Issue 10  October  2005

Sustained generation growth predicted

Gross generation of electricity in Australia will almost double over the next quarter century, according to the latest projections of the Australian Bureau of Agricultural & Resource Economics (ABARE), requiring capacity to reach 75,000 MW.

Current generation capacity is just under 45,000 MW. "Because Australia's generation assets are relatively old," ABARE says, "a large proportion of the forecast capacity will need to be built (between now and 2030)."

Gross generation encompasses all power produced by electricity plant, including consumption bought by customers, own use by suppliers, onsite private production and cogeneration as well as the energy lost by transmission and distribution networks. ABARE forecasts that output will grow from 237 terawatt hours a year at present to more than 400 TWh by 2030.

The agency says that, given existing over-capacity and the influence of a range of government policies, power generation from black coal-burning plant will grow "modestly" over 25 years, increasing by about 80 terawatt hours from its present level of 130 TWh. Natural gas generation, it claims, will rise sharply from a present level of almost 34 TWh to 89 TWh by 2030 with brown coal contributing 71 TWh (52 TWh today). It also expects wind energy output to rise from little more than 1 TWh a year at present to 8 TWh over the quarter century, with renewable power in total almost doubling to 35 TWh by 2030.

ABARE sees the big rise in gas generation occurring in Queensland, with output from gas plants almost doubling, and in Western Australia. Queensland production is forecast to rise from just 3.5 TWh annually now to more than 22 TWh while WA gas-fired output will increase from 15 TWh today to almost 34 TWh. It notes that the 1,000 MW CCGT plant Origin is building at Spring Gully on the Durham Downs will be in operation by 2008-09.

Overall use of natural gas in the Australian economy will more than double to 2,140 petajoules a year by 2030, bringing the fuel's share of the national energy mix up from 20 to 25 percent.

The report also projects an 80 percent growth in wind energy in Victoria, South Australia and Tasmania, with generation output rising to 5.5 TWh a year in the three States by 2030.

Victoria/SA confront peak power problems

Delays to the development of the Basslink interconnector and the Laverton gas-fired peaking plant will confront Victoria and South Australia with potential power supply reserve shortfalls in the 2006 summer. 

A shipping accident earlier this year, which damaged transformers, has delayed completion of Basslink between Tasmania and Victoria while industrial relations problems have slowed completion of the 310 MW Laverton plant, which was originally expected to be available from next month. Both capacity systems are now due to be in operation in April, too late for next summer, leaving the two States with a 530 MW reserve capacity problem in the January-to-March period when both often experience extreme heat at the same time.

The national electricity market manager, NEMMCO, has called for tenders to address the shortfall. 

Qld Govt cheers next QNI step

Queensland Energy Minister John Mickel has welcomed moves to begin a new feasibility study in to increasing the capacity of the Queensland-to-New South Wales high voltage interconnector by up to 20 percent.Mickel says a pre-feasibility study conducted by Powerlink, owned by his Government, and TransGrid, owned by the NSW Government, has given grounds for optimism that a proposal to expand the QNI could pass a regulatory test, now to be overseen by the new Australian Energy Regulator.  The test, previously applied by the ACCC, has been modified to assess network project's economic value and competition benefits.  Powerlink and TransGrid have said numerous times in the past two years that expansion of the QNI could not pass the earlier test.

The two network service providers will now spend a year on a formal augmentation feasibility study.

Mickel says Queensland presently exports electricity to NSW more than 90 percent of the time and the interconnector runs at its maximum southbound capacity of 1,078 MW for a large part of that time. Queensland, he adds, is a good position to meet the growing demand for power south of its borders.

He points out that linking Queensland to the NEM has been good for consumers in his own State, with Qld average wholesale power prices more than halving from around $50 per megawatt hour to $21 per MWh.

$500 million LETDF opens for business

The Federal Government has formally called for applications for subsidies under its low-emission technology demonstration fund (LETDF) to develop Australia's next generation of large scale greenhouse gas abatement technologies.

Federal Industry Minister Ian Macfarlane says the fund will provide grants "in the order of $20 million and upwards," for a total outlay of $500 million. He expects the fund to leverage an additional $1 billion in private sector investment in technologies ranging from renewable energy initiatives to energy efficiency technologies, including coal-fired generation with carbon capture and storage and geothermal power production from hot dry rocks.

Macfarlane adds that the key criteria for support will be the ability of technologies to contribute to the reduction of Australian energy sector greenhouse gas emissions by two percent a year over the longer term and to be available by 2020 to 2030.

Federal Environment Minister Ian Campbell says finding technological solutions to growing greenhouse gas emissions is an essential component of Australia's climate change strategy.

In a statement earlier on the eve of a global carbon capture conference in Berlin, Macfarlane commented that Australia is determined to be one of the global leaders in pursuit of carbon dioxide capture and storage technology. He says Geoscience Australia has identified 65 viable carbon dioxide storage sites across the country.

All change?

The wide-ranging 25-year "vision" for the Victorian energy supply industry just issued by the Government-owned VENCorp include a commentary on why most stakeholders believe the industry structure will be substantially different in 2030 from what it is today.

Factors which could influence the evolution of the industry include:

Feeding the grid

Investment in the US transmission system in the past two years has leapt 50 percent above the decade-long average, but is nowhere near enough to adequately reinforce the grid, according to Edison Electric Institute, the investor-owned lobby group based in Washington DC.

In a new report, "Meeting US transmission needs," EEI says expenditure on the high voltage system averaged $US3.6 billion annually over 10 years and then rose sharply to $US5 billion in each of 2003 and 2004 (the former being the year of "The Great Blackout" when a transmission system failure cut power to 50 million North Americans).

However, argues EEI, augmenting the US high voltage network system to an adequate standard will require outlaying at least $US7 billion a year over the next decade and preferably $US10 billion.

The prospect of such capital expenditure actually occurring has been enhanced by new US energy legislation that gives the Federal Government the power to enforce transmission reliability standards and to step in to license lines where the States do not issue permits in a one-year development time frame.

Keith Orchison

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