State Electricity Commission (SEC) if reelected next month and use it to build new renewable energy projects.
Nationally, Labor is aiming for 82% renewable energy by 2030. So Victoria’s target is even possible? Yes – if the state government can overcome the major stumbling block of transfer. Building solar and wind is not the bottleneck – it’s the grid that isn’t fit for purpose.
Still, it’s an encouraging sign that the floodgates to clean energy are opening in our eastern coal states. Queensland is now targeted for 70% renewable energy in a decade. New South Wales is moving forward with renewable energy zones.
Dizzying pace of change
Why are governments pushing renewable energy ambitions so drastically? Different reasons. An election campaign is underway in Victoria. labor is generally expected to win a fourth term – and infrastructure is one of its strengths. This offers an exciting vision of the future – and any political backlash from cost overruns will come later.
But other changes are on the way. Operators of ailing and aging coal-fired power stations are looking for the exit. The massive Loy Yang A power plant — responsible for 13% of the state’s emissions — will close in 2035a decade ahead of schedule.
Climate change is on the rise, with unprecedented flooding in Australia and Pakistanunprecedented droughts in western America and China, and heat waves at sea devastating fishing. Solar energy is now the cheapest form of newly built power.
Elsewhere in the world, offshore wind turbine technology has grown to 16 megawatts giant turbines, which stretches hundreds of meters into the air. And Russia’s war on Ukraine has pushed up fossil fuel prices, giving consumers around the world hip pain.
This move will also boost Victoria’s emissions reduction target. Nationally, a third of our emissions come from electricity. In the lignite capital Victoria, this is traditionally 50%. Clean power will get the state about halfway to its emissions targets. Today’s announcement made no mention of other emission sources – manufacturing, agriculture and transportation.
But is it possible?
Close your eyes tightly and squeeze. Can you see it? Yes, it is physically possible – just. But I make two serious caveats.
First, it means that coal-fired energy must be phased out. Second, we need to find ways to build the unsexy but critical part of the clean energy system: transmission and storage. A lot has to be built in a short time and the costs will compensate for the low costs of sustainable generation.
When the coal-fired power stations were built in the Latrobe Valley east of Melbourne – where the coal is extracted – state governments bore the bill for the huge cell towers needed to bring the electricity to where people live and work.
Now we have to do that again, but on a much larger scale. This carries serious risks. Rural communities are almost guaranteed to cut back on major new transmission lines. They may be in favor of clean energy, but they don’t want big new power lines.
Some might say Australia can’t build like this anymore. But we can, as our recent fossil fuel infrastructure shows. Just a decade or so ago, Queensland built massive new gas export terminals in Gladstone. The cost was disappointing, but it was done.
We can do it, but it costs us money. The conversion of Snowy Hydro to a pumped hydroelectric power station is far beyond budget and time. Current transmission projects such as EnergyConnect, which will connect NSW and South Australia, have doubled budgets.
We did the easy part: solar energy on roofs, wind and solar parks in places with good existing grid connections. That brought Victoria’s renewable energy to over 20%. Now comes the hardest part: shipping and storage.
Victoria has already announced a renewable storage target equal to half of the state’s domestic use. But it gets harder and more expensive as we get closer to the 95% mark.
What does this mean for the energy markets?
Some vintage cars will shed a tear of joy at the news of the SEC’s return. But why the reversal after the state government privatized the electricity market in the 1990s?
The reason is that the market does not ensure the transition to clean energy. For years we’ve pretended that the market can make the shift itself, but it’s not. Continued government intervention and policy changes certainly did not help. Working through the government-appointed Energy Security Board to reform the market market also didn’t work.
We have been needing these new transmission links for years and the existing regulatory model has not performed.
Today’s announcement represents a fundamental change. The energy market is going to change completely. Yes, there are risks if the state government does it. But governments like Victoria’s have been spurred on by the pandemic, so we’re all looking to them—not the market—to get us through it.
What happens to the workers at coal-fired power stations? Victoria is already quite well placed. The closure of the highly polluting Hazelwood factory in 2017 surprised the state government. In response, it created the LaTrobe Valley Authority to help people transition into other jobs.
Five years later, the authority is still there. That’s good – it’s well placed to help former coal workers find jobs in other industries, such as wind turbine manufacturing or construction.
It may surprise you, but we are a role model
When asked which countries Australia should look at in the energy transition, I can’t help but laugh. In reality, we are leading the way. Many other countries look to us for ideas. Last year, South Australia history made by becoming the first gigawatt-scale network to run (briefly) on 100% renewable energy.
While we have historically been heavily dependent on fossil fuels, we have also had a competitive advantage by switching. After all, we have quite a lot of sun, wind and land.
So the verdict on Victoria’s upgraded ambition? 10/10 for sight. But it takes a lot of work to make it happen. And the problems we often think about – where to build renewable energy – are no longer the problem. Now we need old-fashioned cell towers and power lines – and fast.