White Paper – Renewable Energy Costs

Renewable Energy
Image source: Smithsonian

I had to dig into the academic literature for a three-part assignment on the factors affecting electricity costs in Australia. This is the result of my research, complete with reference list and appendix at the end.


For my Master’s course, I had to complete a three-part white paper on a topic of my choice. We were given some policies to choose from that were to then write about; my policy was the ACT’s renewable policy. We were on a tight word limit, given only four pages for each part of the white paper (excluding references and appendices).

Part A of the paper explains how science works, the scientific process, its role in the economy and why it’s important to use it to inform policy. I also outlined my chosen policy and the use of evidence in that policy. It’s worth noting that my commentary on the use of evidence in the policy will be flawed, as we were only permitted to use the text provided to us, which for my policy, was just a brochure.

Part B of the paper involved the undertaking of a systematic review on a question of my choice which relates (however tangentially) to my chosen policy. It discusses the process I used to formulate my question, the question itself, the methodology of my review (bearing in mind we were advised to limit the scope for the purposes of the assignment), and ultimately the answer to my question. I elected to see for myself what the experts were saying about the effect, if any, of renewable energy on Australian power prices.

Part C builds on the findings from Part B and puts forward some recommendations based on my review. It also discusses the risks associated with taking action and with not taking action, and casts around to foresee any future problems which may arise.

The paper is certainly not perfect, especially given the time constraints. But what struck me was that no paper I read even asked whether a greater share of renewable energy would cause power prices to rise. It was just well-established, assumed knowledge that more renewable energy would see a drop in electricity prices. There may be a debate in the media and among politicians about this, but as far as the experts are concerned, the discussion is over.

Part A

A General Introduction to Science

Science is often thought of as the domain of a handful of superintelligent beings, locked away in their laboratories with their stark white lab coats, conducting experiments and constantly uncovering new information. In reality, the process of making scientific discoveries is a long one, riddled with obstacles and challenges.

In this report, we shall be taking the definition of science in the APS200 report (DIISRTE 2012), which is “embracing all forms of knowledge and all branches of enquiry, to the extent they are informed by an evidence base.” This definition includes not just the physical sciences, but social, economic and any other areas which are based on evidence.

Evidence is possibly the most critical part of any scientific field. Many people think of science as a set of facts we know about the world around us, but that is actually the end result of science. Science itself is a process which we use to gain information.

The Scientific Process

The scientific method is an exhaustive one. Scientific studies must be well-designed to control for biases, and where possible, be carried out over a long period of time. These results are analysed and then written up to, hopefully, become a scientific paper.

The scientist’s paper will be examined by fellow experts in their field in a process known as ‘peer review’. These experts will critically examine the paper and attempt to find every possible flaw, from the question being asked to the final conclusion. Only once a paper has survived this process will it be deemed good enough to publish (Elsevier 2018).

The scientific community will further test this paper by replicating the study, to ensure the results of the original paper were not a chance occurrence. This process of peer review and continual replication ensures that conclusions gained via the scientific method are robust and can be trusted.

Science in the Economy

From a more practical standpoint, advances in science can benefit the economy. An analysis by Australia’s Chief Scientist found that Australian science and its associated contributions bring $145 billion into the national economy each year (OCS 2015). In addition, science undertaken for its own sake may contribute to the national or global economy in unexpected ways (Box 1).

Box 1: Wifi Royalties

An engineer working at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) discovered a new way of transmitting data and then patented the technology (CSIRO 2016). This went on to form the basis of the world’s wifi networks. This contribution alone has earned CSIRO and the Australian government at least $430 million in royalties from various international technology companies.

Source: http://www.abc.net.au/news/2012-04-01/csiro-receives-payment-for-wifi-technology/3925814

The Importance of Integrating Science in Policy

It is crucial that scientific findings are integrated into policy decisions. As the APS200 report (DIISRTE 2012) points out, “It is widely accepted that the best practice approach to policy development is informed through a robust evidence base.”

Evidence Use in Policy

When policy is not informed by evidence, it may be ineffective. A combination of failings within state and federal systems caused an outbreak of white spot disease in Australia (IGB 2017); while harmless to humans, it is lethal to prawns. These failings have decimated an industry worth $87 million annually in Queensland alone, and cost farmers their livelihoods.

The successful implementation of the scientific process can lead to positive consequences. Analysis showed that a more focused plan for assisting Australians with disabilities would be cheaper than the status quo and lead to better social outcomes (PC 2011). The subsequent scheme (NDIS) has better met the needs of Australians with disabilities.

