New power station: The other side of the $75m coin.

p2323-Jenbacher-powerstat-3EXCLUSIVE by ERWIN CHLANDA

 

NT Treasurer Dave Tollner presents the government’s case for the new $75m power station, bolstered by facts and figures to date in short supply on the other side of the debate.

 

He is the sole shareholder, on behalf of the NT Government, of Territory Generation, which is building Alice Springs’ new power station at Brewer Estate – Owen Springs, consisting of 10 gas-powered engines.

 

He says the project, looking at the national and international electricity generation scene, is exactly what Alice Springs needs: “It is fantastic.”

 

Mr Tollner, as the Member for Solomon in Federal Parliament under the Howard Government, says he was one of the key movers to have Alice Springs declared as a solar city: it became one of seven.

 

While professing to be keen on renewable electricity generation he says it needs to be looked at with blinkers off.

 

Germany’s electricity is 40% per cent from renewables. But it has one of the most unstable networks in Europe and is the biggest user of French nuclear power.

 

This type of instability, which had all of Italy without electricity for a week five or six years ago, comes from the peaks and troughs of renewable power: Take a cloudy day or one without wind. The base load system (gas, for example) is chugging away.

 

p2222-Dave-Tollner-1Then comes the sun, or the wind starts to blow, and suddenly the cables are overloaded, they heat up, melt, collide and fail. Brownouts or blackouts are the result, says Mr Tollner (pictured).

 

With present technology a 20% input of renewables is the “rule of sum” that can be handled, with highly skilled technicians keeping an eye on it 24/7.

 

“Alice Springs is well over that 20% now,” says Mr Tollner.

 

Nothing will change until excess power can be stored in batteries, such as Teslar, but Mr Tollner would not predict when these will get to a price that makes them viable as an alternative. But he estimates their cost will add another 20c to 30c per kilowatt hour (kWh) cost, almost the same as current generation cost.

 

We need to look no further than our remote communities for examples: they rely mostly on diesel motors – the most expensive form of generation.

 

In several communities where renewables have been introduced, far from saving money, the stopping and starting of the diesel motors, or their uneven running, triggered by the sunshine and wind variations, has in fact increased diesel consumption.

 

There is a $7.5m solar plant at Hermannsburg, 125 km west of Alice Springs. It is a great success, says Mr Tollner – as an attraction for tourists taking pictures of it.

 

“The core blew up. The plant hasn’t worked practically from the time it was installed,” says Mr Tollner.

 

That was in 2005. The key piece of equipment to fix it still hasn’t been found anywhere in the world.

 

Mr Tollner says an example of the massive taxpayer’s subsidies renewables require is the experience of his father in Queensland.

 

He covered his roof in photovoltaic panels and is selling power to the network for 60c a kWh, subsidised by the Queensland government.

 

Electricity can be generated with coal for between 5c and 15c per kWh. Including the wires and retail the cost is 30c – still half of what his father sells electricity for to the state.

 

Mr Tollner says Queensland is honouring these contracts but not renewing them nor entering into new ones with private producers.

 

A similar system existed in Alice Springs during its solar city heyday. It was shut down after five years.

 

p2323-Hermannsburg-solar Mr Tollner says the governments are clamping down on the “gold plated” distribution systems which have gobbled up subsidies around the nation.

 

The Australian Energy Regulator has replaced most state-based regulators and will replace the Territory’s Utility Commission from July 1.

 

This has resulted in a 30% reduction of network charges while still providing security for investors in electricity networks.

 

In the Territory alone the taxpayer subsidises power by $170m a year – and it would need to be “much more” if renewables were phased in beyond the present level, says Mr Tollner.

 

Commercial consumers pay a “cost reflective” amount but private consumers – households – are heavily subsidised. Remote communities cost $80m a year – nearly half of the total subsidy bill.

 

Alice Springs domestic users are disproportionally subsidised because there are fewer homes than in Darwin and the network is smaller.

 

The most economical system is to use coal – which is “unbeatable” – for base load (but we don’t have any), with renewables in the mix to the extent they can be managed, and gas for peak demand.

 

Coal engines take a week to start up and a week to shut down. Gas takes 15 seconds. It costs significantly more than coal but is much cleaner.

