Renewable Energy

 Wednesday 1 April 2009

Resumed from 19 March on the following motion moved by Hon Paul Llewellyn:

That this house call on the Western Australian government to introduce a state-based comprehensive gross feed-in tariff for renewable energy technologies.

• Final comments from Energy Minister Peter Collier
• Comments from  Labor's Kate Doust
• Reply from Paul Llewellyn

 HON PETER COLLIER (North Metropolitan. Minister for Energy) [4.17 pm]: I will continue from where I left off last week. I was talking about the issue of intermittency. I was stating that intermittent power is not in itself a problem because it acts significantly to reduce emissions, which is a positive thing. At the same time, it is an issue we must address in terms of its impact on baseload capacity. Last week I referred in particular to the report .South West Interconnected System (SWIS): Maximising the Penetration of Intermittent Generation in the SWIS: Econnect Project No: 1465. that Hon Paul Llewellyn spoke about. I mentioned to the house that I would look into the progress that has been made on the recommendations of the Econnect report, in particular the impact of intermittency on the grid. There has not yet been any formal government response to those recommendations, but the Market Advisory Committee renewable energy generation working group is developing a work program considering a range of issues related to increasing levels of intermittent generation in the south west interconnected system. As we move towards 2020, and more renewable energy sources come into the grid, it is essential that we seriously consider this issue. I do not have a problem with it, but I think we need an urgent understanding of the impact so that we are prepared. I do not have a problem with mandated renewable energy targets so long as we are prepared, particularly in the area of the intermittency factor.

I will move on and consider the feed-in tariff, which is essentially what this motion is about. I have said that this is something that the government will enthusiastically support. There is currently, in essence, a feed-in tariff in Western Australia, known as the renewable energy buyback scheme, which is a net scheme. It has been very popular. For example, in February 2008 there were 446 customers, whereas in February 2009 there were 3 364 customers for REBS. That pretty much typifies the fact that there is a growing awareness and a growing embracement of renewable energy within the community. That is what I spoke about last week. In addition, those who are committed to renewable energy sources have the opportunity to purchase the various aspects of GreenPower.EasyGreen in Western Australia or NaturalPower. Again, the uptake of those systems has also been increasing at an accelerated rate over recent years, which is good to see.

What I intend to do now is look at what the motion is specifically about.that is, the feed-in tariff. That has been discussed throughout the nation over recent years. There is no national scheme for a feed-in tariff. There are national principles.I will talk about them in a moment, but there is no national scheme. Essentially, a feed-in tariff is a subsidy that is paid for electricity that is generated from renewable sources. With a gross system, it means that people are paid for every unit of electricity that is fed into the system. With net generation, payment is made only for generation delivered to the grid after a person’s net use.

If I can have the indulgence of members for one moment, I will give a very crude example of how it operates. Say we look at average consumption of electricity, which is about 6 000 kilowatt hours. I will deal with this first under the gross system and then under a net system. Electricity generated by a photovoltaic system might be about 1 800 kilowatt hours. Under the proposed Western Australian gross system, which is 60c a kilowatt hour, payment for the PV would be about $1 080. That leaves a balance of 4 200 kilowatt hours, so the cost of electricity for that customer would be $672. We take that off the $1 080, and that person would be eligible for a rebate of about $408, so he would be in front. Under a net system, under exactly the same scenario, there would be 6 000 kilowatt hours average consumption. With electricity generated by a PV system for about 1 800 kilowatt hours, the balance is 4 200 kilowatt hours, at an average cost of 16c a kilowatt hour. Again, the cost would be $672, so those customers would pay $672. In effect, under a net feed-in tariff, the customer would pay $672. Under a gross feed-in tariff, the customer would be paid $408.

In Western Australia, we have committed to a 60c gross feed-in tariff. I understand that that is the same as the situation under the previous government. When I have been to the Ministerial Council on Energy meetings in the past few months, I have been to two thus far, there has been a lot of debate about the feed-in tariff. There is no national feed-in tariff, although I notice that Anna Bligh mentioned in the Queensland election campaign that she was going to raise the question of a national gross feed-in tariff at the next Council of Australian Governments meeting. However, at this stage we do not have a national feed-in tariff. We must ensure that we have some national consistency. Hon Paul Llewellyn discussed this at length. We must get right where we go as a state. We have to ensure that we have the best feed-in tariff in terms of benefits for the consumers.

I will read from the notes of the COAG meeting on 29 November 2008, which state:

The Commonwealth committed to developing a nationally consistent framework for feed-in tariffs and proposed that it be undertaken through COAG (Council of Australian Governments). COAG agreed and established the renewable energy sub group to undertake the task.

The Renewable Energy Sub-Group within COAG has recommended that national principles be adopted to ensure that small renewable energy generators are adequately compensated, on a fair and reasonable basis, for the jurisdiction they provide. Discretion on the rate of payment would reside with individual jurisdictions.

That is what we have; that is what I have said. That is why there is no consistency. I know that this has caused a great deal of consternation among energy ministers across the nation. Having said that, a set of national principles for feed-in tariff schemes was established. I will not go through the whole lot; I will just read the actual themes for each principle. They state:

• Micro renewable generation to receive fair and reasonable value for exported energy .
• Any premium rate to be jurisdictionally determined, transitional and considered for public funding.
• MCE to continue to advance fair treatment of small renewables.
• FiT policy to be consistent with previous COAG agreements (particularly the Australian Energy Market Agreement).

 

 As I have said, a number of jurisdictions now have a feed-in tariff. None of the other states has a gross feed-in tariff. However, the Australian Capital Territory does. The other states that have feed-in tariffs, I will go through those in a moment, have net FITs. The reason I am doing this is to show that, yes, we have to adhere to a set of national principles, or COAG-established principles, but at the same time we must make sure that we get it right and that we get to a situation in which we have the most effective FIT for Western Australians.

I have with me some findings from a Senate committee, which show just how diverse the systems are throughout Australia. I will not read the whole lot; I will just draw on some selected portions. The findings state:

Currently, there is some form of FIT in the Australian Capital Territory, Queensland, South Australia and Victoria. A FIT has also been piloted in the Alice Springs Solar Cities program. The schemes vary significantly in their design. Some of these FIT schemes are restricted to new installations, others are not. Some offer a FIT for all electricity generated, others for only the electricity that is surplus to the users. needs. Some have set limits for the scheme (such as a target number of megawatts of electricity generation), others have not. These differences in FIT schemes mean there is no consistent national approach. All these design choices raise significant policy questions, discussed in the next two chapters.

...In addition, the existing Australian state and territory schemes have various eligibility restrictions. In Victoria, the scheme is limited to installed units of up to two kilowatt hours . generating capacity, and the scheme as a whole is capped at 100 megawatts (MW) of generating capacity.

...South Australia also limits the size of customers and systems eligible to participate. Its eligibility criteria are that the system must:
?  be operated by a small customer (ie a customer who fits in to the .small customer. category, defined as consuming less than 160 mega watt-hours of electricity per annum)
?  be grid-connected to a distribution network which supplies electricity to 10,000 or more domestic customers .
?  be connected to the grid via a .bi-directional. or .import/export. meter
?  fit the definition of a small (PV generator meaning a PV system with capacity up to 10kVA [kilovolt amps] for a single phase connection and up to 30kVA for a three phase connection*
?  comply with Australian Standard .

...Queensland has a scheme similar to that in South Australia. The conditions of eligibility in Queensland are that customers must:
?  consume no more than 100 megawatt hours . of electricity a year (the average household uses 10 MWh a year)
?  purchase and install a new solar power . system . or operate an existing system that is connected to the Queensland electricity grid
?  generate surplus electricity that is fed into the Queensland electricity grid

I will not go on. All I am showing is that there is a great diversity in what is expected. Also, in South Australia, Victoria and Queensland, they are all net FITs, as I said, and the ACT has a gross FIT.

My point in going through that was to show, as I said, that there is great diversity within the FITs across the nation. There is no national consistency. There is a move on some parts. I must say that some of my ministerial colleagues from other jurisdictions have quite a bit of passion about having a nationally consistent approach to FITs. It will be interesting to see how the debate eventuates if Premier Bligh raises the issue, as I am sure she will, at the next COAG meeting.

In conclusion, I am very mindful of the benefits of the feed-in tariff. I am very mindful of how significant it is in the minds of people in the community. If I have received correspondence on one issue more than any other since becoming a minister, it is about what the government will do about the feed-in tariff.will we remain committed to the feed-in tariff and what structure will it have et cetera. I say yet again that the government is committed; we have committed $13.5 million to the gross feed-in tariff. The Sustainable Energy Development Office is currently working out the structure of the feed-in tariff. Results for the model of the feed-in tariff are imminent. I am committed to it, the government is committed to it and I think the public is committed to it. It is another example of the way in which the community as a whole is embracing renewable energy sources.

Once again, I thank Hon Paul Llewellyn for bringing this motion to the Legislative Council, and I clarify that the government will be supporting the motion.

HON KATE DOUST (South Metropolitan . Deputy Leader of the Opposition) [4.30 pm]: The opposition supports this motion. It is quite unusual in this place to have everyone in agreement before getting to a vote, for a change. I put on record that I consider the very detailed speech delivered by Hon Paul Llewellyn to be one of the best he has given in this chamber. The level of detail was pretty amazing, and I am glad that he provided us with some of the detail of Senator Milne.s second reading speech for the legislation she proposed. I also thank the minister because he provided a great deal of detail. I will not try to fill in any gaps, because I think both members have covered all bases.

One of the key messages we have all come away with is that these types of initiatives are about gearing up the community to change its attitudes towards energy use. I think that is a very key plank when addressing these types of issues. Although I am glad that the minister is so supportive of this initiative and that he actually appears to be generating work to move on and develop the feed-in tariff system, I say quite proudly that I think the former Labor government laid some very solid groundwork for the minister with a number of the initiatives it put in place to encourage people to change their attitudes towards energy use. I note that either Hon Paul Llewellyn or the minister made reference to people having changed their attitude to water usage; it may have been Hon Peter Collier who made that comment. I think that that is a very important comment. In common with the Minister for Energy, I grew up in the goldfields, where water was always a precious resource. I think we should view energy in the same way these days. I know that it has taken quite a seismic shift in people.s cultural attitudes to change their water usage, and I must say that we have done so exceptionally well in Western Australia and perhaps in the way we have managed that as a state, we are a very good role model for other states to accept that change. The challenge for us is to adopt the same sorts of principles to get people to change their approach to energy usage.

I will not go back over ground that has been covered extensively, but I will make one point. The minister talked about the Council of Australian Governments. That is a very important area, and it is interesting to see where the various states are at, and to note that Premier Bligh announced a couple of days before the Queensland state election that her government would undertake work on a feed-in tariff. Now that the Labor Party is back in government in Queensland, it will be interesting to see how that progresses. There have been key areas outlined by COAG, and it will be interesting to see how the states come together on those issues to come up with standard policy. I do not know whether it will eventually lead to some sort of uniform legislation between states or whether Western Australia.s distance and isolation will ultimately prevent us from engaging in that sort of process and we develop our own in splendid isolation and do something better. I am not too sure where that will go. Comments have been made about not relying only on wind power or solar power. When I have been at meetings with a range of players in the energy industry, those sorts of comments are fed back to me.that people are, indeed, very excited about looking at alternative forms of energy and the ways in which we can utilise them, but that we should not become dependent on one single area. I know that Hon Paul Llewellyn is very focused on wind power, because of his own experience, and that is good.

Hon Paul Llewellyn: No, I’m focused on all of them.

Hon KATE DOUST: I know that the member is, but he uses wind power as his example, and it is something that he has always trumpeted as being a very positive way forward. We have to be very clear that there are a range of options available, and that we should not just focus on one or two areas. The federal Minister for Resources and Energy, Martin Ferguson, recently came to Western Australia and spoke at Carnegie Corporation in Fremantle. I do not think the Minister for Energy was available for that, but the federal minister made some very interesting comments about ensuring that we look at all the options. In fact, he made some announcements about federal funding for various projects. I think that the Carnegie Corporation.s wave project is a fantastic example of the work being done in these areas. I know that a number of people turned up for that particular function the day before!

