New hope for solar towers, but South Aust. loads dice to favour gas

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New energy tender could provide new avenue for solar towers with storage as South Australia seeks new entrants into electricity market to reduce the stranglehold of a small group of gas-fired generators. But the government has loaded the dice in favour of a previously mothballed but now operating gas generator.

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There is renewed hope that Australia’s first large scale solar towers with storage can be built in South Australia after the state government announced a new tender designed to introduce new competition in the market and remove the stranglehold of the existing gas generators.

The South Australian government will relaunch a tender for 75 per cent of its own long term electricity needs, with the specific goal of introducing a new competitor into the market.

Crescent Dunes generated its first solar electricity at night.
Crescent Dunes generated its first solar electricity at night.

That has increased hope that a large scale solar tower project like that proposed by SolarReserve for Port Augusta could be built, although it appears that energy minister Tom Koutsantonis favours gas.

Bizarrely, the Pelican Point gas generator, which was built 17 years ago and had been mothballed because its owners saw bigger profits selling gas into the export market, will be allowed to bid into the tender, despite not strictly being a new competitor as it has been operating again since July.

Indeed, the state government is helping the case of gas by offering $24 million in assistance to bring new local production on line, to lower the cost of gas, and also appears to be under the mistaken impression that the new solar tower and molten salt installations rely on gas to deliver dispatchable power.

The dice if further rolled in favour of Pelican Point because the government contract is for 10 years. Although this is said to be “negotiable”, the shorter time frame gives a major advantage to a plant that is already built, and largely depreciated, over a new first-of-its-kind facility.

The S.A. government is under enormous pressure from consumers, the conservative media and the Coalition, over the cost of electricity in the state, and as its share of wind and solar reaches 50 per cent of local generation, and in some cases demand.

This may explain its preference for gas over new technologies, but it has historically been the price of gas and the dominance in the local market of a few generators that has caused the state to have higher wholesale prices than elsewhere.

Its strategy – if that’s what it is – of providing a new subsidy to a 17- year-old generator to ensure it stays in the market could backfire, because it could prompt AGL Energy to mothball one of its 50-year-old and highly polluting generators, which it had intended to do before Pelican Point was put on standby.

Indeed, there is a question about whether awarding the contract will solve the problem. If a new gas generator is built, then it is likely that one of Pelican Point or AGL’s Torrens will be mothballed. The problem may not be solved unless it can bring in new technology. But South Australia may just be happy to reduce the hold that AGL has over the market.

The state government held a tender for all of its electricity needs earlier this year, but decided only on allocating contracts for 25 per cent of its needs – relating to its carbon-free commitment to the Adelaide CBD – to smaller scale projects linking renewable energy with storage.

The new tender does not have an emissions limit, and is not technology specific, although it does say it wants to “reduce carbon emissions”. But by that it means substituting the amount of coal-fired power imported from Victoria.

Given the cost of gas in the market, and all things being equal, it is likely to give the opportunity for dispatchable solar plants, given that such projects have beaten gas and other thermal plants in recent tenders in Chile and elsewhere.

But Pelican Point may have an advantage, having already received a short term contract from the state government and some business groups to take 250MW of capacity out of mothballs. “Pelican point is entitled to bid into this,” Premier Jay Weatherill told media.

Furthermore, the state government says it will also commit $24 million towards a program to incentivise companies to extract more gas and supply it to the local market. It thinks this will be enough for 20PJ of gas, twice its annual need for gas generation.

In the recent electricity price spikes, the price of gas in South Australia hit $24/GJ, far more than other gas hub in Australia. That was due to supply restrictions.

Competition in the electricity market is a major concern for the state government, given the bidding patterns that helped force up the price of electricity in July. Numerous studies have suggested that the main gas generators exploited their market power and lifted their margins, adding $170-$190 million to the cost of supply.

The ACCC, the main competition regulator, said it saw no problem with that. South Australia has also been calling for a  new inter-connector, possibly through NSW, to increase competition, but this could take several years to build.

“The small number of energy suppliers in South Australia have too much power – if we increase competition, we will put the power back into the hands of consumers,” Weatherill said in a statement.

