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Is Western Australia ready to make up for lost time on its renewables transition?

City of Fremantle mayor Brad Pettitt

There is an often-repeated joke between West Australians that WA actually stands for “Wait Awhile”.

On renewable energy generation this has proved accurate, as there’s been a significant delay in state investment in renewable energy. This means WA is now lagging behind the rest of Australia.

WA’s electricity supply has one of the lowest percentages of renewable energy in Australia, and the highest per capita emissions in the country. While WA only has around 10 per cent of Australia’s population, WA contributed 16.6 per cent of Australia’s emissions in 2017.

Underlying this unenviable outcome is that WA is the only state not to have renewable energy or emissions reduction target.

In 2017 only 7.5 per cent of electricity generation was based on renewable sources. According to the Climate Council, this put WA way behind most other states.

The Climate Council’s Powering Progress: States Renewable Energy Race rates states and territories based on their performance across a range of metrics.

By 2018 this had crept up to 8.2 per cent and is around 12 per cent of peak capacity in 2019. But that still leaves us way back with the stragglers. And WA’s emissions are still rising. Every other state has reduced its emissions on the 2005 benchmark year.

This laggard status is not an inevitable outcome for WA. WA’s transition to renewables has been held back by large coal and gas reserves, the state’s incumbent thermal generators, an oversupplied SWIS (the state’s main electricity grid) and, ultimately, by indifferent leadership.

But the declining cost of renewable energy – especially solar PV – and the fact that WA also has some of the best solar and wind resources in the world is creating a strong impetus for major new investment in renewable energy.

At the forefront of this new wave of investment are individual households who have invested in solar PV on their rooftops at a record rate. By 2019, 27 per cent of households now have PV on their rooftops with around 950 MW of capacity – making this the single largest generator in the state – almost three times the capacity of the next largest facility.

This is expected to almost triple over the next ten years, according to the Australian Energy Market Operator, reaching at least 2500MW by 2029. At this point PV rooftops will be providing around 20 per cent of the total electricity on the SWIS.

Mark Taylor is JBA’s principal for built environment sustainability.

The state is still falling short on large scale renewable projects

But these renewable energy investments by individual households will not help the state government meet its obligations under the national Large-scale Renewable Energy Target (LRET).

These LRET obligations are one important factor that we believe should motivate the McGowan state government to further support the switch to renewable energy sources in WA.

The LRET was introduced by the Howard government in 2001 and has largely had bipartisan support since, with the exception of the Abbot government tring to dismantle it in 2014. In the end the RET survived, albeit with a reduced target, when in June 2015 the Australian Parliament amended the RET and the target was reduced from 41 000 GWh to 33 000 GWh in 2020.

This 33,000 GWh of additional renewable electricity generation by 2020 will mean that approximately 23.5 per cent of electricity would need to renewable energy by 2020. The target stays the same from 2020 to 2030.

During this time WA’s coalition government also supported an end to the LRET. When the scheme was continued, the then Chairman of WA’s state-run retailer, Synergy, which dominates the WA grid, responded by announcing that they would actively spend any LRET commitment funds in other states, rather than see more renewable energy generated in WA.

The WA government was explicit in not encouraging new large scale renewable energy projects in WA and instead seeking to satisfy its RET requirement by purchasing certificates from projects on the eastern states.

In other words, the position in WA was to not invest in local renewable energy projects that would generate investment and jobs – and instead subsidise wind farms and solar farms to be built in the eastern states – to protect the interests of fossil fuel plants that have been built but may never actually operate.

A conservative estimate based on Synergy’s annual reports and its published data on in-house renewable generation is that around $240 million has been given to projects in other states in the last five years. Costs going forward are potentially even higher without a different approach.

Green shoots on the horizon

While the new ALP state government had been slow to address the state’s underinvestment of renewables, there are indications this is beginning to change. In 2018 the state government announced that Synergy would lead a development fund called Bright Energy Investments with CBUS and the Dutch infrastructure developer DIF.

As well as the refurbishment of the Albany Wind Farm, this fund is bringing two new projects online in the next couple of years:

  • 180MW Warradarge wind farm (2019)
  • 20MW Greenough solar farm (stage 2) (2020)

According to the Clean Energy Regulator, Western Australia has other “committed” renewable energy projects close to commencing construction, including:

  • 214MW Yandin wind farm (2020)
  • 32MW Kwinana waste to energy plant (2021)

Combined these projects represent around 450MW of new renewable energy generation coming to the WA grid. Already in 2019 two large-scale renewable energy projects, the 154MW Badgingarra wind and solar facility and the 11MW Northam solar farm, have begun operating.