Hon Peter Collier: It was on the Thursday but they changed it.

Hon KATE DOUST: Yes, they forgot to tell a few of us! However, it was a great opportunity because it meant that I could have a fantastic hour with this fellow who was involved in geothermal technology. There are all sorts of interesting areas. We have these great resources in Western Australia.perhaps more so than some other states.and we should make the most of them.

As part of the process of getting people to change their approaches to the way they use energy, we have to start at the very beginning. The previous Labor government sought to do that through the education of children. We have already raised with the minister the matter of continuing the National Solar Schools Project, and I know that the government has also extended the program to the non-government school system, which I think is very good. At the end of the day, it is the children who will educate their parents and, in fact, are probably a lot more strident about doing these things than we were at the same age. We need to broaden the possibilities so that people understand all the other options that are available. I will be interested to see how the government progresses the feed-in tariff program. I do not know whether it will be opened up for public comment, whether it will be purely research based, or based on observation of the other states, but I think it is a very important thing that will encourage people to participate, and I know that there are a number of people already on the REBS program the minister has spoken about. That is a very important program that the Labor government introduced. A number of my friends are on that scheme, and it is something I also have to look at. More and more people are enthusiastic about such things. There have been changes in people.s approaches, and it has not happened overnight. There has been quite an awakening, and people have become more aware of the environment, climate control and what they can do as individuals to try to reduce their carbon footprint. These types of issues are becoming more relevant; they are things that people in the community talk about more openly now. The minister is smiling at me. I do not know whether he is just having a happy thought or whether he is agreeing with me!

If the government is keen to get this sort of thing up and going, community education programs are very useful for helping people to understand what is involved, how they can engage, and what the benefits are. A range of benefits in terms of dollar or energy savings for the community and for government has already been outlined. That means people become more innovative in design and technology development, and that is something we need to encourage. Putting these sorts of schemes in place is an excellent way to encourage those sorts of things to happen. One has only to look at the various academic institutions in Western Australia to see the sort of research that is being done to assist a feed-in tariff. Murdoch University has a sustainable development unit, and Murdoch University, Curtin University and the University of Western Australia are all doing very exciting projects, particularly in the area of energy. That work will assist to educate the broader community about how to better utilise energy and the development of mechanical applications that will enable energy to be saved.

A lot of good groundwork has been done, and the Labor government set the framework for the current government so that it did not have to reinvent the wheel. We had a fairly clear party position on renewable tariffs prior to the election. Although it might seem academic because we lost the election, that remains part of our platform. Hopefully, when we are again in government, we will seek to improve upon whatever this government does and expand on the available options. In some ways our policy is a lot clearer than the government.s. We have a clear record on where we were going. Hon Paul Llewellyn thought that we might not have gone far enough or that some elements could have been improved upon, but we must start somewhere. We have policies that demonstrate our ability to change, and we were doing that. I hope that Hon Peter Collier will look back at a number of the programs that the Labor government put in place and improve upon them because that will benefit the Western Australian community in the long term.

I do not have a lot more to say. The debate on this motion has been extensive. We have been dealing with it for a number of weeks and the level of detail has been substantial. I am interested in the processes that the Minister for Energy will engage in, which he might talk to me about later. I will watch with keen interest to see how the Council of Australian Governments moves forward on this.

I was going to go through a range of matters but I think that they have been covered in some detail. People have told me that the ACT legislation is very generous and is the best legislation that has been put in place. I do not know whether the minister has had the opportunity to read the commentary of the member who dealt with that legislation, whose name is Mr Mick Gentleman. He said that the legislation was important because it pushes social change and people.s attitude towards energy use. It would be worthwhile for the minister to look at some of his comments. Perhaps if the minister is to go down the path of reinforcing and having a feed-in tariff, he might look at the ACT model.

I asked the minister a couple of questions about the feed-in tariff on 17 March regarding the eligibility criteria for the feed-in tariff scheme. At that stage, the minister said that the eligibility criteria had not been established. I do not know whether that situation has moved on.

Hon Peter Collier: It is pretty much imminent in the next week or two.

Hon KATE DOUST: I might ask the minister another question on that in a couple of weeks to see where it is at because that is important.

We will support the motion. Extensive detail has been provided on this matter and we all support this type of program being put in place. We can all see the benefits of this initiative to the community, industry and government. I look forward to seeing how the government goes about doing that. I commend Hon Paul Llewellyn for moving this motion and for the level of detail that he has provided to us.

HON PAUL LLEWELLYN (South West) [4.44 pm] . in reply: I will deal with some of the issues that have been raised. I thank the Minister for Energy and Hon Kate Doust for their contributions to this debate. Clearly it is something that I am very passionate about, and I have the badge to prove it, apparently. The important point I want to deal with is that the purpose of a comprehensive state-based feed-in tariff is to provide energy security and reliable, safe and affordable electricity in the future. The minister raised the matter of intermittency and the impact that renewable technologies, which are inherently intermittent, particularly wind, might have on the grid. We have not yet given our engineers the brief to make this happen. Western Power has not been given the brief to make the grid renewable energy friendly and ready. We must spend $1.8 billion.that is the last figure I heard.on refurbishing the grid and developing the south west interconnected system. At the same time, we need to ensure that we are making the grid renewable energy ready. For example, if the connector that runs to Geraldton through our wind belt were fully reinforced, we could get a considerable amount of wind energy in that area. If it were fed into the wheatbelt, we could have bioenergy and solar energy feeding into the same connector.

The matter of intermittency and grid stability is a work in progress right across the world; this is not peculiar to either Western Australia or Australia. Australia is an island nation and Western Australia is an island state in the sense that it is not connected to the national system. We manage the small grids independently. It is because Western Australia has small integrated local grids that we can use renewable technologies to get stability and security in those grids, more so than other places. That is somewhat counterintuitive because in Europe, where there are interconnected grids, one area can cover for another area. For example, if there is not enough wind in one place, the energy is sourced from another area because the system is interconnected. The south west in particular has the advantage of being geographically widespread.

Five or six per cent of our energy comes from renewable sources. My motion calls on the Western Australian government to introduce a state-based comprehensive gross feed-in tariff for renewable technologies. We were not exclusive about that. This motion is about not only solar, but also other technologies and different scales so that we can drive investment and improve the ratio of renewables on the grid. We need to surpass 20 per cent by 2020 and look beyond 2020 to what the grid will look like in 2030 or 2050. I can see no reason why we cannot create an affordable energy system that uses renewable power.

The Minister for Energy gave an example of the current gross feed-in tariff and discussed the fact that it is funded by consolidated revenue to the tune of $13.4 million. I gave the example that that is small scale, and we need to fund a genuine feed-in tariff through a small levy across all energy transactions, not by consolidated revenue. Today we saw the Minister for Water announce that he will wind back the highly successful water rebate program that has resulted in 350 000 consumers buying into water rebate schemes. The scheme has been cut because, of course, of cost-cutting measures taken by this government. One of the perils of a feed-in tariff sponsored by consolidated revenue is that the scheme will be vulnerable to government cost-cutting measures. I think we need to use the West German model, which is funded by a small premium of about one per cent or two per cent of all transactions. That model has been discussed. It is the most cost-effective model of delivering large-scale renewable energy. That is something in the design that needs to be given serious consideration.

I would like to talk briefly about the Australian Capital Territory. The ACT has the most progressive feed-in tariff arrangements in Australia at the moment. It is not as limited in scale as Western Australia.s has been; it is accepting larger-scale solar and wind energy. But bear in mind that because of the ACT.s population size and location on the national grid, it is a very different animal from Western Australia. It is interconnected to the national grid and it has a very small population, no major industry and very little of its own generation capacity. It is almost like a micro version of Western Australia.a small grid.

Whilst the ACT has put in place the most progressive feed-in tariff arrangements for renewable energy in Australia, it is not the natural model that WA should be looking to. It is more natural that we should be looking to larger-scale models such as the European models. Whilst Western Australia has a very small population, it has an extremely energy-intensive economy, so it is better that we use a different model.

I again acknowledge the distinction made by the Minister for Energy between net and gross feed-in. To follow his example which was that at a household level, if members thought a feed-in tariff could apply equally to a large-scale geothermal facility, for example, then net metering might only work if there is a mine site next to a geothermal facility and it might net meter out of the mine site. For example, if at some mine site there was genuinely a large-scale mining operation that used a lot of power, a very large wind farm could be located next to that mining operation and literally net meter out of that. Effectively, the company operating the mine becomes a generator in its own right. That is happening now. If a large mine was set up in a remote area, it would set up its generation facility. Currently we are using gas or diesel to run those. But if, in the case of Ravensthorpe or the Grange Resources mine east of Albany, the mine was interconnected with a connection into the grid, they could literally net meter at a very large scale. I am trying to expand the scope of thinking about net metering, because it is extremely good for enterprises. If there was a winery on the south coast where there is a large local load, a generator of any type.solar, hydro, wind.could be set up and they could net meter off their property. That has significant advantages in the current market.

We pay for the total volume of energy produced from any facility because it offsets the need to produce coalfired or gas-fired power somewhere else. The gross feed-in tariffs proposed by Senator Christine Milne, modelled on the European one, suggest that all the energy that is produced is paid for because it offsets production or generation somewhere else. The net and gross feed-in tariffs become less distinct when the market rules are changed in that way because that becomes very large scale production.

The reason we should also consider a gross feed-in tariff and imposing a levy to fund the subsidy across all transactions is that it spreads out the load on the whole community. I cannot stress more that in proposing the Western Australian government introduce a state-based comprehensive gross feed-in tariff for renewable energy technologies, we are looking for a design that levels the impacts across the whole economy. To achieve 20 per cent renewable energy we know it will cost $46 a year for each household, which is a very, very low cost. When the costs are levelled, it produces more stability in the whole energy market. The design of the feed-in tariff must lend itself to building stability and reliability into the energy market so that large companies that want to invest can go to their banks and take out a loan or self-fund a renewable energy facility, knowing that it will get a return on investment over time. That is at the heart of this feed-in tariff proposal.

In the last couple of minutes before question time I will deal with the manner in which the program might be implemented and what process we might use. Feed-in tariffs were introduced into European Union countries such as Germany, France and Great Britain because they wanted to do away with the plethora of complex smallscale subsidies and replace them with a uniform scheme. There is absolutely no reason Western Australia could not operate at that level. If we template the legislation, it will be no different from the gas access laws that we will be debating in this house in orders of the day very soon, which are based on South Australia.s access laws. We hope that if Western Australia sets up an adequate template for feed-in tariffs, it will become the basis of a national gross feed-in tariff arrangement, which is what has happened with the gas access laws set up in South Australia.

We think there needs to be a full debate about this issue, but one of the first things we need to do is look at the architecture of the German feed-in laws, as well as that proposed by Senator Christine Milne, because the Senate has already done a considerable amount of research to work out the structure. We also need to consider the connectivity between mandated renewable energy targets and feed-in laws, because they can work back to back.

The mandated renewable energy target will apply to facilities that feed-in laws will not apply to. Therefore, mining companies that are self-generators will be caught up in the MRET arrangements because they are a liable entity. The feed-in laws will not necessarily capture them because they are not feeding into any national or local grid. There is a genuine complementarity between mandated renewable energy targets and gross feeding laws. They can work back to back.

Debate interrupted, pursuant to standing orders.
....
Resumed from an earlier stage of the sitting.

HON PAUL LLEWELLYN (South West) [5.37 pm] . in reply: Prior to question time I was outlining the difference between a mandatory renewable energy target and a feed-in law, and the capacity for those two instruments to work back to back in a smooth framework. I need to again reiterate the importance of having a mandatory renewable energy target. In 2005, I introduced into this house a bill called the Electricity Industry (Western Australian Renewable Energy Targets) Amendment Bill. As members know, that bill was supported by the Liberals and the Nationals in this house. It was, in a sense, a landmark piece of legislation for Western Australia, and it would have resulted in considerable investment in renewable energy technologies. At that time, we were talking about approximately 20 per cent of all electricity on the south west interconnected system. That would have been primarily cost-effective, cheap wind energy. I want to talk about the interaction between that and the current gas generation and coal-fired generation assets that we have.

