Hazelwood closure could open path for solar towers and storage

Hazelwood closure could open path for solar towers and storage

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The impending closure of the big Hazelwood brown coal generator in Victoria could provide the impetus for the construction of the first large scale solar tower and storage project in Australia.

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The impending closure of the big Hazelwood brown coal generator in Victoria could provide the impetus for the construction of the first large-scale solar tower and storage project in Australia.

Analysts are scrambling to identify the possible impacts of the closure of Australia’s most polluting power station, and the withdrawal of more than 1500MW of capacity from the Victorian grid.

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Some analysts, such as David Leitch, predict a jump in the average price of spot electricity. Others say that will depend on the future of the Portland smelter. Still others suggest that wind and solar, underpinned by the Victorian renewable energy target which will see around 5,400MW of new capacity built, will make up for lost output.

One interesting response came from South Australian energy minister Tom Koutsantonis, who told the local newspaper The Advertiser on Monday that the closure of Hazelwood would likely mean that the Pelican Point gas plant near Adelaide would operate as a baseload generator again.

“If Engie closes Hazelwood, market forces will compel them to turn Pelican Point on all the time. The positive outcome for us is we’ll get 500 megawatts of baseload generation here in SA,” he said.

By market forces, Koutsantonis is presumably referring to the position of Engie’s retail arm Simply Energy, and is assuming Engie will have to run Pelican Point to meet the demand needs of those customers, rather than buy power on the spot market.

But that raises another interesting issue. If the South Australian government is convinced that Pelican Point will have to run to meet the obligations of Simply Energy, then why it would need to sign up to a 10 year contract to keep the generator running, in an effort to “introduce a new competitor” to the market.

Last month, the state government said it would tender for around 360GWh of supply – to meet 75 per cent of its own electricity needs – so it could bring a “new competitor” to the market. That follows the recent price spikes in South Australia, which were greatly exacerbated by the market power of a few gas-fired generators.

Controversially, the government decreed Pelican Point to be a “new competitor”, despite the fact that it was built 17 years ago and was only fully mothballed just 10 days before the closure of the Northern brown coal power station, leaving the market in the hands of two dominant players.

But there may be another reason why signing a contract with Pelican Point might not guarantee more competition.

That is because the most likely avenue taken by Engie – should it agree to shut Hazelwood – would be to quit Australia altogether. The AFR has flagged that possibility and Leitch looked at potential valuations and buyers in an analysis here.

The most likely buyers of the plant are AGL Energy and Origin Energy. AGL would be unlikely to get approval without making some sort of commitment to close or repurpose the Torrens Island gas generator.

Either way, neither company would introduce new competition to the market, it would simply consolidate their market power, something they have not been afraid to exploit in recent weeks when the gas price surged and the interconnector was closed for repairs.

That would leave the door open to new competitors, such as the 110MW solar tower and storage plant being proposed by SolarReserve, the US company that is now operating a similar plant in Nevada, and which is the biggest in the world of its type.

It is confident it can compete on price with any new gas-fired generators, although it would struggle to match any offers for a plant that was built nearly two decades ago and which could also benefit from the additional $24 million subsidy offered by the state to release new gas reserves.

That would be a double bonus from the closure of Hazelwood, even a three-fold one.

It would provide an added incentive for Victoria to build more large-scale wind and solar, could provide South Australia with the baseload that the minister appears to be craving, and also open the door to the technology of the future, and which will be able to provide flexible generation without any carbon emissions.

Dan Spencer, campaigner with the Repower Port Augusta group which wants solar towers to replace the closed Northern power station, is pushing the case.

“The South Australian government should use its power purchase to make solar thermal in Port Augusta happen, creating on-demand clean power and a new industry for SA,” he said.

“If it’s the view of the Minister that Pelican Point will operate following the expected Hazlewood closure, it makes no sense for the government to consider Pelican Point for its power use.

“The SA government’s power purchase is one of its strongest levers to drive new renewable technologies, let’s hope they use it.”

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31 Comments
  1. Chris Fraser 4 years ago

    There’s just no underestimating Engie’s, Origin’s and AGL’s predilection for controlling the wholesale market with their damned stinkpot fossil burners. There should be legislation to insist they put at least 80% of their capex and opex into real renewables, not just emissions-reduced technologies. Left to their own devices they conspire to create renewable market failure.

    • john 4 years ago

      True one would not shoot ones foot

  2. howardpatr 4 years ago

    “The SA government’s power purchase is one of its strongest levers to drive new renewable technologies, let’s hope they use it.”

    Regrettably the greatest blockers of new renewable technologies are the LNP right wing religious conservatives aided and abetted by Malcolm Turnbull.

  3. john 4 years ago

    To replace a 1500MW power station is going to be at least 10 off 150MW solar and storage facilities or many more at say 75MW that would be 20 so there needs to be a huge implementation of this immediately.
    Wind yes can play a part but it needs to be at least 500MW with complimentary solar and storage of 750MW to take up the slack.
    Here is an opportunity to engage who will take up the challenge?
    No subsidy needed a simple supply of power to a network that needs it.

    • john 4 years ago

      Considering that the input of energy to run Solar is zero therefore the outcome is no need for increasing cost of energy a huge plus for alternate energy

    • Brian Tehan 4 years ago

      First of all 1500MW is its nameplate capacity. According to Wikipedia, its average output over a year is about half that. There’s no need to match output of Hazlewood because most of its power is surplus to requirements anyway. This is well documented. Shutting it down will also save about 25 Megalitres of water per day! Only a fraction of this would be required to use the mine and cooling ponds for pumped hydro. A pumped hydro system would encourage more wind farms, hopefully. Of course, Victoria and NSW already have the Snowy River hydro, some of which is pumped capacity.

