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Carbon in power grid hits record low

A record low for the carbon intensity of power generation in the national grid has underscored the rapid decarbonisation of the electricity system as booming rooftop solar and increasing numbers of large-scale wind and solar farms force the retreat of coal power.

Fresh analysis by adviser Energy Edge found a record low for the volume of carbon dioxide released per unit of power generated was hit last month, extending the downward trend of emissions from the National Electricity Market.

The news came as the NSW government announced it has given clearance to Snowy Hydro’s controversial $600 million gas-fired power station at Kurri Kurri in the Hunter Valley despite environmental opposition to a new fossil fuel-powered generator.

Snowy says the 660-megawatt plant will be critical to support increasing renewable generation on the grid, but environmental opponents had been calling for the government to reject it.

The record low for carbon intensity in the NEM, of 0.491 tonnes of CO2 per megawatt-hour of power, was reached on November 14, said Josh Stabler, managing director of Energy Edge. The months of September, October and November all averaged below 0.6 tonnes of CO2/MWh, he noted.

“The achievement has been driven by the relentless increase in large-scale renewables and the uptake of residential rooftop solar,” Mr Stabler said.

He estimates the NEM’s annual emissions intensity for 2021 will average 0.63 tonnes of C02/MWh including the zero-emissions contribution of rooftop solar. That compares with an average of 0.904 tonnes of CO2/MWh in 2016, before the closure of the giant Hazelwood brown coal power station in Victoria and the acceleration of large-scale renewables and rooftop solar.

The progressive reduction of coal generation due to price sensitivity, for example exposure to international coal prices, and outages at plants including fire-damaged Callide C and Yallourn, have also contributed to the reduction in NEM emissions this year.

The industry lobby group representing major electricity suppliers such as AGL Energy and EnergyAustralia last week called for an economy-wide emissions reduction target of 55 per cent on 2005 levels by 2035.

The electricity sector has so far been doing much of the heavy lifting on emissions reductions, with carbon emissions from the industry set to drop by 55 per cent from 2005 levels by 2030, the AEC said, citing government forecasts. It is calling for more focus on the coordinated planning for the “orderly exit” from coal in power generation, while still maintaining energy security.

The Australian Energy Market Operator has brought forward its expectations for when coal power stations will close as baseload generators are undercut in the market on a daily basis by cheap renewables.

In its “Step Change” scenario, which is now its base case because of the faster than anticipated transition to clean energy, AEMO expects almost all coal power plants will be shut by 2040, with the last one perhaps clinging on until 2043.

Mr Stabler said Energy Edge’s findings on the carbon intensity of the power grid made clear the impact renewable energy is having on electricity sector emissions, giving clear visibility to the discussion around the pathway to net zero emissions.

A low-carbon electricity market also enables a low-carbon electrification of the country as transportation and other parts of the economy increasingly move towards electricity and away from fuels such as petrol and gas.

“A low-carbon electricity market means that the shift to electrification will have a multiplicative effect,” Mr Stabler said.

“For example, transitioning petrol vehicles into electric vehicles will replace a static carbon emissions rate (oil) with a declining electricity emission rate as well as making the vehicle more efficient in the process.

“The electricity market will always be the first part of the low-carbon transition.”

Total emissions from the electricity sector in 2020-21 were 127.3 million tonnes of CO2, equivalent to a 29.6 per cent reduction on 2005 levels and down from 134.2 million tonnes in 2021 and 144.3 million the previous year. Emissions this calendar year are tracking for about 123 million tonnes, Mr Stabler said.

The Kurri Kurri gas power station will improve energy reliability and security in the National Electricity Market as it transitions away from coal power over the next 10-15 years, a spokesman at the NSW Department of Planning, Industry and Environment said.

“The project will provide on-demand energy when the grid needs it and will only operate on average 2 per cent over a year,” he said.

“It will also inject $600 million into the State’s economy and create up to 250 new construction jobs in the Hunter, so on balance it was decided that the project should be approved.”

The Commonwealth government still needs to give final approval for the Hunter Power Project but as it instigated the project in the first place, that appears in little doubt.

If approved, construction is due to start in early 2022 and the plant should be running in mid-2023. The DPIE said the start-up date was ahead of the closure of AGL Energy’s Liddell coal power station in 2023, however AGL has given April 2023 as the date for the last three turbines to close at Liddell.

Source: Financial Review