By 2015, concentrating solar power will be cheaper than carbon capture and storage coal-fired power. This is very important. Power plants take a long to time to plan and build. A new power plant proposed today would be lucky to get on line by 2011. Given that few new coal-fired power plants are expected in Australia until about 2015-2020, the earliest time in which still untested carbon capture and storage might be available, so called ‘clean coal’ will be priced out of the market by cheaper solar.

This is demonstrated in the graph at right below. At present, concentrating solar power costs somewhere beween A12-16c per kilowatthour. But this is falling by seven percent per year, making its downward price course quite rapid. Solar photovoltaics is also falling in price quite rapidly, but from a higher base. Given the slow-to-fall prices of carbon capture and storage as estimated by experts, solar will ‘cross over’ so-called ‘clean coal’ before ‘clean coal’ is even ready.

By 2015, CSP will be cheaper than clean coal. By 2020 it will be cheaper than nuclear

Source: ABARE, NREL

Concentrating solar power is the conservative, low cost option for Australia’s future power supplies. The coal industry acknowledges CSP is proven (unlike carbon capture and storage — see quote at left) and the costs of concentrating solar power are low. The sooner Australia invests in concentrating solar power, the sooner it can reap the benefits of low and stable energy costs and lower greenhouse gas emissions.

It all adds up to a very positive value equation, particularly given that concentrating solar power is proven and carbon capture and nuclear (ie the next generation of nuclear plants) are not. Better yet, investment is now pouring into renewable energy overseas, and overseas research has shown that solar power power investments have a much larger beneficial impact on the regional economies where they are located than fossil fuel plants (right). This means that renewable energy projects such as wind and other renewables like concentrating solar power have a positive multiplier effect on their host regions.

Responding to the IPART review of CityRail services, Greens MP and transport spokesperson Lee Rhiannon said today the NSW Pricing Tribunal should withdraw its call for fare increases and heavy job cuts.
 
"IPART's recommendations of massive fare hikes and front line service sackings reveals that it has failed to understand the new priorities of regulating public transport services," Ms Rhiannon said. 
 
"IPART should be advising the NSW government that increasing the attractiveness and reliability of CityRail services is its top priority. Increasing revenue should be a secondary priority. 
 
“Sydney’s roads are choked. Peak hour is a thing of the past, air pollution is reaching dangerously high levels and chronic traffic congestion is making Sydney unliveable.
 
“With rising petrol prices and the peak oil phenomenon set to boost rail service patronage the government should be looking to employ more station staff and rail workers. 
 
“The Government must encourage more commuters onto trains, not turn them off.
 
"The IPART recommendations include cutting operation costs by $480 million, the axing of 1,176 train guards and replacing staff at 204 of the 305 train stations with ticket machines.
 
"Instead, IPART should be recommending a large increase in the rail budget to put CityRail on a world class footing, not relying on the traditional economic rationalist approach to drive change. 
 
"It is disappointing that the Tribunal has given such poor advice at a time when the NSW government's public transport policy is so out of step with what passengers need. 
 
"Everyone knows that CityRail has to lift its game but IPART has targeted the wrong areas. 
 
"IPART has jeopardised its standing with these recommendations. They show contempt for public transport passengers and hard working CityRail staff, and a complete lack of understanding of the transport crisis that lies ahead with predicted fuel shortages. 
 
"Fewer staff and higher ticket prices on CityRail services would hit people living in western Sydney and commuters from the Illawarra, Hunter and Central Coast particularly hard.
 
“The Greens will be making these recommendations in our submission to the IPART review,” Ms Rhiannon said.

Utilities Owning, Buying More Wind, Planning for Carbon Regulations

Utilities are increasingly embracing wind — owning their own facilities, buying wind-generated electricity from other producers, and even factoring future carbon regulation into their financial equations, said expert participants on a utility panel at WINDPOWER 2008.

Speaking on the panel were Mike Kotara, executive vice president of energy development at wind power-leading municipal utility CPS Energy; Andy Hesselbach, wind farm project manager at utility We Energies; Galen Barbose of the Lawrence Berkeley National Laboratory; and Matthew Kaplan of Emerging Energy Research.