With this new generation in place the share of renewables in the SWIS electricity mix will have expanded from around 7.5 per cent in 2017 to approximately 19.3 per cent by 2021. But this will still not be enough for WA to meet its share of the LRET. This will require a renewable energy percentage of around 23.5 per cent in 2020 and for this to be maintained until the end of 2030.

There is a gap of 755 GWh of renewable energy per year, or 4.2 per cent of total electricity on the SWIS. Based on some conservative assumptions, including the reduction of the price of renewable energy certificates to $0 by the end of the scheme, WA will be giving $275 million to renewables projects in other states over the next decade of the LRET.

This means that over half a billion dollars of renewable energy investment could unnecessarily flow out of WA during the term of the LRET

What is also noticeable, is that despite this more recent growth in renewable energy investment, WA is still underperforming in comparison to other states. The graph below shows that other states, which got started earlier than WA, are already seeing the benefit of the transition to renewable energy and expanding their programs:

Figure by Green Energy Markets

While the challenge before WA is substantial, change is entirely possibly aided by the fact that control of the energy system in WA is strongly concentrated in state government entities. This is a problem when the government is recalcitrant but also a strength if it chooses to act to support investment in renewable energy.

The newly announced Energy Transformation Taskforce might be a sign that the shutters are coming off and the drawbridge is coming down. The Taskforce was established by WA energy minister Bill Johnston to implement the McGowan government’s Energy Transformation Strategy. This strategy talks a lot about clean energy and there are reasons to be optimistic.

WA is realising we’ve been steadily paying for other states to transition to better ways of doing energy and watching them reap the benefits of this investment.

WA needs targets

As we said earlier, WA is the only state without a renewable energy target or zero emissions target. It is time WA set itself some targets to both provide greater certainty to investors in renewable energy and to see an end to hundreds of millions of dollars flowing east as a result of this under-investment to date.

A reasonable short to medium term target for WA would be a timeline for WA’s entire annual LRET quota to be sourced from WA projects. This will require an extra 220 MW of installed renewable energy generation – easily achievable by 2022 and achievable with money that would otherwise be spent in other states.

A longer term target based on climate science could be one that aligns with the twenty one councils from across Western Australia have jointly called on the state government to commit to a renewable energy target of 50 percent by 2030 and a 100 percent emissions reduction target by 2050.

The WA government says it is serious about addressing climate change and transitioning the state energy system but had been waiting for national leadership before committing. It is clear that the only national leadership scheme that’s still in place for energy and emissions is the LRET.

The focus is now firmly on state governments given the recently re-elected federal government has declared it does not intend to implement additional policies to reduce emissions in the electricity sector.

Hundreds of millions of dollars of renewable energy investment has been unnecessarily heading east.

It is time WA stopped paying other states to invest to renewable energy and invested in renewable energy and jobs locally. For this to happen most effectively, a clear target for renewable energy beyond 2020 and a clear plan and commitment to meet the 2020 LRET target locally are needed as soon as possible.

WA has fallen behind in the renewable energy transition but there are encouraging signs that it may be ready to make up for lost time and the “Wait Awhile” in finally coming to an end.

Dr Brad Pettitt is the mayor of Fremantle and Mark Taylor is JBA’s principal for built environment sustainability.


Spinifex is an opinion column open to all, so called because it’s at the “spiky” end of sustainability. If you would like to contribute, we require 700+ words. For a more detailed brief and style guide please email editorial@thefifthestate.com.au

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Comments

3 Responses to “Is Western Australia ready to make up for lost time on its renewables transition?”

  • RUPERT LODGE says:

    WA could and should do more:

    – WA Government should develop a robust and clear energy and climate change strategy
    – Facilitate the development of new offshore windfarms along the west coast
    – Encourage rollout ofroof mounted solar arrays. The potential in Perth and WA is huge. Reduce the draconian rules which are preventing this
    – Embrace electric storage battery technology and the benefits to demand smoothing this brings
    – Encourage electric vehicle rollout
    – Accept climate change is real and that unless steps are taken to reduce greenhouse gas emissions, the impacts on the economy will be significant and perhaps devastating
    – Stop denying climate change and pretending that these initiatives add cost

  • Dear Brad and Mark,

    Thank you for excellent financial and strategic analysis.

    Yes, why would an Australian state and its government owned businesses send that state’s money – well, its citizens’ money – to other Australian states to build wind and solar energy there and to grow jobs and cleaner air there?

    Let’s hope your article triggers such questions in the Western Australian political world and produces the obvious answer; keep the money in WA where there’s oodles of wind and sun going un-tapped. Best wishes, Michael

  • Jake says:

    Great article which highlights the need for change in WA. after we have waited awhile….

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