Decarbonising Industry: Going Beyond the Grid
In my recent LinkedIn post, I touched on the challenge of steering the world towards 100% renewable energy powered primarily by solar and storage. The scale of the undertaking is enormous and beyond just technology, the transition has substantial economic implications that seem far too often to be overlooked. Let's dive a little deeper into this.
The Australian Energy Market Operator's (AEMO) Draft 2022 Integrated System Plan[i] provides key projections:
These projections underscore the massive scale required to meet Australia’s net-zero policy commitments and decarbonise society. However, focusing only on electrification, especially for industries requiring process heat, is not the solution. Here's why.
Efficiency and Lifespan Matters. The Practical Realities of Technology and Climate
Battery Storage
These targets are ambitious, but they highlight another challenge: storing the energy generated. According to The Australian Energy Market Commission (AEMC) in their report entitled Energy Storage Systems and the NEM[ii], we need to significantly ramp up our storage capacity—by an unprecedented 17 times current levels to 60GW.
According to the AEMC Commissioner
“…energy storage is imperative – and … building the energy storage to manage daily and seasonal variations in solar and wind generation is the most pressing need of the next decade”
And the challenge becomes more urgent with each coal plant retirement.
The report goes on to say that the majority of this dispatchable energy storage will come from utility-scale batteries, pumped hydro, community batteries and other distributed systems, a 30-fold increase requiring an additional $242 billion in generation, storage and transmission investment.
But there's more to be considered.
Thankfully the payback period for household batteries has fallen over the last couple of years and by 2025, according to AEMC, “a typical household will recoup their investment in just under seven-and-a-half years, well within the average battery’s 10-year lifespan.” And while battery innovation has secured a lot of recent popular press, especially for household storage where payback periods seem promising, there is surprisingly little quantifiable data available about the effective life of grid-scale batteries. Most commentators claim a typical life of between 5-15 years, consistent with the Commissioner’s comment and given this, owners and developers must be prepared for inevitable replacements within this period.
Solar Panel Performance
While photovoltaic (PV) panels have a life expectancy of 25 to 30 years, the National Renewable Energy Laboratory estimates performance degradation of roughly 0.5%PA[iii] (an improvement on rates of degradation experienced by earlier panel designs) as well as glass breakage and absorber corrosion, but the rate could be higher in hotter climates and for rooftop systems.
According to the Clean Energy Regulator, solar panel efficiency has improved from a historical average of approximately 15%, approaching 20% in 2019[iv]. And whilst most installers and resellers understandably claim values at the higher end of this range, the reality is that for a major part of the year, most installations deliver far less than claimed for reasons such as:
The Clean Energy Finance Corporation (CEFC) in its 2019 report Benchmarking large-scale solar PV performance in Australia using satellite weather data[v] noted an average Performance Ratio (the ratio of the electricity generated to the DC panel nameplate rating) of just 75%.
The Needs of Australian Industry - The Balance Between Electrification and Thermal Energy
Unfortunately, the enthusiasm for electrification doesn't consider industries that need process heat. While electricity is invaluable for many applications, it doesn’t meet the needs of industry and manufacturing reliant on low-cost heat for process operations.
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This brings us to the pivotal role of Concentrated Solar Thermal (CST) energy. For clarity, whilst the efficiency of large-scale solar farms and commercial PV installations typically lies around 15-16%, there's an additional efficiency loss in converting this electricity to heat via an electric process heater. CST installations on the other hand directly capture between 75-80% of the available solar energy as green heat at temperatures up to 400Deg C, with no additional balance of plant required. This means approximately five times the collection area of PV panels is needed to match the output of a CST plant, plus additional plant and system complexity.
Comparative Collector Area – CST vs PV
For industries needing round-the-clock heat and 24-hour process operations, the metrics become even more compelling. According to Bureau of Meteorology (BOM) data the coastal regions with higher population density average 8 hours or less of “bright sunshine hours” daily[vi], meaning solar installations effectively require three times the collector area to harness enough energy during the day to cater for both day and night-time demands.
This distinction becomes more significant for industries dependent on a continuous supply of process heat. Thermal Energy Storage (TES) solutions are inherently more efficient and cost-effective than storing electricity in batteries, and the plant footprint is in most cases only around 20% of that required for an equivalent solar panel (PV) solution.
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Looking Ahead
To be clear, solar PV is undoubtedly vital in our journey towards 100% renewables. However, the idea that electricity alone can cater to industrial process heat requirements is a misconception. "Electrify everything" simply doesn't work.
The emphasis here isn't to undermine the monumental advances that have been made in electrification. While solar PV is undeniably a cornerstone of our renewable strategies, we need a blend of different energy sources to ensure a sustainable future. It's not just about choosing one over the other; rather it's about integrating multiple solutions and understanding how each can play a part in a balanced energy ecosystem.
As the world grapples with the urgency of decarbonisation, solutions like CST offer a compelling answer.