South Australia has rightly been acclaimed as a leader in renewable energy. Already 38% of their electricity comes from wind and solar. Yet
- Futures contracts on the ASX Energy market for electricity delivered in 2016-2018 are between $86 and $90 a MWh in South Australia, compared with between just $37 and $41 MWh in Victoria and between $43 and $48 MWh in NSW.
What’s going on?
When the wind is blowing strongly power costs literally less than nothing. When the wind fails, the price sky-rockets. Backup comes in the first instance from Victoria’s brown coal power. Recently when that failed local coal and gas-fired power came to the rescue, forcing the wholesale price up to about $2400 a megawatt hour. On several occasions in recent months prices have hit the National Electricity Market limit of $13,800 a megawatt hour.
In similar circumstances Germany, Italy and Spain draw electricity via interconnectors to France, which has plenty nuclear power. France is planning six new interconnectors worth $250 billion. They expect to make money.
Ironically Germany is closing its nukes, but in doing so draws more power from France’s nukes. SA closes coal and gas and ends up depending on brown coal.
Of course gas is more suitable than coal as it can be fired up quickly.
Tristan Edis, now an energy analyst at New Energy Economics, says the market should be left to sort it out. He points out that two of the major gas generators have either been mothballed or are announced to be mothballed. If the price is right perhaps they will stay.
The best answer may lie in what’s being called ”hydricity”. Solar or wind could be used to make hydrogen, which could then be burned as required to generate back-up power. The hydrogen comes from water and then oxidises back into water.
The electricity situation in SA is particularly acute in the case of Dutch company Nyrstar’s plans to redevelop the Port Pirie lead smelter. The project is to be supported by $291 million of SA taxpayer money, but electricity now looks like being twice as expensive as it was when the project was announced.
Politically the project is tricky because Port Pirie is “in the electorate of Geoff Brock, an independent MP who was the kingmaker last year who helped install Mr Weatherill as premier after a cliffhanger election.”
Brock was rewarded by being made regional development minister.