The energy transition brings with it big and bold plans for megaprojects, futuristic technologies and radical new business models. As a cautionary tale we consider some of the spectacular failures of the last decade.
Remember when a Perth based company was going to build the world’s tallest structure in the mid-west of WA? The solar updraft tower concept had worked well at pilot scale, but no-one had built a utility-scale version. No-one has yet. Perhaps the identity of the colourful local businessman backing it was a clue to the risks entailed – he’d already gone bust following the Royal Commission into the WA Inc. scandal. Remarkably another Australian company spent years pursuing a similar project in Arizona.
Remember when geothermal was going to provide Australia with a large chunk of its dispatchable power needs at zero emissions? As recently as 2017 the Climate Change Authority’s modelling of electricity sector scenarios forecast around 40 per cent of dispatchable output to come from geothermal by 2050.
Figure 1: projected generation mix to 2050
Source: Jacobs for the Climate Change Authority
Even then it seemed a stretch, as the three major gentailers had all written off millions of dollars of investment in geothermal businesses. The geothermal plays of the early 2010’s have all pivoted to other activities: Petratherm is now a mineral exploration company, while Torrens energy is a hydrocarbon royalties company called High Peak. Geodynamics changed its name to ReNu energy, and switched to solar/storage and bioenergy, but has now divested of its investments in those area. Panax became Raya group and is now XPed, an internet of things (IoT) company. Geodynamics achieved the impressive technical feat of running a 1MW pilot plant using heat from wells around 3-4km deep, but it spent over $400m to get there.
Remember when Origin was going to run an undersea interconnector from a giant PNG hydro project to connect to the NEM in Queensland? Admittedly, investors were never that enthused about the $5billion Purari plan but for a while there it was going to beat off wind and solar to capture a good chunk of the RET.
Remember when BetterPlace was going to take over the world (well the auto industry)? The Israeli start-up had an audacious plan to lease EV batteries to car users on a subscription model that included the cost of power to charge them. They would deal with range anxiety by setting up a network of battery swap stations so you could change your old empty battery for a full one. It had global ambitions but saw Australia as a key early market. They were enthusiastic participants in AEMC’s demand side reviews known as the “power of choice” as their business model required them to be able to easily provide power to customers at their homes via a separate meter, which would only be feasible with regulatory reform. To help understand the urgency of reforms to assist and manage the update of EVs, AEMC commissioned a forecast from AECOM whose central case had Australian EV sales running at around 200,000 in 2020. We’re on course instead for 6,000 or so. Better Place managed to burn through over $900m before selling off its remaining assets for $450,000.
Of course, there are success stories to match these failures. When Better place was out raising venture capital in 2010, another EV play that was doing the same was Tesla. Tesla is now famously the most valuable car company in the world. If you’d put the same amount into each of a basket of EV plays that year including Tesla and Better place, you’d have a pretty good return on your investment. Back in 2010, rooftop solar PV was only just changing from an expensive luxury for enthusiasts to an everyday appliance that collectively comprises more capacity (18.5GW) than the seven largest coal plants in Australia.
Can we tell which projects or technologies that are being promoted today will succeed or fail? Perhaps not, but there is a “watch-list” of unusually ambitious projects worth keeping an eye on. These include the Asian Renewable Energy Hub, a kind of “reverse Purari” – albeit ten times the size – that is looking to export power to Singapore. Or Star of the South offshore wind farm, which is proposed at up to 2.2GW. This would be almost double the size of the current largest offshore wind farm. Co-founder Terry Kallis was also part of the Petratherm team that was unsuccessful in its geothermal adventure. Solar thermal and carbon capture are technologies to look out for.
The other part of the cautionary tale is the projections for geothermal and EVs highlighted above. This is a reminder that other projections, like AEMO’s Integrated System Plan that is driving billions of dollars in new transmission, are only best estimates.