  4. Rob G 4 years ago

    We need to thank Liberal politicians everywhere. Their now known hatred of all things renewables has given Labor controlled state governments greater urgency. The, ‘Let’s get it underway quickly, before a change of government has time to undo it.’ appears (to me) to have spurred more action. Victoria in particular appears to be making some real ground. Getting to the point of no return is fast approaching.

  5. Kenshō 4 years ago

    Where are our leaders? Maybe Jay Weatherill or Clover Moore will champion the cause of the people and fix competition in electricity markets. Perhaps there should be a Weatherill solar tower in SA and a Moore energy storage facility in Sydney. I think leaders with a solid environmental record need to be recognised. There’s been some fantastic politicians who have taken risks to their careers to step forward when renewable energy had intermittent momentum. Now we’re ready for storage!!!

    • Ren Stimpy 4 years ago

      Have we exhausted the potential for direct usage of renewable energy yet? Storage comes only after that.

      • Kenshō 4 years ago

        The problem as I see it, is price spikes in markets and raising the profile of renewable energy. It has to be sold to the voters otherwise we won’t get any really useful changes in the rules of electricity markets.

        • Ren Stimpy 4 years ago

          So your problem is a PR one rather than a technical one?

          • Kenshō 4 years ago

            Exactly. We need more support from the electorate to muscle the incumbents out of the way.

          • Ren Stimpy 4 years ago

            65% of the ‘muscle’ want renewable energy, matey.

          • Kenshō 4 years ago

            Just because a survey reveals 65% want it doesn’t necessarily mean it’s top priority when they vote. People vote for many things.

          • Ren Stimpy 4 years ago

            Thanks for that superfluous philosophy.

          • Kenshō 4 years ago

            Renewable energy has been under policy attacks as well as propaganda attacks based upon intermittency causing price spikes in SA. Soon if/when Hazelwood closes, that problem has the potential to expand to Vic and NSW.

          • Ren Stimpy 4 years ago

            No burn- no fuel energy. Get used to it. That is the future.

          • Kenshō 4 years ago

            So that’s your effort to convince everybody. Well I personally think there will need to be a shining example of a state powering along fairly happily having overcome the intermittency issue. It’s a dilemma requiring immediate physical proof to offset the knockers.

          • Ren Stimpy 4 years ago

            We’re just about there in overcoming intermittency. Give it another year. Clean energy – clean cheap reliable energy – is that what you are railing against Kensho in this period of experimentation?

          • Kenshō 4 years ago

            ATM I’m railing against your apparent positive thinking approach. I personally like to see a concrete plan to make it work. I’m not a beliefing it into reality person.

          • Ren Stimpy 4 years ago

            I’m not usually a believing it into a reality person either 🙂

          • Kenshō 4 years ago

            If there’s storage, no one will argue the lights will go out if the wind isn’t blowing and the sun isn’t shining. It makes people feel secure. Lifts the cred of renewable energy. Makes people vote better.

          • Ren Stimpy 4 years ago

            Of course there will be storage.

          • Kenshō 4 years ago

            So you know, in many different types of psychology or psychotherapy, people often have negative beliefs, in fact most people do. So part of the job of the counsellor is to uncover them. As a result of this, some people develop a position that negative “beliefs” can get in the way of creating a favourable reality and positive “beliefs” can create the favourable reality. This last crew of people, I call the “positive belief-ers”. It is prevalent though it’s an error. Thought you might be interested in superfluous philosophy.

          • Kenshō 4 years ago

            The development of humanities awareness leading to care of the planet is the number one goal. Renewable energy is a small part of environmental goals and will need voters feeling good about it and having confidence in it. So renewable energy needs an effective rollout that captures peoples hearts and allays their fears. It’s an awareness tipping point as well as a technology tipping point.

          • Ren Stimpy 4 years ago

            Humanity’s awareness of the planet is quite limited. Humanity’s awareness of their own hip pocket is vast.

            We need to win everybody over with very low cost energy. Even climate change deniers will install solar on their roofs if the pricing is very very cheap to do so. That is how we solve climate change – make the solutions cheap.

      • suthnsun 4 years ago

        Storage can also (and primarily?) supply grid services , frequency correction and demand response, far better than gas, so once we add ( by compensating properly and removing regulatory impediments) some high power and reliable storage we will likely find the grid operates much more efficiently, this will facilitate direct usage of renewables at a higher level also. The ultimate quantum of ‘storage’ required + renewables installed is likely to be far far less than the nominal gross capacity of withdrawn coal generation, even taking into account the intermittency and lower capacity factors of the renewables.

        • Kenshō 4 years ago

          Didn’t the incumbents game the market in SA based upon 30 minute intervals? If so wouldn’t 30 minutes of peak demand storage sort the drama out?

    • Chris Fraser 4 years ago

      Yes but I suspect we can’t rely on political solutions alone. We should reduce the lobbying power of incumbents to pursue unfair regulation of the market. Our energy choices, when taken in numbers, are also important.

    • Geoff 4 years ago

      Well after Jay Weatherill’s response to BP drilling in the bight on Q & A the other night and hiding behind NOPSEMA, I wouldn’t necessarily call him a leader anymore…

  6. lin 4 years ago

    Any prospect of turning Hazelwood into a pumped hydro storage, possibly with floating PV panels, solar tower, and windmills close by? They have the hole, the water, the transmission lines, wind and sun. It could also use some of the unemployed labour force closing the mine and power station would create

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