As I said, we have approximately six per cent of renewable energy. Sixty per cent of our electrical energy comes from gas, and 40 per cent comes from coal. The interesting thing about introducing large-scale renewables into the system is that they work in a complementary way with gas-fired generation. In other words, although we might have existing gas generation, they can load-follow wind.in this case, under a mandatory renewable energy target.and basically support the system and keep supply smooth. If the government introduces a feed-in tariff, it will drive investment in technologies that are not currently cost effective, such as solar thermal energy or solar photovoltaic energy; concentrating photovoltaic energy, which is a dish technology that concentrates rays into a single silicon block; wave energy.if we had a feed-in tariff, we would drive investment in wave energy; and geothermal technologies, which cannot currently compete using the mandatory renewable energy target arrangement, because MRETs do not provide sufficient incentives. There is no way we can get geothermal or .hot rocks. technology off the ground in Western Australia unless the government either provides millions of dollars in subsidies or introduces a feed-in law. The Greens (WA) argue that it is much more cost effective and reliable to introduce a comprehensive feed-in law than it is for the government to shell out millions and millions of dollars in upfront consolidated revenue-funded subsidies. The government needs to avoid the temptation of funding the new energy technology industry strategies through consolidated revenue, and should use another method.

I want to talk about the impact on coal generation. We know that some companies have entered the energy market very recently with coal-fired power stations. They understood the risk they were taking at the time. Griffin Coal and Bluewater must have understood the risk involved in competing with renewable technologies and that they were heading towards emissions trading. That was a commercial decision made by those industries. There will still be a role for baseload coal for some time, because we are not talking about going straight into 100 per cent or 50 per cent renewable energy. There may always be a role for coal. My personal view is that coal is so carbon intensive that it ought to be the first technology we phase out, because it will be a liability either now or when carbon trading is introduced. Those companies that are producing electricity from coal will have to pay their way, and I think that they will be the first companies to suffer.

That is a fact of modern life, if we are to take the climate debate seriously, and on Tuesdays and Thursdays, I do; I have realised that I am a climate sceptic on the other days. I am a climate change sceptic on Mondays, Wednesdays and Fridays, and the rest of the time I am persuaded by the science. If we are to take seriously emissions trading and the whole issue of climate change .

Hon Kim Chance: Is that to do with the phases of the moon?

Hon PAUL LLEWELLYN: No, it is to do with the fact that it does not matter whether one believes that climate change is happening; one would still invest in clean, green technology because it makes sense. It does not matter whether one believes in climate change. If we could produce cars that are much more efficient, we would do so anyway. I am a sceptic on certain days because it is convenient; I do not have to worry about the world collapsing and about carbon emissions trading. On the other days I am persuaded by the science!

With that diversion in place, I am trying to make the point that there will be an interaction between energy economy carbon emissions trading and feed-in laws and emissions trading. We need to gain a good understanding of that. The Greens (WA) have undertaken to look at feed-in tariff arrangements. We have looked at that across the world to build a template feed-in tariff architecture for Western Australia and, indeed, for the whole of Australia, in relation to both carbon emissions trading and mandatory renewable energy targets, so that we can get some clear, functional institutional arrangements to meet our renewable energy targets.

I understand that that is a very big undertaking. I am out of this chamber on 22 May, and I must say that it is palpable that the weight will no longer be on my shoulders. There are a few members around the chamber who will also feel that the weight on their shoulders will be lifted very soon. However, the Greens (WA) have already put the federal architecture in place, and I encourage the Minister for Energy to look at the federal legislation. We will be drafting template legislation for Western Australia. I do not wish to take up the space that the Minister for Energy should be occupying, but the Greens (WA) believe that it is our responsibility, having put this motion on the table, to at least take it to base one in the development of a legal framework. We will not shirk that responsibility. There will be a draft bill, quite possibly before 22 May, and we can talk about what mechanisms we have to do that. I do not give any undertaking that the Greens (WA) will even introduce the bill, but we will at least have the architecture in place.

I again thank the Minister for Energy and Hon Kate Doust for their generous contributions and acknowledgement of the work and preparation that has gone into this motion. I have been carrying it around for weeks and it has finally come about. It has been a very interesting exercise. I thank my colleague in the Senate Senator Christine Milne for doing a lot of the heavy lifting to develop this. I also thank Mick Gentleman, a former ACT Labor MLA, because he also did a fair amount of work at that level of government to think out and design a feed-in tariff arrangement.

Question put and passed.
 

3 April 2009

The Greens have achieved unanimous Upper House support for a renewable energy Feed in Tariff (FiT) in Western Australia.  This paves the way for a massive investment in renewable energy industry in our State, said Greens MLC for the South West Region, Paul Llewellyn.

Last Wednesday in State Parliament, Liberals, National, Greens and Labor supported a motion to introduce comprehensive state-based feed in laws.

“Getting 20% renewable energy in the South west alone will result in over $2.3 billion of new investment in clean energy, creating a boom in the power industry.

“More people will have jobs in the renewable energy industry than ever before, building and maintaining wind farms and wave power plants, making and installing solar panels, and growing and maintaining bioenergy facilities.

“Under a gross feed in tariff, a premium price is paid for all the energy generated from grid-connected, compliant renewable energy technologies. The proposal is modelled on the 1992 German green energy laws which have resulted in them now generating 12% of their energy from solar, wind, geothermal and biomass resources,” Mr Llewellyn said.

Minister for Energy, Peter Collier, said during the debate that “we will produce a model for an effective feed-in tariff. The government is committed to FIT; it supports the feed-in tariff concept and will introduce a feed-in tariff.”

“I am looking forward to continuing to work closely with my Parliamentary colleagues to bring this exciting, transformative initiative into force, towards a brighter energy future for Western Australia,” Mr Llewellyn said.

For more information contact Paul Llewellyn on 0428 317 182 or 9848 1555
 

Legislative Council debate, Thursday, 19 March 2009, resumed from 18 March on the following motion moved by Hon Paul Llewellyn:

That this house calls on the Western Australian government to introduce a state-based comprehensive gross feed-in tariff for renewable energy technologies.

• Senate Inquiry recommendations on Christine Milne's feed in tariff bill
• Excerpts from Christine Milne's speech on the Federal feed in tariff bill
• Energy efficiency targets mitigate impacts
• Setting feed in tariff rates
• Response by Peter Collier
• Peter Collier support the Greens motion for a feed in tariff

HON PAUL LLEWELLYN (South West) [11.11 am]: I note that it is highly unusual for a Greens (WA) member of Parliament to spend a long time in this house talking about a particular issue. I am conscious that I have talked about this for at least two one-hour sessions. However, the importance of this motion to the economic development of Western Australia and to the long-term future of our electricity industry, and indeed to the long-term development of a clean green economy, needs the amount of time that we have put into it.

Only last night I spoke about Senator Christine Milne, a Greens senator from Tasmania who introduced a feed-in tariff law to federal Parliament. I also spoke about the practicalities of setting up a national framework underpinned by uniform legislation in each state. Senator Milne’s feed-in bill went to the Standing Committee on Environment, Communications and the Arts. That committee made some very clear recommendations. I will read the recommendations from the committee’s report .

Recommendation 1

2.40 Noting strong industry, consumer and government support for FIT schemes, the committee recommends that the Commonwealth government, through COAG, work as quickly as practicable to implement a FIT framework that is as far as possible nationally uniform and consistent.

Now, the operative words in that recommendation are .as quickly as possible.. We know about the mandated renewable energy target debacle in which it took years for the Council of Australian Governments to seek out uniform frameworks at a state-based level. It was not until Greens (WA) introduced a renewable energy target at a state level, followed by New South Wales and Victoria, that we got any progress on renewable energy law across Australia. This first recommendation acknowledges the importance of implementing a feed-in tariff scheme but then refers it to COAG. I think COAG is a big black hole; one that we should not rely on to deliver this scheme. It is important that the Western Australian state operate independently, build on a national framework and set up its own feed-in tariff at a state-based level. That is why the motion calls for the Western Australian government to introduce a comprehensive gross feed-in tariff at the state level.

The standing committee’s second recommendation reads:

The committee recommends that all governments consider carefully the evidence received by this Senate inquiry regarding metering, as well as the track record of existing FIT schemes overseas, in designing a nationally consistent FIT framework for Australia.

That is commonsense. We should look overseas. I have already been given examples of the frameworks that have operated in other countries for over a decade. We accept that recommendation. I continue .

Recommendation 3

The committee recommends that a more regular system of payments to generators be considered than the annual payments in the proposed bill.

That is fair; especially for small generators who want to receive payment either monthly or quarterly. That is a sensible recommendation and, in fact, Christine Milne went on to amend and reintroduce her bill. I will read some of that bill later. I continue .

Recommendation 4

The committee recommends that tariff degression rates form part of the nationally consistent FIT framework, but that there also be capacity for degression rate .pauses. to be instituted following a rate review procedure.

It is right and proper that the feed-in tariff should .degress. or decrease over time as the technology matures and becomes more market ready. That said, it must be clear that people who enter the market in one set of circumstances need to be guaranteed a payment for twenty years; that does not mean to say that the following year the same payment is guaranteed to the next cohort. The feed-in tariff can be reduced.

Recommendation five states:

The committee recommends that tariff degression rates be technology-specific.

In other words, once we sense the learning in a technology platform.for example solar energy technology.is increasing in scale and that the price is rapidly dropping, the tariff reduction should be commensurate with the maturity of the technology. That is a sensible recommendation.

Recommendation six states:

While strongly supporting a nationally consistent feed-in tariff framework, the committee recommends the current bill not proceed.

Not proceed! After all that, we have an extraordinary piece of legislation, which stands on the shoulders of the work done in countries throughout Europe, the committee says that the bill is exceptional in almost every sense and yet it is not to proceed.

I will give members a sense of the responses to submission made about the feed-in tariff bill. I am, again, citing Paul Gipe’s website Wind-Works.org, which states:

According to the Clean Energy Council, the majority of speakers voiced their preference for a gross national feed-in tariff. Out of a total 127 submissions made to the Senate Inquiry,

• 80% supported a gross FIT (pays for all electricity, including that used on-site);
• 12% did not show preference;
• 8% not in favour of FIT policy;
  

   

I imagine those people supported the mandatory renewable energy target; and .

• 1% favoured a net FIT (only pays for electricity sent back to the grid).

I think those are the people who did not understand .

Hon Peter Collier: Where are those figures from?

Hon PAUL LLEWELLYN: This is a summary of the submissions made to the senate inquiry.

Hon Peter Collier: How many submissions were made?

Hon PAUL LLEWELLYN: There were 127 submissions made on the feed-in bill. Of the submissions received, 80 per cent supported it; 12 per cent did not show a preference; eight per cent were not in favour of a feed-in tariff; and one per cent favoured a net feed-in tariff. I argue that that one per cent of people either did not understand or had no interest whatsoever in progressing renewable energy technologies. I repeat that net metering primarily pertains to household level solar or, for example, people with a small mine site on which they generate their electricity for their site and they also export some they would only export their net production.

Net metering has significant economic advantages for the mining industry, but I think the intention of this proposal is to have gross metering at the household level and the business level; in other words, if a shopping centre puts photovoltaics on its roof and produces 100 kilowatts of electricity, it should be gross metered.

I will now read from the second reading speech of Senator Christine Milne on her Renewable Energy Amendment (Feed-in-Tariff for Electricity) Bill 2008. Bear in mind that I have tried to edit this speech that was read to the Senate, but I will quote from it because it is a fairly good summary of what the bill is attempting to do and it will probably be more articulate than I have been. The second reading speech states .

