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Why South Australia must, and will, lead world on renewables

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When Tesla founder and CEO Elon Musk held a party in late September to celebrate a connection agreement for the already half complete Tesla big battery in South Australia, and declared the installation to be “not just talk but reality”, the timing would not have been lost on premier Jay Weatherill.

It was a year and a day after the state-wide blackout that put the whole idea of turning the state into a renewable energy laboratory into question. It was painted as a black day for wind and solar, but it turned out to be a reality check about Australia’s ageing and dysfunctional grid.

On Friday, at the start of what could be a long, hot summer, Weatherill and energy minister Tom Koutsantonis will preside over the official opening of the world’s biggest lithium-ion battery, and they are not backing off or slowing down.

When they say they intend to make the state “self sufficient” in energy, and even promise to “go it alone”, they are not kidding.

While the long-term renewable energy transformation is stalled at federal level by ideology, ignorance and plain bloody-mindedness, Weatherill and Koutsantonis are going hard into to the future that may not have seemed so easy to grasp when the lights went out last year.

What is clear now is that, having got to 50 per cent wind and solar, nearly a decade before they intended, it would be too late to turn back now. It would leave a project half baked, and allow the major generators to continue to extract their oligopoly rents, and consumers to suffer.

The Weatherill and Koutsantonis strategy is to embrace new technologies, cheap wind and solar and storage, smart software and smarter management, and put into practice the sort of scenarios envisaged by the CSIRO, Energy Networks Australia and more recently by the storage review commissioned by chief scientist Alan Finkel.

And the formal opening of the world’s biggest lithium ion battery into the world’s most elongated grid, in the state with the highest penetration of wind and solar, is the start of a whole series of ground-breaking and world-leading projects coming in the next few years.

The Tesla battery will be quickly followed by two more – at the Wattle Point wind farm (by May, 2018) and Lincoln Gap wind farm in 2019.

And on Wednesday, as we report here, South Australia announced funding for four “next wave” storage projects including lithium-ion and flow batteries, hydrogen fuel cells, thermal storage and a range of concepts and applications.

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Then there is Australia’s first large-scale solar tower and molten salt facility to be built near Port Augusta, the site of the last coal-fired power station, accompanied by what could be the country’s biggest wind-solar hybrid project, with battery storage added.

Even more dramatic is the decision by the new owners of the Whyalla steelworks to build up to 1GW of solar, battery storage, pumped hydro and demand management to slash their costs and turn the argument that you can’t power heavy industry with renewables on its head.

Elsewhere, there are another two pumped hydro storage proposals, any number of new solar projects – both big and small – and other ambitious but less certain projects such as Lyon Group’s solar and storage facilities.

ElectraNet, the state’s major transmission line, estimates that there are already 650MW of what they consider “committed” wind and solar projects to add to the 1800MW of large-scale solar, and the rapidly growing rooftop solar PV capacity (already at 730MW and growing at 100MW a year).

It seems hardly fazed by the inferred jump in renewable share towards 70 per cent of local demand within the next five years. In fact, if you add in Whyalla, Aurora, and DP Energy, then the amount of wind and solar is likely to be at least doubled in the next five years.

And nor is the Australian Energy Market Operator overly fazed. Cautious yes, and since the blackout it has had reason for a wholesale rethink about its own practices and the way it manages the grid.

What was ignored in the blackouts (preventative action like dialling down the interconnector, putting plants on standby, reading weather reports) is now standard practice when a potential threat emerges.

And for all the hand wringing about the impact of wind and solar on the grid, AEMO says that once the potential shortfalls this summer are negotiated, it sees no major red flags on the horizon.

The report by The Australia Institute’s energy analyst Hugh Saddler, you can read it here, bears testimony to that – the state grid has been running at more than 63 per cent wind and solar in the last two months, with barely a glitch.

“Welcome to the 21st century,” Koutsantonis likes to say. And the state government says it will not be held back by the stalling and name-calling in Canberra, and the complete lack of any policy vision that could take advantage of Australia’s huge wind and solar resources.

Koutsantonis recently gave one of the outstanding speeches on the energy transition at a conference sponsored by what is now known as the Smart Energy Council.

We reported on some of its contents here – his take down of the Federal government’s weak-kneed and totally useless national Energy Guarantee – but the remainder of the speech is also worth noting.

