Renewable energy overview...Global context Investment is flowing Global investment has increased...
Transcript of Renewable energy overview...Global context Investment is flowing Global investment has increased...
Renewable energy
overview Resources Industry Productivity
Business Breakfast
Matt Herring
KPMG National Leader Renewables
October 2013
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Focus areas for discussion
■ Global context
■ Australian context
■ Technology alternatives
■ Challenges and opportunities in SA
■ Mining and renewable energy
Can renewable energy
improve productivity
in the mining sector?
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Global context Renewable energy is moving forward rapidly
17% of
global
energy
consump-
tion in
2011 (35%
by 2030)
Strong
growth as
prices fall
and
policies
spread
50% of
new build
in 2011
was RE
World-
wide jobs
exceeded
5 million
in 2012
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Global context Renewable energy in the world
Source: Ren21 Renewables Global Status Report 2012
UN Goal is to double share
of RE globally by 2030
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Global context Investment is flowing
■ Global investment has increased substantially
over the past decade
■ However, softening in 2012/13 and likely in
2013/14
■ Expected to be $395b in 2020 and $460b in
2030
■ Wind and solar continue to attract most
investment
Source: Ren21 Renewables Global Status Report 2012
China will become the top
spot for investment in 2014,
overtaking the US
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Australian context The focus on renewable energy is shifting…
■ Renewables development previously lagged
due to:
– the abundance of coal
– low electricity prices
– remotely located resources
– unsupportive government policy
– transmission and infrastructure constraints
■ However, the market is changing due to:
– the quality of our resources – world class
– improving regulatory/policy environment
– minimal jurisdiction risk and increasing
electricity prices
– Environmental concerns
Source: Clean Energy Council Annual Report 2012
Australia is increasingly
becoming a global leader in
renewable energy – 9% total
energy capacity is RE
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Australian context Australia’s energy challenge
■ Energy White Paper 2012 released November, outlining a number of challenges:
**Delivery of clean energy listed as a core component of future energy policy ($100b
required by 2050)**
…… …… …… ……
……
…… …… ……
Attracting
investment
($240billion)
Improving
productivity
Reducing prices
Ensuring fuel
supply
New technologies
to market
Managing
transitional
pressures
Sustainably
developing
resources
Promoting choice
Reducing
emissions
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Australian context However, what impact will the new government have?
■ Coalition is generally supportive
■ Carbon tax and CEFC to be removed – timing still unknown
■ But the Renewable Energy Target (RET) has bipartisan support (guarantees 20% of
Australia’s energy (45,000GWh) in 2020 will come from renewable sources)
■ Australian Renewable Energy Agency (ARENA) will continue
■ Coalition’s Direct Action plan will provide support for emissions reduction projects – however
details are still unknown
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Australian market and policy overview Primary barriers to the uptake of renewables
Access to debt and equity is an issue for all infrastructure projects
Especially renewables, which is perceived as high-risk
Higher cost, lack of base-load alternatives, and transmission
constraints
Renewables is a new sector – technology improvement is required
RET price is still very low and policy position is uncertain
Impacts cost of renewables - and accessing PPAs is difficult
Many other barriers
Volatile perception in the market, political change, lack of knowledge and
capability, lack of understanding etc….
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Technology alternatives Wind energy – a renewables mainstay
■ Australia has some of the world’s best wind resources in
with capacity factors in excess of 30% not uncommon
■ Currently 22% of all renewables capacity
■ SA has half the nation’s capacity
In the past year wind power
generated enough electricity
to power over 900,000 homes
Source: Clean Energy Council Annual Report 2012
1%
17%
47%
9%
19%
5%
m/s
Western
Australia (WA)
Queensland
(QLD)
New South
Wales (NSW)
South
Australia
(SA)
Tasmania
(TAS)
Victoria
(VIC)
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Technology alternatives Wind energy – facts and challenges
■ Australia’s geography is particularly
suitable to wind energy generation
■ Nearly 200,000 square kilometres of
land which can be utilised for wind
farms
■ Fastest growing renewable energy
source…
■ …although its current share of total
energy generation is only 2%
■ Capacity has doubled in two years
■ Wind energy is an increasingly cost-
competitive using proven technology
Social /environmental
concerns
Many good sites taken
Intermittent supply and cost
Transmission and location of supply
Challenges
Stage of development Operating Under construction Proposed (future pipeline)
No. of projects 37 3 100+
Capacity (MW) 2,567 495 16,000+
Australian wind projects – status as at June 2012
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Technology alternatives Solar energy – the emerging opportunity
■ Australia has the highest average solar radiation per square metre of any continent in the
world, yet its solar potential remains untapped
The number of Australian
households with solar
panels has increased more
than 35 times over the last
three years
Source: http://www.matthewb.id.au/solar/solar-thermal-energy.html
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KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Technology alternatives Solar energy – facts and challenges
■ Currently 7% of all renewables
capacity
■ Installations to date are mainly small
direct-use application such as water
heating and roof-top PV
■ Currently >150MW of installed capacity
from Solar PV – increasing rapidly
■ No large-scale plants, however
potential is vast
Considered by many as unproven
High cost, particularly thermal
Intermittent supply Transmission and location of supply
Challenges
Source: Clean Energy Council Annual Report 2012
When will utility scale
projects be developed?