Australia has immense, untapped renewable energy resources of sun, wind, heat and water. We have some of the top researchers in the world. We have tremendous community support to make the switch from a coal-based economy to a new, zero-emissions, renewable energy economy. With the right policy settings and the right political will, we can make it happen. This Bill is a key first step to making a renewable Australia a reality by rewarding anybody who invests in renewable energy with fair pay for the clean energy they generate.

The purpose of the Renewable Energy Amendment (Feed-in-Tariff for Electricity) Bill 2008 . The objective of the FiT scheme is to provide reliable, long-term financial support for the commercialisation of a range of renewable energy technologies, both large and small. It is particularly intended to help those that are generally unsupported by the existing mandatory renewable energy target scheme or short term ad-hoc rebate policies such as the Solar Homes and Communities Program.

There is overwhelming support for a gross national feed-in law in Australia.

This overwhelming support is not surprising given that the renewable energy boom we are now seeing in many nations around the world is unambiguously attributable to renewable energy feed-in laws. The principal reason for this success is investor certainty . a feed-in law provides the certainty homeowners, farmers, businesses or anyone else needs in order to borrow the up-front cost of a renewable energy system, because they know that the income generated by system will meet the loan repayments.

The Greens’ strong support for feed-in laws does not mean that we don’t also support the Mandatory Renewable Energy Target. Rather we believe they are compatible and complementary. The MRET should be retained because it provides a backstop, minimum level of renewable energy. The effect of MRET, however, is to support whatever renewable energy technology is currently the cheapest . in practice that mainly includes wind energy and solar hot water systems. By contrast, feed-in laws are tailored to support renewable energy that has a good prospect of becoming competitive in the future . these may include solar thermal, geothermal, solar PV, biomass, tidal, wave and so on. It is important to support a range of technologies for two reasons. First, it is not possible to be certain which technology will end up being most successful and second, because ultimately if we are to rely completely on renewable energy we will need at least a few technologies working together. When the sun isn’t shining we will need to be producing energy from other sources, such as wind, stored solar thermal, geothermal, biomass, wave etc.

Since the committee inquiry there have been a number of noteworthy developments. For example in October 2008, the international accounting firm, Ernst & Young, released a report which concluded that Germany’s system of feed-in tariffs delivers more renewable energy at lower cost to consumers than Britain’s Renewable Obligation and its certificate trading system. This conclusion challenges the common misconception that feed-in tariffs cost consumers more than so-called .market-friendly. polices, such as tendering and certificate trading systems. Perhaps not surprisingly this was followed last week by the announcement that Britain’s Labor government will now consider a proposal for feedin tariffs for renewable energy systems up to 3MW.

That is very large, compared with what we are proposing in Western Australia. Our proposed feed-in tariffs are for very small scale two kilowatt household systems.this is for one million watt systems, but that is in Great Britain. To continue .

This represents something of an ideological breakthrough because the UK, like Australia, had been a strong supporter of certificate trading systems (such as the MRET). In other words, what the Greens are proposing is exactly what the British Government is now proposing.

What the Greens are proposing.a federal, fully funded feed-in tariff.is exactly where Great Britain is going now, even though it was on the MRET path that we were on. If the federal government moves slowly on feed-in laws, the states should step in and do the job for it. We saw this with the mandated renewable energy targets, where it stopped at two per cent. The Howard government refused to increase it even to five per cent, which would have transformed our economy, and it refused to move to 20 per cent by 2020. That proposal went to the Council of Australian Governments, and sending it to COAG was like sending it to a big black hole. I make the salient argument that if the federal government will not bring in this feed-in law, the states should take leadership now, because there is no time to lose.

I acknowledge that state and territory governments around Australia have introduced minor feed-in tariff arrangements.some of us in this place know more about that. I was talking yesterday about the Western Australian solar feed-in arrangements.the $3.4 million over four years.and I reiterate that that was not a comprehensive gross feed-in tariff; that was a token gesture and is not what this proposal is about. I shall continue with Senator Christine Milne’s second reading speech .

All State and Territory schemes, with the exception of the ACT, have a number of fatal flaws, the worst of which is the so called .net metering.. Net metering schemes only pay the premium tariff on the net quantity of electricity exported to the grid after accounting for in-home consumption. This contrasts with gross metering schemes, under which owners receive the premium tariff for all electricity produced by their systems (whether consumed at home or exported). The very significant advantage of gross metering systems is that owners and lenders can reliably estimate the value of the renewable energy their system will produce. This is much more difficult with .net metering. systems . which explains why no scheme outside of Australia uses the net-metering approach.

No scheme outside Australia uses that.

It also significantly increases the time needed for the investment to be paid back, reducing the incentive to invest. Net metering, frankly, is a deliberate attempt to set up a .Clayton’s. scheme which looks like a feed-in tariff but does nothing.

Sadly, with all respect to what we have put on the table in Western Australia, although it looks like a fully functional feed-in tariff, it is not at the right scale. It is a small step in the right direction. I go back to the second reading speech .

A second major problem with most of the State schemes is that they support only solar photovoltaic energy.

That is at the small scale .

This is a major restriction. Most schemes around the world provide feed-in tariffs to a range of renewable energies to promote diversification and to maximise the chances of a real breakthrough in the commercialisation of one or more technologies. Again the ACT scheme is better than the other states because it offers feed-in tariffs for technologies other than just photovoltaics, namely wind and solar thermal.

A third major problem with most of the existing State schemes is that only small scale renewable energy generators are eligible to participate in the scheme. This too is a significant deviation from the successful European models. Why would we want to limit the potential of the scheme in this way? The Greens believe that both large and small scale renewable energy generators should be eligible to participate.

Once again the ACT is correct in that regard. The  primary argument against feed-in schemes seems to be that the cost of the scheme will negatively impact low income households. Whilst there will be an impact on households, the experience from abroad indicates the impact is very slight and manageable. The key is to compensate through energy efficiency offsets such as proposed by the Greens through the retrofit of the nation’s housing stock. Even a cost impost of a couple of dollars per month on each household can raise enough revenue for a very effective scheme. Furthermore, it must be acknowledged that the MRET and the yet to be introduced emission trading scheme also inevitably impact on low income households.

I would like to stop there and introduce another concept. While we have a mandated renewable energy arrangement at the federal level, Victoria has also introduced an initiative called VEET.the Victorian energy efficiency target arrangement. The Greens have proposed MEET, a mandated energy efficiency target proposal, at a state-based level.

Hon Peter Collier: We have that government building .

Hon PAUL LLEWELLYN: That is right. We are talking about a similar arrangement to the mandatory renewable energy target whereby retailers are obliged to go out and procure, not renewable energy, but efficiency. They can trade certificates because efficiency can be calibrated. If we take an old refrigerator and replace it with a new, efficient refrigerator, a certain number of certificates can be generated. At the moment, if a solar hot water service is installed, householders get RECs, renewable energy certificates, for installing that service because it is deemed to have produced renewable energy. Under the VEET system or these mandated energy efficiency system, consumers can have certificate trading arrangements in the marketplace trading in efficiency. We know that there are excellent returns on investments.

The payback period is less than four years. One could set up a scheme, for example, in which any technology that can pay for itself within four years should be mandated. Say one has an energy-inefficient motor and it can be changed. In changing it, a person could be paid back within four years. In that scenario, it should be mandated. We can actually effectively generate certificates through doing that as well.

Hon Peter Collier: Did Hon Paul Llewellyn say that could be mandated?

Hon PAUL LLEWELLYN: It could be an obligation. There are various systems. Under the Victorian energy efficiency target arrangements, people can go into the market and trade in energy efficiency and generate certificates. They are interchangeable in the marketplace. They almost become de facto carbon certificates because they are all measured in kilowatt hours .

Hon Peter Collier: At the state level?

Hon PAUL LLEWELLYN: At the state level. The proposition is that when these initiatives are introduced, be it carbon trading, mandated renewable energy targets or feed-in tariffs, there will be a small increase in the electricity cost. That can be very easily offset by other initiatives in the economy to increase efficiency and reduce business and household energy liabilities. This is the brave new world that we have to go into if we want to keep pace with what is happening internationally. This is what is happening internationally.

In Australia we can buy air conditioners that have a 1.5 star energy rating. In other countries that simply cannot be done. China is dumping one and two star air conditioners onto Australia, including Western Australia, because they are not even permissible there. China’s vehicle fleet is more efficient than Australia’s vehicle fleet. One would not even be able to drive some Australian Holdens in China because they do not meet the efficiency standards. That is interesting.

The argument here is that there is a claim that when a feed-in tariff is introduced, it will break the bank; it will cost householders too much. Yesterday I briefly talked about approximately 900 000 households that are currently delivered power by Synergy. It was said that if we took from each household a $24 premium.that is $2 each month.it would generate $44 million. We could also take a smaller contribution from industry. I went online and looked at Synergy’s income. In 2008, Synergy earned $1.7 billion in revenue. If we take that figure as being primarily from transactions in the economy, we can assume that the cost of providing that service is $1.4 billion because it has to buy the electricity from generators and so on. This figure is just for Synergy, not Horizon and all the other operators. We are talking about $1.7 billion. Say we took one per cent of that, $175 million, to fund the feed-in tariff arrangements .

Hon Peter Collier: That is at what rate?

Hon PAUL LLEWELLYN: One per cent. I am just doing a thinking exercise

Hon Peter Collier: That is fine. It is a good point. More and more people are doing it voluntarily of course

Hon PAUL LLEWELLYN: The problem with the people who are doing it voluntarily is that they are paying a premium for doing the right thing. The feed-in tariff levels the costs across all transactions in the economy so that people are not paying to do the right thing. If everyone is paying to do the right thing, we can then spread it across the whole economy and impose a levy.

Hon Peter Collier: The Office of Energy recommendation for the carbon pollution reduction scheme was that that be identified on accounts, which is very similar to what the member is advocating for. That would, in effect, be a renewable contribution.

Hon PAUL LLEWELLYN: Yes. At the moment, if people want to do the right thing, they have to pay for the privilege. People should not be paying for the privilege. We want to develop the industry so that there is a communal benefit. We want to reduce emissions and reduce reliance on imported fuels. We want to reduce the reliance on our own gas fields, which are inevitably going to deplete. That is another story.

Hon Peter Collier: Germany has that tariff. Which other country has a tariff?

Hon PAUL LLEWELLYN: A feed-in tariff?

Hon Peter Collier: Yes, an across-the-board, generic tariff.

Hon PAUL LLEWELLYN: There are Spain, France and Denmark. I think 16 of the European Union countries do. I can provide a list of all countries. The world is changing very quickly. I think 19 states in the United States of America have introduced this independently of state-based feed-in tariffs.

Hon Kate Doust: They started in the 1970s.

Hon PAUL LLEWELLYN: They started with a plethora of different kinds of arrangements.

This is now coming home to roost and the technologies are very close. One aspect of end rates and the feed-in tariff is that if there is no domestic industry, the tariff is being passed on to other countries. We need to develop domestic capacity. That is why I speak of a solar hub in Bunbury, a wind energy hub in Geraldton and a wave hub in Fremantle. Western Australians can produce the technology themselves, either in Western Australia or in another state, so when we pay the feed-in tariff, we are paying our own industries. We will never get those industries unless we get the economies of scale. That is why BP Solar packed up and said that it was going, to some extent, and why Vestas Wind Turbine said that there was no industry in Western Australia worth its while.

It said that it moved here in good faith because it thought the end rate would go up, but it did not, so it was out of here. We need to foster local industry and mitigate the impact. We have taken this little detour about introducing the Victorian energy efficiency targets to lower the impact.

The Greens. national program on energy efficiency involves auditing every household and business across the nation and introducing a low-interest loan to implement a whole range of energy efficiency measures. It would be funded by government money but as a low-interest loan. The payback periods would be anything from three to five years, so it is not money that would go straight out of government coffers but come back as people paid off their loan to the government to get their solar hot-water services and so on. Some of those matters are now on the table. This is not bragging, but that was a Greens. initiative.

