The energy debate

By Keith Orchison

Keith Orchison discusses South Australia’s issues in the wake of a report on possible energy options for the State. (Published in the SA Mines & Energy Journal, April-May 2012.)

The South Australian Chamber of Mines & Energy’s discussion paper on the State’s electricity options was a timely release, coinciding with the Federal Government’s efforts to deliver an energy white paper in 2012, informed in part by a review from its Bureau of Resources & Energy Economics of power production out to 2034-35.

At the same time the Australian Energy Market Commission has had consultants review peak electricity demand between now and 2030.

What all this adds up to for not just South Australians but for other east coast States as well as Western Australia, is that, in addition to pursuing carbon emissions abatement, investment is needed continuously to ensure there is adequate generation capacity to deal with peak periods and that aged network assets can be replaced while suppliers also meet the needs of a growing population and expanding economy.

Overlaying all this for policymakers is consumer concern about rising prices.  End-user bills are expected to double between now and the late years of the decade..

Across the nation, the supply tasks are expected by the Federal Government to require outlaying more than $220 billion over 20 years on electricity infrastructure – equivalent to five giant Gorgon LNG projects or national broadband schemes.

South Australia is a relatively small part of the equation because three-quarters of supply and demand is concentrated in Victoria, New South Wales and Queensland but that doesn’t make meeting local essential service needs any less important. 

Consumers everywhere want reliable electricity prices at what they consider to be reasonable prices.

In a national environment where it sees power demand rising 42 per cent over a quarter of the century, BREE projects that electricity production in South Australia will almost double between 2008-09 and 2034-35 – rising from 14 terawatt hours to 20 TWh in 2019-20 and 27 TWh at the end of the review period.

The South Australian share of national generation output is forecast to rise – from 5.7 per cent three years ago to 7.8 per cent at the end of the BREE review timeframe.

In this period the State will inevitably be closing its old coal-fired power stations, expanding its gas-fired capacity and continuing to develop its renewable generation, notably wind power but possibly also solar power and geothermal energy.

Looking nationally, BREE projections for a “clean energy future,” the Gillard government catchphrase, actually see black coal generation maintain a high level of supply, brown coal production more than halve, wind farm output increase from 4 TWh to 49 TWh, geothermal energy contributing as much electricity in 2034-35 as hydro-electric power (13 TWh each) and solar power, despite the environmental and political hype, trailling the field with only 4 TWh.

There is no nuclear power included in the generation mix because it is legally excluded today and BREE is a government agency – but industry analysts look at SA’s uranium reserves, its mining projects and regional towns and wonder if the State may be a home for some of the small reactors (as little as 100 MW) now being pursued developments overseas.

A technology shift in nuclear power production from huge, expensive plants to units able to fit in to relatively small regional markets may turn out to be one of the big game-changers in electricity supply in the next two decades.

Meanwhile, a key issue for South Australia is the extent to which  State governments and the Federal Government can co-operate to augment the east coast market’s currently skinny transmission system. 

A new era for interconnection could see zero-emission generation, including wind farms, geothermal energy and even nuclear power, built in SA for sale to other east coast regions.

The so-called NEMLink additions to the grid to reduce congestion between regions and promote trade could be operating in the early ‘Twenties at a cost of about $10 billion.

For South Australia, the Ernst & Young report to the AEMC projects that, if current trends are maintained, the State’s peak demand could require capacity of 4,290 MW in 2029-30 compared with 3,383 MW in 2010-11.

Back in 1991-92, SA’s peak requirement was 1,934 MW.

As these bare statistics demonstrate, there is no prospect of South Australia or the rest of the country “powering down” over the next two decades – rather, there is a crucial need for all stakeholders to co-operate to pursue energy security, cost-efficient supply and a curb on carbon emissions, a massive national endeavour.

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