The Pears Report: Why I would not sell Liddell

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We should be repurposing old industrial or electricity generation sites for more sustainable activities.

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These two flooded mine sites at the Kidston solar and storage project in Queensland will be turned into a pumped hydro facility to generate electricity at times of high demand.
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Underlying the absurd debate about the future of Liddell power station is an important issue with broad implications: the repurposing of existing sites.

It makes economic, social and environmental sense to make the best use of existing assets during times of change. We have redeveloped old dockland areas for urban development and more productive commercial activity. We are increasingly making use of roofs to support solar energy systems.

So why not repurpose old mining, industrial and electricity generation sites for more productive and sustainable activities?

The Whyalla steel plant is being repurposed. It has high-capacity power lines and a great solar resource, so energy storage and solar energy production make sense.

It has no nearby energy generation competitors. It has a local skilled workforce and a working industrial plant to produce ‘green’ steel that could sell at a premium. And a state government that is desperate to see it succeed.

In Queensland, the Kidston solar and storage project uses water storage and existing transmission lines at a closed mining site that is a long way from major generators. It is well located to help stabilise the regional electricity grid.

Using the site for pumped hydro storage could reduce the costs of pollution management and rehabilitation. It also has an excellent solar resource. And the project could revitalise the local community.

If I owned the Liddell site, I would not sell it off. Indeed, a future-focused NSW government that was not captured by the privatisation ideology would not have sold it to AGL a few years ago. Today, AGL has very good reasons not to sell this valuable asset.

From an energy perspective, the site has access to high capacity powerlines, generators that can be modified to provide grid support, space for batteries and pumped hydro potential. Modular, flexible gas generators can be located nearby.

It has a skilled local workforce keen for jobs, with a union that sees a clean energy future as inevitable.
Also, Liddell is enmeshed with the nearby Bayswater power station, also owned by AGL. A separate owner would create business demarcation challenges.

Sale of Liddell would also raise the issue of who should pay for rehabilitation and decommissioning costing hundreds of millions of dollars. By keeping the site, AGL can defer and manage those costs.

From a business perspective, why would you sell an asset to a competitor who was likely to gain subsidies from a national government desperate to see the plant continue to operate  until 2025, when its pet Snowy 2.0 pumped hydro project is expected to power up?

From a political perspective, the government argues that it wants clunky old Liddell to continue to operate.

If it wanted competition, it would be pleased that AGL has provided seven years’ notice of closure so that other competitors can invest to fill the gap. Trying to force AGL to continue its operation, sell it or commit to ‘fill the gap’ undermines competition.

It seems to me that the government wants Liddell’s output to lock out other investment in energy supply until Snowy 2.0 begins operations around 2025. Without this, other energy options will come on stream after Liddell’s 2022 closure, undermining the financial viability of Snowy 2.0.

This would be embarrassing to the Coalition and expensive for taxpayers: Snowy 2.0 is being built with taxpayer money.

Snowy Hydro will fund the project by not paying dividends to the government. So instead of visible subsidy payments, an invisible non-payment of dividends will cost the same, but be less likely to be noticed by voters.

These games around Liddell seem intended to placate a small group within the Coalition party room and prop up the economics of our prime minister’s ‘thought bubble’ project. Not very worthy policy goals.

These two flooded mine sites at the Kidston solar and storage project in Queensland will be turned into a pumped hydro facility to generate electricity at times of high demand.

“A new generation of energy/business analysts can identify emerging equipment failures to avoid costly plant shutdowns, improve process scheduling, monitor product quality in real-time to identify poor handling practices and help avoid oversizing of new equipment. All the while saving a lot of energy.”

Disruption spreading from energy supply to energy efficiency industries

It’s obvious to everyone that the traditional energy supply industries are being disrupted by rapidly changing technologies and business models. Economics and climate change are key drivers.

But few look at the disruptive trends creeping up on the energy efficiency industry. Two interesting examples are energy auditing and sub-metering, where extra meters are used to monitor parts of a site, processes, specific equipment or appliances to help identify inefficiencies, faults or to help optimise operation.

Sub- metering is expensive and often difficult. Many businesses are reluctant to invest in
it because it has no direct financial return: it just provides information.

That information is needed to identify energy consumption problems and make informed decisions, but that value seems to be beyond the grasp of many business decision-makers.

Even when a site has an energy data system, it often provides unintelligible data or the wrong data. The data may not be easily accessed by others: the supplier of the data system can use data format incompatibilities to maintain privileged status and profit. And historical data that is important for benchmarking may be deleted.

