Aussies bank on clean energy1 April 2008
The new Australian government has signed the Kyoto Protocol on capping greenhouse gas and set a target to cut Australia's GHG emissions by 60 % of 2000 levels by 2050. The author provides an overview of the Australian clean coal and renewable energy sectors and outlines its many investment opportunities.
The global market for clean and renewable energy is likely to be worth A$750 billion (£367 billion) a year by 2016, according to the 2007 Ernst & Young Renewable Energy Country Attractiveness Indices. The current growth rate of 20–30 % is encouraging companies to look for locations around the world for reliable and sustainable global energy markets to support growth strategies.
Australia is a key energy market that is attracting increasing interest from a wide range of renewable energy firms. The country is at the forefront of the global energy market in terms of cost, reliability, quality and competitiveness, and is rich in energy resources and opportunities. Renewable energy is a significant element of Australia’s future energy needs. The country’s natural endowment of wind, solar, water and land resources provides it with an excellent base to develop this industry. Its leading role in the export of coal has also led it to become a world leader in clean coal technologies. Many Australian firms and research institutes are world leaders in other, newer solutions. Thin-film solar cells, hybrid solar-wind-diesel remote area power supply (RAPS) systems and wave energy systems are just some of the technologies developed to date.
The newly appointed Australian government elected in November 2007 stated that it will introduce new measures to mitigate climate change and CO2 emissions from both the demand and supply side. Core initiatives of the new government are:
• Establishing market based incentives to reduce greenhouse gases through an emissions trading scheme.
• Demand-side management measures, assisting households to contribute to reducing carbon emissions.
• Supply-side measures including support for the development of zero and low emission technologies through a National Clean Coal initiative and a Renewable Energy Fund.
• An expansion to the Mandatory Renewable Energy Target to ensure that 20% of generation is from renewable energy sources by 2020.
These initiatives will increase the market size in Australia and provide excellent market conditions for new companies to establish themselves in the market. Australian government representatives based in London and in centres worldwide are actively attracting overseas companies into the renewable energy sector.
A growing sector
Australia’s renewable energy sector is a key emerging industry, experiencing rapid market growth. The clean energy industry accounts for £2.8 billion in annual sales, over £196 million in exports and the direct employment of over 20 000 people. International companies have already discovered the benefits of investing in this sector and are undertaking extensive renewable energy operations in Australia, including research, development and manufacturing.
Since being appointed in November 2007, the Australian government has signed the Kyoto Protocol on capping greenhouse gas and set a target to cut the country’'s greenhouse gas emissions by 60% of 2000 levels by 2050. A review is currently underway to help establish a carbon trading system and to set GHG emission targets for 2020. To help develop, commercialise and deploy renewable energy in the country, the government has also pledged to raise the Mandatory Renewable Energy Target and establish a £215 million Renewable Energy Fund.
Other measures include R&D support for renewable energy technologies, with A$150 million set aside for this purpose by the government. Many of these programmes provide matching funds and grants for technology research and pilot projects with a renewable energy focus, ideal for helping investors new to the market. These funds are open not only to individual companies, but also to collaborative projects, whether joint ventures in industry, or research projects with academic institutions.
With government support, Australia welcomes international investment into the research, development, exploration and production of its energy resources. There is a very active renewable energy industry supporting all forms of renewable generation (eg, wind, hydro, biomass, geothermal, wave and solar) in the country. In addition, the government has been active in driving new developments to introduce low or zero emission energy from traditional fuels and in the areas of clean coal and carbon capture and storage (CCS).
Clean coal and CCS
Australia is a key world producer of coal – it is the largest exporter (with trade in coal worth £10.7 billion in 2006-7) and the fourth largest producer behind China, USA and India. The challenge looking forward is to seek out innovative opportunities to utilise coal more efficiently and reduce greenhouse gas emissions.
The government is actively encouraging the demonstration and deployment of low-emission technologies by providing direct support to industry for research and development, or working with the research community on the commercial deployment of several other priority technologies.
• Post combustion capture and oxy-fuel technologies for retrofitting to existing power stations or incorporation into new power stations to capture CO2 emissions;
• Technologies to dewater or to dry high-moisture brown coal;
• Technologies such as ‘ultra clean coal’ that can be directly consumed in combined cycle plants.
The government recognises the importance of clean coal technology (approximately one third of all GHG emissions are the result of coal fired electricity generation) and intends to build on previous initiatives by establishing a A$500 million National Clean Coal Fund.
Projects included in the initial funding include:
• A$50 million towards a National Carbon Mapping and Infrastructure Plan, including A$25 million to map and test carbon storage sites in Queensland and Western Australia.
• A$75 million for a national research program, including A$25 million for the CSIRO (Commonwealth Scientific and Industrial Research Organisation) to conduct research into clean coal technologies.
• A A$50 million pilot coal gasification plant in Queensland.
• A A$50 million project to demonstrate carbon capture in New South Wales.
• A$50 million for a large scale post combustion capture plant in the Latrobe valley in Victoria.
The government is also leading the way in the preparation of legislation for CCS. Its work in this area is intended to:
• Deliver a consistent transparent and flexible basis for regulation of CO2 CCS projects.
• Potentially, deliver investment certainty for CCS projects.
• Create public confidence that CO2 will be safely and effectively stored.
• Create public confidence that natural resource management, environmental impacts, health and safety issues will be addressed.
