Renewable energy may have finally found its moment. Amid reports of solar power that is cheaper than any other energy source and massive investments in wind power across the mid-West, there are now calls for more renewables even from some former champions of traditional power sources.
Take the recent full page advertisement that Energy Australia published in many major newspapers across Australia earlier this week. In that advertisement, Managing Director Catherine Tanna said the way that Australia generated energy “had to change”, and that her company, which is the owner of the Yallourn coal power plant, and many others, would contribute to making that transition.
The decision for EnergyAustralia to come out and declare renewables to be the future is remarkable coming from what is a traditional power company. Against that backdrop, it is little wonder that new technologies and approaches are emerging all the time.
Xcel Energy for instance is doing pilot testing on a solar panel and home storage battery system with a small group of customers. The company is working with battery vendors Sunverge Energy and Northern Reliability to understand issues around costs associated with voltage regulation and peak demand. (Full Disclosure: The author has done consulting work with competing firms in the battery storage industry.)
Creating a viable renewable energy system for consumers has been challenging in part because of the high labor cost of setting up such a system, but also because traditionally utilities have had a hard time building economic models that incorporate all of the costs that can be dealt with via renewables. Related: U.S. Rig Count Rises As Crude Inventory Levels Hit Record High
These costs include everything from avoidance of new peaker plant construction to cut costs for spin cycle reserves, and demand management incentives. The full stack benefits for utilities far excel costs though, and so eventually widespread adoption of energy storage solutions and renewables is likely even if it is paid for (or at least subsidized by utilities).
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It’s not surprising then to see projects like Xcel’s taking place, or to see EnergyAustralia embracing the change.
“We believe all Australians should have reliable, affordable energy,” EnergyAustralia’s Tanna said in the letter that was printed for the full-page advertisements. “However, the way we generate, deliver and use energy has to change and I’m determined EnergyAustralia will live up to its responsibility.” Related: Only Crisis Or Cuts Will Move Oil Markets
Tanna was making the point in print and on the radio, that the process of making energy has to evolve as coal plants are retired, investment in newer and much cleaner generation technologies, like renewables, was crucial.
Tanna’s company, a giant in the Australian power markets, last year committed $1.5 billion to renewables development, including plans for a solar power station in Victoria and a wind farm in South Australia.
Energy Australia’s ad was likely driven in part by political uncertainty in the country, but the motivations don’t disguise the fact that a larger trend appears to be at work. The movement towards renewables seems to have advanced beyond hype, and real businesses are being built around the nascent industry.
Only time will tell what mix of renewables and conventional power society uses, or what form of renewables end up in long term use, but it’s clear that the power generation business is undergoing the biggest shift in decades.
By Michael McDonald of Oilprice.com
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