As representatives of two different kinds of utilities, Hesselbach and Kotara were able to offer perspectives on the reasons behind their differing wind forays. As a municipal utility, noted Kotara, CPS Energy cannot take advantage of the federal production tax credit and so has no plans to pursue ownership of wind facilities. CPS, however, is the leading municipal utility for delivering wind to its customers; the utility had 501 megawatts (MW) of wind on its wires as of the end of 2007, thanks to its purchases of the renewable energy source.

We Energies presents a different story. The investor-owned utility owns the recently completed 145-MW Blue Sky Green Field wind farm in northeast Fond du Lac County, Wis., and is looking into owning five or six additional projects to meet its state renewable electricity standard requirements. “We didn’t initially intend to own wind projects,” said Hesselbach. However, when the utility calculated such financial factors as the debt load associated with entering into a power purchase agreement, it decided the wind energy it would deliver “might as well provide some return to our shareholders.” Ownership, he said, is also ultimately cheaper for customers as well.

Barbose, meanwhile, reported on a study that Lawrence Berkeley conducted on how utilities are valuing renewables as a hedge against carbon regulatory risk. The study took a look at what 15 utilities in the West (representing about 60% of total retail sales in that region) are doing in this area.

“Utilities are making fairly important strides in evaluating carbon regulation cost and risks in their resources,” he said. Utilities are bringing renewables into their resource plans and portfolio mixes, said Barbose, although some of that is attributable to state renewable electricity standards (RES). Still, he noted, many utilities are including renewables in their mix “well in excess” of their RES requirements as a result of carbon regulation risk.

While utilities have made much progress on valuation of carbon regulatory risk, much work remains, Barbose said. Methods and assumptions for calculating risk vary widely, and state regulators need to provide guidance to ensure that ratepayers are protected from the associated financial risk, he said.

“We do have a carbon strategy going forward that puts a [premium] on reducing carbon intensity,” said Kotara.

Contrasting with Barbose’s analytical and strategic presentation, Hesselbach shared the We Energies experience in getting Blue Sky Green Field built, offering tips and lessons learned on garnering community support for wind projects. We Energies did everything from hosting community barbeques to conducting the usual landowner meetings during the process. He suggested that setting expectations is key so that residents aren’t surprised by the temporary effects of construction. Painting a picture of the construction process-e.g., forewarning of messy roads, construction vehicle traffic, muddy fields, etc.-that may be even more drastic than reality is advisable so that residents are not taken by surprise, he said.

Minister, welcome to Lateline Business.

MARTIN FERGUSON, MINISTER FOR RESOURCES: Good evening and thank you, Ali.

ALI MOORE: You’ve today raised the issue of tax barriers to large downstream gas processing plants in Australia. Do you believe tax concessions would really make the difference to investment in those sorts of projects?

MARTIN FERGUSON: Well, in the tough competitive world at the moment, to actually attract investment, we’ve got to seriously look at the necessary investment regime to actually get further downstream processing in the oil and gas industry in Australia, take frontier exploration and development – it is deep sea, it is highly expensive. Other countries have got similar incentives in place. We can not allow that investment to escape, because it’s not only about our exports it’s also about our domestic energy security.

ALI MOORE: At the same time, though, the three projects that you mentioned today: Georgian, Brown and Sunrise, which in your words are struggling to get off the ground. When those in the industry talk about those three projects, they don’t talk about tax concessions, they talk about access to getting the right geographical location for their plant: access to resources, infrastructure, the sheer logistics of the problem. Tax concessions would be nice, but there are really far bigger issues, aren’t there?

MARTIN FERGUSON: There are a range of issues. Obviously, access to infrastructure and all those associated issues are exceptionally important, but I can assure you that they are actually talking about potential incentives. And it’s no different to what we did just over 24 years ago with respect to the North West Shelf when it was a sunrise industry and they had very good assistance from the governments, successive governments over a period of two decades. We have got that as a now a mature, successful, profitable outcome. We’ve got to look to the future. I don’t accept two major LNG projects over 20 years as good enough. We’ve got to go out of our way, because it’s about bringing on potentially successful investments in what is a major industry. We want to continue to be a major oil and gas hub. It’s no longer just the West Coast. We’ve also got significant coal seam methane opportunities in Queensland which are attracting a lot of international attention at the moment.

