Battle brews over SA gas plan

SOUTH Australian Greens say the state government's commitment to make Adelaide the world's first carbon-free city by 2050 is at risk, with Treasurer and energy minister Tom Koutsantonis this week opening the door to gas-fired power being used to supply a $50 million per annum energy contract.
Battle brews over SA gas plan Battle brews over SA gas plan Battle brews over SA gas plan Battle brews over SA gas plan Battle brews over SA gas plan

Haydn Black

Reporter

Greens and environmental groups say SA should restrict the upcoming tender process to renewable energy firms, but Koutsantonis has allowed GDF Suez into the bidding.

SA already receives some 40% of its power from wind (30%) and solar (10%), albeit with backup from coal-fired generation in Victoria and New South Wales, but green groups want the state to go further, an alarming premise for industrial groups battling against high energy prices.

French utility GDF, more recently rebranded and Engie, owns the Pelican Point power station and wants to use it to meet the 481 megawatt contract as part of a bid to keep soaring power costs under control, but SA Labor is being more secular, asking for any and all bidders as long as they won't put SA's energy security at risk, or push up prices.

Industry groups say SA's rush to embrace wind and solar energy means supply is unreliable, creating sharp spikes in the spot market, making electricity far more expensive than other states, at some points an incredible $2000 per hour.

Even at contract level they are facing prices of around $90/MWh, around twice that of NSW and Victoria.

The network is also extremely vulnerable. In November power was cut to more than 45,000 properties across South Australia after the failure of an interconnector linking SA to Victoria while the other interconnector was undergoing maintenance - and the SA grid could not meet summer demand.

The government's latest contract allows for CO2 emissions of up to 400kg per megawatt hour.

That means gas is still in with a chance, but coal is right out, which is good news for SA considering it is closing down its last coal-fired power plants this year.

Gas offers half the emissions of burning coal, but can't compete with clean wind and solar on that front.

Labor says that while in the past it has focused on green power, its latest bidding process is focused on maximising the benefits to all South Australians.

GDF developed Pelican Point with Mitsui (27%), on the Port River, 20km north-west of the Adelaide central business district in 1999 and the firm claims it is one of Australia's most advanced, efficient and environmentally friendly power stations.

The power station uses a combined-cycle gas turbine operation to produce 479 MW of electricity, around 25% of South Australia's needs, however it is now running at just 230MW.

The plant's operations were scaled back in 2014 when the owners complained they could not compete with subsidised alternative energy.

The $450 million plant requires $40/MWh to operate, compared to coal at $10MWh.

The plant has been running at around for the past few years.

It is one of Adelaide's two major power stations, with the other being AGL Energy's nearby Torrens plant on Torrens Island.

Pelican Point has an energy efficiency of more than 50%, compared with older power stations which are at less than 35%, GDF says.

SA Premier Jay Weatherill has argued that the big price fluctuations won't last forever, and that the state will benefit from leading the adoption of wind and solar power in Australia, and they have been created by the closure of the Alinta coal and gas power stations at Port Augusta.

He said renewables generators' low operating costs makes it harder for conventional power plants to sell electricity on the National Electricity Network.

But industry groups warn that the state faces severe power shortages in 2016-17 without more conventional baseload and peaking power.

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