In it, he pointed to the state’s troubled history, of near total reliance on local brown coal, imports, and local gas generators. It was almost entirely dependent on other states, and at the mercy of a private energy oligopoly, and dirty fossil fuels.

That’s what he wants to change. The coal is gone, and the addition of storage to the state’s huge fleet of wind farms and the highest penetration of rooftop solar will start to tip the tables against the incumbents.

He speaks of the monopoly rents extracted by the privately owned gentailers through their deliberate policy of scarcity, shutting down generation in order to increase the price of electrons.

“It’s a deliberate policy of scarcity ….Had it not been for renewable energy providing cheap affordable power, imagine the monopoly power those companies would have now.”

Koutsantonis says South Australia recognises that the next stage is storage, and points to the government tender where the 150MW Aurora solar tower and molten salt storage project in Port Augusta beat off a host of competing gas proposals.

“Don’t underestimate the shock waves that tender sent through the fossil fuel industry, not only in Australia but round the world,” he said.

It was a groundbreaking contract – and ingenious; not because it suddenly lowered the cost of solar thermal technology, but because it recognised the value of storage. And by doing that, the benefits flow through to the customer, which in this case is the government.

“Wherever you go people in industry are asking themselves: How did that solar thermal plant beat gas-fired generation in a tender for a 20-year contract?” Koutsantonis said. “They did it, and they did it hands down, and they did it without subsidy.”

The idea of self sufficiency promoted by the Labor government does not mean cutting the connection to Victoria – it couldn’t manage that. But Koutsantonis is in no hurry to build a new connector to NSW, as many suggest, including the two main transmission line owners.

He wants, first, to bring more renewables into the market, initially to reduce the reliance on that connection to Victoria, and secondly to break the oligopoly of the big gen-tailers in his own state.

Once that is done, then he might support a new link to NSW – mostly to export South Australian wind and solar resources eastward, rather than the other way.

That view was supported by US-based AES Systems, one of the biggest battery storage operators in the world. Mark Leslie, its Asia-Pacific head, says storing excess wind and solar energy in South Australia makes sense.

“We have had a very 19th Century view of how that reliability should be delivered – based around centralised generation and long power lines,” Koutsantonis said in his speech. “But we will get more reliability and at a fraction of the price with solar and storage.

“The key question is where those savings go – into the pockets of retailers and asset owners, or shared with consumers. South Australia is said to have the most expensive electricity prices in the world.

“Whether that is true enough or not does not matter. The price of electricity in Australian cities is hugely inflated – not because of the cost of the technology, but the monopoly rents of the major players.

“That is the fight of the 21st Century: How to share in those savings of increased behind the meter solar and storage, and more renewables. It will ultimately save our economy in unnecessary interconnection.

“We want to stabilise our market first, start the transition and then start exporting.

“That is our goal – we can marshal our vast resources so we can export – and we can run Olympic Dam (mine), Karapateena (mine), the Cooper Basin (oil and gas), with solar and storage resources, pumped hydro, hydrogen, and other forms of storage.

“There are lots of opportunities. Do we keep on building billion dollar transmission lines or do we start investing behind the meter?

“To me the answer is clear: virtual batteries where neighbourhoods can share, community grids, micro grids – this is way for the future.

“The difficult part is how to regulate it, and distribute the benefits. It is a difficult question but we are up for it.”

Sadly, that’s not the sort of vision you hear much from other states, and particularly not the Coalition parties.

And when, unexpectedly it is – as it was by NSW energy minister Don Harwin earlier this year when he debunked the myth of baseload – there is no follow through.

Which is ironic, because NSW is potentially at a greater threat of outage this year than South Australia, precisely because it is so dependent on 20th Century technology.  

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  • Charles Hunter

    “We reported on some of its contents here – his take down of the Federal government’s weak-kneed and totally useless national Energy Guarantee – but the remainder of the speech is also worth noting.”

    The link behind that is broken.

  • Joe

    I am loving it every time Premier Jay or EnergeticTom make an announcement or offer their future vision. They are smashing it! It is all progressive stuff, 21st Century stuff as Energetic Tom would call it. It really puts The COALition, Turnbull, Joshie, Lump of Coal Scotty and ‘No Steel with RE’ Abbott to shame when all they can offer is public takedowns and insults against SA. Let them stick to their politicing, they will be gone at next election. Meanwhile SA are getting on with the business and showing everyone how its done. Go well SA.

