‘Avalanche’ of clean energy may threaten power grid security

A rapid shift to renewable energy from coal over the next decade may threaten the security of the nation’s power grid.

International Energy Agency chief Fatih Birol in Canberra. Picture: Kym Smith

A rapid shift in Australia’s electricity mix to renewable energy from coal over the next decade may threaten the security of the nation’s power grid if poorly integrated, while introducing a carbon price may render the nation uncompetitive, the head of the world’s peak energy agency has warned.

As Labor looks to revive the government’s now-abandoned national energy guarantee — underpinned by a 50 per cent renewable energy target — the Paris-based International Energy Agency says Australia needs to ensure an “avalanche” of clean energy supply is backed up by firm generation to keep the lights on. It also cautioned Australia about the perils of introducing a carbon price out of step with other developed nations as Labor mulls over its policy on the issue in the lead-up to the election amid a renewed campaign against a “carbon tax” by the Morrison government.

“It is important that the increasing share of renewables — especially solar and wind — are integrated into the grid in the right way,” IEA executive director Fatih Birol told The Australian.

“Power systems without back-up have accidents in terms of security of supply. It’s definitely not good news for the citizens and not good news for the reputation of the grid.”

It is estimated about 90 per cent of the $88 billion forecast to be spent adding power capacity in Australia until 2040 will be outlaid on clean energy, according to Bloomberg New Energy Finance. Just 2 per cent will be spent on coal, with that ­investment more likely to keep existing, ageing plants running rather than bringing in new coal-fired power stations.

That influx of cheap but intermittent supplies of wind and solar threatens to undermine ageing baseload coal generators in the national electricity market, which currently produce about 75 per cent of generation on the nation’s east coast.

The energy wars between the Liberal and Labor parties are shaping as a major policy battleground ahead of a likely May election. The Liberals are sticking with an emission-reduction target of 26 to 28 per cent on 2005 levels by 2030 compared with Labor’s 45 per cent cut.

Yet the government, which is targeting lower prices and dispatchable 24/7 power as part of its post-NEG pitch, suffered a setback yesterday after being forced to back down on its “big stick” energy policy.

Divestment powers against retail energy companies remain in the legislation floated by Josh Frydenberg but will now require court approval rather than a determination direct from the minister after a backlash from big business and major energy ­operators.

Australia must also be careful should it decide to pursue a carbon price that could put it out of step with other countries, Dr Birol said: “The best way to reduce emissions is to put a price on carbon, but this would put Australia out of step from a political and economic context.

“The next steps to introduce a carbon price are not practical. Because if you have a carbon price for one country and not in the other, the one which has a carbon price may lose some competitiveness when it comes to commercial trade.”

Dr Birol said Australia must strike a sensible compromise and ensure fossil fuel generation was mixed with clean energy demand response and battery storage to deliver reliable electricity supplies to consumers.

“Ambitious targets for increasing renewables in the power mix must be delivered as part of a long-term plan. You cannot switch the system too quickly,” he said.

The IEA, which last week held a global summit calling for more investment on carbon capture and storage to lower emissions, also said an assumption that renewable energy would combat global warming single-handedly was incorrect and more heavy lifting needed to be done by other carbon polluters.

“In many countries, people think a growing share of renewable in the electricity system is the solution. Absolutely not,” Dr Birol said. “Power generation is one part of the problem, but it is not the entire problem and it is not even the biggest problem.”

While the cost of solar in Australia has declined by more than 50 per cent since the start of the decade, AEMO has warned that the national grid is at a “critical point” in terms of congestion.