Hon Ljiljanna Ravlich: You are close to bragging.

Hon PAUL LLEWELLYN: We are. There is also the energy savings initiative, which is a $10 billion national program to roll across every household and business in Australia. I am no longer bragging, but the government can have that one as well.

We are talking about ways of mitigating the impact of a feed-in tariff. I have laid out some of the numbers. I will be happy to work through those numbers across the whole of the economy, because we have done some of that work, to work out just how much leverage can be got from a one per cent increase in the tariff. Something like 52 per cent has to be introduced to get cost reflection.

Hon Peter Collier: That is only for the first year. It is around 110 per cent.

Hon PAUL LLEWELLYN: Yes, it is ugly. When it becomes cost reflective, some technologies will automatically switch in. Wind technology might do that and become automatically competitive with gas, which would be a good thing.

Hon Peter Collier: You reckon?

Hon PAUL LLEWELLYN: It will mean that the state’s gas resource life is extended for many years. Gas is a very valuable resource. We can have this conversation later.maybe never. I went on a detour there, but I am saying that compensation for the small impact that might happen at the household level is necessary but easily achievable through income tax and welfare systems or through the distribution of revenues raised by the sale of permits in the emissions trading scheme or through investment in energy efficiency rollouts to save householders and businesses money on their energy bills. The question is not one of will there be a negative impact on low income households, as this can be offset. The question is: are feedin schemes an effective way to kick-start the vital renewable energy sector? The answer is clearly yes. As with the first version, this bill would go further than the approaches recently adopted in Australian states, by allowing the minister to apply a feed-in tariff to any technology, not just photovoltaic systems; ensuring that the feed-in tariff is applied to all renewable electricity generated, not just that component that is exported to the grid, which in the case of domestic photovoltaic systems may be negligible; and establishing a national register that will yield valuable information about the effectiveness of the various renewable energy technologies supported. In this case it would be a state-based register, but this would happen nationally as other states see Western Australia again leading the way and kick-starting this whole process.

The bill would go further by requiring that, in the case of small to medium-sized renewable energy generators. that is, those with an installed capacity of less than one megawatt.the process of reading electricity meters and the rebate of the feed-in tariff rates will be the responsibility of the electricity retailers; that will allow owners of existing renewable energy generators installed before royal assent to be eligible to receive the feed-in tariff rate rebates and payments. That could be formulated to ensure that it is fair, because those people will have already made a major payment up-front. The bill would also go further by requiring the feed-in tariff rate payments to be paid at least quarterly instead of annually, and the feed-in tariff rate rebates to be rebated at the same time as an electricity bill is rendered to an owner. This will allow the minister to reduce the feed-in rate applied to any particular technology without waiting five years, but at a maximum rate of reduction of five per cent per year.

This is what has been built into the national bill. I think we could look at some of the provisions to see whether they might or might not work for Western Australia, but the thinking has been done. The bill would go further by clarifying that extensions to existing registered renewable systems would not be treated as new systems for the purpose of eligibility for rebates.

It would be the responsibility of the Minister for Energy to set the feed-in tariff rate for any of the renewable energy technologies listed in clause 17 of the bill. In setting the rates, it would be the objective of the minister to support the economic viability of electricity generation from a range of prospective renewable technologies. To achieve this, the minister may vary the feed-in tariff rates according to the type and location of qualifying generators. The owners of a qualified generator would receive a constant feed-in tariff for 20 years, set at the time that they register with the scheme on all the electricity they produce. Only generators which forgo participation in the mandatory renewable energy target scheme could be a qualifying generator. That means we have worked out how to back-to-back this. The minister would have to renew the feed-in tariff rate applying to each renewable energy generator type each year, with the adjusted rates applying only to new installations. In order to provide a degree of certainty to manufacturers and suppliers of renewable energy products, the minister may increase feed-in tariffs at the beginning of any financial year, but could decrease rates at a maximum of only five per cent a year. This sort of detail would allow the market to work effectively.

Regarding the feed-in tariff levy, the minister would need to set a feed-in tariff rate per megawatt hour of electricity acquired from the electricity grid to fund the regulator’s feed-in tariff payments to qualifying generators with an installed capacity equal to or greater than one megawatt. The feed-in tariff levy would be imposed by a proposed renewable energy electricity feed-in tariff levy. Therefore, such legislation might not be able to be introduced in this house, but it could be introduced in the other place. A commonsense provision would be to have the feed-in tariff levy rate set at a sufficient level to cover the estimated cost of payments made by the regulator. The feed-in tariff levy would be payable by all electricity retailers and direct customers of electric energy from the grid. It would be calculated based on their annual energy acquisition statements. For renewable energy generators with an installed capacity of less than one megawatt, the electricity retailers would be responsible for managing the process of reading electricity meters and payment of the feed-in tariff rates.

Effectively, it would be similar to a business activity statement; however, I do not think it would be as onerous as a BAS and it would mean that small-scale generators could manage their own business. Electricity retailers would make payments to qualifying generators through a rebate on the electricity bill and it should be rebated at the same time that an electricity bill is rendered. There is more detail about this but I will move on to the feeding in of electricity to the grid.

I restate that compliant generators need to have access to the grid and this is one place where the state has a role because it manages the networks. We need to make the grid renewable energy ready so that we are already making those payments. In this house about three years ago, I put up an amendment to the Electricity Corporations Bill 2005 to ensure that 50 per cent of all the money that was spent on networks would go into making the grid renewable energy ready, particularly in regional areas. That was defeated by a very slim margin in this house.

Hon Peter Collier: I cannot remember that being passed. Was it defeated?

Hon PAUL LLEWELLYN: It was defeated by a very slim margin because I think the Treasurer at the time, Eric Ripper, said that we would be fined $20 million by the commonwealth if we did that. It was an opportunity lost because we would have had three years of network preparation for what we must do now and the network would have been in a better condition. Sadly, that is history.

Hon Peter Collier: This is good. I actually followed up a bit on the report that you gave me last night, so I will make some comments on that later.

Hon PAUL LLEWELLYN: Okay.

Returning to the feeding in of electricity to the grid, subject to compliance by the owner of a qualifying generator with relevant technical, safety and other requirements, electricity distributors would need to connect the qualifying generator to the grid and permit the owner to feed in electricity. The regulator would need to establish a register to record the details of qualifying generators and, in the case of renewable energy generators with an installed capacity equal to or greater than one megawatt, the total amount of electricity produced by each qualifying generator. The Office of Energy and the Economic Regulation Authority already regulate to this level, so there would be nothing new in such a scheme. There would not be a cost impost. The feed-in tariff rate would be paid to the owner of the registered qualifying generator.

I have more detail on this, but I simply wanted to give members a sense that this procedure mechanism has been very well worked out. We are standing on the shoulders of the many countries that have done this around the world. These countries have overtaken Australia in their technology platforms because we have not taken this opportunity. Is it too late for Australia to catch up? I do not believe it is. When Hans-Josef Fell walked out of the seminar that we held in Kings Park, he said that he could not believe the solar resource that we have. As we have such an excellent solar resource.almost twice the intensity of Europe’s.the space, the wind energy, extraordinary wave energy and geothermal resources and the land for bioenergy, Australia can catch up in renewable technologies. If we had a poor resource, we would be seriously behind the eight ball. At the moment we are only behind the eight ball in our statutory instruments to drive the renewable energy industry. This presents a very narrow window of opportunity for Western Australia, and we could lead the way.

I think we have a new Liberal-National government that can see the business case for mandated renewable energy targets. Its members had argued for renewable energy target legislation in the lower house, which was rejected by the Labor Party for whatever reason. I think that it is time for all of us to come clean and to seize the opportunity to introduce a comprehensive state-based feed-in tariff for all renewable technologies on all scales.

With that, I conclude my remarks.

HON PETER COLLIER (North Metropolitan . Minister for Energy) [11.56 am]: I say at the outset that the government supports this motion. I thank the honourable member for bringing it to the attention of the house.

In my response to this motion I intended to contain my comments to the actual feed-in tariff and the structure of that tariff. However, I will make a few comments about Hon Paul Llewellyn’s contribution, which was extremely enlightening, and, as always, gave us very comprehensive coverage of the renewable energy industry.

We are faced with enormous challenges not only in Australia but also globally with climate change and the necessity to reduce carbon emissions and the pressure that places upon us as a community to embrace the whole concept of renewable energy. At the same time, we must be mindful of the pressure that that places on established plant and energy systems. Therefore, we must ensure that we introduce systems to make the transition from a reliance on fossil fuels to renewable energy and reduced carbon emissions. That is what we must do and we must get it right. I think that we will probably do so, and governments will make that decision based upon what is right for not only Australia but also the globe. I think governments have embraced it.

Since I became the Minister for Energy, without a doubt the single most significant issue that comes through in correspondence to my office, which I reply to, is questions about the structure of the feed-in tariff. I regularly receive a large amount of correspondence from mums and dads and community groups asking about what we are doing about the feed-in tariff and whether we will abide by our election commitment, which I must say we will do. However, that in itself is simply part of that whole notion of reduction of carbon emissions. As Hon Paul Llewellyn has comprehensively outlined, we have national issues and state issues. We have a federation, of which I am very supportive; however, when an issue such as this that has global implications arises, we need to face the problems associated with what each state is doing. To superimpose federal government expectations on that causes problems in itself, and I will mention a few of those problems in a moment. Suffice to say, at the moment, electricity, particularly in Western Australia, which is pretty much isolated in terms of power generation, is predominantly generated by large power stations, which are very heavily reliant on gas and coal.

We have to ascertain how we can make the transition to dependence on renewable sources of energy. At the moment the available renewable energy source is almost exclusively wind power. It was very interesting to hear Hon Paul Llewellyn’s comments about the various renewable hubs, and I will be having a conversation with him about that outside the chamber. I put it on record that I will miss the presence of Hon Paul Llewellyn in the chamber after 21 May; I have every intention of maintaining contact with him and using his advice on this issue; I have already done so since the Liberal-National government took over.

Hon Ljiljanna Ravlich: I.m jealous now!

Hon PETER COLLIER: I will talk to the member all day, every day! Do not worry about it.

Hon Ljiljanna Ravlich: I don.t take threats!

Hon PETER COLLIER: No, too late, Ljil! You had your opportunity; no prize for second place!

Point of Order

Hon KATE DOUST: I note that over the past couple of days the Minister for Energy, Hon Peter Collier, has obviously become unaware of the standing order that provides that when he refers to another member, he should refer to the member as .the honourable. and surname, not by the member’s first name.

Hon Ljiljanna Ravlich: He’s done it all the time over the past few days!

The DEPUTY PRESIDENT (Hon Ray Halligan): Hon Ljiljanna Ravlich does not have the call on that point of order! The minister will refer to members by the correct title.

Hon PETER COLLIER: I thank the Deputy President; point taken. I apologise to Hon Ljiljanna Ravlich for any offence. I assume that that will be reciprocated in the way she refers to me!

Debate Resumed

Hon PETER COLLIER: I say at the outset that I am very confident that the community has embraced the move towards renewable energy and the acceptance of doing its part to reduce emissions. We have moved on. I have used this analogy before, but there was in the past a culture of recklessness in energy usage that was very similar to the abuse of water resources. As our water supplies have diminished, the people of Western Australia, which is a dry, barren state, initially had great difficulty coming to terms with being told that they could not water their gardens as often as they had in the past. At first the restrictions meant that people could water their gardens for only a couple of hours every day; then it was restricted to twice a week. There was a great public outcry, because people thought their gardens and lawns were going to die and they would have to pave their gardens. However, the community has taken the restrictions on board, it has embraced the water conservation concept and done so enthusiastically. I think that even should there be a significant increase in rainfall over the next couple of years, most people will still remain very conservative in their water usage. I am discovering the same thing with renewable energy usage. There is a definite mood within the community. certainly in Australia.of recognising the need to move towards enhancing and expanding our renewable energy usage. The most frustrating thing for Australians.this is what emerges in public debate.is not understanding why we should do anything about this when China, India and other industrial nations are flagrantly ignoring the push towards reducing emissions. That in itself is probably a moot point; I do not think that the Australian public really embraces that concept, but it is an argument that is used.