ALI MOORE: Indeed they are. Are they the sorts of projects that you’d be looking to target for tax concessions?

MARTIN FERGUSON: Well, what we’re doing through the Henry Tax Review and it arises from the budget process is to actually have a look at the current system and see whether or not alternative methods of encouraging investment are required. There’s no pre-determined outcome. I will continue to engage with industry in association with the Treasurer to make sure that we as a nation not only attract investment that we in Asia are the key to resource security for other developing countries such as China and also mature companies such as Japan, whilst at the same time securing adequate energy domestically, which is very important given the interruption of supply and gas at the moment in Western Australia because of an unfortunate accident.

ALI MOORE: But Minister, can we wait for the Ken Henry review? Because of course, these tax concession on big projects are going to be part of the review. But, that’s going to take at least 18 months, possibly even years. The lead times for these projects are huge and decisions surely need to be made more urgently?

MARTIN FERGUSON: Well, the lead time is exceptionally long, but these companies are actually working in terms of potential project development at the moment. They are raising issues with me and my department and no doubt with the Treasurer.

ALI MOORE: But if you’re gonna wait for the Henry review, you can’t answer them now, can you?

MARTIN FERGUSON: No, no, the Henry Review is an ongoing process as the Prime Minister and Treasurer have said. Let’s also be clear. You’ve finally got a Government that’s actually prepared to do the serious work. Companies wanted this done over the last decade and the previous Government neglected yet again, what is very important to actually secure energy futures for Australia. It’s about domestic and export opportunities – we can do both. And finally, they’re saying to me, “At least we’ve got a Government that is prepared to sit down, talk through the issues and seriously debate what is potentially necessary with no guaranteed outcomes, actually have a debate about what might help.”

ALI MOORE: Well, of course, you mentioned earlier the tax break for the North West Shelf project which of course was axed in the Budget, saving some $2.5 billion. Are you looking to hand all of that $2.5 billion back to a new generation of projects?

MARTIN FERGUSON: The Government’s actually looking to see through proper consultation what is potentially appropriate. That’s about detailed work, not only in my department, but also my department in association with other departments such as Treasury and the involvement of the Minister for Finance and the Treasurer.

ALI MOORE: Well, Minister, you’d be aware of the comments made today by Marius Kloppers the head of BHP Billiton. He’s made it clear that in his words, “if the objective is to encourage private sector investment infrastructure, overly regulated infrastructure or a hovering threat of regulated mandated access to existing infrastructure, is clearly not the way to go.” He’s obviously referring to his dispute regarding rail access in the Pilbara. Are you going to provide both BHP and Rio with some relief on that front?

MARTIN FERGUSON: I understand the issues raised by Marius. They have attracted my interest for some considerable period, both in Government and in Opposition. There is clearly a question of a balance between competition and also, a logistic regime which is probably most – one of the efficient in the world, our iron ore provinces in WA, both Rio Tinto and BHP. That is a matter for ongoing consideration, not only by myself, but a range of other Ministers such as the Treasurer.

ALI MOORE: Well, BHP for one, wants the trade practices Act modified to protect them against third party access. Will you rule that out?

MARTIN FERGUSON: Marius’ views are well known to Government and they will be considered in a proper way, the same way in which the views of Rio Tinto and FMG. It’s about getting the balance right which secures investment, whilst also enabling others to increase their export opportunities.

ALI MOORE: But what’s the time frame for this? Because this case is already about to go to appeal to the High Court, it’s also before the Australian Competition Tribunal. It’s been going for years?

MARTIN FERGUSON: That’s an ongoing process, both from a legal point of view and from a regulatory point of view and it is a matter that will be appropriately considered by Government in the course of the normal appropriate timetable.

ALI MOORE: And what would that be?

MARTIN FERGUSON: Well, obviously there are a range of issues from legal consideration in the High Court and also applications by FMG. They’ll be considered, as is required by ministers, in accordance with the regulatory timetables.

ALI MOORE: Well, Minister, of course, you are also Minister for Tourism and the latest figures show the number of overseas visitors to Australia has slowed to a halt. What can you do?

