How can Australia become a renewable energy superpower?

A flexible electricity grid based on energy storage and thermal balancing plants will enable Australia to capitalise on its unparalleled renewable energy resources to become a renewable energy superpower, finds a new report from global technology company Wärtsilä.

The report — Front-loading Net Zero — combines advanced power system modelling and insights on the cost-optimal pathways for power sectors to reach net zero emissions in key regions around the world that are critical to the upcoming COP26 negotiations — Germany, India and California. As well as the deep dive modelling on these power systems, the report also features key insights from Wärtsilä modelling in other countries, including Australia, Chile and the UK.

The report reveals that despite differing starting points, countries and sub-states have all the technologies that they need to rapidly shift to net zero energy systems.

For Australia, the report finds:

• By prioritising the rapid transition towards 100% renewable energy, Australia can decarbonise its power sector at the lowest cost. This is echoed by findings from the other countries modelled in the report — which demonstrates that the levelised cost of energy could be reduced by up to 50% by 2050 if renewables are expanded rapidly.
• Australia’s levels of renewable energy potential per person are amongst the world’s highest at over 10,000 MWh per person per annum. Australia has a unique opportunity to swiftly and affordably transition to a fully renewable power system.
• Replacing Australia’s ageing coal power stations with variable renewable energy will dramatically reduce Australia’s emissions. However, to protect reliability, it’s vital that the system is balanced to withstand disturbances, such as grid outages, as well as to offset periods of low renewable generation.
• A combination of flexible assets, including both battery energy storage and flexible thermal balancing power plants, provides the most cost-effective bridge to a 100% renewable power system that is reliable and efficient. Wärtsilä modelling finds that for Australia, this would require 12% of the overall capacity mix to be flexibility solutions.
   

The news comes following a recent report by EY on opportunities to grow Australia’s economy post COVID-19, which found that every dollar of stimulus spent on renewables projects generates nearly three times as many jobs per dollar than investment in fossil fuel projects.

Kari Punnonen, Energy Business Director, Australasia at Wärtsilä Energy, and co-author of the report, said: “Australia has the raw ingredients to become a renewable energy superpower. However, only when these ingredients are combined with flexible balancing capacity, from energy storage to thermal balancing power plants, will Australia be able to unleash this potential.”

Wärtsilä has modelled transitional pathways in which the lowest cost technologies, ie, wind, solar and flexible capacity from energy storage and thermal balancing power plants, were prioritised in the energy mix. Deep-dive modelling of power systems of Germany, India, California, as well as analysis of Australia, Chile and the UK’s power systems, showed that rapidly replacing coal with renewable baseload, supported by flexibility solutions, could meet power demand without adding additional cost.

The Australian modelling is based on Wärtsilä’s Atlas of 100% Renewable Energy, which models the cost-optimal energy mix if the system was built from scratch.

A combination of flexible assets, including both battery energy storage and flexible thermal balancing power plants, provides the most cost-effective bridge to a 100% renewable power system. Battery storage can respond in milliseconds to solve multiple problems, including storing excess energy and re-dispatching power at times when it is needed, as well as providing predictive analytics and portfolio optimisation. Thermal balancing power plants can ramp up to full load in two minutes, providing a bridge for renewable baseload during mid- to long-term droughts in renewable energy.

Kari Punnonen, continued: “In planning the cost optimal system for Australia, it is crucial to understand that energy storage and thermal balancing power plants are not competing technologies, but complementary solutions to improve grid reliability and resilience. Both are needed to bridge to renewable baseload.”

To illustrate how the flexibility technology landscape is evolving, Wärtsilä’s Atlas of 100% Renewable Energy modelled Australia’s optimal combination of flexibility solutions and renewable energy. The modelling demonstrates that battery energy storage must make up 8% of the total capacity. This optimal system also includes carbon neutral sustainable fuels, such as synthetic methane, which can be produced with excess renewable electricity. In this ‘end state’ model, synthetic gas would provide 3% of capacity.

Since 2019, AGL, Australia’s largest electricity generator, has deployed 12 Wärtsilä multi-fuel engines, providing 211 MW of capacity, at the Barker Inlet Power Station, Torrens Island, to balance the variability of South Australia’s renewable generation assets. Recently, AGL also announced that, by 2023, a Wärtsilä 250 MW/250 MWh battery energy storage system will reinforce the balancing capabilities of the same island power plant — forming a hybrid combination of thermal balancing power plants and battery storage.

Wärtsilä engines are already capable of running on hydrogen blends and the company expects to be capable of running 100% hydrogen by 2025.

Håkan Agnevall, CEO and President of Wärtsilä, said: “Our modelling shows that it is viable for all energy systems to be fully decarbonised before 2050, and that accelerating the shift to renewable baseload, coupled with flexibility, will help economies to thrive.

“We have all of the technologies that we need to rapidly shift to net zero energy. The benefits of renewable-led systems are cumulative and self-reinforcing — the more we have, the greater the benefits — so it is vital that leaders and power producers come together now to front-load net zero this decade.”

The findings from the report were presented by Sushil Purohit, President of Wärtsilä Energy, at the Economist Sustainability Week: Countdown to COP on Wednesday, 6 October.

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