    • Carl Raymond S

      Yes, gone next election, barring a Turnbull/Frydenberg epiphany. GetUp did the analysis on Qld and discovered it was Anastacia’s harder line on Adani that won the day. The people are awake.

      • Joe

        Lets keep them awake right up to the next election.

    • Martin Stawo

      Can we have the cost of the tesla battery disclosed to the public before not after the election?
      This will help me to make a decision to vote yes and accept further increase of living cost in SA which is second to Sydney.

      • BushAxe

        As Neoen own the battery I think its unlikely they’re going to disclose the cost of it to their competitors. Xenophon was a Liberal/independent never Labor, his comments about the state of the NEM are highly hypocritical considering he supported the privatisation!

      • Steve159

        On the SMH website

        ” Tesla could build and install the unit power in 100 days, or the $US50 million ($64million) system would be free.”

        Is that sufficient for you?

        In any case, the actual cost, like many public services, is of a secondary nature. It’s the benefits and assurity to industry that is of inestimable value.

        • Mike Dill

          I believe that the battery was bought with the (perhaps unofficial) intention of reducing the peak gouging by the gas incumbents. I think I remember hearing that the battery should reduce the wholesale rates by a few million a year, which while not ‘paying for the battery’, would more than provide the political payback for having the battery.

          • David Osmond

            The battery has big potential to reduce gouging in the FCAS market. As the following indicates, gas generators in SA have been gaming the market, earning on occasion an extra $6 million in a single day. Over the last year, this gaming has earnt them about an extra $50 million. We’ll have to see if the battery is able to put an end to this, but if it does, then it looks like the battery will pay for itself.
            http://reneweconomy.com.au/gas-generators-profit-scarcity-s-16566/

          • RobertO

            HI Mike Dill, the battery is there to stop the gaming of the market place. If you with hold 1 MW, or 2 or 3 then when the AEMO asks for more and you can bid in at $13,900 and all get that price. With another player in the market place (the battery) and you try to game the market place by with holding 1,2 or 3 MW to try and bid you $13,900 AEMO may accept the battery price of a lot less that your bid. The more producers in the market place the harder it is to game the market place (more batteries = more producers and more interconnection = more producers also).

          • Martin Stawo

            And you think that neoen will be different? Its not the red cross, they here for the money too.

          • RobertO

            Hi Martin Stawo, Neoen will make money out of it, but the battery makes it harder for the Gentailers to get realy big prices. Adding an interconnect to NSW CRE zone will also remove the Gentailers control over the SA wholesale price, effectivly driving it down sooner (and most spikes are interconnector related to maintance times)

        • Alan S

          That’s two batteries for the cost of a plebiscite – bargain.

        • Martin Stawo

          Sure, but this is funded by all of us and it should be transparent.
          Not hidden from public eye until after the election. SMH is not the best source of info on gov spending.

      • Joe

        Marty, Steve159 has the $’s for you just below, a rather modest investment in the future. You talk about cost of living. Really, the equation is pretty simple. Pay a little now for going with RE and a keeping a sustainable climate / environment or just do business as usual and pay a whole lot more later on as the bills come in as a result of the impacts of climate change. So enjoy your current cost of living at the expense generations that follow. But isn’t that bludging off your kids and grandkids by leaving them the mess to fix that us forebears left behind.

        • Martin Stawo

          Is this exactly for the privatisation caused?

          On the site note battery is now in PASA at 100MW generator and 80 MW load.

      • Alan S

        If only we could blame it all on Labour and Nick eh? It wasn’t just three votes in favour – a few Liberals blindly supported the sale.

        • Martin Stawo

          True cannot deny that.

  • Cooma Doug

    Great write G

  • RobertO

    Hi All, Link NSW and SA via a CREZ will also take power away from the Gentailers. Not having this link let the Gentailes with hold 1-2 or 3 MW and drive price up. Also Wind does not get cirtailed if it can be sent to NSW. The CREZ will also drive power prices down faster than just limiting wind in SA

  • Chris Jones

    Giles – Just wondering whether or not the South Australian battery will show up on the NEM Watch widget as “Other” or not. I presume there will need to be a special colour for “electrochemically generated” power (as opposed to hydro).

    • Charles

      There’s a new version of the widget being tested here 🙂
      http://www.nem-watch.info/widgets/reneweconomy/

    • Martin Stawo

      Can i propose “black” for creating a black hole in the state coffers?