I will comment on another couple of issues raised by Hon Paul Llewellyn in his speech about the impact of intermittency of wind power on the grid. I appreciated the honourable member’s reference to the report by the Office of Energy about intermittent generation in the grid. The intermittent nature of wind power generation in the Western Australian grid has an impact on the maintenance of thermal units. Hon Paul Llewellyn acknowledged that in his speech. The large thermal units are the last to be turned off, and it is therefore very inefficient for these plants to be constantly turned off and on. The south west interconnected system is very peaky in its usage.

Hon Paul Llewellyn: That’s a coal-fired plant.

Hon PETER COLLIER: The member is right; I am sorry. Coal-fired plants still constitute around 40 per cent of our fuel use.

On nights when there is no wind, the plants will be used for baseload power. If there is wind at night, they have to be turned off. That is the issue that we have to deal with.

Hon Paul Llewellyn: They have to be run as being the reserve.

Hon PETER COLLIER: That is exactly right.

Hon Kate Doust: There’s a technology that is being developed in this case that can actually deal with that, to harness it and bring it back online at a later stage.

Hon PETER COLLIER: Absolutely. I refer to the report prepared for the Office of Energy, called .South West Interconnected System (SWIS): Maximising the Penetration of Intermittent Generation in the SWIS: Econnect Project No: 1465.. Hon Paul Llewellyn yesterday read into Hansard the conclusions of this report. I have only had one night to look at this, but I will also quote from it. I refer to the section headed .Priority 3 . Network Frequency Stability.; this is the pertinent area. The report states .

As intermittent generation penetration is increased in significant proportion, issues related to system frequency stability will need to be addressed.

Recommendations:

Forecasting .

Members should take into consideration the fact that this report was completed in 2005 .

11 Prepare a plan for forecasting to implement as soon as possible. Consider appropriate persons to be responsible . IMO, NSP or independent third party. Consider multiple providers with additional rewards for best forecast.

Frequency Control Ancillary Service (FCAS)

12 Develop and implement a process for FCAS estimation based on a probabilistic assessment of credible output swings, taking into account the differing timescales over which these occur for conventional and intermittent generators.

Inertial Control

13 Undertake studies and analysis to determine the value of inertia to the system. If appropriate develop and modify the charging methodology to reward generators and loads for providing inertia.

I have checked with the Office of Energy and yes, the IMO and Western Power are working to position the market for increased renewable generators. They actually commenced that process in 2005, and given more time I will, over the next couple of weeks, investigate how far we have progressed on that positioning. We have to be prepared for it; if we are going to introduce more renewable energy into the grid, we simply must be prepared for it. The argument that continues to be used.that the intermittency of wind is having a negative impact on baseload power generation and on power plants.can be answered. It was, however, a valid point, and it was an argument about wind power that I came across constantly. The Albany wind farm in particular is quite spectacular, and I agree with the member: if wind power can be expanded without any deleterious impacts on the current plant, we will go for it.

Hon Paul Llewellyn: The grid could be re-localised; in other words, you control your grid at a local level, and you can have low-flow batteries that could actually stabilise it. We are investigating that sort of thing. You also get cross-regional grid stability and you introduce different kinds of technologies. Solar thermal technologies have a large hold-over, and we need something like 300 or 400 megawatts of biomass that can run into the grid.

Hon PETER COLLIER: I agree entirely, and during Hon Paul Llewellyn’s contribution we will discuss the versatility of renewable energy sources. We simply cannot be reliant upon wind generation alone; it is not possible.

Hon Paul Llewellyn: The modelling we have done shows that if we have a large portfolio of wind, when they are overproducing, we can turn them off.it is not like turning off a coal-fired power station.and we can shed 10 per cent.

Hon Ljiljanna Ravlich: Come on guys, you can maintain your friendship when you leave.

Hon PETER COLLIER: The member is jealous.

Hon Ljiljanna Ravlich: Look at this!

Hon PETER COLLIER: I am accepting Hon Paul Llewellyn’s interjection because it is very relevant.

Hon Paul Llewellyn: One can organise the grids in a way that allows the instabilities to be managed.

Hon PETER COLLIER: Hon Paul Llewellyn should not be put off; he has a valid point and he mentioned it in his contribution. I agree with the member’s point entirely. As I said, as we have more versatility in renewable energy resources, that will overcome a lot of the problems that have been expressed.

Now that we are government, I am looking forward to this. We will produce a model for an effective feed-in tariff. The government is committed to FIT; it supports the feed-in tariff concept and will introduce a feed-in tariff.

Debate interrupted, pursuant to standing orders.

 

Introduction of Motion - 12 March 2009

see pdf (140KB)

HON PAUL LLEWELLYN (South West) [11.19 am]: I move —

That this house calls on the Western Australian government to introduce a state-based comprehensive gross feed-in tariff for renewable energy technologies.

There is a lot of jargon in that motion, but I hope that by the end of the discussion in this chamber, people will be really clear about exactly what it means. A renewable energy technology revolution is sweeping the globe. Billions of dollars are being invested into solar photovoltaics, solar thermal energy and wind energy technologies. There are emerging technologies in the area of wave power, and Western Australia is host to a number of those technologies. Bioenergy is becoming important as a major supplier of renewable energy. Indeed, geothermal technology is a technology that is mature in the areas around the world that have volcanic activity, and low-grade geothermal or thermal resources are becoming a prospective renewable technology.

The problem with what has happened across the globe and what is happening in Western Australia, or in Australia in general, is that Australia has been left behind in the renewable technology area. Ironically, we have been left behind in spite of the fact that we have some of the best clean energy resources. We have a solar resource to die for. There is no shortage of heat from the sun. Outside this chamber yesterday, most people in Perth were sweltering. Many gigawatt hours of untapped renewable energy simply went to waste. When I brought a member of the German national Parliament, Hans-Josef Fell, to Western Australia and took him on a national speaking tour about feed-in tariffs, he had his sunglasses on when standing in Kings Park and said, “We would die for this kind of solar resource. What are you doing in Australia that you have not taken up this opportunity?” We were standing there and his hat blew off, and he said, “And we would die for the wind resource.” What are we doing in Australia that is not realising this extraordinary potential to invest in clean energy technologies and, in fact, to build an entirely new technological, economic and social platform on renewable technologies?

Why is it that Western Australia and Australia have fallen behind? Part of the answer is embedded in the purpose of this motion; that is, we do not have a nationally consistent framework for promoting renewable energy technologies. We have a piecemeal series of arrangements between state and federal governments. We have chosen to use a certificate trading arrangement—that is, the mandatory renewable energy target. Our target was set at around two per cent of the national energy production for 2003 and 2004. We met that very quickly, but we never expanded the target. We have failed to provide the preconditions for massive investment in renewable technologies. Therefore, we have missed the boat somewhat.

Australia has always been a technological innovator in the area of renewable technologies. It is well known. At Murdoch University, Curtin University of Technology and the University of New South Wales there has been cutting-edge research in the area of renewable technologies. As a general rule, we seem to have lost the initiative, so although we have managed to innovate, we have never been a commercialising nation. We have never been a nation that has commercialised the technologies that we develop right here in Australia with our own intellectual property. We expatriate them, and they are commercialised overseas.

I am going to talk about this motion in terms of a number of principal concepts and key phrases: scale, scale, scale—economies of scale. If we want to get technologies brought on line and commercialised, we must provide an environment in which scale becomes the leading factor. Australia has not managed to provide that precondition because we have not been putting in place the right rules. As I said, our rules have been fragmented and piecemeal. If we cast the right spells in this place and if we put in place the right legislation, we will switch on a clean energy revolution right here in Western Australia, and we can bring on a clean energy revolution across the whole of Australia. There should be no reason why we could not do it.

The question is: if we put ourselves into the future—I have done that in this house before—what would a clean energy portfolio look like? We can do it just for the south west interconnected system. I put forward legislation, which was passed by this house, for a 20 per cent renewable energy target in Western Australia. By doing that, we calculated that it would drive more than $2.3 billion worth of investments in renewable energy technologies. However, because it was a certificate trading arrangement—in other words, it was not a feed-in law—it would drive only the technologies that are market ready right now; that is, wind energy and a bit of bio energy. It would also have driven investment in household solar hot water. However, we must be clear. What we are talking about in this motion is renewable energy for electrical purposes, not solar hot water. In fact, I placed before this house another bill called the Greenhouse Gas Emission Reduction (Hot Water Systems) Bill, which would have seen every single building in Western Australia serviced with solar hot water, provided that technology was practical in the setting—in other words, if it was not in a small unit in West Perth such as the one in which I live.

We have 12 to 16 per cent solar hot water penetration in the market so far. If we had reached 80 per cent, we would have offset as much energy as is produced by a 220-megawatt coal-fired power station. That is the potential of simply harnessing solar thermal resources on every household and on every industrial roof. Therefore, if we had 80 per cent penetration, which Israel has currently because it has similar laws to the ones that I promoted in this house, we would have saved the equivalent of an entire coal-fired power station—energy that we need not have produced, greenhouse gas emissions that we need not have produced and so on.

I mentioned the concept of looking at scale rather than thinking of this as just renewable energy at the household level, which is what feed-in laws have typically come to be understood as; that is, a premium paid at the household level for small-scale solar photovoltaics.

Hon Peter Collier: Not necessarily with a premium paid. It depends on the system.

Hon PAUL LLEWELLYN: Okay; that is true. However, the current understanding of feed-in laws is that people pay a premium, in effect, for electricity production from solar photovoltaics. We have had a somewhat limited understanding of the full potential of well-crafted laws to achieve a very large-scale uptake of renewable technologies.

I turn now to the kinds of mechanisms we have to promote renewable technologies across Australia, and they relate to industry grants. There are two quite separate models. The first model involves the government taking money out of consolidated revenue and handing it to certain companies, in which case it picks winners. It picked the Carnegie Corporation Ltd wave energy machine and gave it $12 million. It might pick a wind energy company and give it $25 million. It might pick a solar company and give it money. The granting system has a place in industrial development programs. One mechanism is to give grants and rebates. The other mechanism is the introduction of mandated renewable energy targets. In this way, a target is set for the amount of renewable energy that is required and there is an obligation on the people who buy and sell renewable energy in the market; in this case, it is Synergy that is buying and selling renewable energy. Synergy had to acquire one per cent of renewable energy a year, increasing to 20 per cent by 2020. That meant that it had to go out into the market and look for renewable energy sources. If it did not meet that obligation, it would have been fined $40 a megawatt hour—that is 4c a unit of electricity. It became desirable for Synergy to find a renewable generator that could produce electricity for approximately 8c a kilowatt hour. We need to educate people about how energy is priced. If we pay approximately 12c or 16c a kilowatt hour for a unit of energy, approximately 4c, or one-third, is spent on generation, one-third is spent on distribution and networks, and one-third is spent on retailing operations. Currently, we have generation costs of around 4c a kilowatt hour. As it turns out, coal-fired power stations running flat out can produce cheap power—less than 4c a kilowatt hour—but it comes at an environmental cost. Gas turbines are producing power at about 6c a kilowatt hour; it is a little more expensive. That is why the electricity industry and power generators in Western Australia are suffering. A price cap has been put on power generation and that means that they have not been able to get full cost recovery for power generation, particularly when there has been a shift to gas. When gas comes in at about 6c a kilowatt hour, or even more, we find that wind energy has reduced its costs. It used to be 12c, 10c, 8c and 7c a kilowatt hour. It is possible to get wind energy on a very large scale for almost the same price as gas. That relates to scale. That technology was developed through the German and Danish feed-in system. Those communities paid a premium to develop the technology. As they learned through scale, the prices came down. There is a learning price curve for all technologies. All those technologies are on a downward projection; in other words, the price per unit of electricity is going down for wind energy, while the price for gas-fired and coal-fired power stations is going up. They contract and converge at a point at which there is critical mass and renewable technologies start economically outperforming coal-fired power stations and gas turbines. If we add to that climate change and carbon trading, we can see why the global economic market is saying that it will make this transition.

