We should be thinking big on solar

By Matthew Wright

Australia is blessed with the best solar resources of any developed country, yet the nation has been a laggard when it comes to harnessing the sun’s energy to produce electricity. The government’s recently announced carbon price policy includes the creation of new clean energy agencies – the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC). Those interested in climate and energy policy are now investigating the likely impact of these new bodies.

Solar power will play a central role in the nation’s energy future. However, its short- to medium-term prospects depend on government policy. The nature of the carbon price mechanism that Prime Minister Julia Gillard has announced will benefit the cheapest ‘low-carbon’ energy sources namely fossil gas – in the short term. It is not designed to bring renewable energy technologies (that are currently more expensive than fossil fuels) rapidly down the cost curve to out-compete cheap and dirty energy sources.

By including clean energy measures in its carbon price package, the Labor government has acknowledged that price signals alone will not drive the rollout of renewables.

The main advantage of the proposed Australian Renewable Energy Agency (ARENA) is that it will administer existing renewable energy support programs at an arms length from government. Given the sub-optimum Solar Flagship choices, this is undoubtedly a smart move. The downside is that ARENA is presiding over funding that is already allocated. While the remaining funds will build a few more demonstration plants, they won’t create the pipeline of projects needed to rapidly build a domestic solar thermal industry.

Clean Energy Finance Corporation (CEFC) is the government’s version of a green bank. Its mission is to support renewable energy technologies that are close to commercialisation. The CEFC is going to be run with one eye on profitability and looks like it will predominantly use low-interest loans to get projects off the ground. It appears unlikely that the most promising solar-thermal technology will benefit from this model, although wind projects (that already benefit from the LRET) stand to gain from low-interest loans, as wind is currently the most economically viable renewable energy.

The main flaw with the CEFC is the fact that half of its endowment – $5 billion – is available for 'low-emissions’ technologies. This means hybrid solar/gas plants, trigeneration, controversial coal-to-gas technology, and possibly even ‘bolt-on’ renewables for existing fossil plants, could be eligible for loans. It is unacceptable to invest scarce investment dollars in such projects when our atmosphere is already overloaded with carbon. If the government wants to credibly sell its policy as a plan for a ‘clean energy future’ then it will have to strip out measures that support pollution.

Last month, Spain unveiled the Torresol Gemasolar power tower plant near Seville – precisely the type of project Australia should be rolling out. Gemasolar’s key innovation is the use of molten salt energy storage that will allow 24-hour electricity generation and a generating capacity factor three-times greater than the government-picked Solar Dawn project in Chinchilla. The first CST plants to be built will be expensive, but with follow-up plants in the pipeline to drive economies of scale, the technology can ride the cost curve to compete with fossil electricity.

A targeted deployment policy for the large-scale rollout of Germasolar-style power towers is the missing piece of the climate/energy puzzle.

Well-designed feed-in tariffs in Spain are rapidly increasing the amount of solar thermal generating capacity. CST now feeds over 1000MW of renewable electricity to the Spanish grid. Spain’s FiTs have encouraged billions of Euros worth of private investment that will see 2500MW installed by 2013. The Spanish Solar Thermal Industry Association expects the total installed capacity to exceed 10,000MW by 2020 – a similar amount of the world’s total geothermal electricity generating capacity but installed in under one fifth of the time it took the geothermal industry. To put this into context, Spain’s projected 2020 CST capacity would be enough to provide one fifth of Australia’s current electricity needs.

Solar is ready to play a major role in Australia’s electricity sector. It’s time for the Gillard government to develop a policy for CST deployment to support the newly formed Australian Renewable Energy Agency and Clean Energy Finance Corporation. To achieve this end, it will be difficult for the government to ignore the successes of well-designed and targeted feed-in tariffs. Some 80 per cent of the world’s new non-hydro renewable energy capacity has been installed through the application of comprehensive renewable energy legislation based around the feed-in tariff mechanism.

The Labor government can secure our climate and energy future with an aggressive rollout of concentrating solar thermal (CST). For that to happen we need political will, not political will not.

Matthew Wright is executive director of climate and energy security think tank Beyond Zero Emissions