Renewable energy and the battle to save Whyalla

An unlikely marriage between a UK steel baron and an Australian economist may be a turning point in Australia’s crippling energy wars

Whyalla township, steel mill and port. PHOTO Whyalla News

Whyalla township, steel mill and port. PHOTO Whyalla News

South Australia has always been our nation’s odd one out, ever since its first European settlement was founded on a no-convict principle. No other Australian colony was allowed that option.

True to its tradition of being different South Australia has now positioned itself as a leader in the struggle for clean energy – around half its electricity is now sourced from wind and solar – and a prime target in Australia’s crippling energy wars.

The state didn’t choose to be the butt of heavy Turnbull government criticism for its rapid renewable roll-out. But it seems to revel in the reputation of being at the leading edge of clean energy implementation, not just here but globally.

Tasmania remains the stand-out clean energy state, but except for a few recent wind-farms that reputation rests on a hydro system built last century. By contrast, South Australia’s wind-and-solar revolution is very much a 21st century phenomenon.

Last week, that revolution got a huge shot of adrenalin from a UK billionaire named Sanjeev Gupta. Weeks after formally taking over a distressed iron and steel business based at Whyalla, Gupta announced that he was a majority shareholder in Adelaide-based Zen Energy.

Sharing the stage with Gupta on that day was Zen Energy chairman Ross Garnaut, economics professor, Hawke government adviser, once an ambassador to China and author of a multi-year study that formed the basis of climate policies under Kevin Rudd and Julia Gillard.

There’s a practical side to Garnaut the academic. Having talked and written about clean energy for years, he’s putting effort and money into seeing what will work.

Garnaut’s past political connections and his climate work made him a polarising figure in this space well before he took up with Zen. His participation in a South Australian renewable energy business, given a shot in the arm by the Gupta deal, will do nothing to dispel that.

But what makes this deal really special is Sanjeev Gupta and what he brings to a renewables sector with a reputation, deserved or not, for lacking corporate and industrial muscle.

Former PM Tony Abbott told Radio 2GB last week that heavy industries needed coal or gas power. “You can’t run a steel plant on renewables,” he said. Gupta begs to differ.

Gupta built his fortune as a commodity trader under the name Liberty House, starting while he was still a student at Cambridge University in the early 1990s. He built a reputation for taking over distressed manufacturers, including his purchase of a steel mill in Newport, Wales, in 2013.

His approach to the Newport workforce was unexpected. Instead of sacking workers he employed a handful full-time as caretakers while all others he retained on half-pay, allowing them to take other jobs if they wished until renovations were completed.

That generosity won him the admiration and support of his workforce and their unions, a rare, even priceless asset for any new business, especially in traditional heavy industry. It was a tactic he has adopted again and again in multiple metal industry takeovers in the UK.

At Whyalla Gupta saw “a committed town, people who were not willing to give up… willing to make sacrifices”. In return for the new regime retaining all the remaining Whyalla workforce, workers have agreed to take a 10 per cent pay cut.

Gupta doesn’t seem to have heard the mantra that heavy industry and renewable energy don’t mix. He is steadily moving all his UK metal businesses into various renewable energy mixes including hydro, wind, solar, tidal and biodiesel using advanced demand management technology.

He is setting aside $1 billion to spend on infrastructure at the Whyalla mill and port and, importantly, its township and community. He will act as CEO during a 100-day analysis of the plant’s technology and efficiency.

Energy will be front and centre of that analysis. Garnaut, whose Zen team has spent years working on Whyalla’s energy needs, gave an interview last week on ABC radio in which he identified primary energy sources as wind and solar, both in plentiful supply at Whyalla.

As Coalition MPs keep reminding us, there are periods when wind and solar don’t contribute energy, and that means energy storage is critical at Whyalla. Zen’s battery expertise will be utilised, but the company is focusing on two other storage options.

One is pumped hydro. Excess wind and solar power will drive pumps to raise water from a disused open-cut pit in the iron-rich ranges behind Whyalla, up to a newly constructed dam where the water will drive hydro turbines when there’s no sun or wind.

Another option mentioned by Garnaut last week was cogeneration, by which electricity is produced from the Whyalla plant’s waste heat, gas and other materials. Cogeneration is well understood in the UK, where Gupta’s steel mills have made it a prominent part of their energy strategies.

Australian electricity today is the world’s most expensive, but for most of our history it’s been exceptionally cheap, and for that reason, says Garnaut, we’ve developed wasteful habits. Gupta and Garnaut aim to turn that around at Whyalla.

The Whyalla story will be fascinating to watch as it unfolds, given Gupta’s financial strength, Garnaut’s economic knowledge and Zen’s long-term work at Whyalla, all convinced that renewable power can drive heavy industry.

Nothing at the cutting-edge is ever smooth sailing, but this unlikely combination of steel baron and climate economist might just come up trumps. And if it turns out that Whyalla can manage without fossil fuels, why not the rest of us?