Integrating evidence into policy is particularly important in sustainability as we have only one environment; any errors in judgement can be costly and difficult to rectify. The introduction of rabbits to Australia has caused widespread land degradation and loss of species, particularly of small mammals in deserts (DSEWPC 2011).

The bridled nail-tail wallaby is an example of successful implementation of conservation research. When the species was re-discovered in 1973, local scientists put together a plan to aid the species (Lundie-Jenkins & Lowry 2005), and today its numbers continue to climb.

Challenges of Implementing Evidence

Despite the benefits of evidence-based policy, there are some barriers hampering the uptake of science. These were highlighted in the APS200 report (DIISRTE 2012) as follows:

  • Timeliness – The correct pieces of evidence must be seen at the appropriate time and by the relevant people.
  • Cultural – Scientists and policymakers use differing jargon, work by different processes, and may not interact often.
  • Relationships – Strong relationships need to be built and maintained between scientists and policymakers.
  • Timeframes – Policymakers are often working on tight timeframes, which are far shorter than it takes for research to be conceptualised and then carried out.
  • Access – Policymakers may not be able to access published research easily.

Cleaner Energy in the ACT

What is the Policy?

The Australian Capital Territory’s (ACT) Sustainable Energy Policy (the ‘Policy’) aims to secure its energy sources and reach net zero carbon emissions by 2060; this means the Territory is aiming to produce less carbon dioxide than it manages to offset or remove from the atmosphere. There are three key reasons the Territory wishes to do this:

  • Social – Reduce power bill prices by increasing energy efficiency and ensuring the market is competitive and stable
  • Economic – Ensure security and affordability of energy, as well as supporting a strong renewable sector and its many local jobs
  • Environmental – Reduce greenhouse gas outputs to ensure the livability of the planet. Greenhouse gases cause global temperatures to rise excessively, which has a negative impact on global climate and generates unpredictable weather patterns

A draft of the Policy was crafted in 2009, which was then released so stakeholders and members of the public could contribute submissions. Their submissions, in combination with the political climate, were then taken into account to create the final policy.

The Policy contains four outcomes, each focusing on a different aspect of sustainable energy. For the purposes of this report, I will focus on Outcome Three: Cleaner Energy.

Policy Aims

Outcome Three of the Policy outlines a number of strategies which will work together to increase the sustainability of the ACT, as summarised below:

  • Encourage uptake of renewable energy by promoting GreenPower, which the Policy defines as “government-accredited, emissions-free renewable energy purchased by energy retailers from accredited renewable energy sources.”
  • Increase installation of distributed energy, which is energy located near its end user
  • Increase power efficiency, so it is used for more than one purpose
  • Build gas-fired power stations, as they produce less carbon than coal and can act as a reliable transitional power source
  • Encourage the uptake of rooftop solar through feed-in-tariffs, so citizens earn money when their homes produce excess electricity that goes back into the power grid
  • Generate energy from excess waste, so this waste can serve a new function and the methane produced by that waste doesn’t end up in the atmosphere

Use of Evidence in the ACT’s Energy Policy

Editor’s note: For the purposes of this assignment, we were given a brochure about the policy and asked to evaluate the use of evidence in that text. The brochure was sparse on references, which was the main reason for my being critical below. Looking at the policy after the semester was over, it seemed to be pretty good. You can check it all out for yourself over on their website.

Table 1. Summary of the use of evidence in the ACT’s Sustainable Energy Policy at various points in the APS200 report’s policy cycle (DIISRTE 2012).

Policy Stage Signs of Evidence Use
Anticipation
  • Identified the need for renewable energy in relation to greenhouse gas emissions, power costs and stability
  • Identified the ACT’s moral obligation for action, given their high rate of greenhouse gas emissions per capita
Formulation
  • Final targets gleaned from the Prime Minister’s Task Group on Energy Efficiency Report
Consultation
  • Opened draft for public submissions prior to finalisation
Adoption
  • Policy has concrete targets, whose feasibility appears to have been informed by scientific evidence
Evaluation
  • Reviews of progress have been legislated
  • Targets are easily measurable

While this policy is strong in a number of areas, it appears to be lacking in some aspects of the Formulation phase of the policy cycle. From the document provided, we cannot see many peer-reviewed references, and so cannot say whether they were utilised. Because we cannot see their references, it is difficult to gauge whether there has been sufficient replication to be able to draw conclusions, if they have used multiple lines of evidence or if those sources are biased in any way.