There is also the matter of a peak in the production of gas and oil. We know that we can no longer meet the rate of growth in demand for oil. Oil and gas production has plateaued. Gas, coal and uranium also have peaks; every resource reaches a peak in its production. It makes not just economic sense, but also socio-political sense to decouple ourselves from those unstable regions in the world that are providing us with oil by substituting it with renewable technologies. Some thinking exercises that are taking place around the world indicate that we are not just talking about reaching a five, six, 12 or 20 per cent target for renewable energy. These thinking exercises are asking how we can achieve zero carbon emissions in the electricity and transport sectors. I often use wind energy technology as an example not just because I understand that technology—I have a badge to prove it, but I cannot table it for Hansard—but also because more has been learnt in the wind energy industry than anywhere else. Paul Gipe, on his website Wind-Works.org, has looked at the challenge of meeting the entire energy requirements of the North American continent through the use of wind energy technologies. He is not saying that we should do this; he is merely saying that we can do this. Arguably, it will require a mix of technologies. Paul Gipe undertakes a number of thinking exercises about the current renewable energy market in the United States. He refers to 5 600 megawatts of installed capacity in 2007. We must bear in mind that that is nearly twice the installed capacity of energy in the south west interconnected system. We have about 3 000 or 3 500 megawatts of installed capacity of coal and gas. Paul Gipe says that that is great, but it is not nearly enough. He then has some fun with numbers to determine whether the entire energy demand in the US can be met by using wind turbines. I will have to cut short my comments on this exercise because it is rather technical, but it is simply a multiplying exercise. A two-megawatt wind turbine can produce four million kilowatt hours a year; in other words, four gigawatt hours a year. How many of those turbines would be needed to meet the entire electrical demand of the United States? Paul Gipe goes on to say that it uses 3 000 terawatt hours of fossil fuel fired power. He calculates the amount of energy and the number of turbines that would be required. He says that about 75 000 megawatts of installed capacity would be required to meet the entire electrical energy requirements of Canada. That is extraordinary. To give members some sense of that requirement, Germany today has 20 000 megawatts of installed capacity.

Hon Peter Collier: From wind?

Hon PAUL LLEWELLYN: Yes, in wind. I might have misquoted a bit, so I will go back a step. In my haste, I might have misquoted.

The point I am making is that these thinking exercises are asking how much land and how many square metres of atmosphere we should be intercepting. People are on the case. As a result of these kinds of thinking exercises, and, indeed, as a result of the growth of the renewable energy sector in Europe, not just in Germany, wind energy is now holding up the grid. The south of Europe was having difficulty maintaining its nuclear power stations and coal-fired power stations because they were running out of water to cool and run them.

Renewable energy is holding up the grid on a large interconnected scale. If there is a conversation in the world about the possibility of moving towards very, very large scale wind energy and, indeed, other renewable technologies, we need to be aware of it.

Hon Peter Collier: What about pump storage?

Hon PAUL LLEWELLYN: First of all, pump storage is where there is a wind energy facility and a water resource and it is pumped up a hill. It is held in a storage dam and let back down again. That means the energy is stored. However, pump storage has inherent inefficiencies, so the inefficiencies are multiplied. I do not want to speak specifically against pump storage, but if there is a price premium at peak time, surplus wind can be used to pump water up the top of a hill and release it down to gain an advantage in the market.

Hon Peter Collier: I understand pump storage is good for baseload power.

Hon PAUL LLEWELLYN: It is one of the forms that supports the grid. If the minister does not mind, I will come back to the concepts of maintaining grid stability through renewable technologies and explain that we do not have to depend necessarily on pump storage. We want grid integration. We want to generate wind resources from Geraldton through to Esperance. A company I worked for previously has done studies of 1 000, 2 000 and 3 000 megawatts of wind energy, measured at real-time winds. We know from wind data what the wind profile between Geraldton and Esperance looks like. We also know what the real-time output of the wind farms will look like right across the region. We thought that the curve in the profile would go up and down; however, because of regional variation the curve was much more flattened out. We can get grid stability and cross-regional stability by simply having resources spread across geographic regions.

Hon Peter Collier: That is why I thought that the two systems of wind and pump storage complement each other—for that very reason.

Hon PAUL LLEWELLYN: That is true, but there are many other ways of complementing technology and getting grid integration of renewable technologies. In moving this motion, I want to have this conversation about what potentially awaits Western Australia and put forward technical solutions to these problems. The first problem is geographic variation. The second is to have an entire portfolio of solar and solar-thermal technology. Solar-thermal technologies will have a 72-hour energy holdover. We have very long periods of sun out in the wheatbelt, for example, so we can get grid integration of solar-thermal technologies with photovoltaic, which is the direct electrical energy from silicon, across the region. I will come back to Paul Gipe in a minute.

I will take members down this pathway: Hon Kim Chance set up an inquiry into the biofuels industry. We struggled with issues about producing biofuels to replace liquid fuel for cars. One of the concepts that became clear was that we could produce electricity through large-scale renewable electrical energy, because the distribution grid is everywhere, and run an electrical vehicle fleet on battery-powered cars. This will be the Scalextrics vision of the future. Who had Scalextrics?

Hon Kim Chance: I think I am a little old!

Hon PAUL LLEWELLYN: Is there anybody who has seen Scalextrics?

Hon Ed Dermer: I used to enjoy them!

Hon PAUL LLEWELLYN: I had Scalextrics. I used to be fascinated by them. We can take Scalextrics as a concept and convert the entire vehicle fleet to run on electrical motors. That is no different to cordless drills. I think about what has happened to cordless drills and the technology. Have any members got a cordless drill? Mostly blokes, I imagine! Hon Wendy Duncan has a cordless drill. We need to consider the revolution that has taken place in the portability of that power and we need to think about an entire motor vehicle fleet. Say there were half a million plug-in electric cars. How many hours a day does a car sit around? It is unused for 23 or 23.5 hours of the day. One might have a very large battery in the car plugged into the grid, available for grid integration at any time. That car is drawing power to charge the battery, when it is required, from large wind farms, solar farms, geothermal and wave energy machines. It releases that power back into the grid when the grid needs it, so that there is this grid integration. This is the development of the smart grid. This is happening as we develop smart grid integration. We need to get on to this vision and we need to get on to that same technology platform because we are going to be left behind if we do not. We will be technology takers rather than technology developers. We will be expatriating our intellectual property overseas and buying it back at a higher rate. Part of the motivation for bringing forward this motion was to have this conversation about the potential for renewable energy to transform the economic platform of this state.

I go back to Paul Gipe’s thinking exercise. He calculates the light vehicle fleet for North America as a whole. How many billion kilometres a year do they run? How much energy do they use? He says that they need the electrical equivalent of 750 000 megawatts. He does the same calculation for Canada. This is a PowerPoint presentation, which I am happy to either table or give to the new Minister for Energy. Do I seek leave to table this PowerPoint presentation?

Hon Peter Collier: I will take it.

Hon PAUL LLEWELLYN: That is very unfriendly to Hansard!

Hon George Cash: I am suggesting that Hon Paul Llewellyn table the document.

Hon PAUL LLEWELLYN: This is in cyberspace. I will put it on the record.

Hon Kate Doust: He may want to email it around to share it.

Hon PAUL LLEWELLYN: It is all shared in the great global network we know as the internet. However, Paul Gipe and Wind-Works.org do these kinds of thinking exercises for us. Paul Gipe is many years ahead of his time. I was hoping that we could deal with the concept of baseload because this has become a common discussion amongst people who are putting roadblocks in the way of renewable technologies and roadblocks in the way of bringing forward this entirely new paradigm.

Baseload is an invention of the coal-fired power industry. It is an invention of the steam age. A steam-fired power station cannot easily vary its output. It is fired up when it is commissioned, and its load has to be kept approximately the same the whole time. It cannot easily load-follow. If we fired up all the coal-fired power stations at Collie, they would run sweetly, and then, when a peak came along, they could not load-follow. We introduce gas turbines which can load-follow; they can follow the peak. However, right in the middle of the night we have 1 000-megawatt and larger coal-fired power stations that have to be kept warm for the morning; and so this concept was invented that we need baseload power. That is a complete fabrication. We need energy when it is required. The concept of baseload serves the interests of steam-aged technology much more than it serves the interests of consumers. We would be encouraged to leave all the street lights and city lights on in Perth largely to keep those coal-fired power stations running and warm so that in the morning, when the loads increase, they are ready to take up the load. This has been a fabrication, and, through smart and intelligent redevelopment, we can overcome many of the impediments of the so-called baseload of power by having varied resources operating at the same time.

Even if we are heading towards a zero emissions electrical system, no-one in this room—certainly not me—is saying that we should not integrate wind and gas. Of the gas that comes down the pipeline to the south west, approximately 45 per cent to 50 per cent goes into industrial purposes for Alcoa, which is a good thing if members agree with that, but Alcoa has not co-generated, so it is not even using its waste heat. We now produce something like 60 per cent of our electrical energy from gas, so a proportion—about 30 per cent—of the gas produced is used in our electrical system. That gas is extremely valuable and we could shandy down the energy consumption there by introducing large-scale wind power and saving that gas resource. That is not a strong argument to BHP Billiton because it is in the business of selling gas, and I fully respect that, but it is a good argument for the community of Western Australia which wants to have the benefits of those gas resources over time. We can minimise the use of that gas resource and extend the life of those gas fields by shandying it down and sharing the load with wind power, because wind power could take that load. Wind power and gas power are completely complimentary.

The Minister for Energy talked about whether we should pump store. Sure, we could do so if we have wind power that is cheap enough. We could have our pump stored wind energy coming online and offline and infilling with gas quite easily to provide a stable electrical system. We could just about shut down the coal-fired power stations and do it that way relatively quickly—possibly by 2020 or 2025.

It is not about whether the novel technology of pump storage, or this technology or that technology, is good or bad, because I think any technology that takes us down the low emissions pathway is good, not just because I am concerned about climate but because I think it is a better technology. I remind members about the oil sheik who said that the Stone Age did not end because we ran out of rocks and stones; the Stone Age ended because we found better ways to do the stuff that we were using stones for. The oil age will not end because we have run out of oil. God forbid; if we ran out of oil, we would have polluted the atmosphere to the point where it would have become uninhabitable. The oil age will end because we have invented a new technology platform that will do it better, and so will the steam age and the coal age end.

We are now on a pathway to a genuinely sustainable low emissions energy economy—then zero emissions. It is at a high-tech factory near all of us. I do not know whether members have had the pleasure of visiting one of these large wind power farms, either the one in Albany or one of the very much larger ones up at Emu Downs. I visited the very factory where they manufactured the turbines that went to Albany. I saw the person who ensured that they were put onto the ship—he owned them personally; he loved those machines. The interesting thing is that that was in a town called Magdeburg in Germany. That town was in the rustbelt of the East Germany economy. It was in decline. They had an excellent technical education system in East Germany with training schemes for technologists. Enercon, the company, had basically inhabited that space in Magdeburg and all the surrounding areas and totally converted that entire town from a rustbelt of East Germany to a high-tech wind energy industrial precinct. The mind boggles at how big it is. That was just one German factory.

Enercon, and all of the wind energy companies and all of the solar companies, were developed because of the feed-in laws. They were developed because people who invested in clean energy technologies were paid a small premium for their clean energy because it was an industry development strategy. The industry has developed a long way, but there is a long, long way to go with intelligent control systems and technology platforms, and Australia is extremely well placed to be in that game. I went to the factory and saw the turbine blades —

Hon Peter Collier: They are literally the Mercedes Benz of turbines.

Hon PAUL LLEWELLYN: They are the Mercedes Benz of turbines. When we fly in a jumbo jet and look out of the window and see “Rolls-Royce” on the side of the engines, what do we think? We think, “It’s a good thing to have ‘Rolls-Royce’ on the engines”, and these wind turbines are the Rolls-Royce of the energy industry.

