Government electricity firm in trouble as solar booms

By ERWIN CHLANDA

 

While the new fossil fuel-burning Owen Springs power station is still in its commissioning phase, the NT Government-owned Territory Generation (TGen) is predicting it will have financial difficulties because many consumers are switching to solar.

 

The local renewable energy lobby will be saying “told you so” after urging the government to buy five, not 10, gas-fired generators for the powerhouse  25km south of town, and spending the rest of the $75m – now said to be closer to $100m – on renewables.

 

Meanwhile the Electrical Trades Union (ETU) says a flawed change-over from the old Ron Goodin power station (above right) at the edge of the Golfcourse Estate is exposing the town to blackouts as it faces another very hot and dry summer, and alleges TGen is discriminating against Alice Springs employees.

 

Dave “Strawbs” Hayes, Territory Organiser of the ETU, says: “The replacement system at Owen Springs wasn’t fully tested nor did it have the necessary trained staff to meet the reliability standards.

 

“TGen’s bloody-minded attitude and lack of meaningful consultation is putting the power supply of Alice Springs at risk.”

 

Territory Generation (TGen) says in its 2019-20 statement of corporate intent: “The growth in solar penetration continues to impact on our business as solar reduces our market share [and] overheads are absorbed over a smaller market.”

 

Translation: The 10 gas fired generators will be obsolete long before they have earned what was spent on them.

 

Says TGen: “Our commercial environment continues to be difficult as households increase the installations of solar panels on their roofs and Jacana has recently signed contracts with three solar farms which will have a capacity of 45 MW.”

 

Jacana is the marketing arm of the government-owned electricity business troika that also includes the Power and Water Corporation, owner of the wires and switching stations.

 

ETU members in a Bangtail Muster parade.

 

That means the government-owned Jacana is not buying all the power from the government-owned TGen but – increasingly – from private solar companies while TGen is grappling with liquidity worries partly because of its recent massive investment into non-solar electricity.

 

“Our prediction … is that solar generation capacity will grow from about 30MW at present to over 140MW by 2022/23,” says the TGen statement announcing “a $16.5m net impairment of assets, recognising that our assets cannot provide the return that they used to.

 

“We also need to write off our current deferred tax asset of $45.5m (an offset against future taxes) as we are unlikely to be in the position of paying tax in the foreseeable future.”

 

The statement says for the next four years staff and management will have “certainty” although this does not seem to be the case in Alice Springs where the ETU says eight will be sacked with the mothballing of Ron Goodin, more than half of its current staff.

 

Are power prices going up? This is what the “corporate intent” statement says: “In this uncertain policy environment, TGen suggests a continuation of last year’s pricing approach with the Government agreeing to forgo a dividend … and our wholesale price will be increased on an indexation basis rather than at full cost recovery.

 

“This avoids uncertainty for customers while consultation on market design continues.”

 

This can charitably be interpreted as “we have no idea what to do”.

 

Not only is it now egg-on-face time Mr Giles and Steve Brown, the unsuccessful CLP candidate for Araluen in 2016 who supported the Owen Springs expenditure, but also for Labor’s Gerry McCarthy, who said in February 2017 that Owen Springs “gives us a solid foundation to achieve the Territory Labor Government’s commitment of at least 50% renewables by 2030”.

 

Mr McCarthy (at left) isn’t on his own with getting it wrong in the electricity generating business: Former Labor Chief Minister Paul Henderson in 2009/10 locked the Power and Water Corporation into buying gas from an Italian company, ENI, for 25 years – that’s till 2035, five years later than when Labor wants to be half solar.

 

The News is requesting an update on this deal from current Energy Policy Minister Dale Wakefield.

 

Meanwhile the European giant has just bought two solar farms in the NT.

 

TGen, via an advertising agency, announces that “Alice Springs relishes in [sic] the sounds of silence” following Ron Goodin’s “successful shift into standby mode”.

 

As there may still be “minimal disruption” Ron Goodin will “continue to be manned 24-hours a day for a period of time … should an issue be identified with the new power station”. No timeframe is given.

 

That media release, dated October 3, 2019, is silent on the substantial delays with Owen Springs, some 25 km south of the town.

 

We quoted TGen CEO Tim Duignan (pictured) in June 2017 that decommissioning of Ron Goodin will not start until the new systems at the upgraded Owen Springs Power Station are proven.

 

Ron Goodin “will remain operational – or in active standby mode – until mid-2018 at the very least … until we are comfortable that we have guaranteed the safe reliability of power supply”.

 

That moment of comfort has only just arrived.

 

Decommissioning from that point would take a further two years to complete, Mr Duignan stated at the time. That will take the full commissioning  of Owen Springs  (when we can rely solely on it) to August 2021.

 

Tim Brand, of RePower Alice, says the town was told by the Giles Government four years ago that the engines in the Ron Goodin power station had only a year to go.

 

The TGen tender document for Owen Springs said: “The project shall be delivered under an engineering, procurement, and construction contract with a date for commercial operation of 2017.”

