NSW power price warn­ing

The Weekend Australian - Travel - - Resources - Keith Orchi­son

THE Iemma Gov­ern­ment has been given a warn­ing by its own elec­tric gen­er­a­tion busi­nesses that, with­out the avail­abil­ity of new baseload plant within seven years, power prices in NSW will be­gin to rise sig­nif­i­cantly.

With the state elec­tion out of the way and the in­quiry into the state’s elec­tric­ity sup­ply by Pro­fes­sor Tony Owen pro­vid­ing an av­enue for straight talk, gov­ern­ment-owned cor­po­ra­tions Delta Elec­tric­ity and Mac­quarie Gen­er­a­tion have been blunt in their ad­vice.

Delta has told the Owen in­quiry that na­tional elec­tric­ity de­mand trends in­di­cate a new baseload plant is re­quired in NSW by 2013-14.

It as­serts that sig­nif­i­cant risks and costs’’ as­so­ci­ated with a high reliance on power im­ports from other states mean that fur­ther trans­mis­sion de­vel­op­ment is not an ad­e­quate sub­sti­tute’’ for con­struct­ing new power plant within NSW. The losses as­so­ci­ated with the trans­fer of elec­tric­ity over long dis­tances can off­set any po­ten­tially cheaper fuel costs and con­trib­ute to higher over­all green­house gas emis­sions,’’ Delta claims.

At present power gen­er­ated in other states, and trans­ported via the Snowy Moun­tains and QNI in­ter­con­nec­tors, pro­vides more than 10 per cent of NSW elec­tric­ity needs an­nu­ally, ris­ing to a third of sup­ply dur­ing high peak pe­ri­ods. The com­mis­sion­ing of the link to Queens­land has given NSW cus­tomers ac­cess to more than 1000 MW of new sup­ply since 2000 and en­abled the gov­ern­ment to avoid a ma­jor row with the Green move­ment over build­ing more coal-fired power sta­tions in the state.

Delta also warns that the Gov­ern­ment should not at­tempt to get round the need to build baseload plant by re­ly­ing on peak­ing and in­ter­me­di­ate load gen­er­a­tors. Spot elec­tric­ity prices for NSW in April and May this year, it says, av­er­aged $45 per megawatt hour more than in the same pe­riod of 2006 as a re­sult of the drought’s im­pact on wa­ter sup­plies to NEM plants.

If a de­lay in hav­ing new baseload plant avail­able and con­se­quent reliance on peak­ing power led to a sim­i­lar rise in an­nual whole­sale prices, Delta says, it would push up costs to res­i­den­tial cus­tomers by about 30 per cent, an ad­di­tion of $250 a year to the av­er­age bill.

The gen­er­a­tor also points to prob-

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‘‘ lems that could oc­cur if ex­ist­ing fos­sil­fu­elled power sta­tions are re­quired to op­er­ate at a sub­stan­tially higher pro­duc­tion lev­els be­cause new baseload gen­er­a­tion is not avail­able around 2013-14. NSW plant, it says, cur­rently op­er­ates at a ca­pac­ity fac­tor of 70 per cent. To meet pro­jected de­mand this would need to rise to 83 per cent in the ab­sence of new baseload gen­er­a­tion. This is very un­likely to be re­li­able.’’ Mac­quarie Gen­er­a­tion, which is NSW’s largest power pro­ducer, sup­ply­ing 40 per cent of state needs from its Bayswa­ter/Lid­dell com­plex in the Hunter Val­ley, also warns that over­re­liance on ad­di­tional high volt­age in­ter­con­nec­tion to meet ris­ing de­mand is un­wise.’’

With new baseload plant needed be­fore 2015, it adds, and given the time­frames in­volved in plan­ning and con­struc­tion, the win­dow for de­ci­sion-mak­ing is rel­a­tively nar­row’’.