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Technology alternatives Geothermal energy – what does the future hold?
■ Australia’s geothermal resources
represent a potentially large-scale base
load opportunity
■ However the industry is in an embryonic
stage of development
■ Technology is yet to be proven
commercially or technically
■ Australia has no active volcanoes and
few hot springs, but does have good
reserves of hot dry rocks
■ Potential for innovation to reduce the cost
by ~30%
■ Economics are favourable: analysis
suggests a price sub $100/MWh when
commercial
Unconventional is unproven
Significant upfront capital costs
Fragmented industry
Transmission and location of supply
Challenges
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Technology alternatives Ocean energy – substantial long-term opportunity
■ Near shore wave energy resources are
significant – estimated at four times
current power needs of Australia
■ However, relatively new technology and
not proven technically or commercially
■ Australia has >4 pilot and
demonstration plants – all small-scale
■ Australia has numerous strong R&D
companies focused on developing
ocean energy projects
■ Potential to work with global companies
to develop projects – particularly R&D
and pilot projects
Cost Size of projects
Proximity to grid Transmission and location of supply
Challenges
Source: Clean Energy Council Annual Report 2012
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KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Technology alternatives Biomass and biofuels – an emerging opportunity?
■ Currently Australia’s biomass is sourced
mainly from sugar cane residue, wood
waste and capture of gas from landfill
and sewerage facilities
■ Interest in small-scale biomass projects
is increasing
■ Many global technology providers
investigating Australia
■ Ethanol is gaining wider community
acceptance
■ Support at national and state levels for a
greater role for biofuels in transport
■ Australian Government regulations limit
the proportion of ethanol in petrol to 10%
Fuel source and supply
Market acceptance
Size of projects Biofuels in early
stages
Challenges
Source: Clean Energy Council Annual Report 2012
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Technology alternatives What is the ultimate tipping point for renewables?
Baseload and low cost
Non-baseload and high cost
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
South Australia What are the key issues?
What is the long-term strategy for renewables in SA?
SA is the Australian leader but are other states bridging the gap?
How do we create an enduring industry around renewables?
Currently only have projects, but no manufacturing, supply chain etc
Can we create a knowledge economy focused on renewables?
Opportunity to integrate with mining and manufacturing…
How do we overcome infrastructure and other (eg community)
constraints?
Critical to the long-term future
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KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Renewables and mining Is it possible to utilise renewables in mining projects?
Rising and volatile
energy costs
Mining project
challenges
Reliability of energy
supply
Productivity Carbon policy
legislation
General
environmental
concerns
Resource
depths
Resource
location
(remote from
grid)
Energy
security
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Renewables and mining Projects are being developed to address these challenges
Many of the first applications of renewable energy technologies for mining operations are
hybrid solutions using a combination of renewables and diesel gensets, eg:
■ Generally all are new projects with limited performance data available, but evidence of cost
reductions through diesel consumption reduction
■ Productivity improvements? Probably not yet the primary focus
■ Few if any meaningful examples in Australia – we are lagging other mining jurisdictions
Pacific Hydro – wind in Chile
Vale – wind in Brazil
Rio Tinto – wind in Canada
Codelco – solar in Chile
Croniment – solar in South Africa
Teck – hydro in Canada
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Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG
International.
Possible benefits…
Can reduce energy costs/ consumption/
volatility
Supply: abundant resources located close
to mines
Can address environmental concerns
Can be built at scale and for discrete
applications and improve reliability
Can augment/enhance fossil fuels
Overall productivity
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Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG
International.
Constraints…
Concerns about unreliability and immaturity of
technology
Concerns about high costs
Lack of baseload alternatives - intermittency
Lack of knowledge and understanding
System integration and grid stability issues
General perception and suspicion
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Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG
International.
Renewables and mining WA study focusing on renewables in the mining sector
Assessed
various
renewables
technologies
Identified
potential
opportunities
and barriers
Analysed five
scenarios
(case studies)
Made key
recommen-
dations
Assessment of the potential for renewable energy projects
and systems in the Mid West
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Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG
International.
Renewables and mining Study concluded:
RE has difficulty being accepted as there are few if any off-
grid exemplars
Solar (PV and thermal) and wind are the principal viable
renewable energy sources
The most suitable renewable power solution is seen a hybrid
solution
Renewable energy generation is capital intensive
Miners perceive RE to be unreliable and not dispatchable
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Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG
International.
In summary
■ RE is increasingly being adopted globally
■ SA has a clear opportunity to be a global leader
■ There are opportunities for RE in the mining
sector, including reducing energy costs and
improving productivity
■ However, there are many (technological and other)
barriers to overcome
■ Particular opportunities in hybrid and storage
solutions with intelligent communication
systems to overcome stability issues
■ Reliable operational data highlighting real-life fuel
savings and other benefits is required
■ Without it many mining companies will not
embrace renewable energy solutions
“Once miners trust the
technical solution and the
stability of the system, they
are eagre to delve into the
financial business case”
Can SA become an R&D
leader in mining and
renewable energy
solutions?
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(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of
KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
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