• Increase R&D and transfer of technology.
• Create consistency in the application and regulation of CO2 carbon capture and storage technologies and processes.
Australia is a world leader in the development of solar technologies, particularly in the photovoltaic (PV) market. The country's high tech companies as well as its academic community have produced a range of practically-applicable PV technologies that are being used or trialled across the world today.
Professor Martin Green, winner of the Alternative Nobel Prize 2002, and Professor Stuart Wenham at the University of New South Wales’ School of Photovoltaic and Renewable Energy pioneered the development of PV cells that were far more cost-effective than their predecessors. Their cells were used to power the Olympic Village at the Sydney 2000 games, and most PV cells now produced in Europe are based on the Green principle.
The SLIVER cell, which dramatically reduces the amount of silicon used, by 90% compared to conventional solar PV modules, has also come out of Australia. This revolutionary award-winning technology is currently being commercialised by Origin Energy, from research done at the Australian National University’s Centre for Sustainable Energy Systems. And an award in a more material form has come from the Structural Adjustment Fund for South Australia (SAFSA) as $2 million in grant funding to support the purchase of capital equipment that will enable limited commercial manufacturing in the future from the company’s Regency Park R&D pilot facility. The technology is claimed to exhibit improved tolerance to partial shade and low silicon use without losing performance, and employs mono-crystalline, high performance silicon proven over 30 years of reliable service.
Dyesol Ltd, another Australian company, has developed technology based on the emerging Dye Solar Cell (DSC) technology. DSC involves a two stage sunlight-to-energy conversion process in which special dyes mimic photosynthesis and create a stream of electrons within the medium. Following an in-depth assessment, Corus, Europe’s second largest steel producer, and Dyesol have agreed to develop DSC technology with the aim of providing the most cost effective solution to Corus’s market demand for metal-based PV construction products. The Welsh Assembly has agreed to provide significant funding to further progress the development of DSC technology on steel. Corus and Dyesol have been working closely for the past two years, and in January successfully completed a detailed 12-month study, which confirmed the feasibility of this technology.
Other developments in the solar field include the construction of Solar Systems’ £200 million 154 MW heliostat solar concentrator power station in northern Victoria. Solar Systems was awarded a A$32 million grant by the Australian government as well as a A$25 million grant by the government of Victoria. The state is also part funding a new Solar Systems project in South Australia, providing A$3.55 million for the Coober Pedy project under its Renewable Remote Power Generation Programme (RRPGP) with the South Australian government chipping in a further A$635 000.
Making use of a natural feature
Australia’s waves are more than just a bonus for beach enthusiasts. Researchers are harnessing wave energy from the country's lengthy coastlines and developing solutions for electricity generation and water desalination.
Australian company Oceanlinx is already demonstrating its patented oscillating water column technology (Figure 1) in a full scale wave plant that was installed at Port Kembla in New South Wales over two years ago. The company has signed a Power Release Agreement with the Australian utility Integral Energy and expects to be the first wave energy company to be connected to the commercial grid. Oceanlinx is now proposing a 27 MW wave energy facility near Portland in Victoria. Development is expected to take place towards the end of 2008.
Oceanlinx was one of four developers chosen for the UK’s Wave Hub project, a large scale wave farm being developed off the coast of Cornwall by the South West of England Regional Development Agency.
While most wave systems sit on the water’s surface, the CETO system (Figure 2) collects energy from rows of buoys tethered to the sea bed. As the buoys sway, they pump high-pressure water to shore where it can be used either to produce fresh water or to drive turbines.
The converter measures about 20 by 4.5 metres and is capable of pumping water at a pressure of 1000 psi. Each installed unit can generate up to 180kW. The company behind Ceto, Seapower Pacific, is owned by Renewable Energy Holdings, which is based in the Isle of Man and listed on the London Stock Exchange.
Because Ceto sends water – not electricity, as other systems do – it can also be used for desalination. A 300-unit Ceto wave farm could produce 50 MWe, or, if deployed fully for desalination instead of power, 50 billion litres of drinking water per year, or about 10 % of the annual needs of metropolitan Sydney.
The company is now fully confident that it can move forward to commercialisation of the device. The Federal Government has invested A$775 000 in the technology. Commercial site selection is already under way, and commercial levels of production are expected within three years. Pre-commercial prototypes are undergoing initial testing at sea that should be completed this year.
Financing renewables projects
There is a range of financing options available to companies operating in the Australia renewable energy industry. Several groups have established portfolios of renewable energy assets, becoming experts in the location, investigation and development of renewable power projects. There is also increasing interest from a number of the larger infrastructure companies in setting up renewable energy businesses within their existing business.
Government funding may be available for some projects, particularly those for demonstration or pilot plants. Such funding usually requires matching or greater funding from other sources. The scale of these grants can extend from a few hundred thousand to several million A$.
Grants can come either from one of the Australian government funds set up for this purpose, or from State governments if they are seen to benefit the local community, for example by generating employment. In addition, Australia offers a politically stable and strong economic base for overseas companies that intend to tackle the Asia-Pacific markets.
For more information about investment opportunities in Australia’s renewable energy sector contact a local Australian government representative (London office: +44 20 7632 0011; New York office: +1 212 351 6570; Frankfurt office: +49 69 9055 8209; Paris Office: +331 40 59 33 91).