NERA Federal Treasury Pre-budget Submission – AOEG Extract

NERA’s Pre-Budget Submission (31 January 2020) to the Department of Treasure included support for the Australian OceanEnergy Group. The following extract provides more details about the AOEG content. Read the full submission (PDF) for details.

Executive Summary – (Page 2)

Harness Australia’s Ocean Energy

The International Renewable Energy Agency (IRENA) has noted: “The potential of oceans as an energy source is staggering – more than sufficient to meet global electricity demand well into the future. Yet the contribution of ocean energy to the world’s energy mix remains very small, with key technologies still in development and demonstration phases.”

Fulfilling the potential of ocean energy requires continued investment into technology development, national test sites, supportive industry policies and continued engagement across related industry supply chains such as for example: offshore wind, oil and gas, aquaculture and advanced manufacturing.

Around the world, increasing commercial maturity is expected to be achieved in competitive nations such as the UK, Portugal, Ireland, France, USA, Canada, Japan, the Republic of Korea and many others. The governments in these countries have realised the potential for ocean energy to contribute to energy independence, decarbonisation and job creation, with ocean energy being recognised as far more predictable than solar and wind. Tides are predictable over all time frames and waves have a forecast horizon up to three times more than wind.

Australia, the world’s largest island continent, has enviable access to ocean energy, with over 25,000 kms of coastal area and the third largest Exclusive Economic Zone, with over 80 percent of that being classified as offshore, beyond two nautical miles from the coast and subject to oceanic waves, tidal currents and wind. With the world’s most powerful wave and tidal resources available, ocean energy development in Australia means our surrounding seas and oceans offer enormous potential to deliver power (energy and hydrogen), heating and cooling, drinking water and other products (for example oxygen). This potential is multiplied when partnered with

• other major infrastructure projects such as offshore wind farms or deep-sea oil and gas platforms.
• other renewable energy sources (solar/wind) to deliver improved predictability, decreased variability, spatial concentration, and greater socio-economic benefits in the localised area.

Australian Ocean Energy Group and Integrated Micro Grids

NERA is supporting the Australian Ocean Energy Group (AOEG) – an industry-led cluster formed to facilitate industry collaboration across the ocean energy industry to create significant value for Australia. The founding partners include leading energy organisations, Australian research institutions, plus innovators and SMEs drawn from across Australia and the world.

NERA’s project funding and industry support to AOEG is providing the important catalyst to attract engagement and collaboration with Australia’s energy sector and adding ocean energy to Australia’s future energy mix. The following are some of the key ocean energy projects that will be implemented for Australia in 2020:

• Development of a 10-year Ocean Energy Roadmap: This strategic industry document will outline opportunities to accelerate ocean energy technology development in Australia as a commercial, stable and viable low carbon energy source, suitable for multiple industrial and community applications. In developing solutions to meet Australia’s unique set of circumstances, the Ocean Energy Roadmap also recognises the opportunity for the Australian ocean energy sector to serve global markets, and deliver new technologies, approaches and/or supply chain capabilities.
• Aquaculture/Ocean Energy Market Assessment AOEG, in collaboration with CSIRO and Avil Allen Consulting, are submitting a project proposal to the Blue Economy-CRC to undertake a market analysis of the commercial potential for ocean energy as part of the decarbonisation of the offshore aquaculture and fishery industries.
• Analysis of ocean renewable energy uptake for the energy-intensive industrial sectors of Australia’s Blue Economy (study). This is a graduate research project conducted under the direction of AOEG. The graduate intern is co-funded by CSIRO and Climate-KIC Australia.

However, there is a significant additional opportunity to support coastal, offshore and island communities, including tourism operations, to build greater self-sufficiency, resilience and disaster recovery capabilities across energy, fresh water, small scale hydrogen and other additional externalities, such as oxygen for improved waste water treatment. The opportunity is from integrated micro-grid systems.

By creating not just a micro-grid but also an integrated micro-grid (e.g. a grid which supports multiple sources of renewable energy and which can meet the load demand of various modular technologies e.g. hydrolyzers, desalination units, waste water treatment units) communities can enjoy numerous complementary and ancillary benefits from harnessing the water and energy from Australia’s oceans.

Australia has numerous potential competitive advantages (ocean resource, research, technology, manufacturing), as well as geographical proximity to key end-user markets, which could see Australia secure a global market leadership position in this niche, but significant sector.

Ocean energy can play a significant role in supporting coastal and island communities, including tourism resorts who are unable to connect to a large-scale grid and/or would seek to:

• reduce their reliance on a large-scale grid.
• stabilise /integrate the use of solar/wind.
• decarbonise both their energy and their fuel sources (diesel replacement).
• utilise other potential by-products of ocean resources (hydrogen & oxygen).
• void over-head electricity transmission systems.
• ensure disaster recovery capabilities (extreme weather/ fire/drought/flooding).

The global micro-grid market is estimated to reach $US18 billion in 2022, with the demand in the Asia-Pacific to grow the quickest (cumulative annual growth rate of 18 percent from 2017 – 2022) due to the strong interest in micro-grids in Japan, Indonesia and other island-nations in the region.

Funding Proposal

To catalyse the development of internationally competitive technologies and capabilities in integrated micro-grid systems, NERA will support AOEG to develop a full proposal to the Australian Government for operational and project funding of $5 million over three years.

1. Operational – 3 x FT Staff – Project Managers & Stakeholder Engagement
2. Feasibility study – into a wave energy technology and end user micro-grid development site on Garden Island, WA and a tidal range facility in Tasmania. These sites would enable end users, government agencies, utilities, councils and others to plug and play their desalination units, hydrolyzers, batteries, etc to test their efficacy with different wave energy technologies. Data from pilot projects would be made available bilaterally to those involved and non-commercially sensitive data would be shared across the industry.
3. Establish Test Site 1 – Garden Island, WA – wave technology
4. Establish Test Site 2 – Tasmania – tidal range technology
5. Regulatory Project to participate in international standards work to ensure Australia is not shut-out of international market opportunities for integrated micro-grid solutions

NOTE: Infrastructure costs for a Tasmanian site may be the subject of a separate funding proposal if the feasibility study is positive. This is because, unlike in Garden Island, WA, no suitable micro-grid infrastructure already exists which can be re-purposed.

Open access or “Plug and Play” development centres are key to Australia being able to test both wave and tidal range devices, while simultaneously advancing capabilities in integrating with local grids, batteries, desalination modules, small scale hydrolysers and/or waste treatment units, as well as houses or other equipment. By specialising in micro-grids, Australia can potentially carve out a global niche in the provision of integrated systems which permit coastal and island communities, including tourism resorts, to be totally or partially self- sufficient in terms of energy, fresh water, transport fuels (diesel replacement) and other by- products (oxygen for waste treatment). In 2019, Australia outlined a $500 million foreign aid program to help Pacific nations to invest in renewable energy and disaster resilience. Micro- grid systems which utilise ocean energy could support Australian foreign aid objectives of this kind.