Ladies and gentlemen,
Welcome to the inaugural edition of EnergyLink Services’ fortnightly news wrap up!
At the end of every fortnight, we will be publishing a collection of interesting and topical articles that we believe are a great read for those both inside and outside of the energy space. For more on who we are, you can check out our website.
Jumping straight into the news and what a fortnight it has been! I think it’s fair to say just about every commentator did not predict the election would go the way it did, which just goes to show there’s no such things as a ‘sure thing’. In the energy space, there has been a flurry of activity across the space after the election, I have included 7 articles this fortnight for your reading:
An interesting development in NSW with Infigen, one of the earlier renewable project developers in Australia. They primarily deal in wind farms but have increasingly been looking to contract the commercial and industrial sector, so this acquisition should allow them to provide ‘firm’ power to that sector. Note ‘firm’ power is the ability to provide power at all times (from either wind or gas). They estimate this will only add an additional $9 - 12 per MWh and would enable pricing below the going rate for firm renewable contracts.
The proposed Adani coal mine was one of the lightning rod issues for the federal election, with questions flying around about the approvals process and Government commitment to the mine. One of the more neglected issues was the actual financials of the mine (and required infrastructure) itself. This back of the envelope from Bloomberg paints a pretty damning assessment of the mine, and Adani’s ability to fund it by issuing debt. In short, Bloomberg estimates to produce one tonne of coal would cost $US 88 per tonne and sell for $US 66 per tonne, which would explain why no financial institutions want to go anywhere near it.
A bold claim coming in from one of the guru’s of the corporate renewable energy power purchase agreements, Jonathan Prendergast. His analysis indicates that with the renewable energy projects currently under construction in Victoria, the focus needs to shift on grid connected storage, otherwise there is a significant amount of excess electricity that will be wasted. He has focused on batteries as they take far less time to build (think the Tesla big battery completed in under a year) compared to pumped hydro stations or transmission links to other states. His conclusion is expansion of the storage capabilities in Victoria would help maximise the value of existing renewable energy assets and help reduce the impact of, and accelerate the pace of coal fired power station closure.
The recently elected Coalition has doubled down on calls for a new coal fired power station in Northern Queensland. I will be amazed if this gets off the ground with significant tax payer support for a number of reasons. Queensland has one of the youngest and more efficient coal fleets in Australia, so will be the last state to experience coal power station closures as they reach the end of their life. Secondly, the Queensland state government has a 50% renewable energy target, and considering they still own the electricity infrastructure, it is hard to see them agreeing to a coal fired power station. Finally, and I cannot stress this point enough, it is not the cheapest form of electricity, not even close. This figure clearly shows there are significantly lower cost options and this was reaffirmed by the decision of Sun Metal’s Townsville solar project, which provides approximately a third of their electricity needs and was used to underpin an expansion of their refinery.
A preliminary assessment of Australia’s greenhouse gas emissions for 2018 by the United Nations were released this week, and no surprise - Australia’s emissions have gone up once again. The wait for any meaningful action in this space continues, and will once again fall to industry to lead without a policy direction.
Time for some good news, there has been a landmark rule change put in motion that would allow stand alone power systems to replace poles and wires for those individuals and communities who are at the fringes of the electricity grid. This is a huge shift, and is truly a win-win scenario, with users at the end of the grids getting more reliable power supply, and all electricity users benefiting from the cost savings associated with no longer maintaining and repairing long electricity lines that serve a small number of people. There Is still some work to do in this area before the rule changes formally come into action but the cost savings are substantial and I suspect it’s a mere formality.
A victory for common sense in this case as the recently introduced rules that solar panels could only be handled (not actually connecting them to any electrical infrastructure) by a licenced electrician were struck down by the Supreme Court in Queensland. This new rule would have had a significant impact on the cost of delivering solar projects, and no doubt all EPC’s currently working on solar projects in Queensland are breathing a huge sigh of relief.