Costly wind, solar batteries good for Australian coal: International Energy Agency

solar batteries australia
The batteries required to stabilise supplies from wind and solar power are too expensive for widespread adoption in poor countries. Bloomberg

by Ben Potter

Storage batteries used to back up wind and solar power are too costly to undermine Asia’s booming demand for coal, the International Energy Agency says.

The agency defended its resilient global coal demand projections against criticism that they exaggerate demand growth, especially from India and south-east Asia, for Australian coal.

Critics say the forecasts, which suggest Australian coal exporters have a prosperous future despite slowing global growth in demand for coal, underestimate India’s capacity to supply its own coal needs and the growth of wind and solar power.

But Laura Cozzi, head of energy modelling at the IEA, said the agency expects demand for coal to boom in India and south-east Asia even though the region will splurge on wind and solar energy.


That’s because the batteries required to stabilise supplies from wind and solar power are too expensive for widespread adoption in poor countries striving to rapidly build manufacturing and other industries.

“Batteries and other forms of flexibility will be badly needed to accommodate larger share of variable renewables, but we need to see a very steep decline in their costs, which so far cannot be taken for granted,” Ms Cozzi told The Australian Financial Review in an email.

​Ms Cozzi, who was in charge of modelling for the IEA’s 2015 World Energy Outlook, said it had pared projections for global coal demand growth to just 0.4 per cent a year – a 10th of the annual increase in the past decade – because of falling use in Europe, the United States and China.

“But in India and south-east Asia, where electricity demand is set to grow at a break-neck pace if policies do not change, coal plays a significant role in fuelling manufacturing-based economic growth and providing energy access to the millions who currently lack it,” she said.

“As they continue their decline in cost, solar and other renewables technologies cover an increasingly large share of the 60 gigawatts a year needed to cover electricity demand in the region.”


Back-up baseload power sources – from coal, gas, nuclear, hydro or energy stored in batteries – are essential when the electricity network contains a large share of wind and solar energy, which drop to negligible levels when the wind doesn’t blow or the sun doesn’t shine.

Because batteries are not yet cheap enough for wider use, the IEA expects India’s coal consumption to nearly triple to 1334 million tonnes a year by 2040, and south-east Asia’s consumption to more than triple to 446 million tonnes.

Australia’s coal mines are best placed to fill the gap and can expect overseas sales to increase 37 per cent to 424 million tonnes by 2040, becoming the largest exporter again in the process.

The IEA’s view that a rapid fall in battery costs can’t be taken for granted is at odds with critics such as Tim Buckley, the director of energy finance studies at the Institute for Energy Economics and Financial Analysis, which promotes renewable energy.

Mr Buckley says in a new report that global solar manufacturers, financiers and utilities – including Indian power giants – are flocking to the country’s renewables sector, investing $100 billion in just eight months.

Indian coal imports declined 6 per cent year on year in the six months ended September 30, in line with Energy Minister Piyush Goyal’s desire for lower coal imports, Mr Buckley said.

“The sharp, unexpected fall in India’s coal imports reinforces the fact that seaborne thermal coal is in structural decline,” he said. “India is executing one of the most radical energy sector transformations ever undertaken.”

Climate Institute chief executive John Connor said the IEA’s projections are not forecasts but are designed to spur the world to strive harder to reduce carbon dioxide emissions to levels that would limit global warming to safe levels.

“The scenario showing growth in coal use in south-east Asia and India isn’t a vision of the future at all – it’s a warning of what could happen if we stop making progress on the clean energy innovation that’s already changing global power supplies,” he said.

Minerals Council of Australia coal head Greg Evans said the IEA’s projections carry more weight and have a stronger record “than those from individuals with an axe to grind” and align with those the US Energy Information Administration, the Institute of Energy Economics of Japan and private forecasters.

Mr Evans said the IEA and other forecasters had underestimated the growth of coal trade since 2000.

The IEA is an autonomous organisation that works to ensure reliable, affordable and clean energy for its 29 member countries.

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