TiP

Having already seen the important national energy resource assessment delivered, although not the essential federal energy white paper, 2010 is now also marked as the year the electricity industry came to grips with its high voltage network needs for the next two decades and came up with a potentially game-changing development in power supply for the major regions of demand.

The transmission network development plan, launched this week by Energy Minister Martin Ferguson and produced by the Australian Energy Market Operator, is a critically important contribution to further development of the eastern seaboard power supply chain and the future decarbonised economy. The effort to produce it has been hard-headed enough to encompass what happens if carbon abatement doesn’t achieve the Pollyanna levels to which some ascribe or if the new decade plunges us and the rest of the world in to another oil crisis.

The complexity of the way forward, and its uncertainty, is highlighted by AEMO working with scenarios that foresee power demand rising between 30 and 70 per cent over 20 years, requiring, it says, capital outlays on generation and transmission needing to be between $40 billion and $130 billion.

Possibly the biggest single issue raised by the review is the prospect of Australia building a majo new inter-regional transmission system — christened NEMLink by AEMO — which would extend from Queensland, through New South Wales and Victoria to South Australia, with a second DC link to Tasmania. (West Australian and Northern Territory residents may or may not forgive a newspaper for describing this as “a bid to create a truly national power grid.”)

AEMO has set a price tag on NEMLink of $8.3 billion, but that is in 2010 dollar values for a development it suggests will not be completed until 2021. The deliverable, the agency avers, will be “a largely unconstrained and reliable interchange of energy” across the entire eastern seaboard market, providing greater operational flexibility, an ability to locate new generation more effectively and enhanced opportunities for sharing reserve capacity.

An example of what NEMLink could achieve is the capacity to balance the variability of wind or solar generation in one part of the market with hydro-power in the centre of the east coast and in Tasmania.

This is literally a bridge to the energy future for eastern Australia and a major infrastructure development — and therefore has been largely ignored by the national media, a marked contrast with how journalists have gorged themselves on the national broadband issue.

The “NTDNP” report — one more acronym for the electricity industry’s alphabet soup — not surprisingly sees wind power as being the major alternative power technology in the next decade, but it suggests 2020 to 2030 will see the commercial emergence of geothermal and solar thermal. Gas-fired capacity obviously is the big-ticket mainstream investment and, given current policy, nuclear power is ignored, although one wonders whether AEMO should not have at least raised the network issues involved if the political wind changes (not least if there is another oil crisis, with its concomitant big spike in gas prices).

AEMO use five scenarios to sketch possible futures. One suggests that, by 2030, the east coast generation mix could have 16,000 MW of baseload gas generation, 13,000 MW of open-cycle gas power and 8,000 MW of wind farms, an outlook that seems to me to fit with the federal government’s resource assessment perspective.

As can be expected, a carbon price regime is a substantial uncertainty factor in this modelling, but AEMO holds the view that, even in a medium growth scenario, there will be a five-fold increase is the use of gas for electricity generation.

Given the amount of hype surrounding wind prospects in South Australia, AEMO’s suggestion that Tasmania might provide up to 2,050 MW of wind capacity, based in the State’s north-east, north-west and Midlands areas, is worth mention.

This is a very important addition to the power debate, including the ongoing fracas over decarbonisation. Given the federal political situation, one wonders whether it will get the whole-of-government attention in Canberra that it merits?

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