Australia’s coal industry raises barriers to solar and storage

By most estimates of a clean energy future, solar thermal with storage will play a major role in providing electricity to Australia – and to many other parts of the world.

The International Energy Agency, for instance, suggests it will account for at least 12 per cent of all electricity generation by 2050. In some countries, the share could be more than twice that much. Private analysis shows the market share could be much greater.

The frustration in Australia is that it is hard to imagine it in our future without actually seeing the technology – and in Australia it’s proving extremely difficult to get the technology built at any scale.

That frustration was increased yesterday when Alinta, which is being pushed by the local community at Port Augusta and by environmental groups, to replace its ageing, highly polluting brown coal generators with the first large-scale solar tower plus storage array in Australia.

As we reported on Wednesday, Alinta has produced a report that says solar thermal is still way too expensive – even though projects overseas are delivering such technology at the tariffs Alinta says are needed.

The findings have frustrated advocates for the industry, who suggest Alinta’s consultants have got it wrong on costs.

“This is another extremely ultra conservative costing exercise,” says Andrew Want, the head of the Australian Solar Thermal Industry Association, who described the estimates as “ridiculously high”.

“It doesn’t take a great deal of investigation to see where there is a huge amount of contingency built into this,” Want said. “These are relatively simply projects. We are not building spaceships here. These have been built many times overseas.”

It is clear that Australia’s big generation companies are in no hurry to make the transition to clean energy, because it means less money and returns for their exiting assets. That explains the push by the fossil fuel industry to wind back the renewable energy target, although not the government’s acquiescence.

The position of Alinta – which has been a vocal opponent of the current renewable energy target – is further complicated by the fact that it is in the middle of a sales process by its private equity owners. Buyers don’t want their vision clouded by investments in new technologies.

Some suggest that the matter should be taken out of Alinta’s hands, and the state government should seize the initiative by holding a “reverse auction”, as the ACT government has done and the Queensland government plans to do. Victoria is also considering such measures.

Repower Port Augusta says solar thermal is operating in the United States, Europe, Africa and South America; but in all instances, governments have shown leadership to make these projects happen.

“Port Augusta needs our leaders to do the same,” it said. It also called on the government of South Australia, which already sources 40 per cent of its electricity needs from wind and solar, to step in.

“The ball is in the South Australian government’s court. This is a tested policy working overseas and in Australia, that Jay Weatherill could make happen here and show leadership”.

It also noted that latest greenhouse emissions data showed that particulate emissions from the Leigh Creek coal mine, which supplies the Northern coal-fired power station, has dramatically increased by 189 per cent – a result of accessing poorer quality coal.

The Alinta study says that even though capital cost have been cut by more than $200 million since its previous study a year earlier, the funding gap is still around $150 million.

The study says Alinta needs to be able to get $131/MWh of revenue to get a return on investment – yet its middle case suggests solar thermal technology is 50 per cent more expensive than that. In its most optimistic case, where capital costs are 30 per cent cheaper, the cost of delivered energy is still 10 per cent more expensive.

But the findings have confused those in the solar thermal industry, who point out that solar towers and storage are being delivered elsewhere in the world at the prices Alinta says are needed. And some question if the solar tower really needs to be “base load” given South Australia’s demand profile. Lesser storage may reduce costs.

In the US, Solar Reserve is delivering electricity to Nevada at $US135/MWh. Although the capital costs are supported by cheap finance by the Department of Energy, Solar Reserve says because this is the first of a kind array, subsequent costs will be lower.

This has been borne out by the latest solar auction in Redstone, South Africa, where Solar Reserve technology will be built by Saudi energy giant ACWA Power, at a cost of $US124/MWh in its first year.

Abengoa has built one solar tower with storage in South Africa, and is contracted to build a 100MW facility in Chile. It is looking for a miner to contract for a 20MW facility in Western Australia.

Vast Solar, which says it has much cheaper capital costs, is completing a 1.2MW pilot plant near Parkes, NSW, and has plans for a 30MW facility.

Want, who also heads Vast Solar, says solar thermal technology needs to demonstrate – in Australia – that costs can be reduced.

“There is no question (the technology) needs to come down the cost curve … it shows how critical it is that we get on-the-ground examples in Australia to show financiers that these costs are lower than what many think.”

Most eyes are on the ACT government’s next tender, which will be for 50MW of “next generation” solar with storage. Solar towers are likely to compete with PV and battery arrays. Calls for expressions of interest are likely to be made soon. The ACT has already contracted for 40MW of solar PV and 200MW of wind energy through its auction process.

Queensland may follow. It has signalled plans for a tender for 40MW of “baseload renewables”, which probably means solar plus storage. Victoria is also looking at the issue to try to generate some investment while federal policy remains at a standstill.

Meanwhile, one bizarre problem cited by Alinta was the height of the tower. At 150m, the company says the visual impact of the receiver tower could be a “substantial” and “significant issue,” even though it will be 12km from the centre of Port Augusta. But it wouldn’t even be as high as the exhaust stack of the coal-fired power station the residents want closed.

“The receiver would be taller than any other structure in the vicinity with the exception of the Northern Power Station exhaust stack. The glare off of the receiver at the top of the tower would likely make the structure the most obvious landmark in the viewshed.”

Given the support from the town’s mayor and the population, this might actually become a point of pride.

Indeed, Port Augusta Mayor Sam Johnson was unfazed by Alinta’s conclusions. He called on federal and state governments to back “visionary project”, saying they had the opportunity to “lead the world in renewable energy.”