Will the closure of Alinta Energy’s Port Augusta power station cost you more in electricity?

AS Alinta Energy’s Northern power station in Port Augusta went offline on Monday, there are concerns about the impact on SA’s electricity prices and supply issues.

A train hauling coal between Leigh Creek and Port Augusta, with the Northern power station in the background.

• Alinta Energy power stations at Port Augusta shut down
• Business SA warns wholesale electricity prices have risen ever since Alinta announced plans to close Port Augusta power station
• Alinta plant closure to leave huge economic hole

AS Alinta’s Northern power station went offline at 9.30am on Monday, bringing to an end more than 60 years of baseload power generation in South Australia, the state’s business community raised concerns about higher prices and supply issues.

Chief executive of the SA Chamber of Mines and Energy, Jason Kuchel, said uncertainty around price and supply was an “unwelcome distraction, to say the least”.

A November 2015 Deloitte report found already high SA wholesale power prices will soon be more than double that of Victoria, largely because of the removal of coal.

“What the industry is looking for is price security. There have been past instances where it’s been cheaper to turn off an operation and pay only labour costs,” Mr Kuchel said.

“The other aspect, which can be quite costly, is reliability and security of supply, which is important for everyone in SA, but often it’s business that suffers the cost rather than consumers.”

Mr Kuchel said mining projects reliant on the grid will be most affected if issues arise with the interconnector from Victoria, given their proximity. The Deloitte report found that by 2019, the interconnector will be at capacity for 23 hours a day.

Alinta Energy’s Port Augusta power station, in 2015.

With the removal of coal, data showed that Tasmania was generating more power than SA for a large part of the afternoon. At 3.45pm, 55 per cent of SA’s 1100MW stemmed from gas, with the remainder from wind and solar. The now-offline Northern power station was a 544MW provider.

Executives from Leigh Creek Energy, the company behind an ambitious baseload gas project that would use Alinta’s existing infrastructure, have said they are in talks with concerned mining companies, including BHP and OZ Minerals, about affordable and secure power.

Late last year, there was a significant blackout across SA because of an interconnector failure. However, Treasurer Tom Koutsantonis said that was not a capacity issue.

“The likelihood of that occurring is very, very low,” he said.

“The reliability of our system, even without Northern (power station) online, is over 99 per cent, so it takes a remarkable act of God for that to occur.

“The biggest issues we’re going to have is whether the infrastructure can hold up — it’s not about whether or not there’s enough generation.”

Business SA’s Andrew McKenna said power prices are threatening the ongoing viability of some of manufacturers and irrigators.

“Regular surveys of Business SA members consistently show electricity costs as a major concern for doing business in SA,” he said.

Mr Koutsantonis said there would be a “natural increase” in electricity prices due to inflation and that the power station closed because it couldn’t compete with “very, very cheap” renewable energy.

“I urge South Australians to shop around. There are a lot of contracts offering up to 40 per cent discounts on current prices offered by some standard retailers,” he said.

Alinta’s remaining Port Augusta employees will continue to secure the site this week, before a staged departure over the coming fortnight. Chief executive Jeff Dimery said the closure was a “sad day” that signalled the end of a “proud era”.

Pointing to Sundrop Farms’ solar-reliant operations, Innovation Minister Kyam Maher said Port Augusta was undergoing a transition from “old technologies to new technologies”.

Local MP Dan van Holst Pellekaan said the closure of Alinta’s operations was a result of the State Government’s “foolish energy policies” and “overzealous promotion of wind power”.

Port Augusta is pushing for a concentrated solar thermal plant, which has seen US company SolarReserve explore opportunities in the area.

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