Recent developments in data analytics, machine learning, cheaper and better sensors and smart people, often from outside the traditional energy sectors, are changing all that.

The impact of these innovations flows through to energy auditing, too. Energy audits are costly, and often have limited impact for too many reasons to go into here.

New data analysis techniques can extract real-time information on operation of individual items of equipment from central meters. They can combine multiple data sources to provide ‘actionable advice’ in an accessible and meaningful form.

We are beginning to see a new generation of energy/business analysts who can advise a business or household on a range of issues that are worth much more to them than just how to save energy.

They can identify emerging equipment failures to avoid costly plant shutdowns, improve process scheduling, monitor product quality in real- time to identify poor handling practices and help avoid oversizing of new equipment. All the while saving a lot of energy.

This revolution is just one element of a much broader industrial transformation that will open up many opportunities, such as modular, relocatable micro-factories, replacing gas and other fuels with renewable electricity, and 3D printing (additive manufacturing).

We will see transfer of traditionally ‘industrial’ activity upstream to farms, mines and sources of reprocessable waste, and downstream to shops and offices. Some describe this as ‘Industry 4.0’. Others call it ‘smart manufacturing’.

But it is a blurring of production across the whole economy. This offers potential to reinvigorate rural economies, shift power from big companies and drive ‘closed loop’ production and virtualisation. I’m looking forward to it.

The work of the Australian Alliance for Energy Productivity (www.a2ep.org.au), Beyond Zero Emissions, Startupbootcamp and many others is underpinning a demand- side energy, environmental, economic and social revolution. Hold onto your hats!

Appliance energy efficiency

Not many people are aware of the recent review of the legislation covering appliance and equipment efficiency policy.

Yet this is a critically important area relevant to energy use, management of peak energy demand, energy costs, environmental impacts and social policy.

The consultation document notes that Greenhouse and Energy Minimum Standards (GEMS) regulations (that set minimum energy performance and labelling standards for appliances) “save the average Australian household between $140 and $220 on their electricity bill each year …

In 2016, the net savings of GEMS regulations to the Australian economy was in the range of $870 million to $1.58 billion, with greenhouse gas emissions savings of between 4.5 and 6.9 million tonnes. That is the equivalent of half of Queensland’s annual household emissions.“ Superficially, this sounds like a great result.

But it actually reflects serious policy failure, because we could be doing so much more. If we drove appliance policy muchharder, with higher standards, incentives and stronger action to replace inefficient existing appliances, it would still be very cost-effective and we could cut millions more tonnes of carbon emissions per year.

And do this a lot cheaper than the emission reduction fund which costs $10 to $15 per tonne of carbon emissions abated; energy efficiency measures, on the other hand, have a negative cost, as low as minus $118 per tonne, as the measures are cost-effective in their own right.

Appliance efficiency has lacked political commitment and resources. Its progress has suffered from restrictions placed on new regulation by the Abbott government. The focus on mandatory standards and energy labels is very narrow.

It fails to address inefficient and faulty existing appliances, and to include smart monitoring to identify faults during operation. Information and standards for commercial and industrial equipment are seriously inadequate. Our mandatory standards are typically weak.

I made a detailed submission to the review in March, but it is still not clear when the review report will be published. The submissions have been published on the Department of Energy and Environment website.

A key recommendation in my submission was for the “establishment of ongoing funded consumer representation to engage in development, operation and evaluation of the GEMS program, possibly within Energy Consumers Australia.”

Consumers need a much stronger voice, sufficient resources to make an effective input and stability of resourcing to provide input to long-running processes.

Alan Pears, AM, is one of Australia’s best- regarded sustainability experts. He is a
Senior Industry Fellow at RMIT University, advises a number of industry and community organisations and works as a consultant. He writes a column in each issue of ReNew, where this article was first published. You can buy an e-book of Alan’s columns from 1997 to 2016 at shop.ata.org.au.

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9 Comments
  1. john 2 months ago

    As per usual the aspiring leader of the country comes up in this quote.

    “Appliance efficiency has lacked political commitment and resources. Its progress has suffered from restrictions placed on new regulation by the Abbott government. The focus on mandatory standards and energy labels is very narrow.”

