SA electricity crisis: Energy group warns gas-fired power station might end up as a ‘white elephant’
SA could be lumped with a new power station that can’t fire up in a crisis, a key industry group warns. Here’s the early reaction to the Premier’s power plan.
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SOUTH Australians could be lumped with a gas-fired power station that can’t fire up in a crisis, a key industry group warns — and politicians say it could turn into a desalination plant-style “white elephant”.
Energy Users Association of Australia has raised questions about the wisdom of the State Government building its own 250 megawatt gas power plant when existing ones had been mothballed as a result of short supply and high prices.
It comes as the Greens slam the use of taxpayer dollars to fund a gas power station.
“We should have a government-owned solar thermal plant instead of a generator dependent on expensive gas, which risks being a white elephant like the South Australian and Victorian desalination plants,’’ Greens energy spokesman Adam Bandt said.
The Australian Energy Market Operator’s annual Gas Statement of Opportunities, released last week, forecast a 20 per cent fall in gas production to 478 petajoules by 2021. Unless production rises, shortfalls in SA are predicted in coming years.
It followed AGL wholesale markets manager Richard Wrightson telling a Senate hearing he has “a suspicion we are going to run short of (gas) molecules this winter”.
“We are struggling to source molecules to run Torrens (Island gas-fired power station),” he said.
EUAA chief executive Andrew Richards said the government needed to explain where the gas was coming from and how much it would cost.
“While we understand the reasons why the South Australian Government is prepared to invest in new plant, we have to ask the question, given the current crisis remains — how will the power station run without gas?” he said.
“It is interesting why they (the government) would choose to build a gas plant considering the feed stock is in such short supply.
“We’re not critical but we do need to understand where the gas is coming from and the cost of getting gas contracts to supply that particular plant.
“The fact is the LNG terminals in Queensland (which export gas) are just sucking up every spare molecule of gas.”
But Mr Richards did recognise that because the proposed power station would be government-owned it was unlikely to sit idle.
“It will be driven by different objectives being reliability and energy supply instead of profits which will mean high gas prices won’t keep it from switching on,” he said.
RMIT University Department of Environmental Engineering Associate Professor Gavin M. Mudd said the plan should have included a large scale solar-thermal power plant.
“This would be ideal for South Australia’s long-term energy mix and future,” he said.
He questioned whether the plan considered the climate change implications of more gas over renewables such as solar thermal.
Mr Richards welcomed the government’s announcement it would further incentivise new gas production but said it would take years to come online.
“It’s great to see some new and big ideas from the SA Government, but we must ensure that the solutions being put forward solve the long-term problems we face,” he said.
“The announcement today ... underscores the severity of the situation where it appears that energy markets are not working.
“There is a crisis and it’s a gas crisis but there needs to be a national solution. We need to fix market failures that have led to this crisis to avoid history repeating itself.”
Prime Minister Malcolm Turnbull has called a crisis meeting with gas chiefs in Canberra on Wednesday to tackle a looming gas shortage.
The Climate Council said the battery storage policy was positive step — although it criticised the plan’s reliance on gas-powered emergency supplies.
“Smart, clean renewable energy coupled with storage technology is the future of Australia’s energy system. Renewables and storage technology means zero emissions, affordable power and electricity that’s available every hour of every day,” said Climate Council CEO Amanda McKenzie.
“Australia’s energy system is ageing, inefficient, polluting and is not coping as extreme weather events worsen. This significant increase in battery storage would build resilience into the South Australian grid, while maximising supply.”
Energy giant AGL said the power fix plan was likely to improve the security and reliability of power in the state.
The company said the plan was a “considered and comprehensive approach” to challenges in the market, and recognises the need to secure more gas to assist with a transition to renewable energy generation.
“Increased gas supply is a key way of improving energy competitiveness for South Australian business and households,” AGL said in a statement.
Conservation Council of SA welcomed the increased funding for renewable energy but was less impressed by the commitment to gas.
“There is a great risk that a better and cheaper option to provide grid security than a gas-powered station will emerge even before we as taxpayers receive the keys to the plant,” it said in a statement.
Leading large-scale battery storage developer Lyon Group welcomed the government’s investment in a battery but said the national energy market’s rules needed to keep pace with such technology.
“Batteries can help our electricity system ride through peaks and extreme events,” company partner David Green said.
“But the national market rules and institutional arrangements are holding us back from making large-scale batteries fully commercial.”
The Australian Services Union’s SA and NT branch said the plan would bring an end to the employment insecurity its members in the energy sector have felt.
“The government has offered pathways for cleaner technologies to develop, whilst giving security to workers in gas-fired generation until that pathway is clearer,” branch secretary Joseph Scales said.
- with AAP