 

How did the USA achieve its “enormous” reduction in greenhouse emissions? By using shale gas obtained by – you guessed it – fracking, and replacing coal power stations.

 

Engine technology is equally important, says Mr Tollner: McArthur River Mining has built a new power station upping its output from 20 to 30 megawatts (MW) while using the same amount of gas. (Alice Springs has an average demand for about 25 MW and the peak is around 58 MW.)

 

“McArthur River now uses new engine technology, such as we’re putting into Alice Springs,” he says.

 

Here this will result  in a 10% to 15% reduction of power costs for commercial users.

 

“That’s a 30% reduction of the generation costs as half the tariff is for distribution and retail,” he says.

 

On January 1 the tariff across the Territory was reduced by 5% after making improvements to the Channel Island power station in Darwin.

 

Domestic consumers will not get a further reduction: “They are being subsidised already.”

 

And so the experiments continue: 10 remote Territory communities are getting plants with a combined 10 MW capacity, running on renewables, under the Australian Renewable Energy Agency (ARENA) scheme.

 

Even with a $35m subsidy from the Federal ARENA, and $30m from the NT, the cost per power unit will still be “borderline” with diesel.

 

This experiment “is purely out there as a feel good measure to demonstrate we’re doing something for the environment,” says Mr Tollner.

 

He recalls during a trip to China mingling with people wearing masks to cope with smog and pollution. He was talking to a woman promoting solar panels. He asked her if they make power at a competitive price. She said, no but think of the environment.

 

He says he replied, with his Treasurer’s hat on: “In the Northern Territory we have 240,000 people on 1.3 million square kilometres. Our biggest greenhouse problem is bush fires. If we increase our emissions from power stations fourfold nobody would notice any difference.

 

“Our great pressure is cost of generation, not greenhouse emissions.”

 

PHOTOS: Top – Austrian-built Jenbacher piston engines built for gas similar to the ones to be installed in the new power station. Above – The stillborn Hermannsburg solar power station.

 

 

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12 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. John Edgoose
    Posted May 16, 2016 at 10:14 pm

    The arguments put forward by Minister Tollner are those usually put forward by ideologues who believe fossil fuel is superior to renewable energy.
    The old need to “base load generation” and backup running all the time for when there is no sun or wind have proved total untrue in other Australian regions.
    Also, it is not appropriate to compare the cost of electricity of small community power systems with what can be done with the latest modern renewable technologies.
    Port Augusta has just had a 110 MW solar concentrating thermal power plant with built in storage approved. A similar 30 MW solar plant would be perfect for Alice Springs and there are developers out there ready to build it.

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  2. Jimmy Cocking
    Posted April 26, 2016 at 1:38 am

    @ Chandra: The National Energy Market is not Alice Springs, Tennant Creek and Darwin-Katherine grids. We have much more potential here to demonstrate leadership to our southern and eastern counterparts in relation to renewables and gas integration, and create an industry around it – not just a couple of jobs in Darwin.
    It is critical that governments invest in re-training and re-skilling people who will lose their jobs as the fossil fuel industry sack workers due to their increasing lack of access to capital as divestment campaigns take hold and finance companies seek to reduce their exposure.
    When the pendulum swings back and people, who recognise the need for a rapid transformation of how our energy systems are governed, and a Federal and Territory anti-corruption body is established, we will see some big shifts.
    The Alice Springs grid needs a serious upgrade and long-term plan; the NT Government needs an energy policy that extends beyond fracking for shale gas everywhere possible.
    We all want clean water and a safe climate for the next generation. Do you reckon the kids of today will thank you for voting for your power bill over their future?
    I don’t think so.

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  3. Chandra
    Posted April 24, 2016 at 6:26 pm

    @ Jimmy Cocking: No sir, nothing is beyond debate.
    By the closing of the Port Augusta power station and consequently, Leigh Creek, this will put many blue collar employees out of work as the government moves to renewable energy.
    So South Australia has gone from cheap, reliable power that employed their own people to expensive, BROWN coal power supplied by Victoria.
    Because renewable energy cannot supply anywhere near this state’s daily requirements, they need to tap into the Victorian grid.
    Victoria has no plans to shut down brown coal mining, but to increase production, in order to obtain revenue.
    Of cause none of this makes any sense but it will be the future if people are not paying attention to the costs involved when electing governments.
    The NT has very cheap power – until the next election if Labor gets in.
    Information about power costs is here.

