SYDNEY -- The war of words between proponents of renewable energy and fossil fuel-based power in Australia is intensifying after a long hot summer marked by power outages and finger-pointing over system failures.
South Australia, which has been an early adopter of wind power, is the epicenter of the debate after a catastrophic state-wide blackout last September was followed by more power system failures this February during a 40 C-plus heatwave.
Andrew Mackenzie, chief executive of BHP Billiton, the world's biggest mining company, has entered the fray, warning that expansion plans for one of Australia's biggest mining projects, Olympic Dam in South Australia, would not proceed without power security.
Olympic Dam produces 180,000 metric tons of copper a year, with a target of 230,000 metric tons within five years. BHP Billiton's long-term aim is to lift annual output to 450,000 metric tons. The mine also produces gold, silver and uranium, and is regarded as one of the biggest copper and uranium deposits in the world.
In a half-year results presentation on Feb. 21, Mackenzie said his company lost $105 million at the Olympic Dam mine, located 550km northwest of the state capital Adelaide, as a result of the Sept. 28 blackout, which was caused by a severe storm knocking out pylons carrying high-voltage transmission lines.
Speaking in London, Mackenzie told analysts that BHP Billiton "absolutely" would not look at a major expansion of Olympic Dam unless it was confident that it had a "reliable and affordable" power source within South Australia. Mackenzie said the company sincerely hoped the state and federal governments would "actually address some of the great difficulties we have had to face" as a result of the "very poor" provision of power within South Australia. "That needs to be fixed before we would push ahead with a project like that," he said.
South Australia's Labor government, which has been in office since March 2002, has a renewable energy target of 50% by 2025. The figure is now about 43%, drawn primarily from wind farms plus some rooftop solar power. It aims to have zero net emissions by 2050. The state's three biggest wind farms -- Snowtown (369 megawatts), Hallett (350MW) and Lake Bonney (278MW) -- account for almost 1 gigawatt of generating capacity.
Last coal-fired plant
Alinta Energy closed the state's last coal-fired power station at Port Augusta in May last year, saying it could not compete on cost with other energy providers. Baseload power in South Australia comes from wind farms, French multinational ENGIE's gas-fired generators at Port Pelican, plus power sourced from neighboring Victoria and New South Wales states via two interconnecting lines known as Murraylink and Heywood.
Just before the Sept. 28 blackout, the generation mix for South Australia was 883MW of wind, 330MW of gas and 613MW of electricity imported via the Murraylink and Heywood interconnectors.
According to a preliminary report into the blackout released in December by the national market operator, the Australian Energy Market Operator, storm damage to the transmission towers caused voltage dips, and output from nine of the 13 operating wind farms dropped sharply. This put extra load on the Heywood interconnector, causing it to trip protectively. As a result, the South Australian power system was left stranded from the national energy market. The AEMO said these wind farms did not continue operating through the disturbances because the turbine settings were too sensitive and tripped prematurely.
The latest blackout on Feb. 8 affected 90,000 people and occurred after the AEMO ordered load-shedding in South Australia to avoid system instability and risk to the interconnecting line from Victoria.
South Australia's Energy Minister Tom Koutsantonis blamed the AEMO for the Feb. 8 outage, saying the operator's own report showed it "got its demand forecasts wrong in South Australia, causing it to order load-shedding to manage the system despite the fact there was additional gas-fired generation available to be turned on." Koutsantonis said South Australia had its highest ever demand on Feb. 8, but there was enough local generation to meet it.
"Even more alarmingly, this report shows that AEMO directed the local private owners of our poles and wires, SA Power Networks, to load-shed 100MW, but they accidentally load-shed 300MW, unnecessarily turning off power to 60,000 South Australians," he said.
Prime Minister Malcolm Turnbull said on Feb. 21 that South Australia had the most expensive and least reliable electricity in Australia, and the nation needed more storage capacity in its electricity market as the amount of wind and solar energy increased.
"We've seen the consequences of not having that backup in South Australia. The key element is storage. Batteries are developing, but the big opportunity is in pumped hydro," Turnbull said, announcing his support for a plan by power generator and retailer EnergyAustralia to develop a seawater-based pumped hydro energy storage project in South Australia's Upper Spencer Gulf. In such systems, water is pumped into storage and released through turbines to produce electric power when needed.
Turnbull has also said the country needs to look at high-efficiency "ultra-super-critical" coal-fired power stations to provide baseload power, and to further investigate the use of carbon capture and storage.
Australia is the world's largest coal exporter and has large quantities of thermal coal in places such as the Hunter Valley in New South Wales, the Bowen, Surat and Galilee basins in Queensland, and the Latrobe Valley in Victoria. It also has extensive gas fields off the coast of Western Australia and coal-seam gas on the east coast. Much of this gas is exported as liquefied natural gas to power utilities in Asia.
Virtually all power in New South Wales, Victoria and Queensland comes from black and brown coal-fired plants, with the remainder sourced from gas, hydro, wind and solar. Nuclear power has its advocates but remains highly controversial, and no new coal-fired power plants have been built in Australia since 2001. ENGIE will close its 1600MW Hazelwood coal-fired power plant in Victoria on March 31, saying the plant is more than 50 years old and is no longer economically viable. Japan's Mitsui owns about 28% of the ENGIE power assets in Australia.
Until Turnbull in February expressed his support for advanced coal-fired plants, the expectation was that any such proposal would founder on a lack of financial support.
In an address to the National Press Club in Canberra on Feb. 1, Turnbull said "clean coal" technology could be part of the mix of technologies needed in Australia if other states were to avoid South Australia's energy problems.
He said new coal-fired power stations were being built around the world. Many of the advanced designs operated at higher temperatures and pressures, resulting in much lower carbon emissions than older plants.
Fiona Wild, BHP Billiton's vice president for sustainability and climate change, said on Feb. 7 that governments and industry both had roles to play for carbon capture and storage to realize its full potential. She said carbon capture and storage was not just for power stations, given that emissions from the industrial sector represented about a quarter of global emissions.
The scale of the climate change challenge required action. "The longer that action is delayed, the more critical CCS will become," she wrote in an outlook paper on the technology.
After the Sept. 28 blackout, South Australian Premier Jay Weatherill said his government had chosen a renewable energy future rather than one based on coal, and he was prepared to be judged on that choice. On Dec. 2 Weatherill said Turnbull had taken "the low road" of attacking renewable energy and had abandoned South Australians.
"Even worse, Mr. Turnbull is shirking his responsibility as prime minister by ignoring the federal government's obligations to oversee a fair national energy market for all states," he said, noting that it was clear South Australians were paying the price for a national energy market that was not working.