Gas, pumped hydro, coal upgrade win in Federal underwriting scheme, new coal not out of the picture

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Prime Minister Scott Morrison has unveiled a list of a dozen shortlisted project for underwriting, including one “very small” coal upgrade in New South Wales, and promised funding for a feasibility study looking into the economics of a new coal-powered plant in Queensland.

After considering 66 proposals for 29 GW of power generation, the Government has agreed to 12 projects – six renewable pumped hydro projects, five gas projects and one coal upgrade project in New South Wales proposed. It also pledged to provide $10 million over two years to identify viable locations for firm generation including coal, gas, pumped hydro, and biomass opportunities, including Collinsville and Gladstone.

“These projects include but are not limited to a new HELE coal project in Collinsville, upgrades of existing generators as well as gas and hydro projects,” Morrison said in a release.

Despite mounting evidence that wind and solar supported by batteries and pumped hydro are the lowest cost new generation and that new coal is entirely uneconomic, the government has not renounced the possibility of underwriting upgrades or construction of new dirty generators. 

“Government funding for extending the life of existing coal is at odds with the original recommendation of the Australian Competition and Consumer Commission (ACCC) and simply serves to spook private investors who have backed renewable energy and storage technology to the tune of more than $20 billion over the last year alone,” Clean Energy Council Chief Executive Kane Thornton said.

“A further feasibility study into new coal generation in Queensland is baffling, and an objective feasibility process should again confirm that a new coal plant in the state doesn’t make economic sense.”

Morrison told reports today that the shortlisted projects, which will deliver around 4,000 MW of power generation will now be examined in closer detail. Although there has been no binding commitment towards any coal project, Resources Minister Matt Canavan and former Nationals leader Barnaby Joyce have voiced their approval of the government Tuesday commitment.

Earlier this month, six Queensland Nationals demanded their leader Michael McCormack and Federal Minister of Energy Angus Taylor “take immediate action” to “underwrite new generating capacity construction for regional Queensland”, an initiative that was backed by Canavan, who noted that the best time to start building a coal-fired power station was 10 years ago, and the second best time is now.

“The chaotic and divided Morrison Government continues to show just how out of touch they are when it comes to Australia’s energy future – leaving Australians picking up the pieces with higher energy bills,” Mark Buttler, Shadow Minister for Climate Change and Energy said in a statement following the Tuesday announcement, stressing that renewable energy is the cheapest form of new energy.

12 projects

There are six pumped hydro projects on the government’s shortlist including three South Australian projects and the Tasmanian Battery of the Nation project, which previously emerged as an early winner of the Underwriting New Generation Investment Program when PM Morrison promised to allocate $30 million for Hydro Tasmania to narrow the number of potential sites for the interconnector from 14 down to three.

“Pumped hydro is one of the lowest cost and most flexible forms of new clean generation which can underpin renewable energy. The shortlisting of half a dozen pumped hydro projects is welcome and appropriate in this context,” said Thorton of the CEC.

According to a new study released yesterday by the Australian National University, a series of pumped storage projects currently in the pipeline across five states could triple Australia’s electricity storage capacity, and pave the way for more solar and wind. If all 20 projects at various stages of development would go ahead, Australia will be well on track to have a national grid that could rely almost entirely on renewables, the study finds.

In his press release, the prime minister said the program has been “fuel agnostic”, and that the emissions intensity of individual projects was considered when finalizing the shortlist.

“The weighted (by capacity) emissions profile of the shortlist is around 0.27t CO2-e per MWh, compared to the 2018 NEM average of 0.82 t CO2-e per Mwh. This is around one third the emissions intensity of the National Electricity Market and reflects the significant new pumped hydro and low emissions gas projects in the shortlist,” the statement reads.

However, the government will also examine five gas projects in: East Gippsland and Dandenong in Victoria, Reese Plains in South Australia, Port Kembla in NSW, and Gatton in Queensland, as well as a Delta coal power station upgrade at Lake Macquarie, which Morrison has described as “very small”.

The coal project proponent is coal baron Travor St Baker, who is also the proponent of a pumped hydro project in South Australia which is on the list.