Can Campbell Newman use green energy to slash a $4.8bn diesel bill?

Queensland Premier Campbell Newman has shown little enthusiasm for wind and solar – or at least for state subsidies to support their construction. He believes that since the federal government introduced a carbon price, then such things should be a federal issue.

But Newman faces an interesting conundrum in his own state. A total of 33 remote communities serviced by the state-owned Ergon Energy rely almost entirely on diesel, and the cost of this is steep, and getting steeper.

Indeed, unless a combination of green energy such as wind and solar, along with storage and energy efficiency programs can be introduced, the total diesel bill for the 5,500 customers scattered over these communities will amount to $1.6 billion over the next 25 years, assuming that diesel fuel costs do not rise, according to Ergon Energy.

However, that cost could balloon to $5 billion depending on the scenarios for diesel costs outlined by the likes of the International Energy Agency. This would translate into a cost of nearly $1 million per customer, or $40,000 a year, and much of this would subsidised by the state government, because under its community service obligation, the state-owned utility currently meets all electricity costs faced by remote users over and above the standard rate of 25c/kWh.

Jennifer Gannon, generation project engineer at Ergon, gave a fascinating insight into the task ahead of Ergon Energy at the recent Clean Energy Week in Sydney. Currently, the utility has a plan for “zero diesel” by 2050. As this graph below shows, the 33 communities – located in western Queensland, near the Gulf, on Cape Yorke and on islands – currently uses around 109 gigawatt hours of energy, almost all of it through diesel with virtually no wind or storage.

The plan calls for a gradual increase in energy conservation and the deployment of renewables, to the point where demand has more than doubled by 2050m but is offset entirely by energy conservation and renewables. Gannon says the hope within Ergon is that this plan can be accelerated. “We are sitting on a big bucket of risk,” she said.

Like many who have to service remote and isolated grids, Ergon has concluded that the first stage will be relatively easy. Without storage, the diesel systems can accommodate up to 30 per cent penetration by wind and/or solar without too many difficulties, resulting in direct savings on diesel consumption and costs.

After that, the capital costs involved in storage, for instance, become an issue – and it becomes a balancing act – identifying the cost break-even point between anticipated rising diesel prices and falling renewables and storage prices becomes the key.

The other challenge is the availability of land. Either the communities are on remote islands with little land available, or adjacent to flood plains that would make it perilous for wind or solar (the world’s first inland floating turbine, perhaps!)

Gannon says storage systems are still a way off. Ergon has spent considerable time looking into various battery technologies, and has been testing some at its

Windorah solar plant, where it has been smoothing output from the concentrated solar PV plant developed by Solar Systems. Replacement turbines planned for Thursday Island (one of only two wind farms in the whole state) may feature fly-wheel storage when installed. The Birdsville geothermal plant (Australia’s only geothermal plant, but this one served by a hot spring rather than superheated rocks) is also due for an upgrade.