Lack of transmission costing investment in green industry

Townsville Enterprise says CopperString 2.0 is the only project which can deliver on the region’s energy needs.

The lack of connection to Australia’s electricity grid is one of the single biggest inhibitors of growth and a major handbrake on the development of the region, Townsville Enterprise says.

The region’s peak economic development body was commenting as debate on the proposed $2.5bn CopperString transmission project reaches fever pitch with opponents looking to sink it and governments facing big decisions on whether to fund it.

It also comes as mining customers in North West Queensland reveal they are paying almost three times the prices of their counterparts on the east coast — much more than governments have calculated to assess CopperString’s benefits.

Townsville Enterprise CEO Claudia Brumme-Smith said the priority outcome for North Queensland was the provision of affordable and reliable energy to the North West Minerals Province and the transmission of increasingly valuable renewable energy back from North West Queensland to the National Electricity Market.

She said CopperString was the only project identified in a state government consultation regulatory impact statement which could provide these outcomes.

“The lack of National Electricity Market connectivity to this region is one of the single biggest inhibitors of growth, and a major handbrake on development in our region all the way from Townsville to Mount Isa,” Ms Brumme-Smith said.

“The lack of a National Electricity Market connection beyond Woodstock is also costing the region hundreds of millions of dollars worth of investment into green industry, as world class wind and solar resources remain unlinked to the National Electricity Market and industrial customers.”

Claudia Brumme-Smith with Windlab Project Manager Martin Vries in Hughenden. The $160m Windlab project has been constrained by lack of transmission capacity.

Ms Brumme-Smith said green energy projects were getting funded in Gladstone, not because they were the best renewable project options, but because electricity transmission into the national electricity grid was pre-existing.

“We need a functional transmission line now to secure the future for our region. Waiting longer means we will miss out on the green energy and industry boom we have the potential to see happening in our region,” Ms Brumme-Smith said.

“It can’t be that we have the largest mineral province and the best solar and wind resources in Australia in our backyard but we operate like a third world country with isolated electricity supply monopolies and in some cases diesel generators.”

Gas and energy giant APA Group, which owns and operates the gas-fired power station in Mount Isa, this week released its submission to the state government, saying CopperString would create a “40-year electricity tax on mums and dads” and provide no material reduction in energy costs for the region.

But major mining companies in the region beg to differ.

The State-owned gas-fired Mica Creek power station has been closed, leaving APA Group’s gas-fired Diamantina Power Station as the only generator on the region’s network.

One customer, who did not want to be identified, said they were paying more like $200 a megawatt hour when large customers connected to the national electricity market were paying between $74MWh and $93MWh.

Customers not only had to buy the gas used by APA Group to produce the electricity but also had to provide them with $10m bank guarantees to ensure supply. Also, contracts were “take or pay” so mining companies paid for power during maintenance downtimes.

“Electricity is the biggest cost of our operation. It would be for all the big customers,” the customer said.

The customer said the arrangements were a function of there being one baseload generator on the network and rejected APA Group’s claim there would be no material benefit.

“It doesn’t make sense. If that’s the case, why are the five big customers signed up to the CopperString project,” the customer said.

Meanwhile, Minister for Energy, Renewables and Hydrogen Mick de Brenni said the government had made clear their support for better options to power the North West, while a department spokesman stressed the issue was still being considered.

“The Department of Energy and Public Works is currently considering 48 submissions received from communities and industries on Electricity supply options for the North West Minerals Province,” the spokesman said.

“Any Government decision will need to carefully consider all the submissions and costs and benefits for the North West and Queensland as a whole, the potential to bolster existing industries as well as creating new industries and how it will benefit taxpayers.”

APA GROUP BLASTS COPPERSTRING TRANSMISSION PROJECT

Gas giant APA Group has challenged the benefits of building a $2.5bn transmission line in North Queensland which could undermine its own big power investments in Mount Isa.

In a submission to the State Government, the company’s Group Executive Strategy and Commercial, Julian Peck, says the CopperString 2.0 project will create a “40-year electricity tax on mums and dads” and leave behind a $1bn taxpayer debt, while providing no material reduction in energy costs for the region.

“We believe CopperString 2.0 is an extremely expensive solution in search of a problem that does not exist or at the very least has been overstated,” Mr Peck says.

The State Government released an Electricity Supply Options document in December calling for comment and APA is one of the key stakeholders.

It has invested more than $1bn into assets including the Diamantina Power Station in Mount Isa and Carpentaria Gas Pipeline which provide annual revenues of more than $120m.

CopperString, an 1100km transmission line proposal to connect the North West Minerals Province into the national electricity grid at Townsville, threatens to deliver competition into a market where APA holds a virtual monopoly.

It is understood some ventures like the Century mine north of Mount Isa are paying up to $200 a megawatt hour for electricity and have to provide $10m bank guarantees just to confirm supply.

But Mr Peck says the only way CopperString can deliver power at the prices proposed “is to smear more than a quarter of the total project costs across all Queensland electricity users”.

Even so, he says CopperString’s claimed price of $90/MWh is “highly improbable” and that their consultant Oakley Greenwood finds mining customers are still likely to pay $150/MWh.

APA says derogations sought by CopperString will shift more of the investment risk to the State Government and taxpayers, while its developers benefit from large upfront fees and high returns.

The submission says progressive development of renewable generation around Mount Isa and augmentation of the local network will be a much cheaper, more reliable and environmentally sustainable solution

“APA’s long-term vision for the region is to develop a hybrid energy grid that aims to reduce carbon emissions and lower energy costs, while continuing to provide firm, dispatchable energy through APA’s Diamantina Power Station complex,” Mr Peck says.

Originally published as Lack of transmission costing investment in green industry