In order to improve this in the long-term, the ACT can utilise the scientists they have at their disposal. If expert opinion has already been used to create the policy, they could reference them throughout the document and insert an appendix at so keen readers can examine the information for themselves and determine if they contain any of the abovementioned flaws.

Conclusion

Sound evidence is crucial to ensuring a policy has the best chance of being successful, and scientific evidence in particular is a large part of that. It is especially important in regards to the environment, as we only have one of those, so any missteps will stay with us forever. Outcome 3 of the ACT’s Sustainable Energy Policy does this well, as it strives to help the Territory reach its goal of net zero carbon emissions by cleaning up its energy sector. While the policy is light on references, it appears to be quite sound overall and has excellent and easily measurable goals.

Part B

Introduction

Scientific research often involves the examination of a specific question, after which the results are published in journals for their peers. After a number of different experiments have been undertaken, typically over several years, an expert in that field will analyse all of the published research and assemble it into a technical summary.

This collation of research is known as a ‘systematic review’, and it allows the reader to gain an understanding of the current state of the literature in that particular area. Systematic reviews tend to have the following characteristics (QUT 2018):

  • Objectives are clearly laid out
  • Criteria for study inclusion is pre-determined and clearly defined
  • Methodology is detailed and reproducible
  • Study search is systematic and attempts to find all studies that meet the criteria
  • Study validity is assessed based on their methodology
  • Systematic synthesis of the collective findings of the studies

Systematic reviews are important tools that allow us to see what we know in a given area, and how well-evidenced our knowledge is. It also identifies and succinctly lays out any uncertainties, therefore indicating where future areas of research may focus to further increase our knowledge within that area of expertise.

Systematic reviews can take many forms depending on their purpose. The most robust, known as ‘gold standard’ reviews, are comprehensive papers which may take months or even years to complete.

Policymakers tend to find rapid protocols more useful; while less comprehensive than a gold standard, these can be undertaken more quickly. A rapid protocol is a useful tool for a policymaker to gain an overview of a topic for which they may be formulating legislation.

The usefulness of a rapid review will be demonstrated in this report by undertaking one. The review question has been formulated using the PICO method (Table 1), which assists researchers in breaking down their question into parts and guiding how they will search for the papers used in their review.

The question we will be examining in this report is:

“How will an increase in the amount of renewable energy in Australia affect the Australian energy market?”

This paper will provide background information to this question including its importance, the details of the review process, and then conclude with the results.

Table 1. Key PICO elements of the research question

Population Intervention Comparator Outcome
Australian energy market Greater share of renewable energy Lack of renewable energy Effects on the energy industry 

Climate Change and Australia

It has been established since the 1980s that large amounts of carbon dioxide being released into Earth’s atmosphere by humanity, known as ‘carbon emissions’, was causing the planet to heat up (Hansen et al. 1981). This process is known as ‘global warming’. More recently, it has been referred to as ‘climate change’ to encapsulate the full suite of global variation of a warming planet. This includes more extreme weather events and rising sea levels.

To help reduce global carbon emissions, economies across the world are abandoning traditional forms of carbon-rich energy production, such as coal-fired power plants. Instead, they are opting for sources of energy which are both renewable (they are not available in limited quantities) and which do not produce carbon pollution (IEA 2017).

It is worth noting that the introduction of renewable energy into the electrical grid, and climate policy as a whole, is a sensitive political issue in Australia. Both major parties agree action needs to be taken, though they disagree on the mechanism by which to take it. A national price on carbon was passed in November 2011 and came into effect in July 2012, which aimed to disincentivise the use of carbon-intensive fuels and encourage the development of renewable technology. This was repealed in July 2014 when that government lost a subsequent election.

The importance of this topic is outlined via two examples below.

Effects of Policy Uncertainty

Australia’s commitment to the 2015 Paris Agreement will, amongst other strategies, necessitate a reduction in the amount of fossil fuel-based power generation. Having a suitable assessment of the effects of additional renewable generation on Australia’s energy market will allow policymakers to foresee and plan for any consequences. The current lack of a bipartisan agreement to meet Australia’s Paris commitments has had a negative effect on decarbonisation investment, stalling the national response to changes in our energy (Shahnazari et al. 2017).

Fossil Fuel Deaths

Aside from the carbon pollution released by coal and other fossil fuels, energy production from these sources can directly harm people’s health. An estimated 91% of the world’s population lives in areas with air pollution higher than what is considered safe, and many of these pollutants are generated by burning fossil fuels. It is estimated that 4.2 million people each year are killed by health complications instigated by air pollution, with many more falling ill (WHO 2018).