Posted in Australian politics, batteries, biomass energy, carbon, carbon emissions and targets, climate politics, coal-fired, energy, energy conservation, energy efficiency, energy research, fossil fuels, hydro, investment, leadership, mining, workplace issues | Leave a comment

Malcolm Turnbull’s latest pulp fiction

The PM’s take on Australia’s energy management just doesn’t stack up.

Liddell (right) and Bayswater power stations, near Muswellbrook in the Hunter Valley. PHOTO The Australian

Liddell (right) and Bayswater power stations, near Muswellbrook in the Hunter Valley. PHOTO The Australian

We all carry with us a narrative that gives shape to our lives. From time to time we might adjust our story to meet changing circumstances, but no-one does it like Malcolm Turnbull

The narrative he took on in opposition was about being a champion of strong climate action. When he toppled Tony Abbott as prime minister in 2015 he dropped that in favour of innovation. Two years on, he now has another story. It goes something like this:

“All the problems we face in the energy market today are the fault of my political opponents. In their zeal to convert us to renewables they forgot about keeping lights on and power prices down.

“Blackout Bill and various incompetent colleagues in South Australia and Victoria are entirely to blame. Their ambitious targets for windmills and solar panels caused coal power stations to shut down, while they locked up gas supply in foreign contracts and blocked new gas exploration.

“Coal used to be a problem because of climate change, but my government’s climate target has all that sorted. Coal is now fine, as are the old power stations that rely on it, which must be kept running at whatever cost. Emissions are of no consequence.

“My government’s innovation credentials were on show in March and April this year when I announced plans in the Snowy Mountains and then in Tasmania to pump water uphill so it can make more renewable electricity.”

A little incoherent, but that’s as near as I can get to Malcolm Turnbull’s story today.

The story has a small cheer squad within the Coalition, but most Australians seem to think it doesn’t stack up. Those to Turnbull’s right think it doesn’t do justice to coal. The rest of the country says it’s self-serving, technically flawed, anti-business, wrong and/or just plain dumb.

The rest of the country is right, and here’s why.

The Rudd-Gillard Labor governments made mistakes in their oversight of the National Electricity Market, but they were not alone. They were part of a long, sorry saga of mismanagement that goes back decades and includes the four years of Abbott and Turnbull governments.

The sale of energy utilities to private companies from the 1990s was done with reckless neglect of the need for close regulation of this strategically-vital industry – a failure both of the states involved and of successive national governments, including Turnbull’s.

Since the NEM was set up in 1998, the Australian Energy Market Operator has papered over cracks but failed to deal with inherent weaknesses.

Apart from the fact that it excludes Western Australia and the Northern Territory, the NEM is not really a national grid at all, but a cobbled-together patchwork of previously-separate state power systems linked by a few interconnectors over state borders and under Bass Strait.

Poor interstate connection became critical a year ago when a huge windstorm took out long stretches of South Australia’s transmission system and a Victorian interconnector failed. Reviews have found that consumers also suffered from gas-power spikes driven by market manipulation.

In blaming South Australia’s many intermittent wind and solar generators for the state’s blackouts, the Turnbull government skated over the whole point of the NEM – a grid sufficiently large and connected to iron out uneven supply by moving power across borders when needed.

It also blamed renewables, especially wind, for high power prices, but as ANU energy analyst Hugh Saddler has pointed out, wholesale prices turn out to be consistently lower during high wind generation. The dominant price factor today, he finds, is the high wholesale cost of gas.

Which brings us to coal. Like gas and hydro, coal provides baseload power because it can be used economically to meet a minimum continuous demand. Unlike gas or hydro it is not readily dispatchable to meet peak demand because it takes hours to get a coal-fired turbine up and running.

The new Turnbull coal thesis falls at another hurdle – hard-nosed business. “We can’t allow this to happen” was his response to AGL’s plan to close a Hunter Valley power station, Liddell, in 2022.

The AGL timetable can’t have been a surprise to the PM. Now 46 years old, Liddell rarely operates at full capacity, and last summer two of its four turbines failed during a heatwave in NSW. AGL had earlier plans to close it this year, but in 2015 pushed this out five years, to 2022.

The cost to AGL of keeping it open for yet another five years, as Turnbull is asking, could be huge. The WA government spent over $300 million on refurbishing a smaller station of similar age only to see it limp along at just 20 per cent of its original capacity. The station was closed last week.

As for pumped hydro, although not in itself renewable it could work if driven by wind or solar power. But there are legitimate questions about financial and environmental cost, as Chris Harries outlined in the Tasmanian Times last week.

There are questions, too, over its use in tandem with coal-fired power, which would pump water uphill and in return draw on hydro for peak demand. Its principal role as conceived by Malcolm Turnbull is likely to be to enable coal to stay in the energy mix. Hardly an innovative solution.

Finally, the matter of emissions. Turnbull says with a straight face that we are meeting our targets, but avoids any detail. Hugh Saddler’s quarterly reports tell us that actual coal emissions had been rising until held in check this year after the closure of Hazelwood brown coal power station.

My take on the 2017 edition of Malcolm Turnbull’s story? Pulp fiction.

