Cheap energy to kickstart Victorian manufacturing as offshore wind farm on the agenda
Victoria is in talks for an energy deal which could slash prices and kickstart the manufacturing sector. Take a look at how our first offshore wind farm could prevent summer blackouts.
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Victoria could cash in on a multibillion-dollar energy deal to cut prices, improve the stability of the power grid and kickstart the state’s manufacturing sector.
Federal Energy Minister Angus Taylor said there is now a “great window” to cut power prices so that manufacturing businesses could thrive in the post-coronavirus era, creating new jobs for Victorians.
“We really want to work with the Victorian Government to strengthen their industrial sector. It’s been a big part of the history of that state, and we want it to be a big part of the future of the state,” Mr Taylor said.
“That’s where I’d like the state deal to have a really strong focus.”
“That resurgence of the Victorian manufacturing powerhouse as energy costs are coming down is something that both federal and state governments can work on. There’s lots of common ground.”
Victoria opened the door to talks with the federal government over an energy deal when it lifted its moratorium on gas exploration.
A similar agreement in NSW netted that state a $2 billion deal.
Mr Taylor told the Herald Sun that gas and pumped hydro projects would be his focus in the agreement, ensuring dispatchable power to balance intermittent renewable energy.
The Andrews Government is keen to prioritise green hydrogen and make Victoria a leader in the technology, believing it could also create new industries, manufacturing opportunities and jobs.
“Green hydrogen is the next frontier for renewable energy,” Victorian Energy Minister Lily D’Ambrosio said.
“We’re investing in developing a homegrown green hydrogen industry for Victoria. Ultimately, it could be a game changer across the economy from storing clean energy, fuelling manufacturing to heating people’s homes.”
A discussion paper on the Morrison Government’s new technology investment road-map, released on Thursday, set its first goal as producing hydrogen at under $2 per kilogram so that it could be competitive for large-scale deployment.
It also focused on cutting the cost of energy storage so that low-cost renewable generation “could re-establish our advantage in energy-intensive manufacturing”.
The Herald Sun understands the Morrison Government is also keen to pursue more onshore processing of Australia’s minerals so they can be used in products made on our shores, rather than resources being exported overseas, forcing Australians to buy back end-use products.
The NSW energy deal set a commitment for new gas generation, plus federal funding, grants and loans for emissions reductions initiatives, and underwriting new transmission lines.
Mr Taylor said the coronavirus crisis had shown that “we can get federalism to work”, and he was keen to replicate the energy support in Victoria.
He said the closure of the Hazelwood coal-fired power station had put Victoria on the threshold of “serious pain” with potential energy shortfalls, which was why he was prioritising gas and pumped hydro.
“That’s hugely important for the electricity sector — as intermittent renewables ramp up, you’ve got to have that firm, dispatchable power,” he said.
“It’s in everyone’s interests that we get the right mix of intermittent power and dispatchable power. Otherwise, you just don’t get lower prices and keep the lights on.”
The Andrews Government was due to lock in new emissions reduction targets for 2025 and 2030 by the end of March, with the decision to be made public within 10 parliamentary sitting days.
Industry sources fear that if the government accepts independently recommended targets, it would hasten the demise of the Latrobe Valley’s coal-fired power stations, which would be another major blow for employment in the region after the closure of Hazelwood.
Mr Taylor said the targets were a matter for Victoria.
“If it’s threatening the reliability and affordability of the grid, it’s a problem for manufacturing, for households, for small businesses,” he said.
“We’ll be looking for ways to work together to make sure that doesn’t happen.”
The Herald Sun can also reveal the federal government is working on a new program to roll out micro-grids in regional areas, including in Victoria.
Micro-grids use renewable energy and storage to create an independent power supply for small towns, ensuring the lights stay on even if there are issues in the broader grid, as seen during the summer’s bushfire crisis when some areas went days without power.
“This technology is evolving really fast and in a really positive way,” Mr Taylor said.
WIND IN STATE’S WINGS FOR ENERGY FUTURE
Australia’s first offshore wind farm would create thousands of jobs for Victorians and provide almost a fifth of the state’s energy needs.
The $8-10 billion Star of the South project, off the south coast of Gippsland, would be one of the largest in the world, powering 1.2 million homes by 2027 if it receives federal and state approvals.
The Herald Sun can reveal modelling completed for the project shows strong winds in Bass Strait are produced during heatwaves in Melbourne, meaning it could help stabilise the state’s energy grid.
“These winds are perfectly timed to hot summer days when people are turning on their air conditioners and the existing power system comes under stress,” Star of the South chief Casper Thorhauge said.
Mr Thorhauge, who has developed offshore wind farms in Asia and Europe, said it would deliver “the right jobs at the right time” for Gippsland.
“The Star of the South could play a role in Victoria’s and Australia’s economic recovery,” he said.
“The COVID-19 pandemic has sharpened our focus on what’s important — offshore wind has the potential to reshape local economies, making them stronger and providing a foundation for broader industry development.”
New federal laws are needed to enable the approval of offshore wind farms, with a framework expected to be finalised this year.
A discussion paper, released in January, says such projects can stimulate billions of dollars in investment and have “the potential for significant new employment”.
Federal Energy Minister Angus Taylor told the Herald Sun offshore wind farms were attractive because landowners were not impacted, and such projects could more easily take advantage of “economies of scale”.
He said the regulatory framework would be based on existing provisions for offshore oil and gas.
“It’s a big difference but there are lots of similarities,” Mr Taylor said.
Victorian Energy Minister Lily D’Ambrosio said offshore wind was “an exciting opportunity as Victoria works to meet our renewable energy target of 50 per cent renewables by 2030”.
“The Commonwealth needs to get on and make the regulatory reforms needed for projects like Star of the South,” she said.
Seabed testing started in March after an exploration licence was granted last year for a 496km2 area. Private investment will be needed once approvals are in place.
Mr Thorhuage said: “Victoria needs a diverse energy portfolio to keep the lights on and create a more reliable system — that’s why we believe offshore wind is a crucial part of the puzzle.”
ROBOTIC TWIST TO POWER BAKING BOOM
Ferguson Plarre has been proudly churning out pies, cakes, scrolls and slices for Victorians to devour since 1901.
But fourth-generation baker and chief executive Steve Plarre acknowledges large-scale baking can be a menial job with a higher risk of repetitive strain injuries.
“It’s hard to keep great people,” he said.
That’s why Ferguson Plarre is turning to robotics to automate some of the work at their Keilor Park factory, having received a $950,000 Federal Government grant for their $7.3 million “Future Bake Project”.
“Half of our business has a fair bit of automation. The other half is making cakes the same way people did 60 years ago, just in a big kitchen,” Mr Plarre said.
Some fear automation will reduce employment, but at Ferguson Plarre, the opposite is true.
Mr Plarre said it would enable loyal staff to move to more appealing jobs, such as cake decorating or management roles.
More importantly, it will help the company to grow. It has plans to expand its 80-store network into regional Victoria, opening as many as 40 new stores over the years to come.
Mr Plarre said the company wanted to boost the size of its factory, develop products to export interstate and overseas, and even start producing vegan and gluten-free food to be sold in supermarkets and other stores.
“Scale for us is key … Robotics means we can do things faster so we can move people to higher-value positions and employ more people,” he said.
“We can now invest in kit to speed everything up, and deliver better pricing as well to customers.”
Mr Plarre said the company installed solar panels on the roof of its factory in the last 18 months after energy prices increased rapidly.
“It was high six figures that disappeared very quickly,” he said.
“It costs jobs or costs your capacity … and it flows through to customer prices.”
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