Significance of Review

As yet, there has been no review looking specifically at the impact of an influx of renewables on the performance of the Australian energy market, and conflicting information from vested interests is prevalent. As the world moves away from carbon-emitting energy production, it is essential to understand the alternative energy options to ensure the best-suited ones are utilised in the energy mix to the best of their capability. The topic has ramifications for everyday Australians, as it directly relates to the impacts of their electricity use in the form of their power bills (monetary costs) and indirectly in the reliability of their supply (social costs).

Australia’s lack of a bipartisan energy policy and the accompanying shortage of renewable investment could be well-served by an examination of the peer-reviewed research on the effects of renewable energy, to equip policymakers with the required information.

Review Methodology

The rapid protocol was based on the framework outlined by Bottril et al. (2014) and targeted primary literature in four scientific databases.

Papers were discovered using the following terms:

  • “Australia” – As a keyword or a subject
  • “Renewable”
  • “Energy”

Attempts to refine the search further using terms such as “National Energy Market”, “energy pric*” and other, similar terms resulted in few to no papers being returned in the search.

The databases used for this protocol were:

  • Wiley Online Library
  • Web of Science
  • JSTOR
  • Scopus

Due to time constraints, only the first five relevant papers from each database were taken. Relevancy was determined by first reading the title of the paper to ensure it was about both Australia and renewable energy, and then by screening the abstract. If the abstract was deemed relevant to the question, the paper was added to the database.

Wiley Online Library output far fewer studies than the other three databases, and as such, only three papers were able to be gathered from it, bringing the total number of studies used for this paper to eighteen.

Searches were limited to the past five years, due to both time constraints and because renewable energy has garnered a lot of investment in the past decade which has improved their efficiency and viability.

After the eighteen papers were selected, the relevant data was extracted. This was done by skimming the introduction for information, and the methodology to ensure the authors worked to eliminate any bias and that the study’s findings could be relied upon. The results and discussion were read in detail to ascertain any findings relevant to the protocol question.

In studies or reports which did not clearly outline differing sections, the papers were skimmed for their headings. Any headings deemed to be relevant to the protocol question were treated as a results or discussion section and read in detail.

Table 2. Outline of inclusion/exclusion criteria, based on predetermined selection criteria as recommended in Bottril et al. (2014).

Location Study design Outcomes Temporal scale
The review will only target analyses of increased renewable energy in an Australian context. The review will target assessments of any direct effects on Australia’s energy market. The review will target studies which predict how increased renewables will affect Australian energy prices and reliability. The review will be limited to the past five years of analysis, as there have been recent, rapid advances in renewable technology.

Review Results

The papers selected for the review have been summarised (Appendix 1). The first column names the paper by lead author(s) and year of publication. The second column briefly summarises the paper’s purpose. The third column shows how relevant to the original question the paper was found to be after detailed scrutiny, and the fourth column indicates the quality of the study.

The third and fourth columns use a traffic light system to denote study relevance and quality:

  • Green: Strong connection to the question or high study quality
  • Orange: Tangential connection to the question or moderate study quality
  • Red: No connection to the question or poor study quality

Review Findings

The key issue with Australian energy is that some coal-fired power plants, which produced a large amount of energy for the country, have been retired without adequate replacement.

The consensus gleaned from the selected papers is that inserting more power into Australia’s National Energy Market will increase grid reliability and cause power prices to fall. This would be true for both carbon-intensive or carbon-free generation. However, with looming climate change, the consensus was that carbon-intensive forms of energy would soon become unpalatable.

Simshauser & Tiernan (2018) noted that Australia and the USA had the same proportion (18%) of coal-fired power plants exit their markets at the same time, yet only Australia has had issues with power reliability and affordability. They concluded this was because policy consistency in the USA resulted in the necessary investment and construction of new power generation, while policy paralysis in Australia has acted as a barrier to new generation.

Renewables can be especially beneficial to rural communities, because unlike traditional fossil fuel plants, renewables can be custom-built at a small scale for a particular town or area (Freeman & Hancock, 2017). They can also be paired with batteries to enhance their reliability, and they may complement each other; wind and solar are the two most popular renewable energy sources, and often when the sun isn’t shining, the wind is blowing (Blakers, 2015).

Review Process

The rapid review protocol outlined in this paper was adequate given time constraints, and allowed for a rough summary of the current state of the literature. In future, more time and greater resources to conduct the review would assist in its robustness.