“The current rules also let the big private electricity companies drive prices higher by withholding supply – these measures address this inadequacy. Increasing competition in the energy market is the best way to drive down power prices for South Australian households and businesses.”

Koutsantonis also said South Australians are at the mercy of a “small group of electricity generators”. He took particular aim at AGL Energy, which owns 50 per cent of the market. Its planned will not be allowed into the tender, despite flagging they would be mothballed and then reversing that decision.

Koutsantonis also blamed the previous Liberal Government that sold the State’s electricity assets to monopolies and scrapped plans for an interconnector to NSW to maximise the profits from asset sales.

The new tender could attract interest from SolarReserve, which has a 110MW solar tower and molten storage plant operating in Nevada and wants to replicate that in Port Augusta, and Lyon Solar, which is proposing a 100MW solar PV plant with 100MWh of battery storage near Roxby Downs.

It could also attract interest from Solastor Australia, chaired by John Hewson, which has boasted that it can provide the world’s cheapest 24/7 solar power using graphite technology, but it has yet to deliver any electricity to the grid in Australia and little is known about its Chinese pilot project.

Hewson caused controversy earlier this year when he attacked the solar tower and molten salt technology used by SolarReserve and other existing plants, saying they were redundant and dependent on gas-back up. That is not so, but it appeared to have stuck in the mind of Weatherill and Koutsantonis.

“It could be that some of these new technologies could be underpinned by gas boosters … (such as) solar thermal supported by gas generation,” Weatherill said. SolarReserve provides dispatchable power to Las Vegas from its Crescent Dunes plant with no gas back-up.

Community group Repower Port Augusta says the tender for the power purchase is the strongest lever the Premier has to make solar thermal happen for Port Augusta.

“Today’s announcement keeps solar thermal with storage well and truly on the table for Port Augusta. We urge Premier Weatherill to use this tender to secure Federal funding for a large solar thermal plant with storage in Port Augusta creating badly needed jobs and on-demand clean power,” said campaigner Dan Spencer .

“We had hoped this tender would be specifically for solar thermal in the Port Augusta region, but it is good news that the tender is open, keeping solar thermal on the table.

“Port Augusta badly needs new jobs following the closure of the coal station. This tender is the best lever the Premier has to make solar thermal happen for Port Augusta and help the community build a new future.

Any new big solar tower project will likely need support from the Australian Renewable Energy Agency, because it will be a first of its kind project in Australia. But the future of ARENA is clouded, despite it achieving a 40 per cent reduction in the costs of large scale solar PV, because both the Coalition and Labor want to strip it of funds.

South Australia also renewed its push for an “emissions intensity” scheme which it first raised at the COAG energy ministers meeting, as we reported exclusively at the time. It says the scheme will allow credits to be traded between energy companies at a national level. It intends to undertake further modelling in coming months.

 

 

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24 Comments
  1. Kenshō 3 years ago

    SA appears to be leading the country in the adoption of RE/storage and setting their citizens up for long term energy abundance whereas a minority of other states are setting their citizens for energy poverty. Great to see inspired leadership. In the medium term, it will become clear which states have invested wisely and which have been seduced by big business and merely patching up old paradigms. Go SA.

  2. john 3 years ago

    While I do see SA having at attitude toward wanting solar and storage there is a hazard in this for the developers if they achieve the goal with enough for the production 24/7 then the base line price never rises enough to make the kind of profits needed.
    Yes with out a doubt free energy will always beat any other energy input cost to produce power, however the capital cost of new technology is always high with a down ward cost curve as more is implemented.
    Frankly bit the bullet allow it and watch what happens as more are built the cost goes down the outcomes become better.

    • Kenshō 3 years ago

      Provision of a modest amount of utility level integrated RE/storage would:

      a) absorb daily intermittency of sun and wind,
      b) create a buffer for when fossil fuel generators are powering up and down,
      c) provide backup for an interconnector outage,
      d) give gas generators time to come online,
      e) address local network demand challenges without introducing unnecessary network upgrades,
      f) buffer fossil fuel generators which are struggling, resulting in frequency being in danger of falling and hence governments needing to buy expensive FCAS services,
      g) create flexibility and redundancy for damage by wind, flood and fire.