Hon Peter Collier: I used “Mercedes” because of Germany!

Hon PAUL LLEWELLYN: When producing a very large-scale technology platform for a society, we want reliability. Do we have a Toyota bus fleet in Perth? I think they are all Volvos or Mercedes.

Hon Kim Chance: There are a lot of Renaults.

Hon PAUL LLEWELLYN: I have not seen Hyundai buses, although we might have them! I am not making a slur on Hyundai; I am merely saying that when we buy our bus fleet to carry out this large task, we buy the best technology available. This company, Enercon, is an interesting company in that it set itself up in the East German rust belts. When the Leader of the House asked “How do we get the clean, green new deal?”, this is part of the story: we can utilise the jobs and the capacity of the economy, which is falling away right now, with a new technology platform.

We must look at what is happening in the United States and across Europe. Rust belts are being occupied with new technologies. I have another example of a company that was manufacturing car windscreens in the Great Lakes area. That is precisely the kind of technology needed to manufacture solar panels, because the silicon has to be sandwiched between glass. Those factories are now converting from producing windscreens to this new technology, which utilises the same technology platform and the same group of skills. The manufacture of wind turbines utilises the same group of skills required to run the nickel mine in Ravensthorpe; namely, the technologists, the truck drivers, the concrete workers, the electrical fitters and turners—all those people. But there is no financial driver in Western Australia, and there is no substantial driver across the whole of Australia, to get that platform up and running.

This motion to implement a state-based gross feed-in tariff into Western Australia will be a key driver towards rebuilding the economy and taking up that slack. We need the steel, we need the copper and we need all of the power electronics; we need all those materials. I have no argument against mining those materials, provided we are not using them in a wasteful, zero sum endgame. We need to be building the new technology platform with the capacity that we have now. We need to use the oil that is in the ground to build the technology platform to displace our dependence on oil. That is the reality of a finite world. If we built clean energy machines, we would be doing the next generation a service.

I will give members an example of the energy-in and energy-out model and why it is profoundly important for us to move to a clean energy platform. People have argued that it takes more energy to produce a wind turbine because of the energy used to produce the concrete, steel, plastics, copper and control systems et cetera than the wind turbine ever produces in its life. I will quiz members. A wind turbine lasts for at least 25 years before it has its first major stripdown. How long does it take for a wind turbine to pay for the entire embodied energy in it? I am inviting interjections now. It is a 25-year asset. Members can bid for it. Either no-one is listening or they do not know or it does not really matter to them. In fact, it takes between just three and six months for a wind turbine to pay for its entire embodied energy. For the subsequent 24.5 years it is a free-energy machine. That is a very salient point. Are we going to continue? Is it 6.00 pm?

Hon Peter Collier: Today you have 30 minutes, but you can talk for as long as you like.

Hon PAUL LLEWELLYN: I can speak for an eternity, apparently, but I do not intend to do that. I do not want to bore the house with these minor details. However, I will go back to that salient point. It takes between just three and six months for a wind energy turbine to pay for the entire embodied energy that it takes to build the machine. For the next 24.5 years it is a free-energy machine. Someone who buys a Rolls-Royce or a Mercedes Benz would rebuild the bearings and run it for another 25 years. I have just realised that I was misreading the clock. Heaven forbid! I must have been getting carried away.

Hon Simon O’Brien: It’s the blooming daylight saving that does that to you!

Hon PAUL LLEWELLYN: I do not know who voted for daylight saving! It feels like six o’clock at night to me. My stomach is telling me it is six o’clock at night but it is only midday. I have to finish this story and I want to tell members more about it.

The PRESIDENT: Perhaps if Hon Paul Llewellyn will continue to tell us his story because I am beginning to feel as if it is about 10 o’clock at night!

Hon PAUL LLEWELLYN: I might have put myself to sleep, as a matter of fact!

Hon Ed Dermer: How will Hansard spell the snoring?

Hon PAUL LLEWELLYN: I am so accustomed to being stopped at the crucial moment that I was waiting for members to stop me.

Hon Helen Morton: You will be stopped if you don’t get on with it.

Hon PAUL LLEWELLYN: Take it easy!

Recently I had the pleasure of making a presentation to the WA Power and Gas 2009 conference and I titled my speech “Beyond the Dark Side of the Boom”. Some of us must be old enough to remember the Pink Floyd song Dark Side of the Moon. All of us are either too old or quite old enough to remember the Dark Side of the Moon. I can tell that even some of the staff know about the Dark Side of the Moon. I contend that because of the breakneck speed at which the state has developed, and by running the economy so hot, we have exhausted our families and the capacity of our workers and our bureaucracies to keep up with this whole thing. We have inflated the economy because people were paid such high wages—I am not saying that they should not be—that the house prices have inflated and we have gotten ourselves into a really awkward bubble. The dark side of the boom is the crash that has happened. Many of us thought that it had to happen for various reasons, not only because of the way in which the financial systems are set up, but also because there was so much friction in the economy. That is the way the economy was overheated.

During the conference I introduced in a much more abbreviated way the concept of a completely new technology platform for Western Australia. I talked about the differences between the legislative drivers to achieve renewable energy investment and about the difference between the feed-in laws in Germany and the 17 or so European Union countries with similar feed-in laws and also about many of the North American states that have independently taken up feed-in laws. I also talked about what we in Australia call the mandated renewable energy target. Hans Josef Fell, the German greens MP who was the father of the feed-in laws in Germany, provided me with a very interesting graph. It shows the cost in cents per kilowatt hour for the German feed-in laws compared with the United Kingdom’s mandated renewable energy target. The UK uses a certificate of trading scheme. That is the same framework that is used in Australia and which I promoted in this house and which we voted in favour of. In Germany, wind energy costs 7c a kilowatt hour using feed-in tariffs and in the UK it costs 13c a kilowatt hour using the certificate trading model. The most interesting point is the rate at which German industry grew. I will table this graph for Hansard. German industry skyrocketed from just a few megawatts in 1990 to more than 23 000 megawatts of installed capacity by 2007, whereas Great Britain flatlined and Australia barely went anywhere. I will table that graph to incorporate into Hansard because it is incredibly instructive. I have a spare copy of it for anyone who is interested.

That graph compares feed-in laws and mandated renewable energy targets. We must look also at the difference between feed-in laws and rebates. A rebate is when people are paid money to put solar panels on their roofs. I will use the photovoltaic panels as an example. I will talk about the difference between Australia, Germany and Japan and the difference between having a feed-in law and a rebate system. The most important point to note is that a rebate is paid out of the consolidated revenue. When the money runs out or the economy hits bad times, the government stops paying the rebate. Japan had a million-roof solar program whereby its government was paying people a rebate to install photovoltaic panels on one million roofs. Japan originally beat Germany but Germany’s feed-in laws meant that it completely overtook Japan by 2007.

Hon Peter Collier: The German model was a uniform tariff, was it not, and that paid for it?

Hon PAUL LLEWELLYN: Yes. It was a uniform tariff but a premium was paid for the clean energy it generated. I will explain the detail of that. The evidence is entirely clear that the rebate system has got us nowhere and in Australia we did not even make it onto the graph in terms of installed capacity for photovoltaic panels. This country has invented some of the most advanced photovoltaic technology on the planet. However, that technology has been now expatriated to China. The University of New South Wales professor who invented that technology has now become the richest person in China, on the back of photovoltaics.

Another page of the Hans Josef Fell presentation uses different-sized yellow spheres to illustrate the worldwide potential renewable energy sources. The largest yellow sphere on the page represents the potential amount of solar energy in the world. The smaller yellow spheres on the page represent the potential amount of geothermal energy, hydro power and wave energy, biomass and wind energy in the world. He compares that with the yearly global consumption. What is interesting about that presentation is that it shows that solar energy alone is able to meet the entire global energy task. I also have another document that shows the northern part of Africa—the sub-Sahara. The red dot on that page represents the total area of concentrated solar energy that would be required to meet the entire global energy task. It is very interesting. The Europeans are actually trying to set up a grid connection between North Africa and Europe, because they believe that the sub-Sahara will be able to supply their energy needs and thereby make them independent of the oil-producing nations. I seek leave to table that document.

Leave granted. [See paper 536.]

Hon PAUL LLEWELLYN: What I am trying to prove is that the legislative and statutory implement that we use to achieve renewable energy uptake is vital to the economic outcome. Feed-in laws have been proved to be more financially efficient. That is despite the fact that I believe that the certificate-trading model will deliver renewable energy in a less expensive way, because it puts a cap on the penalty. In other words, if the penalty is $40 a megawatt hour, or 4c a kilowatt hour, that has to be less expensive.

Debate adjourned, pursuant to standing orders.
 

24 February 2009

We should phase in electricity prices and mandate across-the-board energy efficiency at the same time, to reduce our power bills, says Greens (WA) MLC, Paul Llewellyn.

“It makes no sense to delay the full cost recovery for electricity, because like it or not, taxpayers ultimately pick up the bill for the entire power industry,” he said.

“We can keep household, business and industry power bills down even when electricity prices increase, by introducing a Mandated Energy Efficiency Target for Western Australia.

“A Mandated Energy Efficiency Target for Western Australia will help consumers save energy and thereby neutralizing the impact of increased electricity tariffs on their homes, businesses and industry,” said Mr Llewellyn.

“For example, changing from electric hot water to solar hot water can reduce power bills by between $300 – $700 per year, which is more than the electricity price increases announced yesterday, and that is just the start.

“Most people don’t know what the price of a unit of electricity is, but they do know how big their power bills are. We can keep a lid on our power bills by being more efficient and smarter in our use,” he said.

“The Victorian Government is ahead of us and has already introduced the Victorian Energy Efficiency Target (VEET) Act 2007 (Vic), which aims to achieve across the board energy savings.

It is estimated that the first phase of the VEET Act incentives will save 8.1 million tonnes of greenhouse gas which is the equivalent of making around 675,000 households carbon neutral for a year. This is set to play an important role in achieving the Victorian Government’s target of reducing that state’s overall emissions to 60 per cent below the level it was in 2000 by 2050.

For more information contact Paul Llewellyn on 0428 317 182 or 9848 1555
 

18 February 2009

The Greens are turning up the heat on the Power Industry and the Government by calling for State-based ‘feed in tariffs’ for clean energy, in order to boost the economy and fix up our power problems, says Paul Llewellyn MLC, speaking at the WA Power and Gas Conference in Perth today. 

Under ‘feed in laws’, a small premium is paid for clean energy sources such as solar, wind, wave bio and geothermal energy, in order to boost investor confidence in the renewable energy sector.  The premium payments are raised from an across-the-board levy on all energy transactions.

“20% clean energy in the South West grid alone will create around 4,000 additional green collar jobs in the region and bring in over $2.3 billion dollars of new investment in solar, wind and bioenergy. We can have all of this for less than $1 per week per household”, Mr Llewellyn said.

“We can reemploy the thousands of workers recently retrenched from the mining industry. Truck drivers, crane operators, concrete workers, electricians, engineers and planners are needed to build wind turbines, solar power stations and wave energy machines for the future. Our workers are ready for the job”, he said.

Last year in WA, we only sourced 3.8% of our energy needs from renewable sources. 

“I want the Government to urgently introduce a comprehensive State-based renewable energy feed in tariff based on the highly successful German model”, Mr Llewellyn said.

“A national feed in framework, introduced by Greens Senator Christine Milne in 2008, has been frustrated by the Rudd government, so a State-based scheme could show real leadership and fill the gap for WA. 

“The piecemeal solar feed in scheme announced at the last election is so small that it is barely equivalent to the energy output from one turbine in the Albany windfarm”, he said.

The German styled feed in tariff has been replicated in 37 countries and states, and has been responsible for creating over 300,000 jobs worldwide and saving millions of tonnes of CO2 pollution.  

This is part of Paul's campaign to ensure A Clean Energy Future.