MARTIN FERGUSON: Well, there is, in terms of our tourism industry, a very rough period ahead and I’m not going to hide from that fact. We have got to manage not only a strong dollar, but perhaps an oil crisis. And we are seeing a major rationalisation of the airline industry, not only domestic, internationally. We are going to do what we can in association with the private sector and State and Territory Governments to put together a strategy, and I have announced that commitment about supply side issues, whilst also reshaping our international travelling – international advertising campaign.

ALI MOORE: Well, the Australian Export – Tourism Export Council says hundreds of small businesses face failure. The piece de resistance was a decision in the last Budget to raise the departure tax and other taxes and charges. They want direct financial assistance and they point out you’ve still got $200 million in the kitty from the so-called “over-collect” from the Ansett levy?

MARTIN FERGUSON: I appreciate the concerns in industry at the moment.

ALI MOORE: But are you going to give them any relief on taxes and charges?

MARTIN FERGUSON: I will engage, not only with ATECH, but also the other major tourism operators in the industry. It’s more than a increase in the passenger movement charge. This is clearly a problem because of the strength of the Australian dollar and a major oil crisis. They are the crux of the problems confronting Australia at the moment, and in terms of actually assisting small and medium sized businesses, there are a range of issues including supply of labour, question of improving infrastructure and also, trying to get Australians to actually have a holiday. It is …

ALI MOORE: But do you rule out direct financial assistance? Is that a “no” to direct financial assistance?

MARTIN FERGUSON: There is no way that you throw money at a serious problem. You’ve got to sit down in a proper way and consider how we go forward. I am not going to make decisions on the run because I know this is a far more complex problem than increasing the passenger movement charge and so do the great majority of people in the industry.

ALI MOORE: Martin Ferguson, many thanks for talking to us.

MARTIN FERGUSON: Thanks very much, Ali.

The listed company told the Australian Stock Exchange on Friday: “MEC was reviewing new data from an airborne survey conducted east of Newcastle which detected evidence of petroleum seeps on the sea surface.”

Responding to the newspaper report, Greens MP Lee Rhiannon said companies exploring for oil off the NSW coast could face lawsuits because of mounting evidence that such operations harm whales, and the potential for an oil spill could wreak untold harm on the tourism and fishing industries.

“There is no guaranteed benefit for the people of NSW from coastal oil and gas exploration and there is a real chance such activities would cause harm and stress to migrating whales,” Ms Rhiannon said in a statement.

“If seismic testing is used to explore for oil, the shock waves could distress whales migrating along Australia’s east coast.”

She noted indigenous people in Alaska and conservation groups filed a lawsuit last month against Shell Oil and British Petroleum to stop exploration planned for the seas above the Arctic Circle where bowhead whales migrate.

“This problem and the associated potential for oil spills demonstrate that proposed oil exploration off the NSW coast should be scrapped before it starts,” Ms Rhiannon said.

Furthermore, the exploration off the NSW coast would not reduce petrol prices or secure oil supplies as “offshore oil fields take at least five years to develop so such reserves would have minimal impact on the peak oil phenomenon”.

The MEC report estimates undersea reserves of up to 1 billion barrels of oil and enough gas to meet Sydney’s needs for a decade. It is seeking shareholder approval to restructure its oil and gas assets to improve access to capital for exploration.

A joint contract led by MEC and Bounty Oil is expected to be executed this year and the project has applied for an extension of a licence to explore the site while awaiting the arrival of the drilling rig to Australia, which is expected by May next year, the newspaper reports.

A spokesman for NSW Premier Morris Iemma confirmed to the newspaper the application had been received, and MEC has told shareholders it expects approval to be granted.

Drilling in NSW will send petrol prices down: Opposition

If the venture is successful the public will benefit from a drop in petrol prices, NSW Opposition Leader Barry O’Farrell said.

The promise of oil would be welcomed by the public, Mr O’Farrell said.

“The beneficiaries are the public,” he told reporters in Sydney.

“As is evident by the increasing price of oil, we’re reliant on international oil cartels and the prices are currently only going in one direction.

“If we’re talking about oil rigs 20 kilometres off the coast, if that offers the hope of increased oil [and] reduced petrol prices, I think the community will welcome it.

“We see both State and Federal governments talking long and hard about working families but doing nothing practically to assist the cost increases they’re facing.”

Mr O’Farrell said that the environmental impact would be minimised by safeguards such as those in place for other mining projects.