    I do remember asking the reason a commercial piece of equipment with a 1 star rating had been purchased instead of 2 or 3 star rated machine.
    The answer may amaze you, ” A 1 star rated machine lasts longer “.
    With this kind of myth in use, no wonder the country has no fuel efficiency standards just accept any type of cast off item from any other country.
    I guess one good thing has happened incandescent light bulbs gone.
    As for LIddell, AGL has plans to utilize the high voltage connections with new build to replace the coal system.
    As I understand it Solar, Wind possibly PHES and upgraded gas generation is the plan.

  2. david_fta 2 months ago

    would it be cheaper per MWh of pumped hydro into the NEM for Snowy Hydro to invest in Taswegian pumped hydro … plus a second Basslink?

    • RobertO 2 months ago

      Hi david_fta, just adding the second interconnector Tassie would add about wind in the order of 2,000 MW and drown any attempt to just add PHES in any large amount in Tassie (even though wind and H2O work very well together). I look at it this way, if a company is able to make a profit at it, they will do. They do not care about the efficiency if they are making a profit.
      It would effect coal power somewhere in the interlinked states possibly in NSW first, and maybe Vic, but not 1 for 1 but say about 500 MW to maybe 700 MW (possible for both Bass Links to become almost full time exporters).

  3. Ken Dyer 2 months ago

    It will never fly with the LNP COALition. It is far too logical, cost effective and apolitical.

  4. Mike Westerman 2 months ago

    I think there is no doubt pumped hydro sites with a lower cost per MWh than Liddell but it does have the advantage of existing infrastructure and clear title over sites. My estimation is that if a low bund could safely be developed around the Liddell ash pond, every meter of depth of a lined pond built there would store 36MW for 6h, so 360MW x 6h could be stored with a 10m bund. Lining the pond would cost around $40M, but there would be virtually no connection costs, penstocks <100m long if a surface station was built, Lewiston style, at the foot of the ash pond dam, with a channel under the highway to Lake Liddell. The machines would be physically large since the rated head would be about 35m. Still worth a look!

    • RobertO 2 months ago

      Hi Mike Westerman, and add in existing H2O rights it is very worth a second look. With RE it’s possible that we will see some very interesting ideas making progress (some that people are just dismissing because it does not fit within their range of what is suitable to develop, or it does not fit within the efficiency range they require while other remember it “I am going to make a profit at this so it going ahead”. With RE there are no exact requirement on what is required so long as it is profitable somehow.

  5. RobertO 2 months ago

    Hi Alan Pears, Australia has an existing Natural Gas Network. If Japan goes down the H2 pathway is it possible to re purpose large parts of this network if Australia was to decide to become a supplier to Japan of H2
    The sort of things that I would remove are the well heads (could also include some supply lines from the well heads. There may be some requirements to change some of the pipework in places and also much of the equipment currently used. If RE generation is used then they may require access to the lines. Some current lines may be just simply removed as no longer required. I am under the impression that most of the pipelines installed over the 20 plus years have been H2 tolerant lines (able to handle H2 without issues).

    The question I am asking is (general purpose answer)

    From an energy point of view is it cheaper to re purpose this line?

    If the answer is yes , then is this network likely to cheaper to re purpose than build a new one (given that it covers vast areas on good RE supply possibilities) or is the answer “We should re-purpose anyway, it such a good storage system?”

    From a practical engineering point of view there would seem to be little to stop this being done if someone can make it profitable.

  6. Craig Burton 2 months ago

    Hi Alan, I agree that in general facilities should be re-purposed at least because building new stuff always creates lots of emissions. Anything providing storage with means other than lithium should be pursued aggressively – pumped hydro or CAES being very promising. I hope these storage techniques get used to fill large valleys in renewable supply because making solar and wind do storage largely cancels out their benefits. Small valleys and over voltage should simply be allowed on the grid and we condition at the consumer end as needed.

    I submitted to the GEMS review as well. I agree the legislation is narrow. The labels could be on every product that substantially emits GHGs, like aluminium. I asked if embedded carbon was going to get a look. I asked how they work out their savings and Anna said they would publish this information. I suspect the only thing they can accurately determine is avoided emissions from devices prevented from retail by the min standards.

    I look forward to your next Report !
    Best regards

  7. DogzOwn 2 months ago

    It’s a year or 3 ago now but energy ratings web site used to show count of how many items matched your search .For split system AC, the last time it was visible showed more than1500 models. If you looked any closer, for many, energy ratings made them illegal imports forcou tries with real standards. For new cars, this is becoming a guzzler junk yard. Thanks for report Alan.

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