Future studies should monitor any changes in Australian power reliability and prices as more renewables enter the National Energy Market. There is little research into renewable sources outside of wind and solar. It would also be worth completing a more comprehensive, gold standard review of this topic.

Conclusion

  • Systematic reviews are useful tools for gaining extensive knowledge on a topic
  • Climate change makes carbon-intensive power generation less appealing
  • Primary cause of Australian power issues is the exit of large amounts of generation
  • Policy stability is required to encourage investment in energy infrastructure
  • Renewable energy can assist in stabilising national power generation and reduce costs

Part C

Introduction

This paper is the third in a three-part White Paper, whose overall aim is to encourage the use of evidence in the formulation of policy. The first section of this White Paper, known as Part A, examined The Australian Capital Territory’s Sustainable Energy Policy. Part A focused on Outcome Three: Cleaner Energy, and evaluated the use of evidence in its formulation. The second section of the White Paper, Part B, saw the undertaking of a rapid systematic review on the effects of renewable energy on the Australian energy market.

This paper, known as Part C, will outline evidence-based recommendations drawn from the examination of the literature which took place in Part B. These recommendations will be presented alongside a matrix will help visualise any risks, followed by a scenario planning exercise to prepare for any consequences which could result from these recommendations.

The integration of evidence allows a policymaker to draw on, and learn from, the effects of any prior implementations of a similar policy elsewhere in the nation or in the world (APSC 2009). Without this evidence, any proposed solutions may be less likely to succeed, or unintended consequences might occur. This may result in mistakes which are irreversible, particularly for issues relating to the environment, where it is difficult to recover from large-scale disruption.

The risk matrix consists of a 3×3 table, coloured in such a way as to allow the reader to see, at a glance, the relative amount of risk in a given scenario. Labels above and to the left of the matrix denote separate, but connected, areas of risk related to the recommendations.

Scenario planning involves first examining current trends and drivers of change, as well as identifying any uncertainties which may influence the policy or idea. Once these have been scrutinised, any barriers to success can be uncovered, planned for and then effectively dealt with (Cook et al. 2014).

Recommendations

The previous segment of the White Paper, Part B, found that including more renewable energy in Australia’s energy mix will lower costs for the end user and increase the reliability of supply. The most significant factor to have a negative impact on this metric was policy uncertainty in relation to energy (Simshauser & Tiernan 2018).

Recommendation 1: Formulate a bipartisan energy policy.

Australia’s leading political parties should come together to formulate an energy policy which they will both agree to uphold. While the differences in energy policy between the two main political parties remains so large, investors will remain reluctant to finance new energy installations in Australia. They are unwilling to invest in a market whose requirements may change every three years come election time.

Notably, Australia and the USA lost the same amount of coal-fired power generation (18%) at the same time. However, the USA has not experienced the same issues Australia has. This was because they foresaw the looming energy supply issue and proactively installed new generation to replace that which was being lost (Simshauser & Tiernan 2018).

Recommendation 2: Install renewable energy.

The papers examined in the review were unequivocal in stating that Australia must replace the energy generation that has been lost as old sources have been retired. It would make little sense to build any carbon-intensive forms of energy, as the world is moving away from them in the context of carbon’s role in anthropogenic climate change. The ability of renewables to decrease power prices has been discussed in the literature (Bahadori et al., 2013a) and was acknowledged in the latest AEMO quarterly report. It stated an increase in renewable generation helped lower power prices in Victoria, South Australia and Tasmania (AEMO 2018).

Renewables are especially suited to small and rural communities. These communities do not require the amount of generation produced by a large coal or gas-fired power plant, which are not able to be built at a small scale (Freeman & Hancock, 2017). Building renewables in these communities will preferably involve conducting an analysis for each one, and then collaborating with state and local governments to develop an energy plan that will best suit them. Governments can also offer training to local individuals to build, operate and maintain the new power generation to create ongoing local jobs.

Recommendation 3: Develop hydropower.

More efficient ways of utilising hydropower should be explored. Over 85% of Australia’s population lives within 50km of a coast, which makes Australia a strong candidate for the technology, particularly for pumped and offshore hydro (Hemer et al. 2018). It is recommended the government commission a formal study via the CSIRO on the potential of hydropower for the largely coastal Australian society.

Recommendation 4: Assist workers in the fossil fuel industry.

As old forms of power generation are phased out and replaced with new ones, workers in the old industry will inevitably be made redundant. With appropriate planning and foresight, the people working in these industries can be offered training to work in the emerging renewable industry, or a different industry which is available in their area. Similar to the rural communities in Recommendation 2, the government can work with these individuals and their employers to ensure their future employability.