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  4. Jimmy Cocking
    Posted April 21, 2016 at 2:22 pm

    @ Chandra: Renewable energy is right for Australia, like the science of climate change it is beyond debate. The key is how can we best invest now to secure a renewable energy future that provides stable, reliable and affordable power while also reducing our emissions.
    The Institute for Sustainable Futures released a plan for powering Australia on 100% renewable energy this week.
    http://www.uts.edu.au/research-and-teaching/our-research/institute-sustainable-futures/our-research/energy-and-climate/100
    Investment in renewable energy and storage is beyond the “feel good”, it actually has great returns and will continue to grow into the future. It is a safe bet as far as investment goes.
    If you plan on living in the Territory for a while, then you’ll want to be seeing investment in renewables and energy storage now rather than propping up the gas fracking industry with taxpayer funded propaganda and lax regulations.
    The NT economy is faltering due to over-reliance on a single gas project, Icythys.
    Now is the time for a renewables lead recovery creating jobs and investment in renewable energy development. Government needs to provide the signals, the dollars are ready to flow.
    From this article it seems like those signals aren’t going to happen with Dave Tollner there. Thankfully an election is coming. Let’s hope we see some leadership on this issue in the lead up to August.

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  5. Chandra
    Posted April 20, 2016 at 5:35 pm

    As a consumer, I think Mr Tolner has made a very good case. We all hope that one day science will harness the sun to provide all the pollution-free energy we need. That time has not yet come.

    I did once believe (or hope) that renewable energy was right for Australia – but it is not.

    It seems that renewable energy, like other conservation issues, has left the realm of science and is now a religion. As as atheist I cannot subscribe to religious views of any sort, so I now reject the renewable doctrine of 2016 as being a fallacy.

    Perhaps if Mr Giles went to the election with the just facts and figures regarding the cost to each NT consumer of energy and other bills we would expect to pay under his government versus Labor, then he might have half a chance of winning.

    I am voting with my wallet this election – my budget is very tight.

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  6. Alex Hope
    Posted April 20, 2016 at 3:47 pm

    If what Bob Durnan says is true, it would be very interesting to read the story behind the (secret?, certainly very quiet) dismantling and transfer of a solar power plant from Ntaria to Queensland, given that Google only takes you to a number of 2005 stories full of enthusiastic hoopla about its installation.
    We need to know about the failure of experiments like this as well as the successes, especially when it cost half as much again as the $5m odd it cost to connect Ntaria to the Alice Springs grid.
    As to Mr Tollner’s assertions – they would be more convincing if they were backed up by some evidence.
    One hopes that there was a process within government to canvass the options for new generation capacity which looked at the pros and cons in both dollar and environmental terms.
    It would be very interesting to see the rationale put to the minister in support of the choice which has been made. It seems to me that an opportunity was missed here, could this not have been a decision informed by some public comment and debate?
    After all it was not as if the decision had to be made in a hurry, the engines [to be replaced by the $75m power station] are over 40 years old, so we have all known for years that they needed replacing.
    And as to the expectation for increased property values on the Golf Course estate, perhaps there is an opportunity for the government to find a way to capture some of this value so that we all benefit from this windfall, and so to help defray the cost of moving the power station?

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  7. Bob Durnan
    Posted April 16, 2016 at 6:49 pm

    Dave’s calculations and grasp of detail may well be questionable, Richard Bentley (Posted April 15, 2016 at 4:58 am).
    In relation to the large solar array which was installed at Hermannsburg 12 years ago, Dave reckons that “It is a great success … as an attraction for tourists taking pictures of it.” This clearly shows Dave’s ignorance, as the array was sold off to a Queensland operator 18 months ago. I have been told it is now operating fine, serving a small town in central Queensland.
    Tollner then states that “the core blew up. The plant hasn’t worked practically from the time it was installed.”
    I don’t know whether the “core” blew up in 2005. I do know that the array seemed to be working between 2006 and 2010, when we were told repeatedly by PAWA that it was functioning well, supplying nearly half of Ntaria’s electricity in peak periods.
    Is Tollner saying that the PAWA spokespersons were lying, or more likely, does he not know what he is talking about?
    I’d be interested to hear what the former PAWA employees have to say about this.

