Year past

It pays from time to time to pause and look back.  Unfortunately, too often in our current energy environment this involves looking back in anger or dismay and we couldn’t jump over the piles of angst created by this activity even in recent months.

My looking back today is courtesy of the excellent EnergyQuarterly publication produced by Graeme and Susan Bethune, the latest 156-page edition of which has recently reached me. The big focus of EnergyQuest, their consultancy firm, is gas and they do a useful job of keeping an eye on matters electric, too.

In the latest edition, their dissection of the ongoing imbroglio over gas supply in Victoria throws a harsh light on those proceedings, not least the recent Andrews government’s poor mouth assertions about onshore prospectivity to bolster its moratorium and ban approach. “The discovery of gas can only be made by drilling, not desktop studies,” EnergyQuarterly snaps. “Arguing that drilling is not needed is like saying pharmaceutical R&D is a waste of money because there are no new drugs left to be discovered.”

My own immediate interest lies in the publication’s power segment, containing a synthesis of calendar 2017 east coast market production — a year notable for the closure of Victoria’s Hazelwood power station.

In the EnergyQuest data I find something I had expected, more fodder for one of my hobby horses: the growing dominance of New South Wales and Queensland in the NEM and the need to separate the eastern market consisting of these two States from the southern market (Victoria, South Australia and Tasmania) when considering issues such as expanding weather-driven generation and the policy environment.

This EnergyQuarterly edition shows that, when rooftop solar PV is stripped from the NEM numbers, the system’s power production slid back in 2017 to 194,313 gigawatt hours compared with 195,441 GWh in 2016 — but the combined NSW and Queensland output rose from 124,704 GWh in 2016 to 129,255 GWh last calendar year. In other words, the eastern NEM’s generation accounted for 66.5 per cent of the whole market in 2017 compared with 63.8 per cent the previous year.

The dominant feature of this supply, of course, is black coal generation. In 2017 these power plants produced 110,018 GWh in the two eastern States versus 104,078 GWh in 2016 — a 4.7 per cent increase. (Meanwhile, not surprisingly, minus Hazelwood, brown coal generation in Victoria fell back from 45,713 GWh in 2016 to 38,316 GWh last calendar year.)

The other outcomes for the eastern NEM in 2017 were 9,624 GWh of gas-fired generation, 2,875 GWh from hydro systems, 1,879 GWh of wind power (NSW only, down from 2,029 GWh in 2016) and 525 kWh of utility-scale solar (essentially the Broken Hill projects of AGL Energy).

Moving to the southern NEM, leaving aside brown coal, generation production from gas turbines totalled 11,751 GWh along with 9,306 GWh from wind farms (half of it in South Australia) and 9,937 GWh from hydro systems (dominated naturally by Tasmania).

The combined power grid production of the southern NEM last year totalled 69,327 GWh, little more than half of the eastern market and dominated of course by Victoria with 47,489 GWh.

South Australia, about which there has been so much fuss over the past two years, accounted for just 6.1 per cent of all NEM generation in 2017. (Would it be unkind to mutter about too much roaring nationally about a power mouse?)

Another non-trivial aspect of the EnergyQuarterly data is the flow of electricity between the States. In 2017, Victoria, sans Hazelwood, exported less to NSW and imported more from South Australia. NSW took more from Queensland. The net flow from Queensland to NSW rose to 4,979 GWh while the flow from Victoria to NSW fell to 1,600 GWh (it was 5,664 GWh the previous year). The net Victoria/SA flow was just 455 GWh where it had been 2,441 GWh in 2016.

Then there is the matter of small-scale PVs. In NSW in 2017 output from panels on small business and household roofs was estimated to be 1,700 GWh (18.8 per cent up on the previous calendar year). In Queensland it was 2,568 GWh (up 20.5 per cent). In Victoria 1,369 GWh (also up 20 per cent) and in South Australia 1,020 GWh (up 12.7 percent). Altogether, rooftop PVs accounted for an estimated 6,793 GWh in the NEM or 3.3 per cent of all power output.

A notable feature of the data is the 32 per cent rise in gas generation in 2017 compared with 2016 (with 21,375 GWh of production last year, 11 per cent of the total NEM grid’s output). In terms of gas sales, 2017 saw power stations buy 196,167 terajoules compared with 151,943 TJ in calendar 2016.

With companies now considering whether it is worth their while to build more gas generation in New South Wales — EnergyAustralia, in the context of the rolling row between the Turnbull government and AGL Energy about the fate of Liddell power station and the State’s need for new dispatchable capacity, is pointing to its plans for Tallawarra (near Wollongong) and Marulan (near Goulburn) that could involve adding 1,000 MW — it is increasingly likely that the role of this sector will grow over the next several years.

This, in turn, of course, underscores the need to resolve the mess that is gas exploration and development policy in the southern States.

EnergyQuest observes that recent federal agency analysis “paints a picture of unavoidable shocks” in the supply and cost of offshore gas in Australia’s south-east. A “supply crunch is inevitable” from offshore fields, it says, given current rates of depletion and the time it would take to bring gas to market from new field discoveries. Meanwhile, it adds, even while the potential for resources from onshore Gippsland and Otway basins is smaller than offshore plays, the costs of exploration and development are possibly only 10 per cent of the marine efforts. There is “plenty of promise” in the onshore south-east, the firm opines, and more drilling is needed to establish its real potential.

How to cut the political Gordian Knot to make this happen remains the enduring question with no answer readily in sight. Meanwhile the unadorned power data tells its own story and, in the eastern NEM, it is not the “death of coal.”

Comments are closed.