Gas chief McCormack says renewables on grid's fringe will be 'dusted'

The head of Australian gas pipeline monopoly APA, Mick McCormack, says renewable investments on the grid’s fringes will be "dusted" as he backed hydrogen gas as the next major source of power.

A flood of power from large scale wind and solar generation on the frontiers of the grid have been cut back by the energy market operator because it  caused excess loads coming into the system at the same time. This has resulted in a number of renewable projects and investments becoming less financially viable.

Soon to retire APA chief executive Mick McCormack said renewables on the edge of the grid will be 'dusted' financially. Credit: Cole Bennetts

“There’s a lot of money going into the renewables sector right now and a lot of it is going to be dusted,” APA chief executive Mr McCormack said during a Macquarie Group conference on Wednesday.

“There are issues with getting that [renewable] power into the grid. It puts pressure on the grid.

“People are starting to realise now that you can put all the generating capacity you like but [it means little] if you don’t have the transmission lines to connect it, who’s paying for that?”

Mr McCormack said the Australian Energy Market Operator (AEMO) had warned of a mismatch between the rising levels of wind and solar at the boundary of the grid and its ability to cope with excess power at times of low demand.

“You’ve got AEMO scaling back because of these geography issues, it's just a fact. If you put a 1000 megawatts [of generation] at the back of Bourke then there has to be a cost for getting that into the network...the grid connection has to scale it back,” he said.

Earlier this year, AEMO cut the price AGL’s 200 megawatt Silverton wind farm near Broken Hill in NSW could receive for its power to about 80 cents in the dollar and reduced the level of electricity it can feed into the grid by a quarter.

It also slashed the 88 megawatt Bannerton Solar Farm's earnings to around 80 cents for every dollar's worth of energy generated.

However, Mr McCormack said the shift towards renewable power was inevitable and that gas – particularly hydrogen – would play a greater role in the energy mix to support wind and solar generation.

“In the next five to 10 years, green gas, hydrogen [will become a power source] it’s almost like a magic pudding,” McCormack said.

Hydrogen can be produced by running an electric charge through water to 'crack' it into hydrogen and oxygen, and be produced by the excess energy from wind and solar that may be otherwise be wasted.

A scientist demonstrates technology that produces hydrogen fuel from solar power.Credit: Jon Reid

"Technology changes; hydrogen and green gas are very exciting, we've just got to get there," Mr McCormack said.

"Whatever happens politically, you're going to have gas to back up the network - you can take coal out of it - but you can't have renewables without some support and it'll be years before batteries can come in."

He said hydrogen would play an increasingly important role as future gas exploration hotspots like the Beetaloo Basin in the Northern Territory and the Galilee in Queensland were still years away from being developed.

“On Beetaloo, I wouldn’t want to pour a bucket of cold water on everyone’s expectations, it could be 10-plus years, the Galilee Basin five to seven years [until gas flows from these basins],” he said.

The Beetaloo Basin is believed to be the next major gas hotspot, potentially holding around 6.6 trillion cubic feet of gas.