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  8. Fred the Philistine
    Posted April 16, 2016 at 5:45 pm

    I think Mr Tollner is grossly mistaken. Solar and wind power are the cheapest form of power. It is natural and clean. Price of gas fluctuates and will become very expensive.
    I think there needs to be more research into this before any decision as solar power is going to be the cheapest. In Germany and America, 40% of the houses are now going solar regardless of the climatic conditions.
    Mr Tollner needs to visit Pt Augusta to see what they are doing with solar power, creating 1800 new jobs
    and desalinating the water of which they have 150,000 tonnes contract to Woolworths to supply them with tomatoes over 10 years.
    I think it is very irresponsible of Mr Tollner to suggest that we should increase our green house emissions when the rest of the world is looking at reducing it.
    Can Mr Tollner please explain why the Alice Springs Council has a lot of solar panels on their infrastructures such as the council building, aquatic centre, even power and water have solar panels.

    View Comment
  9. Phil Walcott
    Posted April 16, 2016 at 2:20 pm

    Dave’s merely arguing against the solar revolution because his fracking mates want the money.
    With advances in technology being achieved on almost a daily basis, by the time “The Solar Centre” is ready to be up and running much of the issues around storage and capacity will have been resolved.
    Just imagine how much could be developed with that $75m (random figure plucked out of the ether) invested in solar and geothermal technology.
    By the time Dave gets back to his Dad in Bilouela after August, we’ll know more than we do today. It’s about planning for the future; not being left behind in the past with the dinosaurs and other fossil fuels.
    As for his “feel good” comment … there’s nothing that feels good about having a contaminated water supply! You might be finished with living in the Territory, Dave, but many of the rest of us are not.
    Phil Walcott
    Independent candidate for Braitling

    View Comment
  10. David de Vries
    Posted April 15, 2016 at 2:00 pm

    Mr Tollner you are brilliant. Those clots in in Germany, Italy, Western Aranda and China, they would give their eye teeth for someone as clear thinking as you to make all their decisions for them. I hope they don’t poach you.

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  11. Jacky
    Posted April 15, 2016 at 12:41 pm

    Tollner has made out a good argument.
    He could have added that the remote area solar power program run by the Centre for Appropriate Development has been a disaster.
    Firstly it was a gold plated system but even so it was horrendously expensive, CAT did well out of of it.
    But once the fanfare died down maintenance fell away and one by one the remote units broke down.
    Part of the program was to train locals to maintain the system.
    That earned CAT even more money as they ticked locals off on quickie training.
    However, the local maintenance just didn’t happen.
    The lights have long gone out on many of the remote locations.
    The cost of the program would have run diesel generators for a decade.
    Until the technology improves and maintenance systems are put in place solar power can be a huge mistake.

    View Comment
  12. Richard Bentley
    Posted April 15, 2016 at 4:58 am

    Commentators with greater expertise than I will no doubt unpick treasurer Tollner’s calculations with respect to costs and benefits of subsidies but two statements stand out that show his lack of sensitivity and understanding of carbon pollution.
    Firstly the cost of generation is much higher in remote communities and reports to Government called for investment in renewable generation as early as 2010. Investment there is much more than a “feel good measure”. If “feel good” was the reason I might say you were wasting our money.
    Secondly carbon dioxide emissions are global so our emissions are just as important as the ones in China. We may not suffer the particulate pollution from coal burning that they do but what we burn be it gas, diesel, petrol or wood adds to the rising CO2 levels in the atmosphere and we have as much responsibility to reduce these as China does.
    The government’s decision to switch from old gas generation to new gas generation when renewables are clearly the future shows how they have failed to meet their responsibility in this space.
    I think the treasurer should expect many more challenges to the government’s decision in coming days and weeks. Integrating more solar into the Alice Springs network is technically possible and is demanded by the world challenge of rising atmospheric CO2 levels leading to global warming.

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