Why South Australia will lead the world on renewables

weatherill-frydenbergBy Giles Parkinson,

When Tesla founder and CEO Elon Musk held a party in late September to celebrate a connection agreement for the already half complete Tesla big battery in South Australia, and declared the installation to be ‘not just talk but reality’, the timing would not have been lost on premier Jay Weatherill.

It was a year and a day after the state-wide blackout that put the whole idea of turning the state into a renewable energy laboratory into question. It was painted as a black day for wind and solar, but it turned out to be a reality check about Australia’s ageing and dysfunctional grid.

On Friday, at the start of what could be a long, hot summer, Weatherill and energy minister Tom Koutsantonis will preside over the official opening of the world’s biggest lithium-ion battery, and they are not backing off or slowing down.

When they say they intend to make the state ‘self sufficient’ in energy, and even promise to ‘go it alone’, they are not kidding.

While the long-term renewable energy transformation is stalled at federal level by ideology, ignorance and plain bloody-mindedness, Weatherill and Koutsantonis are going hard into to the future that may not have seemed so easy to grasp when the lights went out last year.

What is clear now is that, having got to 50 per cent wind and solar, nearly a decade before they intended, it would be too late to turn back now. It would leave a project half baked, and allow the major generators to continue to extract their oligopoly rents, and consumers to suffer.

The Weatherill and Koutsantonis strategy is to embrace new technologies, cheap wind and solar and storage, smart software and smarter management, and put into practice the sort of scenarios envisaged by the CSIRO, Energy Networks Australia and more recently by the storage review commissioned by chief scientist Alan Finkel.

And the formal opening of the world’s biggest lithium ion battery into the world’s most elongated grid, in the state with the highest penetration of wind and solar, is the start of a whole series of ground-breaking and world-leading projects coming in the next few years.

The Tesla battery will be quickly followed by two more – at the Wattle Point wind farm (by May, 2018) and Lincoln Gap wind farm in 2019.

And on Wednesday, as we report here, South Australia announced funding for four ‘next wave’ storage projects including lithium-ion and flow batteries, hydrogen fuel cells, thermal storage and a range of concepts and applications.

Then there is Australia’s first large-scale solar tower and molten salt facility to be built near Port Augusta, the site of the last coal-fired power station, accompanied by what could be the country’s biggest wind-solar hybrid project, with battery storage added.

Even more dramatic is the decision by the new owners of the Whyalla steelworks to build up to 1GW of solar, battery storage, pumped hydro and demand management to slash their costs and turn the argument that you can’t power heavy industry with renewables on its head.

Elsewhere, there are another two pumped hydro storage proposals, any number of new solar projects – both big and small – and other ambitious but less certain projects such as Lyon Group’s solar and storage facilities.

ElectraNet, the state’s major transmission line, estimates that there are already 650MW of what they consider ‘committed’ wind and solar projects to add to the 1800MW of large-scale solar, and the rapidly growing rooftop solar PV capacity (already at 730MW and growing at 100MW a year).

It seems hardly fazed by the inferred jump in renewable share towards 70 per cent of local demand within the next five years. In fact, if you add in Whyalla, Aurora, and DP Energy, then the amount of wind and solar is likely to be at least doubled in the next five years.

And nor is the Australian Energy Market Operator overly fazed. Cautious yes, and since the blackout it has had reason for a wholesale rethink about its own practices and the way it manages the grid.

What was ignored in the blackouts (preventative action like dialling down the interconnector, putting plants on standby, reading weather reports) is now standard practice when a potential threat emerges.

And for all the hand wringing about the impact of wind and solar on the grid, AEMO says that once the potential shortfalls this summer are negotiated, it sees no major red flags on the horizon.

The report by The Australia Institute’s energy analyst Hugh Saddler, you can read it here, bears testimony to that – the state grid has been running at more than 63 per cent wind and solar in the last two months, with barely a glitch.

‘Welcome to the 21st century,’ Koutsantonis likes to say. And the state government says it will not be held back by the stalling and name-calling in Canberra, and the complete lack of any policy vision that could take advantage of Australia’s huge wind and solar resources.

