Back to black? Australian industry prepares for possible summer power cuts

MELBOURNE/ SYDNEY: Some of Australia’s biggest power users, including mining giant BHP, are taking steps to curb the impact of any repeat of crippling blackouts that hit last summer, worried about a grid that increasingly relies on wind power and old coal-fired plants.

Their back-up strategies come despite assurances from the nation’s energy market operator that it has lined up enough power reserves – including the world’s biggest lithium ion battery, set up by Tesla Inc – to get through all but the most unexpected conditions.

Australia’s summer, which starts on Friday, is forecast to be hotter-than-normal in the nation’s southeast, already helping double wholesale power prices in the wind- dependent state of South Australia to almost A$ 170 ( US$ 129) per megawatt hour ( MWh).

That raises the spectre of a repeat of outages that hit South Australia and New South Wales last February if households crank up air conditioners at the same time as the wind dies down or extreme heat knocks out an ageing coal-fired plant.

The threat has prompted top global miner BHP Billiton to install 30 megawatts of diesel generation at its Olympic Dam copper mine in South Australia, which was forced to close for two weeks last year after a statewide blackout that cost it US$105 million.

“That doesn’t give us the ability to operate at normal levels. It’s really just insurance to prevent any asset damage,” Olympic Dam president Jacqui McGill told reporters this week.

Meanwhile, Alcoa Inc, which runs the Portland aluminium smelter in Victoria, is taking a different tack, offering to curb its power use for a fee for up to an hour during peak- demand, said spokeswoman Jodie Read.

The company’s Port land smelter has recently returned to operating at about 300,000 tonnes a year since suffering a near-fatal power failure.

Elsewhere, the Tomago aluminium smelter in New South Wales would be vulnerable if it faced a prolonged heat wave at the same time as Victoria and South Australia.

“If the power goes off for any more than three hours, our potlines will freeze and they cannot be unfrozen. It’s a catastrophic loss,” said Matthew Howel l, chief executive of Tomago Aluminium, owned by Rio Tinto, CSR and Norsk Hydro. — Reuters