Posted in Australian politics, carbon emissions and targets, climate politics, coal-fired, electricity networks, energy, fossil fuels, gas-fired, hydro, solar, wind | Leave a comment

Going where governments fear to tread

Party politics is making it impossible to get traction on climate policy at higher levels of government, but others are stepping up.

Tasmanian energy policy and sustainability go hand-in-hand. IMAGE Tasmania_From_Space/Sustainable Living Tasmania

Tasmanian energy policy and sustainability go hand-in-hand. IMAGE Tasmania_From_Space/Sustainable Living Tasmania

The modest attendance at a Hobart Town Hall event last week belied the significance of the occasion: the launch of a major new community bulk-buying program for energy-efficient products and services.

Residents in all southern Tasmanian municipalities – Derwent Valley to Glamorgan-Spring Bay, Central Highlands to Huon Valley – are now eligible to join a bulk-buy of heat pumps, insulation, low-wattage lighting, rooftop solar panels and energy-efficient hot water systems.

With bulk buying’s economies of scale combined with the state government’s $10 million Tasmanian Energy Efficiency Loan Scheme (TEELS), announced earlier this year, this is an unprecedented offer to households and businesses to join the battle for a more sustainable future.

Ahead of last week’s launch the authority’s chair, Hobart Lord Mayor Sue Hickey, said it aimed to make emission reduction cheaper and easier. “We wanted to help home-owners reduce their energy use and we knew if enough homes did this there would be a big sustainability benefit,” she said.

Bulk buying was behind an earlier arrangement between Sustainable Living Tasmania (SLT) and Tasmania’s venerable No-Interest Loans Scheme, or NILS, adding bulk-buying advantages to NILS subsidies enabling households to buy and install energy-saving hot water and space heating.

Now the idea has returned bigger and better than ever. Home Energy Bulk Buy is a partnership between SLT and the Southern Tasmanian Councils Authority, representing local government across all of southern Tasmania.

SLT executive officer Todd Houstein is enthusiastic about its prospects given the large range of products and services on offer and the many organisations behind it.

We shouldn’t overstate the impact of such initiatives on fossil-fuel emissions. Most Tasmanian home energy is generated by renewable hydro power, so home energy efficiency has little direct effect on emissions here compared to states where energy comes mainly from coal.

But councils are right to highlight the need to cut emissions. Being energy-conscious is an essential step on the way to becoming more sustainable, and efficient use of energy, no matter how it is generated, strengthens this mindset.

When energy minister Matthew Groom announced the TEELS initiative in May he could have mentioned climate change in these terms, or just the important underlying issue of developing community resilience. Instead he focused solely on enabling Tasmanians to save money.

Both Groom and his leader, Will Hodgman, have reason to be proud of the scheme, and previously declared a firm position that we need to act on climate change. But they keep playing it down because at higher levels of government partisanship has made climate change hard to talk about.

But with party politics largely absent from the local scene in Tasmania it’s possible to set ideology aside and just get on with smaller-scale, practical steps to improve both energy use and emissions.

Some cities have gone for ambitious targets, but Katrina Graham, Hobart’s environment and climate change officer, highlights the city’s incremental approach, steadily ticking off on practical steps like improving buildings’ energy performance and generating energy from landfill.

That said, there’s no substitute for the heavy-lifting capacity of higher levels of government. Building codes are mostly determined at state and national levels. Tasmanian local authorities don’t run major energy infrastructure and can do little about transport, the state’s main carbon polluter.

Federal government cuts to grants for voluntary environmental organisations two decades ago had a devastating impact on groups such as Sustainable Living Tasmania, which suddenly had to put a huge effort into funding its basic running costs.

With further federal and state funding cuts since then, a dedicated supporter base and a lot of hard work by staff and volunteers have kept SLT afloat, enabling it to continue its basic advocacy and information work while also winning support for programs like home energy audits.

These grass-roots organisations exist because of basic needs in local communities. Their work in the public interest would otherwise fall to government, at much greater public cost.

So we have to ask why they have found it so tough, over so many years, to have their contribution recognised and supported by government. The answer is to be found in party politics.

Sustainable Living Tasmania, the Environmental Defender’s Office and some other similar bodies that have suffered funding losses want their community to be conscious of natural values and to make an effort to minimise their environmental impact.

In the case of SLT and its municipal partners in the bulk-buying deal, that plays out in making it easier for people to board the sustainability train by subsidising the cost of home and business improvements that in the long run will enhance the bottom line.

There’s nothing inherently political in this. It’s what any good citizen would want to see happen.

But politics is about taking sides. The Greens set themselves up as the party for the environment, so their political opponents have chosen to align environmental organisations with the Greens – even when there is no connection between the two. The inevitable victim is good public policy.

FOR INFORMATION on the home energy bulk buy scheme, see here. On the Tasmanian Energy Efficiency Loans Scheme, here.

Posted in Adaptation, Australian politics, built environment, carbon emissions and targets, cars, climate politics, climate system, community action, energy, energy conservation, energy efficiency, environmental degradation, fossil fuels, leadership, local economy, local government, planning, social and personal issues, social mindsets, Sustainable Living Tasmania, Tasmanian politics, transport | Tagged , , , , , , , , | Leave a comment