Koutsantonis recently gave one of the outstanding speeches on the energy transition at a conference sponsored by what is now known as the Smart Energy Council.

We reported on some of its contents here – his take down of the Federal government’s weak-kneed and totally useless national Energy Guarantee – but the remainder of the speech is also worth noting.

In it, he pointed to the state’s troubled history, of near total reliance on local brown coal, imports, and local gas generators. It was almost entirely dependent on other states, and at the mercy of a private energy oligopoly, and dirty fossil fuels.

That’s what he wants to change. The coal is gone, and the addition of storage to the state’s huge fleet of wind farms and the highest penetration of rooftop solar will start to tip the tables against the incumbents.

He speaks of the monopoly rents extracted by the privately owned gentailers through their deliberate policy of scarcity, shutting down generation in order to increase the price of electrons.

‘It’s a deliberate policy of scarcity ….Had it not been for renewable energy providing cheap affordable power, imagine the monopoly power those companies would have now.’

Koutsantonis says South Australia recognises that the next stage is storage, and points to the government tender where the 150MW Aurora solar tower and molten salt storage project in Port Augusta beat off a host of competing gas proposals.

‘Don’t underestimate the shock waves that tender sent through the fossil fuel industry, not only in Australia but round the world,’ he said.

It was a groundbreaking contract – and ingenious; not because it suddenly lowered the cost of solar thermal technology, but because it recognised the value of storage. And by doing that, the benefits flow through to the customer, which in this case is the government.

‘Wherever you go people in industry are asking themselves: How did that solar thermal plant beat gas-fired generation in a tender for a 20-year contract?’ Koutsantonis said. ‘They did it, and they did it hands down, and they did it without subsidy.’

The idea of self sufficiency promoted by the Labor government does not mean cutting the connection to Victoria – it couldn’t manage that. But Koutsantonis is in no hurry to build a new connector to NSW, as many suggest, including the two main transmission line owners.

He wants, first, to bring more renewables into the market, initially to reduce the reliance on that connection to Victoria, and secondly to break the oligopoly of the big gen-tailers in his own state.

Once that is done, then he might support a new link to NSW – mostly to export South Australian wind and solar resources eastward, rather than the other way.

That view was supported by US-based AES Systems, one of the biggest battery storage operators in the world. Mark Leslie, its Asia-Pacific head, says storing excess wind and solar energy in South Australia makes sense.

‘We have had a very 19th Century view of how that reliability should be delivered – based around centralised generation and long power lines,’ Koutsantonis said in his speech. ‘But we will get more reliability and at a fraction of the price with solar and storage.

‘The key question is where those savings go – into the pockets of retailers and asset owners, or shared with consumers. South Australia is said to have the most expensive electricity prices in the world.

‘Whether that is true enough or not does not matter. The price of electricity in Australian cities is hugely inflated – not because of the cost of the technology, but the monopoly rents of the major players.

‘That is the fight of the 21st Century: How to share in those savings of increased behind the meter solar and storage, and more renewables. It will ultimately save our economy in unnecessary interconnection.

‘We want to stabilise our market first, start the transition and then start exporting.

‘That is our goal – we can marshal our vast resources so we can export – and we can run Olympic Dam (mine), Karapateena (mine), the Cooper Basin (oil and gas), with solar and storage resources, pumped hydro, hydrogen, and other forms of storage.

‘There are lots of opportunities. Do we keep on building billion dollar transmission lines or do we start investing behind the meter?

‘To me the answer is clear: virtual batteries where neighbourhoods can share, community grids, micro grids – this is way for the future.

‘The difficult part is how to regulate it, and distribute the benefits. It is a difficult question but we are up for it.’

Sadly, that’s not the sort of vision you hear much from other states, and particularly not the Coalition parties.

And when, unexpectedly it is – as it was by NSW energy minister Don Harwin earlier this year when he debunked the myth of baseload – there is no follow through.

Which is ironic, because NSW is potentially at a greater threat of outage this year than South Australia, precisely because it is so dependent on 20th Century technology.


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