Issue 11 November 2005

Where's the paper?

The New South Wales energy white paper, originally scheduled for delivery last April, may now not appear this year. Conflicting unofficial comments from within the Iemma State Government suggest it may be as late as next March before the policy statement is finally published, although senior ministers are said to be "still hoping for a pre-Christmas statement."

Central to the debate over the past year within the Government has been conflict over when New South Wales will need new baseload power plant, how it can be fuelled and who will build it.

Consumption of electricity in NSW, including Australian Capital Territory demand, has risen from 61,000 gigawatt hours in 1999-2000 financial year to 72,370 GWh in 2003-04, the latest year for available data. This trend, sustained over two decades, would see demand pass 84,000 GWh at the end of this decade and reach 100,000 GWh towards 2020.

Climate talks open on stormy note

The new round of UN talks on climate change -- involving 10,000 people from 190 nations meeting in Montreal, Canada, for 12 days -- has opened with developing nations making it clear that they will not sign on at this stage for post-2012 greenhouse gas emission reduction targets while still pushing for all industrialised countries to commit to the Kyoto treaty.

South African Environment Minister Marthinus van Schalkwyk says that it is too early for "have-not" nations to commit to greenhouse gas cuts while they seek to drive up economic growth to alleviate poverty. Ninety-two percent of South African electricity is fuelled by coal.

The Montreal meeting -- the 12th "CoP" (conference of the parties) session -- is also unlikely to pursue an agreement on how to deal with greenhouse gas emissions created by international air travel despite a new European Union study that shows this is one of the most rapid forms of emission increase. The Kyoto protocol deals only with domestic GHG emissions.

The EU Commission says airline fuel efficiency has improved 70 percent since 1990, but this is more than offset by the growth in air travel.

Even as the Montreal conference began on 28 November analysts were claiming that the Kyoto protocol is "history" and that it will "limp along for another seven years (to 2012)" while the UN members try to negotiate a new path forward. Pessimists suggest that the negotiations may peter out as more and more countries join voluntary blocs pursuing new technologies to address the issue.

These views are seen as being supported by recent comments from British Prime Minister Tony Blair, who has admitted to changing his thinking and now says: "No country is going to cut its growth or consumption substantially in the light of a long-term environmental problem." Instead, he argues, nations should focus strongly on "developing the science and technology in a beneficial way."

The most important challenge for the Montreal meeting is to finalise the arrangements for an international system for trading greenhouse gas emissions and to simplify the "Clean Development Mechanism," which is aimed at enabling new technology development in developing nations by the industrialised countries that have ratified the Kyoto treaty. The International Energy Agency has marked the "CoP 12" opening by releasing a report on emissions trading in which it argues that the scheme needs to be "at the core of any future agreement to combat climate change."

NZ probes power prices

New Zealand's Commerce Commission has opened an investigation in to the retail cost of electricity as power charges rise at a rate well beyond inflation levels.

In a letter to the NZ Major Electricity Users' Group, the Commission says it is pursuing the investigation because of "complaints and concerns about prices, company profits, issues around customer switching and a perceived low level of competition activity."

Three of the five largest suppliers are integrated generation and retail businesses owned by the NZ Government.  A spokesman for Contact Energy, a subsidiary of Australia's Origin Energy, says the inquiry is not a surprise. "There has been a lot of commentary about whether the electricity market is sufficiently competitive," he says.

Shortly before the Commission inquiry was revealed New Zealand's largest power user, NZ Aluminium Smelters (NZAS) announced that it will reduce production by 5 percent because of low water levels in the hydro-electric system and rising spot power prices. The Opposition National Party claims the cuts will reduce New Zealand export income by $NZ1 million a week and highlights the power generation problems the country now confronts as a result of investment being deterred by Government policies.

Meanwhile one of the country's leading minerals investors, L&M Group chairman Geoff Loudon has called for the re-elected Labor Government to rethink its policies after the Governor-General announced in the new Parliament's opening address that the administration plans to develop a national energy strategy. Loudon, who has international resources interests including fuel cell technology in Europe and coal, petroleum and coal seam gas interests in New Zealand, warns that the country is moving from the bottom to the top quartiles of OECD energy costs despite having the highest energy resource per capita in the developed world.

Greg Hogan, managing director of the Christchurch-based L&M, says coal seam methane has the potential to meet 10 percent of New Zealand's gas supply by 2010 if prospects currently being explored meet their geological promise.

Tasmania's big dry

Not even cloud seeding could ease Hydro Tasmania's water supply problem in 2004-05 -- there were insufficient clouds as well as the eighth driest year on record.

The State Government-owned business notes that the latest dry year follows seven years of below-average rainfall, leaving hydro power storage at 22.7 percent, 15.5 percent lower than in 2003-04.

Hydro Tasmania says in its annual report that the prolonged dry conditions have posed "a significant problem," pushing costs up 7 percent, and notes that contingency plans are in place to manage the situation if it does not improve this summer and next autumn. The situation, it adds, underlines the importance of Basslink, its wind farm developments and continuing investigation of alternative power supply options. The delay to the completion of the high voltage link under Bass Strait -- caused by transformer damage during shipment from Germany -- has created "an enormous challenge" for the business, it acknowledges.

Hydro Tasmania's steps to cope with the combined impact of the drought and the Basslink delay have included buying three gas turbines, with a capacity of 105 MW, for installation at its Bell Bay thermal plant early in the new year.

CEO Geoff Willis says that, even with this additional capacity, Hydro Tasmania may import more power from the mainland than it exports when Basslink starts operating next year in order to replenish its hydro storage capacity. 

WA's power thirst

The isolated West Australian southern grid system can be expected this year to achieve a doubling of its electricity consumption over two decades. 

Demand data in the Energy Supply Association's annual report show that WA consumption was close 13,000 gigawatt hours for the 2003-04 financial year -- the latest statistics available -- compared with just under 6,600 GWh in 1987-88. The State's generation capacity has increased by more than 57 percent over this period to reach 3,570 MW in 2003-04.

Keith Orchison

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