While in favour of boost­ing ex­ist­ing coal-fu­elled baseload pro­duc­tion by co-fir­ing us­ing coal seam gas, Mac­quarie has told the Owen in­quiry that there is not suf­fi­cient nat­u­ral gas or

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‘‘ pipe­line ac­cess to in­ter­state sup­plies to sus­tain ad­di­tional gas-fired baseload gen­er­a­tion. Nu­clear power is not in any way prac­ti­cal’’ in the time­frames re­quired. Wind and so­lar power are not fea­si­ble’’ for baseload gen­er­a­tion. Nor is it fea­si­ble, Mac­quarie says, to de­lay plan­ning for the next baseload plant in the hope that a tech­nol­ogy so­lu­tion with neg­li­gi­ble green­house gas emis­sions will emerge in the short term, able to de­liver elec­tric­ity at the same cost and re­li­a­bil­ity lev­els of to­day’s coal-fired power sta­tions. It es­ti­mates six to eight years will be needed to ini­ti­ate and fi­nalise the stages needed to fin­ish a ma­jor project.

Any de­ci­sion or ac­tion which de­lays the plan­ning for ma­jor new projects could re­duce sup­ply re­li­a­bil­ity and in­crease prices as short­ages emerge in the fu­ture,’’ it warns. If the new in­vest­ment is not com­pleted on time, NSW will be in­creas­ingly re­liant on in­ter-state sup­plies, in­creased out­put from older and in­her­ently less re­li­able, higher cost plant and on gas­fired peak­ing gen­er­a­tion. Busi­ness and house­holds would end up pay­ing more

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‘‘ for a less re­li­able sup­ply.’’

Both the gov­ern­ment-owned cor­po­ra­tions want to build large coal-fired ad­di­tions to baseload gen­er­a­tion, al­though Delta also of­fers three gas­fired op­tions.

Mac­quarie Gen­er­a­tion pro­poses con­struc­tion of what would be the largest gen­er­a­tion units in the coun­try — two 900 MW­tur­bines at Bayswa­ter. The largest cur­rent unit is the 750 MW plant be­ing built at Ko­gan Creek by Queens­land gov­ern­ment-owned CS En­ergy. This power sta­tion is sched­uled to be­gin op­er­a­tion in Septem­ber. The new Mac­quarie plants would emit less car­bon diox­ide than con­ven­tional coal power and would use less than 10 per cent of the wa­ter re­quired by ex­ist­ing sta­tions.

Delta Elec­tric­ity pro­poses adding two coal-fired units on its Mt Piper site, near Lith­gow, each of 750 MW. It also of­fers re­fur­bish­ment of its Mun­morah power sta­tion (a 600 MW gen­er­a­tor fed by Hunter Val­ley coal near­ing the end of its life). A third op­tion it sug­gests is de­vel­op­ment of three com­bined-cy­cle gas-fired plants.

Un­like Mac­quarie Gen­er­a­tion, Delta be­lieves con­tin­u­ing rapid ex­pan­sion of the coal seam gas in­dus­try, es­pe­cially in Queens­land, will meet the gas re­quire­ments of ex­tra power gen­er­a­tion in the medium term’’. It notes that con­struc­tion of a 780 km gas pipe­line from south-east Queens­land to New­cas­tle is cur­rently un­der con­sid­er­a­tion by private in­vestors.

While the pro­pos­als are based on cur­rent pro­jec­tions of de­mand growth from busi­ness and res­i­den­tial cus­tomers, Delta points out that they do not al­low for any de­vel­op­ment of large, new in­dus­trial loads such as an alu­minium smelter.

Both cor­po­ra­tions pitch for reliance on gov­ern­ment-owned de­vel­op­ment of the next tranche of baseload gen­er­a­tion. Delta says the prog­no­sis for private in­vest­ment in baseload gen­er­a­tion (in NSW) is un­cer­tain, with the risk that the in­vest­ment will not be timely.’’

How­ever, it also puts for­ward the con­cept of the Iemma Gov­ern­ment al­low­ing its gen­er­a­tors to em­bark on joint ven­tures with the private sec­tor.

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Ko­gan Creek: Ad­di­tonal power comes on­line in Queens­land in a few weeks

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