Australia's Looming Power Crisis  

Robert Gottliebsen has a thought provoking, albeit slightly confused, article in the Business Spectator, arguing Australia (like Britain) faces a crisis in power generation capacity in the coming years ("Our power vacuum") and that action needs to be taken if the looming supply gap is to be filled by private investment rather than a rushed program of government built power stations when blackouts become more frequent (given the enormous prices rises forecast for power in NSW over the next 3 years we seem to be seeing the impact of this already).

Australians expect their governments to provide them with reliable electricity and if, or when, that doesn’t happen, community anger will be white hot. With the exception of a period in Perth, for the past few decades – except in extreme weather conditions – power has been reliable. But unless we take action now Australia is about to enter an era where electricity supply will be much less reliable. We have received an alert from the UK where, like Australia, the country moved away from the traditional model of one government supplier. ...

It takes about four to five years to put together a major power project, we must make decisions fairly quickly. The biggest problem is in Victoria. In the 2009/10 summer, Melbourne had only one very hot day and that took place in January when industry was shut and many people were on holiday.

Had Melbourne experienced a hot January/February, black outs would have been widespread and Premier John Brumby would have copped the blame – possibly leading to his electoral defeat later this year. Yet Brumby is fully aware of the problem but can’t act to solve it because of the buffoons in Canberra. Australia not only needs more baseload power, but also needs to reduce its dependence on coal, particularly brown coal. Renewables are important, but they can't fill the gap. Gas, or nuclear, is essential.

Robert's conclusion is confusing for a number of reasons - nuclear power simply isn't an option on any level (it's too expensive compared to the alternatives, could never be built in time to avert a 2015 crisis in any case and would meet intractable public opposition) and thus could be discounted without further thought.

While gas could be used to avert any potential failure to meet future demand (as I've noted before, if you take natural gas, coal seam gas, biogas and unconventional gas into account, we could generate all our power from gas and still be chugging along happily - discounting all the carbon emissions - for more than a century) its hardly the cleanest option and keeps us locked into an extract and pollute model of power generation.

While Robert glibly dismisses renewables without explanation, these are clearly the best option for shifting Australia onto a sustainable, carbon free power generation model - and are eminently suitable for meeting the near term challenge of growing peak consumption on hot summer afternoons in the major east coast capitals.

Looking at the available options:

- wind power available from the South Australian coast is often strong when days are hottest in Melbourne and Sydney (as the southerly change approaches)

- solar PV can be deployed locally within the big cities and follows load on hot summer days

- solar thermal power can be built in northern Victoria and Western NSW, which will also have maximum production on hot summer afternoons

- solar thermal power could also be combined with gas, as is being proposed for some new Queensland power stations to provide "baseload" power if combining energy storage proves too expensive for the time being

- solar thermal power can be built out in small units (and on brownfield sites close to cities, eliminating transmission costs) which requires smaller amounts of capital

- home insulation projects implemented as part of the stimulus package should decrease summer power demand (as should solar hot water programs) regardless of all the bad press the program received

- geothermal power could be pursued more vigorously (as could tidal power in bass strait, as the British are looking to do in Scotland)

- smart meters / smart grids can be used to manage demand without the need for blackouts / brownouts (and are something we need to accelerate the implementation of regardless)

Robert goes on to note that creating a price for carbon emissions would annoy foreign investors in Victorian brown coal fired power stations:

The emissions trading scheme legislation would have had the effect of destroying the Australian equity of major global power generating companies (led by China Light & Power). If their capital was destroyed by government action, there is no way those global generating companies would fund new developments in Australia given the attractive proposals being offered to them by India and China.

Our local power generating groups like Origin and AGL do not have the capital for extensive investments and even if they could raise the equity funds, banks would not lend the enormous sums required to a few groups.

In response to this it would be tempting to ask who cares about foreign investors in the dirtiest form of power generation - global warming science was already on their radar when they bought these assets so they need to be prepared to take a loss for ignoring it - and they will invest whenever they see an opportunity to profit, regardless of past mistakes.