Recommendation 5: Analyse changes in energy price and reliability.

Any changes to electricity prices and reliability should be tracked relative to the amount of renewable energy in the grid. AEMO already monitors changes to electricity in terms of both price and reliability. It also already tracks the amount of renewables in the grid on a state-by-state basis (AEMO 2018). As the monitoring already takes place, a new report can be created at low cost which explicitly states the effect renewables are having on Australian energy.

It should be stressed that all states and territories should be included in the analysis, even ones which are not installing renewable power. This will help to eliminate any bias in the analysis by allowing us to see whether any changes to price and reliability are as the result of more renewables, or simply part of a wider nationwide trend owing to other factors.

Risk Assessment

Climate Risk Matrix
Figure 1. An evidence risk matrix, which denotes the risk of delaying a transition to renewable energy to the Australian economy and environment.

The risk matrix (Figure 1) is a tool which allows readers to see the relative risk of a given scenario, with the risk denoted by colour for ease of reading. Each colour represents:

  • Green – Low overall risk for that scenario
  • Yellow – Moderate overall risk for that scenario
  • Orange – High overall risk for that scenario
  • Red – Very high overall risk for that scenario

The risk which will be discussed here is the risk of damage to the economy against the risk of damage to the environment if action to reduce the effects of climate change is delayed. This is important to the Australian, and the world’s, future considerations. The projected impacts on both the global economy and environment have been discussed by a range of different kinds of experts, notably in the comprehensive reports from the United Nations’ Intergovernmental Panel on Climate Change (IPCC 2018). These impacts include rising sea levels, which is particularly problematic for countries like Australia where many citizens live near the coast, as discussed in Recommendation 3. Australia will also be subject to stronger hurricanes, drier and longer-lasting droughts, and more (IPCC 2018).

The risk matrix shows that failure to act immediately to reduce Australia’s carbon emissions, particularly by increasing our share of renewable energy, has at least a moderate chance of inflicting harm to both the environment and the economy. It is important to note that are none of the projected scenarios are low risk. Even if Australia begins the transition to renewable energy immediately, with the cumulative effect of the carbon that has already been emitted, it will be difficult to impossible to completely mitigate any harmful effects.

With the recent rapid decline in renewable and battery storage prices, which is likely to continue, it would be advisable to continue to install renewable energy even without the climate driver. The burning of fossil fuels are associated with a number of health issues in the miners and in those who live near the power plants (WHO 2018).

This precautionary principle states that if the consequences of a particular path are not entirely known, but it has a good chance to have a significant negative impact, action should be taken to mitigate that as much as possible. The impacts of climate change are likely to be wide-reaching and continue to have an effect for centuries or even millennia into the long term (IPCC 2018). Given this, and the abovementioned reduction in renewable prices, it would be advisable to install renewable energy in Australia.

Scenario Planning

The scenario planning in this section follows a methodology which is accepted by experts in the field (Cook et al. 2014; WCS & Vio-Era 2007). This process involved identifying key elements, drivers and uncertainties in relation to the review question from Part B and the corresponding recommendations in Part C. Four possible futures were then explored based on the future course of the uncertainties.

Elements

Energy demand in Australia has a direct effect on policy as it influences how much energy needs to be planned for. Energy demand is likely to increase going into the future as Australia’s population continues to increase (AEMO 2017). This will affect Australia’s energy policy as the country establishes which energy sources will be best suited to meet its demand.

The context of climate change will influence the types of energy governments and constituents will want to see installed, which will in turn affect energy policy. As the effects of climate change become more prevalent in severe droughts and storms (IPCC 2018), renewable energy will become more appealing to help mitigate any future warming.

Drivers

Advancements in technology will affect the viability of renewable energy as they occur. These advancements have already led to a sharp fall in renewable prices, and will continue to do so as further refinements take place (IRENA 2017).

As Australia’s population continues to grow, more energy will be required to power it (AEMO 2017).  This will affect energy policy, as more projects will need to be financed and built. The location of the population growth will also affect the policy; whether the government needs to increase its support to rural areas more than urban or vice versa.

Uncertainties

The prospect of a bipartisan energy policy in Australia, while recommended by this report, is still not known. The existence, or not, of such a policy will have a profound impact on the speed at which renewable energy is taken up and the confidence investors will have in the Australian energy market (Simshauser & Tiernan 2018).

