South Australia
Most of South Australia’s electricity generation capacity is based in the south of the state, near Adelaide. There, gas-fired power plants satisfy most demand and also help offset growing amounts of wind power, the highest percentage in the nation.
But at the northern tip of the Upper Spencer Gulf, just south of Port Augusta,
two relic coal-fired power plants cling to life. They produce power the dirtiest
way possible. The two culprits are the 520MW Northern and the 240MW Playford.
Both of these plants brown coal, emitting roughly 1.5 tonnes of greenhouse
gas per megawatthour. That ranks them among the dirtiest in the world, and
the most expensive to operate on any carbon-adjusted basis. The Playford, built in 1960, is the oldest coal-fired power plant in Australia.
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The Northern and Playford are
two of the nation's dirtiest coal fired power plants |
Source: "Greenhouse
Gas Issues Within Australia's Electricity Industry," Institute of Actuaries of Australia, 2003 |
Both the Northern and the Playford must be retired, and the sooner the better. Apart from the punitive economics carbon pricing will place on them, their brown coal supplies from Leigh Creek are expected to dry up within 15 years.
In mid July 2006, Adelaide Thinker in Residence Stephen Schneider, a Stanford University climatologist, suggested making a virtue of necessity. He suggested northern South Australia become a showcase of renewable energy: solar and geothermal. The high capacity power lines connecting Port Augusta to Olympic Dam and to Leigh Creek pass through some of the nation's most promising areas for generating concentrating solar power and geothermal. By adding large amounts of renewable solar and geothermal to its existing portfolio of wind power, South Australia could meet its ambitious greenhouse gas reduction targets.
And if such a conversion to renewable energy were made quickly in order to conserve and extend the Leigh Creek coal supplies, it would be even better for the state. The reason is that the Northern and Playford, instead of being taken completely offline, could be used to provide peaking power. Yes, it would be dirty peaking power. But it would be peaking power nonetheless. South Australia -- as well as the nation as a whole -- has a strong need for peaking power. The Northern, Playford and other "well-past-their-use-by dates" coal-fired power plants could provide this power as an insurance policy as they are progressively taken offline and replaced with cleaner capacity.
Intriguingly, this could even end up making more money for the coal-fired plants than they make now. The reason is that their costs would be cut (through more infrequent operation) at the same time as their revenue per kilowatthour produced skyrockets because peaking power prices are multiples of base load power. The chart below left shows that South Australia has the nation's highest ratio of peak to average electricity demand. A mere two percent of the annual half-hour spot market periods in the National Electricity Market yields 15% of the revenue. By using aging power plants for high-priced peaking, it would pay to keep them on line until the national electricity generation system can completely switch over to cleaner sources of energy.
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| South Australia has the nation's most volatile electricity prices as measured by the ratio of peak to average demand | The very high electricity prices than can be reached
during peak power represent a disproportionate amount of market value. Reducing these peaks would reduce power costs across the board. |
| Source: "A Transmission Network to Power South Australia," ElectraNet SA, 2002 | Source: "Securing Australia's Energy Future," Office of Prime Minister
and Cabinet,2004 |
South Australia has huge amounts of wind, solar and geothermal waiting to be exploited. If Australia has to the potential to be an energy superpower, South Australia has the potential become its premier energy sultanate. And it can do this merely by following the advice of its own one-time Adelaide Thinker in Residence, Stephen Schneider. In his 2006 report to Mike Rann, Prof. Schneider recommended the below.
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| Power parks could create a second life for regional areas with declining fossil fuel industries |
| Source: Climate Change and Opportunities, Stephen Schneider |
For its part, the electricity needs of Olympic Dam represents the perfect test case of Premier Rann's seriousness about greenery. That's because the Olympic Dam mine already consumes a sizeable portion of the state's electricity, and Olympic Dam's electricity needs are expected to quadruple due to its expansion. As has been outlined earlier in this report, this represents an ideal opportunity to make Olympic Dam and nearby Moomba the center of a national energy network.
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The power needs of Olympic Dam are huge |
| Source: "Annual Planning Report 2006," ETSA |
This network could include solar from the Outback, wind from the Nullarbor, nuclear from the Woomera Prohibited Area and hydrogen made from nuclear energy, renewables and natural gas in a fully flexible fashion that ensures that the market picks the long-term winner.
This kind of strategy also ensures that South Australia benefits from more capture of the value-creation process, now subject of a verbal tussle between Mike Rann and BHP.
If South Australia presses its advantage in wind, solar, nuclear energy and gas -- it could become rich indeed.
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