      • Mike Dill

        I’m not sure why running the battery would be a black hole for the state. It will be a black for the incumbent energy producers that have gamed the system. For the consumers, cutting off that overpriced situation will be definitely green.

      • Alan S

        Or ‘in the black’ as an accounting sheet – contrary to being ‘in the red’.

  • Robert Westinghouse

    Congratulations. Tell the feds to stick it…we need regional power not centralised….Good on you SA!!!

  • Steve159

    That is such an inspiring report, I’m thinking “gee, it’d be great to relocate to SA and be part of all this”.

    But circumstances … yadda yadda.

  • Ian

    You have to get on the wave to enjoy the ride. That’s what Weatherill and Koutsantonis are doing – give props to them!

  • brucelee

    I think Tom wants the NSW transmission delayed so its easier to demonstrate that his & Jays initiatives are working and it wasnt the transmission that saved the day. I imagine LNP might push for the NSW transmission as a point of difference and then pointing to NSW coal as the saviour?
    are SA labour really on the ropes this election? is there hope?

    • Mike Westerman

      Someone will have to demonstrate that $1billion makes sense. If SA puts in 1GW of PHES for $1.5billion instead but it allows for increased export of solar and wind the bottom line for SA is much better – lower local prices and income from exports.

      • brucelee

        Sounds like common sense, not exactly what LNP are famous for…

    • BushAxe

      The SA Liberals energy policy includes $200m for a NSW interconnector, the transmission companies are currently doing a RIT study on it but it won’t be completed until 2021 at the earliest. I’ve no doubt there’s a lot of RE proposals in SA waiting for an announcement on it next year. SA Labor is in the box seat for next year’s election as Xenophon will split the Liberals vote.

      • brucelee

        Fingers crossed

      • Joe

        If The NSW Nationals have their way I’m sure the Barilaro ( Nats NSW Leader ) who is pushing for a new Coaler to built in The Hunter with taxpayers money, will get that interconnector hooked up directly to his new Coaler baby well…Coal power, powering SA?

        • RobertO

          Hi Joe, Any idiot can claim that a “Coal Power” is good. Most of them cannot prove anything about how “good ” it is. It a total $ loss making exerise that has only one “good: point. It may provide some jobs for about 2 to 5 years as it being built and even those are small in number compared to RE. The reply has to be RE will provide more jobs both in construction and running the system. These idiots also need to be reminded that sometime in the next few years it will be cheaper to build new RE that it will be to feed a coal power station.

          • Martin Stawo

            Not exactly,
            Hazelwood had about 1000 employees.
            Loy Yang b about 250.
            Typical wind farm about 10.

          • Alan S

            I have trouble following your logic: Do you want lots of people to be employed in generation and therefore a high wholesale cost? Most people seem to want lower energy prices.
            BTW where does the Hazelwood figure come from and what did 1000 people do there – ditto a wind farm?.

          • RobertO

            Hi Alan S, Australia exports most of jobs overseas, and I want more jobs done in Australia. The logic for coal is that most process with coal are being automated, e.g. in 1900 it was about 1000 people mined 100 tons of coal, 1950 about 500 people mined 1000 tons of coal, Adani want to mine coal at 26 people (EPA QLD Doc) per 1000 tons, but Adani wed site states Automation from pit to port so how many jobs if that happens. Try power stations, running the power in 1950 about 2 people per MW, 1990 with some automation say about 2 people 50 MW, current build coal power is about 2 people 150 MW, Automation is reducing the numbers of jobs in coal. Building a coal power station maybe 1000 -2000 for say 3 years whatever size chosen. Wind farm at this moment to run is about 5 people per 100 MW, however to build it is about 250 people for a year and say 100 MW. Given that we may need 10,000 WTG of 3 MW and transport may increase that number. Some WTG have had the towers built in SA (I know of 1 so far but there may be more) why not build more in Australia (and yes they might cost more but there jobs that stay in Australia) Free Trade agreements can be good things but our one with Thailand cost Australia its car industry (We exported about 120 cars to Thailand, there local rules stopped our cars, but we allowed some 2 million cars from Thailand)

  • MaxG

    Wishing Jay and Tom all the very best in their endeavour to apply common sense to an urgent problem. Damn the coalition fools. Yes, labour is paid off / donated yo by the same ‘donors’, but at least they are a tat better.