Australian governments have signalled they will need to invest at least $100 billion in electricity infrastructure over the next decade in order to meet growing demand for electricity and replace ageing infrastructure. Most of this money will be spent on new power plants, as well as distribution infrastructure to get the electricity from the plants to the places of use – factories, buildings and homes.
What many people do not realise is that a lot of this investment is needed to meet peak demand – typically only several days a year. For instance, 25 percent of the Powercor electricity network is used for less than 150 hours per year.
Over the next five years, the electricity network companies will invest $39 billion on infrastructure upgrades. Almost all of this will be spent on business as usual and only a very small portion – in the order of 1percent for some utilities – will go towards non-network solutions and demand-side management. This is a very inefficient way of allocating resources and will significantly increase power prices for consumers. Household power bills are forecast to double by 2015. Putting a price on carbon will increase electricity prices even further.
Currently, households and small businesses have very limited ability to respond to these price rises: they can try to reduce their electricity usage; switch between energy retailers (which charge similar prices); or install solar panels.
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An alternative: ceramic fuel cells
A viable alternative is gathering momentum. Homeowners, small businesses, governments and schools worldwide are installing fuel cell ‘mini power stations’ in their homes and buildings to produce their own electricity from natural gas.
Unlike solar panels, these fuel cells generate power constantly, and the power output can be controlled in response to changes in demand or price.
Ceramic Fuel Cells’ BlueGen gas-to-electricity technology came out of Australia’s CSIRO. Units are operating in Germany, the United Kingdom, Switzerland, The Netherlands, Japan, Italy, Australia and the USA. In Australia, BlueGen units are operating in Melbourne, Sydney, Canberra and Adelaide.
The BlueGen unit, approximately the size of a dishwasher, is an example of distributed generation – generating electricity at the point of use. Crucially, it negates the need for investment in large, centralised power stations and distribution infrastructure.
A BlueGen unit produces approximately twice as much electricity as the average Australian home requires each year. The excess production can be sold to the grid. This means that households change from being electricity buyers to electricity sellers.
Importantly, each BlueGen unit – because it runs on gas and not coal – reduces the average home’s carbon footprint by up to 14 tonnes per year.
And they reduce waste. In 2007, Australia’s electric power transmission and distribution losses were 7 per cent of all output – or 17.91 terawatt hours. This wastage was enough electricity to power 3 million average Australian homes for a year.
No government dependency
Ceramic Fuel Cells’ units do not need government subsidies or premium feed-in tariffs. Unlike many large-scale renewable energy projects, the Government does not need to underwrite the investment. Homeowners and businesses will buy BlueGen units to generate a commercial payback, provided the energy retailers pay them a reasonable rate for the low emission electricity they export back to the grid – which should be equal to the standard retail rate, currently about 20 cents per kilowatt hour. Currently, there is no mandatory feed-in tariff for fuel cells, meaning early units are being offered to commercial customers, who can use all the power onsite.
The cost savings of distributed electricity generation have been recognised in many studies, internationally and in Australia. A CSIRO report, published in 2010, estimates that the value of wide-scale deployment of distributed energy in Australia could be $130 billion by 2050. The Australian Academy of Science has also called for a national feed-in tariff for small-scale fuel cell products.
The University of Technology Sydney has studied the savings on grid infrastructure from distributed generation. The University’s June 2009 report shows that distributed generation and demand-side measures can meet all New South Wales’ electricity demands to 2020, with annual savings of $1.4 to $3.9billion. In addition, there would be much lower greenhouse gas emissions than from new coal-fired power stations. The national savings would be far higher than this.
The outlook for Ceramic Fuel Cells
Fuel cell generators using naturalgas provide 24/7 base load generation. They increase the utilisation of existing gas networks, especially over summer when gas demand is low and the demand for electricity is high.
Fuel cells are the most efficient way of generating electricity from natural gas (and renewable fuels in the future). The marginal cost of generation is therefore very low.
If only 5 per cent of Australia’s homes installed fuel cell generators, 700 megawatts of controllable generation could beadded with no additional grid investmentand no subsidy from government.
A CSIRO report confirms that each BlueGen fuel cell unit offsets up to four times as much carbon as a similarly-sized solar photovoltaic unit. If only 200,000BlueGen fuel cell units were installed by 2020, they would reduce Australia’s carbon emissions by up to 5.6 million tonnes.
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