 

The ETU’s Mr Hayes said yesterday: “Back in April we raised significant issues about the quality of the load testing and capacity of the replacement systems at Owen Springs.

 

“You have to be either incompetent or wilfully negligent to conduct testing when the system is not under peak load.

 

Part of the new Owen Springs power station.

 

“While it might be a beautiful time of year in the Alice at present with mild ambient temperatures it is most definitely not the time to test a system that will have to cope with long periods where the ambient temperature is above 40 degrees.

 

“We demand that load and reliability testing is undertaken when the system needs to cope not when it gets an easy ride,” says Mr Hayes.

 

“We are far from convinced that Owen Springs can cope under its own steam and we therefore demand that the Territory Government intervene to make sure TGen complies with all of the Advisian Independent Report  recommendations to secure Alice’s energy future.

 

“Further we demand that Ron Goodin be maintained in a safe state of isolation and be fit for purpose for when the inevitable happens and it is relied upon to provide back-up generation.”

 

Mr Hayes says the union had commissioned the report from the global consulting firm Advisian. It and other sources have pointed out that:-

 

• Every engine must pass a test of running 24/7 for 30 days without any fault.

 

• Demand from the new powerhouse will rise when Pine Gap goes on the grid soon.

 

• The V-24 Austrian Jenbacher engines are a new model, bigger than anything the company had built before, and they have never been tried in high ambient temperatures.

 

• With the concentration of the management of all TGen power houses – Darwin, Alice, Katherine, Tennant Creek and Yulara – in the Darwin based Remote Operating Centre, Mr Duignan had promised that with any approach of a cyclone, senior staff would be transferred to Owen Springs. That contingency has not been put in place, says Mr Hayes.

 

• Mr Duignan told the Alice Springs News: “Territory Generation is confident that we will transition the majority of our staff; and although a small number are currently listed as surplus by the time Ron Goodin moves into decommissioning, we believe this will reduce due to natural attrition.  We will continue to work with the ETU and our employees on the Ron Goodin decommissioning process and remain confident that we will reach agreed outcomes for all of our employees.”

 

Mr Hayes says redundant staff in Darwin were being paid out on their total salary while in Alice Springs this is not the case: “Under the enterprise agreement, redundancies allowances are at the discretion of the CEO,” says Mr Hayes.

 

Is this really happening in a company that is owned by a Labor Government, with its Treasurer, Nicole Manison, as the sole shareholder?

 

“We have lost faith in TGen and our elected politicians need to do more,” says Mr Hayes.

 

He acknowledges there has been no supply problem so far since the shut-down of Ron Goodin in mid-August, but it’s early days.

 

He says, in anticipation of blackouts,  people are checking the prices of small generators. Tip for using them: Disconnect you house from the grid with the main switch by the gate so there is not a damaging surge when the power comes back on. Listen to the radio to find out when that happens. Don’t use your kettle or bar-style heaters while you’re using the genset.

 

The News has invited TGen to respond and comment.

 

 

UPDATE 2.50pm

 

Statement from Dale Wakefield, Minister for Renewables, Energy & Essential Services:

 

The $82m private sector investment by ENI, the world’s 11th largest industrial company, is a vote of confidence in this Government’s policy and the future of our economy.

 

The three solar farm constructions will support 170 jobs and create power for the equivalent of 13,000 homes.

 

The CLP oppose renewables – and jobs like these are at risk from a CLP Government.

 

The NT Government through Power and Water can and already does, on-sell excess gas to other users, not just for electricity generation.

 

There is sufficient demand for the use of gas into other markets, not just for electricity generation which the majority of the ENI gas is currently used for.

 

 

UPDATE 5.10pm

 

TGen CEO Tim Duignan has replied to questions from the Alice Springs News about a power outage yesterday. He wrote:-

 

As part of its commitment to providing a stable and reliable electricity grid for the Alice Springs region, Territory Generation continues to undertake testing on the battery energy storage system (BESS) located in Sadadeen Valley.

 

On Sunday October 6 TGen undertook a planned system test in conjunction with Power and Water Corporation System Control.

 

One MAN unit was tripped to cause a system disturbance and to collect BESS data in response to the system event.

 

An unexpected response from the BESS occurred which caused a system oscillation. The results of the BESS testing have been sent back to Siemens, the manufacturer of the inverter units, for investigation. The response / performance of the other units dispatched online during the testing is currently under investigation.

 

The BESS was returned to service in its normal operating state which has been operating very well in supporting and stabilising the Alice Springs system. All customers were restored within seven minutes.

 

 

UPDATE Oct 9, 11.30am

 

TGen CEO Tim Duignan provided the following statement:-

 

The transition from inefficient generation at Ron Goodin Power Station (RGPS), which is at the end of its life, to the new highly efficient low emissions Owen Springs Power Station (OSPS) is occurring in stages to ensure a reliable supply of electricity to Alice Springs region.

 

This transition began in August 2019 and will be completed only when the system satisfies the stringent requirements set out by Power and Water System Control and an independent advisory group.

 

OSPS services the Alice Springs community using the latest gas-fired technology supported by the cutting-edge battery energy storage system (BESS) located in Sadadeen Valley.

