Part 4: NSW between a lump of coal and a hard place

From the October edition of pv magazine

“I’m thrilled to see around 490,000 New South Wales households and small businesses have installed small-scale solar,” said the State Minister for Energy and Environment, Matthew Kean.

Later this year, the New South Wales government’s Empowering Homes Program will open for applications, although Kean was unable to give the program’s start date. Empowering Homes will provide interest-free loans of up to AUD 9,000 ($6,065) for a battery system, or up to AUD 14,000 for a solar-battery system, to up to 300,000 eligible state residents over the next 10 years. Its partial aim is to unlock around AUD 3.2 billion in clean-energy investment.

A side hustle of the program is to enable distributed energy resources (DER) that support the electricity grid to benefit all of the state’s electricity users – not just solar-empowered homes. “Virtual power plant technologies will give us an opportunity to do just that,” Kean says. “I want to see them rolled out across the state.”

The biggest barrier to orchestrating the potentially enormous renewable-energy flows within and through the New South Wales energy system is – as elsewhere in Australia – the National Energy Market (NEM) transmission system, which is not built for the renewable age.

NSW’s big picture

New South Wales is the most power-hungry consumer in the NEM, claiming 25.2% of the overall energy pot – just ahead of Queensland, at 24.9%. Situated at the grid’s geographical center, it shares borders with Queensland, South Australia and Victoria, which offers great potential for the state to share resources across different time zones and weather regions.

Despite renewable electricity generation having increased Australia-wide by 25% in the calendar year 2017-18, the Australian Energy Update, released in September, shows that New South Wales still relies on coal-fired generation for more than 75% of its electricity, with renewables accounting for around 10%.

This stands in stark counterpoint to the state government’s stated goal of achieving net-zero emissions from electricity generation by 2050. As the only state among its neighbors without a renewable energy target, New South Wales is instead “committed to delivering affordable, reliable and cleaner power for NSW,” says Kean.

“Cleaner,” however, remains a technology-neutral adjective, as the Liberal state government seeks to maintain some alignment with its coal-committed federal Liberal-National colleagues, while steering the state to meet the Paris target of limiting global warming to well below 2 degrees Celsius.

The state government has gained some kudos for supporting the Paris climate accord and for speaking out for the revival of a National Energy Guarantee (NEG), despite the federal Liberal-National coalition’s refusal to embrace an accelerated energy transition that would help put the brakes on climate change.

“Reducing risk means we need a national framework that properly integrates climate and energy policy,” Kean said at the Australian Clean Energy Summit 2019 in July. “If the Commonwealth won’t get on board, [New South Wales] will consider going it alone.” But the national leadership mindset tends more toward “What climate change?”

As such, New South Wales finds itself between a lump of coal and a hard place in managing the retirement of its aging thermal-generation fleet.

Battle for Liddell

The coal-fired Liddell Power Station, for example, was originally rated at 2 GW, but now sometimes delivers less than half that in extreme conditions (as in the heatwave of 2017). It has long been scheduled to exit the electricity supply chain in 2022, on its 50th birthday. But under federal government pressure, Liddell owner-operator AGL Energy recently agreed to extend operations to 2023. And the state government is now participating in the federally initiated Liddell Taskforce, which is widely expected to try to extend the plant’s life, at huge cost. In 2017, AGL estimated it would cost AUD 900 million to keep Liddell running for another 10 years.

At the same time, the state government is running the AUD 75 million technology-neutral Emerging Energy Program to support the commercialization of large-scale, dispatchable energy projects. Designed to encourage investment and innovation that supports the reliability and security of the state’s energy system as coal exits, the program deadline for applications was April 2, 2019. It aims to have distributed its funds by June 2022.

The main game for the state is, as mentioned, to enable connection and transmission of new generation. Former New South Wales Energy Minister, Don Harwin, last year acknowledged that only one in 20 of the state’s pipeline of proposed renewable-energy projects could be accommodated. He then launched the state’s Transmission Infrastructure Strategy in November 2018 to remedy the situation.

“By 2024, four priority transmission projects are set to be delivered, including upgrades to the existing Victoria and Queensland interconnectors and a new interconnector with South Australia,” Kean says.

A fifth project – a second double-circuit interconnector between New South Wales and Queensland – could support the sharing of resources from the 4 GW Walcha Energy Project, proposed by co-developers Energy Estate and MirusWind. The site incorporates solar and wind generation, as well as pumped hydro and other storage technologies, within the New England Renewable Energy Zone, close to the backbone of the state transmission network and near retiring coal plants in the Hunter Valley.

The first stage of the Walcha Energy Project – which could ultimately supply 15% of the state’s energy requirements, eclipsing Liddell with clean, dispatchable energy – is set to begin generation when Liddell was supposed to retire in 2022.

The potential is that the economics of this project – the kind of flexible, mixed-generation, grid-stabilizing combination that the state grid needs – and others could be affected by federal government intervention to keep coal-fired plant spinning in the state.

“Coal assets are not displaying the ability to run cheaply, so we just have to move on,” Simon Currie, Energy Estate principal, told pv magazine. “And we have to move on before the investor flight, because investors are not going to invest in countries that are not green – if you are prolonging the life of coal, you will become increasingly uninvestable.”