Miners to Dictate Renewable Energy Supply Lines

The Queensland Government has left it up to big energy users, mainly miners, to dictate the energy supply for the North West Queensland Minerals Province, other local industries and communities for decades to come, including building a link from Townsville to Mount Isa to connect renewable energy projects such as wind and solar to the grid.

Kerrie Sinclair  in The Courier-Mail (25 April 2010):

THE State Government has left up to big energy users, mainly miners, a decision that will dictate the energy supply for the North West Queensland Minerals Province, other local industries and communities for decades to come.

The Mount Isa region lacks a national grid link. State-owned CS Energy owns the only large power source, the ageing 325-megawatt gas-fired Mica Creek plant that needs new capacity to feed any further regional growth.

Xstrata, the Swiss miner that is the world’s biggest exporter of coal for power stations, BHP Billiton and Incitec Pivot are among the companies to decide between four options: build power lines to central Queensland to tap the mainly coal-fired national grid; build a link from Townsville to Mount Isa to connect renewable energy projects such as wind and solar to the grid; expand Mica Creek; or rely on self-supply, mainly from diesel-powered generators.

McKinlay Shire Council mayor Paul Woodhouse says: “The major energy users have been asked to make the decision.

“I’m hoping that for everyone’s sake they make a choice that works long term, not just short term.”

Suppliers are vying for customer commitments. If there is no supply agreement by December 2010, the Government may step in.

Exposure to rising long-term gas prices is a concern for local councils and the big energy users, while a carbon tax would push up diesel costs.

Local councils favour a Mount Isa-Townsville link as it would kick-start a fleet of renewable power plants with little or no carbon emissions with Mica Creek as their back-up.

Councils say this “clean energy corridor” would help lower north Queensland’s energy costs by reducing gas-price exposure and slashing losses from transporting energy over long distances.

But a BIS Shrapnel study, funded by a regional development body and the Queensland Resources Council, identifies a chicken and egg problem for the clean energy link.

It says enough generation capacity to make the link cost-competitive from the outset isn’t likely until 2015-16 – two years after the link must be commissioned.

“There is a risk the major users will dismiss the clean energy corridor … However, by 2020, north Queensland could become an exporter of energy to central Queensland, which would reduce the cost of electricity to the northwest and to the major users, the mines,” BIS Shrapnel says.

Mayor Woodhouse says: “Gas and coal prices are only heading higher.

“Australia’s electricity prices are determined by gas demand, which is determined by the major energy-consuming nations like China, so we’re stuck in a wheel we don’t deserve to be in.

“All we can do as a shire council is move to circumvent that wheel by demonstrating and introducing on-property and local clean power sources, perhaps following the German example in use of solar power.

“In 10 years or less, we could provide our excess of clean power into the national electricity market.”

BIS Shrapnel says if the transmission line is built, it could catalyse enough local clean energy to meet up to a fifth of the Federal Government’s target for 20 per cent of Australia’s power to come from renewable energy by 2020.

It says renewable energy costs are expected to eventually equal or undercut conventional gas and coal, and solar and geothermal costs are widely tipped to undercut or equal “clean coal” plants.

It says research shows renewable energy generation creates more jobs per energy unit than all conventional fossil fuel-based sectors.

“If this solution isn’t chosen, it’ll clearly cut out the possibility of renewable generation occurring and that would be quite sad because that opportunity won’t present itself again probably for at least 20 years,” says Glenn Graham, executive director of regional economic development body the Mount Isa to Townsville Economic Development Zone (MITEZ).

Scientists say annual global carbon emissions – mainly from extracting and burning coal, oil and gas – must peak about 2015 then start to fall away fast to give a decent chance of keeping average temperature and sea-level rises manageable for most countries.

Queensland’s reliance on coal for power and extraction for export make it one of the world’s biggest per-person carbon emitters.

Over half of Xstrata’s global annual carbon emissions come from its Australian operations.

Xstrata says renewable energy “is one option under consideration for the region” and it is working with proponents of the various options as they embark on feasibility studies.

“We know this region … also has huge potential in terms of renewable energy sources, such as wind, solar and geothermal. There is a great opportunity in progressing the long-term solution to leverage mineral and renewable resources,” a spokesman says.

By 2015-16, there is potential for 900MW of installed renewable capacity to be grid-connected via the transmission link, with 300MW of baseload power from a biomass and solar thermal plant proposed by Korean firm Samsung at Pentland and another 600MW from a windfarm proposed at Hughenden by Australia’s Windlab Systems.

Source: www.couriermail.com.au