Carbon price brings billions of investment into energy generation

More than $3.5 billion dollars of annual investment will return to the electricity generation sector by 2015 as a result of the governments carbon price, according to an internal report by Alstom Australia.

The report, which was prepared by the company to anticipate likely changes in Australias energy generation environment, showed the importance of carbon price certainty for the sector.

The lack of certainty around a carbon price had crippled investment in the power generation sector. From 2008 to 2010 the market for utility scale generation fell from $4bn a year in 2008 to just $1bn in 2010, said Alstom Australia CEO Chris Raine.

Alstoms analysis indicates that if the carbon price passes through parliament, average investment will increase to $3.5bn a year by 2015. That is a 250% investment rebound over five years. This will be further encouraged by the Renewable Energy Venture Capital Fund, which means we are likely to see a return to a healthy market size by 2013.

The report indicates that 50% of new investment in constructing utility-sized generation is likely to go towards building baseload and peaker power provided by flexible gas-fired power generation plants.
The Alstom report has calculated that renewables will take up the remaining 50% of total investment, comprising mainly of wind but also increasingly solar thermal and other technologies.

Alstom also stated that the carbon price makes carbon capture and storage a more feasible option for Australia, both on future gas and coal-fired facilities. But government involvement is absolutely essential to support the commercialisation of this technology.

If this legislation passes through parliament, we will see a marked transformation of the electricity generation sector, Mr Raine said.

It will be a signal to re-skill the workforce in the power generation sector to accommodate this change, as recognised and partially funded in the Governments Clean Energy Skills package. However, the significant lifespan of coal-fired assets means they will still play a major role in our power generation capacity for years to come.

Today coal fired electricity accounts for about 80% of Australias generation mix. With the average age of Australian baseload plants, currently at over 30 years, it is important to assess what we can do to improve their performance as we transition to lower CO2 technologies. This could include reducing the CO2 intensity of existing fossil fuelled fleet.

Alstom offers solutions for all power generation technologies from coal, gas, hydro, and wind to emerging technologies such as solar thermal, tidal, wave and geothermal, Mr Raine said.

Australia needs electricity wherever it comes from. By removing the uncertainty, investment can return to the market place and we can get back to providing reliable and affordable electricity for Australia,