While public support for action on climate change is currently strong in Australia (Lowy Institute 2018), that may not always be the case. Should energy prices continue to rise, any perceptions that renewables would exacerbate those price rises and other issues may negatively impact that view.

Both of these uncertainties and how they interact with each other are further explored in the scenario planning exercise (Appendix 2). Specifically, they examine the effects of either strong public support on policy or a lack of it, against whether we have bipartisan energy policy support or policy uncertainty.

Scenario Planning Discussion

The astute reader will have noted that one of the uncertainties is the first and most important recommendation. This was included, as reaching an agreement on energy policy is still an uncertainty, and has major implications for the industry for reasons previously outlined.

The author feels that even lacking strong public support, renewables would end up being installed in Australia due to their lower relative cost and their ease of deployment, especially at small scale. This will hopefully include hydropower, though hydropower is more likely under a scenario which has government policy support, as it is less economical than wind and solar, and needs assistance to make it viable at a large scale.

The lack of an energy policy implies a lack of planning for future energy requirements. This means that when old carbon-intensive forms of energy inevitably run their course and close, the accompanying redundancies would not have been planned for either; this is the situation Australia is currently in. By contrast, in a scenario with a clear policy direction, these would have been planned for and the workers would have been prepared and re-trained.

An energy policy would, ideally, incorporate monitoring to see its effects, which the author believes would be included in the bipartisan agreement scenarios. The scenarios lacking this policy would likely not be gathering this data.

Conclusion

  • Part A audited the efficacy of the ACT’s renewable energy policy
  • Part B examined the effect of renewables on Australia’s energy grid, finding they would be a positive force and the primary negative factor in Australian energy was unstable policy
  • Part C crystallised the findings from Part B as policy recommendations, discussed risk surrounding energy policy, and identified issues surrounding any future policy
  • Bipartisan energy policy is required to bring down energy prices and increase reliability in Australia’s energy grid
  • Installing more renewables is strongly recommended in Australia

References

Australian Energy Market Operator. (2017). Annual Consumption Overview. Available from https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Planning-and-forecasting/Electricity-Forecasting-Insights/2017-Electricity-Forecasting-Insights/Summary-Forecasts/Annual-Consumption.

Australian Energy Market Operator. (2018). Quarterly Energy Dynamics Q2 2018. Available from https://www.aemo.com.au/-/media/Files/Media_Centre/2018/QED-Q2-2018.pdf.

Australian Public Service Commission. (2009). Challenges of evidence-based policy-making. Available from https://www.apsc.gov.au/challenges-evidence-based-policy-making.

Bahadori, A., Nwaoha, C., Zendehboudi, S., & Zahedi, G. (2013a). An overview of renewable energy potential and utilisation in Australia. Renewable and Sustainable Energy Reviews, 21, 582-589. https://doi.org/10.1016/j.rser.2013.01.004

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Appendices

Appendix 1. Summary of the outcomes of the review protocol. The table includes a citation, an overview of each study, and evaluations of both study relevance and quality.

