Renewable Energy Zones: clean, cost-effective energy zones
As coal-fired power stations are reaching the end of their designed lives, Australia’s rooftop, solar output and battery storage take up is breaking new records. In the transition to clean, infinite renewable energy generation, Australia’s regions are replacing the now uneconomic coal fired power stations with Renewable Energy Zones (REZ).
A REZ is ‘a designated area that combines renewable energy generation (e.g. solar, wind), as well as storage (batteries), and transmission infrastructure, to deliver clean, reliable, and cost-effective electricity.’ Australia’s Department of Climate Change, Energy, the Environment and Water (DCCEEW) is already working with the states and territories to introduce these regional REZs as efficiently and effectively as possible.
The NSW initiative
In New South Wales, EnergyCo is the appointed body to coordinate investment in REZs across the state. It has identified five dedicated regional REZs - the Central West Orana REZ, the New England REZ, the South-West REZ, the Hunter/ Central Coast REZ and the Illawarra REZ.
The thinking behind these renewable energy zones is that inflexible base-load generators and smaller peaking generators are ‘the economics of the past’, as per the CEO of Australia’s Energy Market Operator (AEMO), Daniel Westerman’s, recent CEDA address. He went on to say that today’s economic ‘paradigm shift’ in our power system is … ‘to renewables and firming’.
Regional REZs will be powered by large-scale solar and/or wind farms designed to re-use the current transmission lines, sub stations and infrastructure from the retiring coal-fired power stations, and connect to the grid. There may be some upgrading of existing transmission lines or some new sub-stations required, but the overall cost effectiveness will even out over time.
Regional REZ
The bonus from the regional REZ program is that it will boost the local economy. The REZs will provide good local construction and services employment in the refresh and maintenance phases of the transition, with more than 6,300 new jobs predicted. And, where feasible, these regional REZs will continue to provide local specialised employment opportunities in the operational phase, with more than 300 new ongoing jobs expected. (see Energy Insiders Podcast: Regional communities and the renewable gold rush )
By connecting the multiple renewable energy projects to both battery storage and new transmission infrastructure, the regional REZs will also be able to capitalise on economies of scale. In NSW case, the State Government expects its REZs will deliver multiple benefits including:
Energy bill savings from reduced wholesale electricity costs
Emissions reduction from a cleaner energy sector, and
Reliable energy from significant amounts of new energy supply.
It will also have various local economic spin offs, providing an additional $1.3 billion in revenue to ‘drought-proof’ farmers should they choose to lease their land as hosts for the renewable electricity infrastructure. And now, that Minister Murray Watts is determined that the proposed “regional planning” guidelines for major projects is locked into legislation, renewables and other developments should avoid previous delays.
Cost savings
REZs are projected to reduce consumer electricity bills by around $130 p.a. And for businesses, by potentially $430. Once operable, the cost of generating clean electricity, and its environmental benefit for Australians, will of course be significant.
But despite all the value they provide, there are limits to how much they directly benefit consumers. Regional REZs will perpetuate the current power economics, where electric power is provided by large generators and retailers to businesses and consumers. This means the opportunities to significantly lower energy costs by incentivising installation of rooftop solar and batteries, won’t be so accessible them.
The current Return On Investment (ROI) dynamic will remain with the large established energy industry players.
But there is a better approach that will work well in Australia’s urban environments. In the next blog we will discuss the more ‘futuristic’ and more equitable Urban REZ. We will describe how best to leverage the Consumer Energy Resources (CER) or Distributed Energy Resources (DER) revolution and deliver healthy Returns on Investment.
We will cover how to:
mitigate the need for expensive transmission infrastructure by optimising the government’s National Battery Strategy, by coordinating community storage, rooftop solar, and electric vehicles.
and the differences between ‘Open Gardens’ and ‘Walled Gardens’ and their various merits.