 

The 10 OSPS Jenbacher generators will ensure there is adequate reliable capacity to meet the Alice Springs electricity demand whenever the sun is not shining.

 

The BESS accommodates the increasing penetration of solar technologies into the region by providing frequency stability and voltage support to the power grid. In response to system events such as cloud cover, the BESS can deliver up to 10% of the region’s highest recorded load requirements or over half of the minimum load.

 

By enabling greater uptake of solar power in Alice Springs, the combined OSPS and BESS system supports the Northern Territory Government’s target of 50% renewables by 2030.

 

RGPS will continue to be manned 24-hours a day while ongoing system testing is undertaken and OSPS monitored for stability.

 

While OSPS and the BESS offer significant environmental benefits and support the transition to renewables, Territory Generation recognises there will be an impact on our remaining staff at RGPS. Discussions with the Electrical Trades Union (ETU) and RGPS employees on ways to minimise the impacts are ongoing.

 

Territory Generation also continues to work closely with the agreed independent consultant to help facilitate discussions around the transition from RGPS to OSPS.

 

Territory Generation will continue to deliver reliable and stable electricity services to our customers as the Northern Territory’s trusted and respected energy services business.

 

 

 

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9 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. Neil
    Posted October 14, 2019 at 8:38 pm

    Is it overly complicated or is there very little incentive for NT solar installers to quote and install battery back systems to householders connected to the grid?

    View Comment
  2. Paul Parker
    Posted October 14, 2019 at 1:37 pm

    I would be interesting to know the number of houses and buildings with solar power systems which
    (a) did NOT keep their electricity on,
    (b) kept their electricity on.
    Does any know the numbers?

    View Comment
  3. Erwin Chlanda
    Posted October 14, 2019 at 7:01 am

    @ Simon Kelly: This article quotes the “local renewable energy lobby”. Feel free to google our site for our many references to it.
    Kind regards, Erwin Chlanda, Editor

    View Comment
  4. Simon Kelly
    Posted October 11, 2019 at 10:28 pm

    Interesting article, which raises several questions I am sure you can answer for me and other readers of your excellent newspaper.
    Mr Duignan says: “The 10 OSPS Jenbacher generators will ensure there is adequate reliable capacity to meet the Alice Springs electricity demand whenever the sun is not shining.”
    Are you saying that Alice Springs really only needed five new generators, not 10, to meet the overnight demand, or indeed to cater for the highly likely event that the sun eventually stops shining every day and the town experiences a more intermittent supply of solar energy as happened in 2010?
    To be fair to Territory Generation, it would seem the company is in a difficult situation when it has to provide a continuous, full and reliable back-up electricity supply for times when there is no sunshine, but cannot use its turbines when the sun is shining.
    It was also interesting to read that Pine Gap will be going on the grid, but left me wondering how much electricity it will need and whether five generators would have been enough for both the town and the JDSRF at the same time.
    Of course batteries could provide a possible alternative back-up solution, but it sounds as if the town would need another nine to provide the necessary back-up.
    Besides the cost of these, the question then arises of when the batteries would run out of stored solar-driven electricity.
    Meanwhile I have heard reports that the town is facing an over-supply of solar power as consumers continue to cash in on subsidised solar panels. Is this the case?

    View Comment
  5. Curious
    Posted October 8, 2019 at 12:24 pm

    Didn’t Giles and/or predecessors already sell all of NT’s Gas?!
    As well as Darwin Port??!!
    For short term election funding war chest purposes … which did him a wealth of good. Not.

    View Comment
  6. Richard Bentley
    Posted October 8, 2019 at 10:34 am

    The electrification of transport is one way that some value can be extracted from the investment in gas generation at Owen Springs.
    I understand that transport amounts to around 30% of energy consumption so there is a great opportunity to reduce emissions by utilising local energy sources – sun or gas – to run your transport fleet. Ultimately all electricity is likely to be solar sourced as the technology is improving by the day and getting cheaper.
    But for now anything is better than burning petrol or diesel in an ICE.

    View Comment
  7. Psuedo Guru
    Posted October 7, 2019 at 6:10 pm

    Australians breathe easily while Beijing folk choke from pollution.

    View Comment
  8. Interested Darwin Observer
    Posted October 7, 2019 at 4:20 pm

    Gotta’ love input from Minister Wakefield – really has her finger on the pulse of the community and is an expert in this field.
    Her recent media release regarding Sadadeen substation $11.85 Million project she states: “The Territory Labor Government’s number one priority is creating local jobs and investing in the future …”
    Uh, news alert: The tender you speak of was awarded to a Queensland state owned company! Yes local companies get subcontracted by them but the cream ($$) floats to the top – being Queensland Treasury! Well done, minister!

    View Comment
  9. Posted October 7, 2019 at 11:24 am

    The rise of renewables supplanting the old fossil-fuelled energy technologies echoes the period almost a century ago when camel trains and droving on horseback gave way to rail and motor transport.
    The mind boggles, all the same, at the prospect of feral gas generators roaming the outback with mobs of camels, horses and donkeys.

    View Comment

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