      The most important thing is buying time in emergencies and unexpected network events and market manipulations.

      • Analitik 3 years ago

        Would you care to state what this “modest” amount needs to be in terms of both power output and energy storage so that we can do some math on the issues?

        I can see storage as you state being somewhat useful as a FCAS but not as an actual generator.

        • Kenshō 3 years ago

          Sorry Analitik I’m just an electronics technician who knows something about how the system works. Your asking something way beyond my training. I actually retrained with degrees related to social welfare. Looking at a micro level, the inverter/charger only has to supply the shortfall in the load which is over and above what the fossil fuel ones can’t. e.g. if the inverter/charger on a property might have a nominal output power of 5kW though it might be able to transfer 10kW through it. So in that case the load could be boosted to a total of 15kW even though the inverter is only supplying 5kW. Once the air conditioner or whatever is turned off and the load goes back down under 10kW, if the inverter/charger is programmed to keep the batteries at 100%, the inverter in the inverter/charger would turn off, the grid would take full control of the load, and the charger in the inverter/charger would then turn on to re-charge the battery. So the inverter/charger would only add its output power to the grid in peak demand then take the power back to charge its batteries in the troughs – if it were setup to keep the batteries 100% full to act as a FCAS service..

        • Kenshō 3 years ago

          I’d say your right, it would be much cheaper for the storage + inverter/charger to act as a FCAS than to actually take 100% responsibility for the load – in the event a fossil fuel generator went down. I suppose whatever MW the generator could produce would need to be multiplied by the hours it needed to be supplied, i.e. if it were 100MW fossil fuel generator then 100MW of inverter/charger would be needed to replace it and 1000MWh of batteries to supply the load for 10 hours. I think I heard of a football field of nickel cadmium batteries in Iceland or somewhere being used as a backup in case a grid went down and it was built a decade ago and it could only supply the load for 30 minutes.. It is apparently crucial to them because they get temperatures of -40 degrees C.

        • Kenshō 3 years ago

          Sorry its world’s largest battery in Alaska:
          http://motherboard.vice.com/read/behold-the-worlds-largest-battery

  3. Brunel 3 years ago

    Mr Musk looks at base level physics and works up from there.

    If solar thermal makes sense, why have rooftop solar panels? If rooftop solar PV makes sense, why have solar thermal?

    • Mark Diesendorf 3 years ago

      Brunel, concentrated solar thermal (CST) and solar PV are complementary technologies. CST is currently an expensive technology that will become cheaper as its market expands. Adding thermal storage to CST does not increase its levelised cost of energy (LCOE), because, although its capital cost increases, so does its capacity factor. However, CST must concentrate direct sunlight and so cannot operate in overcast weather.

      On the other hand, PV with flat-plate collectors is much cheaper at present and can operate (below its rated power) in overcast conditions. However, battery storage for PV is still expensive. Together, CST with thermal storage and PV without storage are a good combination.

      • Kenshō 3 years ago

        Various commentators have talked about the need for FCAS so why would anyone put more PV without storage in SA? Once the system is setup with inverter/chargers to act as a PV/storage service, there could just be a small battery bank in the beginning. If it’s only setup with PV and with no storage at all, then its more drama and cost replacing those inverters to add inverter/chargers to manage batteries later. As far as I’m aware its a limit of the technology. It’s best to decide if its a PV only service or a PV/storage service at the outset. If FCAS is an issue, deciding upon PV/storage right away would seem the easiest path. I imagine it depends upon the % of renewables already on the grid.

        • Analitik 3 years ago

          You could add Enphase type batteries that are independent of the PV inverter (since they contain their own) to older systems.

          But I feel all renewable generators (including wind turbines or maybe at farm level) should have some storage to buffer their output by at least half an hour as inbuilt FCAS. This would greatly the pricing volatility that SA has seen of late.

          • Kenshō 3 years ago

            Sounds good Analitik. The only other factor I think is crucial for some properties, is the provision of an inverter/charger will give more control and more features. We need an Enphase expert to tell us exactly what the system can do though the types of additional features of an inverter/charger could be:
            a) ability to coordinate multiple external AC inputs e.g. grid, generator, wind turbine, other onsite inverter/charger (microgrid),
            b) onsite load management of AC circuits with relays turning loads on individual circuits on and off staggering loads around RE, making the property responsive to RE,
            c) mobile applications may need a GPS and some inverter/chargers report back the location of the system in the world (so one knows where one’s yacht or RV is),
            d) inverter/chargers tend to have allot more profiles for grid interaction (ditto controlling how each external AC source is utilised) e.g. navigating demand charges.