Source Study Overview Study Relevance Study Quality
Bahadori & Nwaoha, 2013 Used data from government and peer-reviewed material to discuss the current state, as well as the future of, the Australian solar industry. More about the future of solar in Australia than how it will affect the electricity market. Analysis based on quality data from reputable government agencies, clear outcomes, clear outline of positives and negatives.
Bahadori et al., 2013 Analysed and discussed the current state and future of different types of renewable energy in Australia. Renewables have reduced electricity costs and will continue to do so. They lower carbon emissions, are better in terms of energy security, and will generate more jobs, research and innovation. Based on quality data from reputable agencies, and peer-reviewed literature. Clearly states outcomes, discusses renewable sources and their future.
Blakers, 2015 Explained how different renewable technologies work and the barriers preventing them from being deployed at a large scale. Also made predictions regarding how much they will be used in future. Solar and wind getting cheaper. Solar has low maintenance costs due to less moving parts. Often windy when it’s not sunny. Can be coupled with batteries to make up for unreliability. Less war, as we will not be fighting over fossil fuels. Good use of peer-reviewed and government sources. High quality analysis of their data. Unfortunately didn’t use in-text citations, making it difficult for readers to fact-check specific claims.
Brown, 2015 Interviews with workers in various industries about the impact of environmentalism and regulation on their work. Prefaced with an explanation of these effects on industry as a whole. Generates more jobs in many industries, including in energy. Affects industry by forcing them to absorb carbon externalities. Body of study primarily draws on anecdotal evidence. Introduction is well-referenced with good sources.
Buys et al., 2015 Aims to create a model which will predict how energy usage changes as customers, governments and other factors change. More about creating a model for predicting energy use than about how we get that energy. Well-reasoned methods, backed up with many peer-reviewed references.
Chesser et al., 2018 Examining a possible link between increased rooftop solar uptake and increasing electricity prices. As more people install rooftop PV solar, they draw less electricity from the grid. This forces utility companies to increase their prices to recoup costs. Good use of peer-reviewed literature and data from governmental agencies for their analysis.
Crawford et al., 2016 Discusses sources for biomass energy production in Australia, and how much each source will generate. Does not discuss how biomass would affect the energy industry, just where it may possibly come from. Paper assumes what is, by its own admission, an unrealistic amount of investment. Paper has not completed full logistics analysis.
Crowley & Jayawardena, 2017 Examines the intersection between lack of climate policy, the renewable mix and energy prices. Paper mentions that more renewables will prevent rapid increases to electricity costs. Detailed, peer-reviewed analysis based on other peer-reviewed and government data.
Dowling et al., 2018 Discusses how policy affects renewable uptake and how cities are pushing for more renewables. Doesn’t discuss the effect of more renewables on the electricity grid. Strong analysis using both peer-reviewed sources and governmental case studies.
Ellison et al., 2016 Models are used to predict how electricity prices will change as more renewables enter the mix. Renewable uptake will cause moderate gains in electricity prices in Australia. Good government sources, clearly show all their data for transparency.
Freeman & Hancock., 2017 Examines how Australia can help to stabilise its energy grid and make it more reliable, and how current policies affect the energy industry. Renewables can offer energy security and reliability, especially to remote and rural areas. Plant designs should be flexible and made on a case-by-case basis. Can lead to faster disaster recovery, as energy can be switched back on more quickly. Good peer-reviewed and governmental sources for data, including reputable international organisations.
Hemer et al., 2018 Discusses the state of ocean renewable energy in Australia, how it can be improved and where future investment should focus. Hydropower is predictable and reliable. It is particularly good for Australia, as so many of us live near the coast. Useful to power desalination. Sources are peer-reviewed and otherwise come from trusted government and international sources.
Howard et al., 2018 Modelling shows that Australia will fail to meet aggressive carbon emission targets. Renewables can maintain energy reliability, and can be affordable. Peer-reviewed sources and government information. 
Huo et al., 2015 Introduction to the journal. Doesn’t discuss the research at all. Doesn’t discuss the research at all.
Ma et al., 2015 Investigates how installing solar PV on a building in WA affects the resale price. Installing rooftop PV increases the market value of the building. Backed up with peer-reviewed sources and data from the government and reliable websites.
Sarkodie & Strezov, 2018 Examines the effect of Australia’s energy portfolio on environmental degradation and CO2 emissions. Renewables increase the amount of energy being exported and increase energy security. Examined a long time period using reliable government sources, with other points backed up by peer-reviewed papers.
Simshauser & Tiernan, 2018 Summarises the issues with energy policy in Australia and the reasons behind our current  energy market. More energy sources, including renewables, will reduce power prices and increase reliability. Succinct summary and analysis of Australia’s last two decades of energy policy, using government and peer-reviewed information.
Simshauser, 2018 Compares the Australia and USA energy markets, which had similar issues, but which were fixed in the US but not in Australia. Discusses the chaos of the policy cycle using Australian energy as an example. Doesn’t go into the effects of renewables. Uses peer-reviewed information and government sources.

Appendix 2. Four likely future scenarios based on the stability of Australian energy policy and the public’s desire for action on climate change.

Bipartisan energy policy Unstable energy policy
Strong public desire for action on climate change
  • Government support for renewable energy; policy certainty
  • Rapid uptake of renewables; action to mitigate climate change
  • Shuttering of fossil fuel energy sources
  • Energy demand met by new renewables
  • Rapid technological advancements through increased funding
  • Policy uncertainty
  • Renewable investment paralysis
  • Lack of energy uptake due to competing interests; energy demand not being met
  • Lack of government support for energy industry
  • No government support to mitigate climate change
Lack of public desire for action on climate change
  • Policy certainty
  • Government support for energy industry
  • Uptake of renewables, as they are cheaper and cleaner; inadvertent action to mitigate climate change
  • Energy demand met by new renewables
  • Policy uncertainty
  • Lack of energy uptake due to competing interests; energy demand not being met
  • Increase in coal production and exports
  • Lack of government support for renewable industry
  • No action to mitigate climate change

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