$20m to keep the lights on for Defence subs build

SA’s energy security crisis has forced Defence to commission an emergency $20m supplementary power source.

Defence Industries Minister Christopher Pyne says the South Australian power crisis was a threat to the shipbuilding industry.

South Australia’s energy security crisis has forced the Department of Defence to commission an emergency $20 million supplementary power source to safeguard the federal government’s $90 billion submarine and ship construction.

The back-up power plan was revealed as SA was hit by rolling blackouts again after the Australian Energy Market Operator yesterday ordered load shedding because of “a lack of available generation supply in SA”, where the temperature was over 40C.

Defence officials late last year began developing a contingency plan to build a large-capacity generator in response to concerns the state government could not guarantee reliable power because of SA’s reliance on ­intermittent ­renewable energy sources, chiefly wind.

Danish firm Odense Marine Technologies has been commissioned to design a power generator — most likely diesel-fuelled — to ensure power at the ­Osborne South shipyard, which will employ 5000 people.

It will be designed to operate up to five days a week as an off-the-grid power supply to mitigate statewide failures such as those last September and December. A Defence source said the department was working on a cost estimate of up to $20m, before the running expenses of fuel and fuel storage were factored in.

Defence Industries Minister Christopher Pyne said yesterday the SA power crisis was a threat to the shipbuilding industry and the federal government would have to pay for supplying its own back-up power source.

“So the massive obsession that the Labor Party has with renewable energy … has meant in South Australia, Australian taxpayers are going to have to pay millions of dollars more,” he said. “Power in South Australia is more akin to what you would expect in a backpackers’ hostel in a third world country.”

Defence is believed to have been spooked when the SA government told BHP Billiton to buy its own generator after the ­December blackout shut down the miner’s Olympic Dam operation.

Supply security was not the ­department’s only concern, however, with the state’s skyrocketing electricity prices threatening to hike construction costs at ­Osborne South. Last July, the ­National Electricity Market spot price for SA surged from averages of about $100 a megawatt hour to more than $14,000/MWh for several hours, leading to a period of average power prices 60 per cent higher than the rest of the country.

Mr Pyne said a design and cost was still to be supplied but he was told it would run into the millions of dollars.

“It is a pressing problem,” Mr Pyne told The Australian, with construction due to begin for nine frigates next year, followed by the offshore patrol vessels, and the contract for delivery of 12 submarines due to start in the early 2020s. “I called the department and asked them if we had a contingency plan for this … what happens to the submarines and frigates if we can’t supply power?”

“And it’s not just the cost of the generator but the cost of the fuel and the cost of storing the fuel on site.

Mr Pyne said the department advised it had begun work on commissioning its own generator from the company contracted to design the new shipyard.

Premier Jay Weatherill has consistently denied the blackouts had anything to do with its renewable energy targets and significant reliance on intermittent power sources.