BHP gas deal ends brown coal fantasy, could pave way for solar thermal

A decision by BHP Billiton to sign an electricity supply agreement with an existing gas generator in New South Wales should bring an end to plans to restart the Northern brown coal generator in Port Augusta, and could open the path for the much touted solar tower and molten salt storage project.

BHP confirmed on Tuesday that it had signed an agreement for gas-fired electricity to help support its Olympic Dam mining operations in South Australia.

The decision dashes hopes by bottom-feeding energy entrepreneur Trevor St Baker to reopen Northern brown coal generator, which was closed in May because it was no longer profitable.

Its demise has often been blamed on renewable energy and the state government’s energy policy, but that fact is that it was old, highly polluting and it was unable to find an industrial user to sign an off take agreement.

“We have had discussions with proponents potentially looking to restart the Northern Power Station,” a BHP spokesperson said in an emailed statement to RenewEconomy.

“However after substantial consideration we found our needs were better met by entering a supply arrangement with an existing gas generator in South Australia.”

That gas generator is thought to be Pelican Point, the gas generator that was mothballed 10 days before the closure of the Northern brown coal power station after deciding to sell its gas supply to the LNG market.

It was brought back into operation in July for a brief period during work on the inter-connector to Victoria in an effort to loosen the stranglehold on the market and prices by the remaining gas and diesel generators, most of which are controlled by just two companies.

The state government was keen for it to return on a more permanent basis, and appeared to calibrate its tender for a 10-year supply contract for government departments just for that purpose. The state government even increased its emission allowance to cater for that idea.

However, advocates of the solar tower and storage proposal in Port Augusta say that the fact that BHP has signed an off-take agreement with Pelican Point means that the government can look further afield, and ensure it is using its contract to encourage new technologies.

Repower Port Augusta has called on the South Australian Government to rule out purchasing its power from the Pelican Point gas plant and use its energy tender to make solar thermal happen in Port Augusta following news Engie (Pelican Point’s owner) has signed a contract to supply BHP with power,” the group said in a statement.

The federal Coalition has led a campaign to demonise renewable energy and has suggested that 40 per cent wind and solar is too much for a state such as South Australia, because it made its energy supply too unreliable.

But those claims are ridiculed in a new report by the CSIRO and the network owners lobby group, which outlines how South Australia could be 80 per cent powered by wind and solar by 2036, and the whole country 90 per cent powered by 2050.

However, it says such targets require co-ordinated policies, and the curation of new technologies such as battery storage and solar towers and storage.