            In summary the inverter/charger is more expensive than some other systems which are emerging, however the inverter/charger has additional features that may be useful for specific residential, agricultural, commercial and industrial applications – depending upon the AC sources (offsite and onsite) and the level of sophistication of the loads being controlled.
            With older systems, the inverter/charger is AC coupled onto the output of the PV inverter.

          • Kenshō 3 years ago

            I hope I haven’t given the impression I’m promoting inverter/chargers. Enphase looks extremely cost effective. My interest is what RE can do and hence each property is unique. Many small applications don’t even need an inverter and could just connect PV, fridge, water pump and lights to a battery by only using DC. I am confident RE can do everything.

          • Kenshō 3 years ago

            Probably the main reason I mentioned the ability of the inverter/charger to have one level or another of precise control of any off site AC source, is some of them don’t behave very well.

          • Kenshō 3 years ago

            Haven’t you ever fallen in love with a woman who proved difficult to have a relationship with, so a negotiated equality became the main goal?

          • Kenshō 3 years ago

            The grid can be complex and difficult therefore many of us may need a sophisticated computer to relate to it. That’s the role of the inverter/charger.

          • Kenshō 3 years ago

            In this light, the grid-connect inverter can be seen as codependent. It suffers any relationship offered to it. I personally am unfamiliar with the nature of the relationship Enphase forms with the grid.

      • Brunel 3 years ago

        Right. Solar panels work in zero gravity and in cloudy weather.

        Wind and solar are complementary.

        While batteries are crashing in price every year – but the Powerwall 2.0 is overdue.

        I think solar thermal probably takes more land, glass, and cement to build. There is no point in building solar thermal if batteries get very cheap.

        And Tesla, Dyson, MIT, are working on making batteries very cheap.

      • ClimateWarriorMelb 3 years ago

        Brunel, I think another factor in ‘rooftop PV making sense’, at least if you’re talking at the consumer level, is that that only has to compete at the Retail Price level, say 20c+/kWhr to be viable/justified, whereas grid-scale production has to compete at the wholesale level – around 5c/kWhr (at least here in Vic).

      • Analitik 3 years ago

        Adding thermal storage to CST does not increase its levelised cost of energy (LCOE), because, although its capital cost increases, so does its capacity factor.

        That is half true. Capital cost increases but capacity factor of the heliostat array cannot – the concentrators can only collect the (direct) sunlight that shines on the heliostats and it makes no difference at all to the amount of energy collected whether it is stored or used directly.

        The capacity factor of the generator can arguably be increased since the generation period can be spread out but that depends on the intention of the system – long or short term storage.

        • Mark Diesendorf 3 years ago

          My statement is correct, but perhaps I should explained that when the thermal storage is added, so are additional solar collectors to fill the store. That’s why the LCOE remains the same.

          • Analitik 3 years ago

            So the additional solar collectors (heliostats and towers) are free? That’s a remarkable breakthrough.

  4. Kenshō 3 years ago

    Once Weatherill gets this Lyon solar/storage project up and running, in theory it could sort out the peak demand dramas and in the longer term, if Weatherill wanted it reprogrammed to focus upon contributing generated supply rather than short term peak demand dramas and FCAS, it would probably be the same inverter/chargers used – merely checking and unchecking boxes on a computer screen to reconfigure it. That’s the advantage of the inverter/charger’s computer control regards whether the batteries are used to maximise generated capacity from the PV or to keep the batteries 100% charged for grid emergencies. I’m sure Green would know exactly what range of applications the same gear can do. I imagine the solar towers are all computer controlled too for flexibility in how the asset is programmed and hence deployed.

  5. Kenshō 3 years ago

    No wonder regulators and fossil fuel generators are obsessed with FCAS and spinning reserve. Greenies keep wanting to add RE to the grid without storage.

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