They’re Getting Ready to Power Up in South Australia

THE CONFERENCE CALLER: The old joke used to go something along the lines of ‘would the last person leaving Adelaide, please turn out the lights’.

This became less of a joke in recent times when the Croweater’s power woes became a national discussion.

However, opening the Paydirt 2017 South Australian Resources and Energy Investment Conference, South Australia Minister for Mineral Resources and Energy, Tom Koutsantonis moved to allay any concerns.

Koutsantonis said the state government was introducing a major reform on the power front in the shape of its Our Energy Plan, which aims for the state to take back greater control of South Australia’s energy security.

Explaining the elements of the plan, Koutsantonis said it incentivises local exploration for more gas supplies to feed new generation while allowing South Australia to remain on the forefront of renewable energy including the next generation of storage technology.

The implementation of the Our Energy Plan is already underway, Koutsantonis said,being underpinned by six initiatives:

Battery Storage and Renewable Technology Fund;
New Generation and More Competition driven by the State Government’s bulk-buying power;
A State-Owned Gas Power Plant to provide emergency stand-by power;
Gas Incentives such as PACE Gas and the Australian-First PACE Royalty Return Initiative;
Local powers over the national electricity markets; and
An Energy Security Target that will increase South Australia’s energy self-reliance.

$48 million is allocated to PACE Gas, with the first round on grants already approved and a second round open for applicants.

“South Australia has enough gas in the ground to power the grid for centuries, it’s a question of measures to extract more of it, faster and competitively,” Koutsantonis declared.

“Gas extracted through the grant scheme will be offered to South Australian electricity generators first, increasing the affordability of supply and putting downward pressure on prices.

“The first grant round of $24 million is expected to generate $174 million in new investment by oil and gas companies in local production projects.”

The Minister’s speech was given a warm welcome and received some back up later on in the conference when respected SA energy market commentator, Kallis & Co principal, Mr Terry Kallis took to the stage.

Thumping the podium, Kallis said a range of solutions – not just a limited project approach – needs to be adopted if South Australia is to resolve its regional power industry issues.

Among the options that have been thrown into the mix for additional interconnector capacity, Kallis identified a 300 megawatt connection into New South Wales as the best such interconnector option at present as it represented a reasonable cost and geographically diversifies the State’s sources of generation.

However, Kallis conceded that SA’s energy future for baseload generation is inextricably linked to gas, the security of its supply and a competitive gas price regime.

“Part of the SA solution is for the State to access reasonably priced gas but I acknowledge this will be difficult without the co-operation of the incumbent gas suppliers – but such a stance is crucial to SA’s economic well-being,” he said.

“Additional baseload renewable generation also needs to come into the mix, and this brings with it some rural district advantages, sourcing such generation from biomass or extra wind and solar power generation coupled with storage capability.

“There are large-scale storage options emerging and these need to be explored and incorporated such as battery farms and Compressed Air Energy Storage (CAES).

“Industry and government should also be looking at options to combine technologies such as wind and gas to produce firmer energy supply products.”

Kallis noted reforms in the National Electricity Market covering such issues as capacity contracts and interconnector rules, which he considers will further assist SA’s move to greater energy stability as would a price on carbon – most likely through an Emissions Intensity Scheme.

He said nuclear energy should not be ruled out as a long-term contributor to SA’s baseload power case – through a supply chain building up incrementally to 500MW.

Kallis also pointed to the option for the SA Government to “split” its recent commitment to a new $500 million 250MW gas turbine power station.

“Some 100 megawatts of this capacity should be regionally spread over SA with say a 30 megawatt plant in Pt Lincoln, a 30 megawatt plant in Port Augusta and a 40 megawatt facility in Mount Gambier, leaving a balance of 150 megawatts capacity provide supply insurance for the rest of the State” Kallis said.

“This approach would better help protect some of our regional areas in the event of future supply constraints.”

Kallis’ uranium baton was picked up by the Minerals Council of Australia’s executive director – uranium Daniel Zavattiero.
 
“There remains strong potential for nuclear energy in Australia’s power mix,” Zavattiero said.

“We have a well-established Australian uranium industry and we have a platform for a bigger conversation around harnessing this baseload energy opportunity.

“Critically, Australian uranium remains an important component of Australia’s energy exports and is of strategic importance to our major trading partners.”

Zavattiero said the MCA supported the conclusion reached by the South Australian Nuclear Royal Commission that it would be wise to plan now for the possible need for nuclear power in Australia in the future.

He agreed with the SA Nuclear Royal Commission that while it was not clear whether nuclear power would be the best choice for Australia beyond 2030, it would be prudent for it not to be precluded as an option.

“Australia should position itself to be able to take advantage of all the potential options. It would be wise to facilitate a technology neutral policy for Australia’s future electricity generation mix,” he said.

“Regarding nuclear power in Australia, the Royal Commission noted that while it did not find it was viable in SA currently, some of the modelling suggested that nuclear might well be viable elsewhere now as the challenges facing baseload generators in SA were not shared with other NEM regions.

“This is the strongest possible argument for the immediate removal of prohibitions on nuclear energy in Australia.”