Australia’s energy sources

Materials World magazine
27 Sep 2019

Coal, wind and solar are parts of Australia’s energy mix. But with the states having much responsibility for distribution and technologies, how does the country move towards sustainability?

Australia’s energy resources include coal, gas, oil, hydropower, solar and wind, but with no nationally controlled energy policy, authority over power delivery is largely left to individual states. This has caused some angst across borders, particularly when power supply has failed and there has been poor backup in place. On top of that, the country’s commitment to clean energy has been questioned, particularly regarding plans to proceed with a major new coal mine in Queensland (QLD).

However, a number of projects have been developed to push increase renewables capacity and offer backup power supply when needed. As such, Australia’s energy policy and diversity is complicated and fascinating.

Resource rich

Australia has huge renewable and fossil- derived energy resources, and is the world’s ninth largest producer.

According to the Australian Department of Environment and Energy’s report, Australian energy update 2018, the country contributed around 2.5% of world energy production and 5% of world energy exports in 2016–2017. The updated report for 2018 read that 81% of Australia’s electricity was supplied by fossil fuel resources, with coal making up 60% of total generation. The remaining 19% of electricity was supplied by renewable resources, an increase of 25% from 2017.

Louisiana State University, USA, Assistant Professor in Political Science, Andrea Simonelli, said that up until the last 10–15 years, energy policy was ‘driven by the practicality of abundance as well as the economic imperative. As the stabilising US ally in the region post-WWII, Australia’s growth and economic success would have been seen as necessary for peace and security’.

This remained the case for many years, but recently, both demand and policy have changed.

Simonelli believes that, even without a clear national energy policy to encourage the adoption of renewables, state-driven schemes to subsidise roof-top solar have made an impact, reducing costs and therefore making personal solar affordable for many families.

‘A recent report from Clean Energy Regulator stated that Australia was on track to meet its 2020 goal of a 26% emissions reduction through solar, wind and hydropower,’ she said. ‘The short-term future looks good, but long-term planning is needed for a smooth transition between fossil fuels to renewables. It is unlikely that coal, oil, and gas will be phased out quickly but they have a better chance of being overtaken in the home sector or by small local grids.’

In contrast, the UN has warned that Australia is unlikely to achieve its longer term commitment to emissions reductions by 2030. Former Prime Minister, Malcolm Turnbull, proposed the National Energy Guarantee (NEG) policy, which would create a framework for grid security and covering emissions. The latter proved unpopular with many MPs and contributed to the country’s political instability during August 2018. Current Prime Minister and leader of the Liberal Party, Scott Morrison, jettisoned NEG as part of his approach to re-stabilise the government.

However, in this federal system, there is a great deal the states can do. For example, South Australia (SA) Energy Minister, Dan van Holst Pellekaan, proposed an interconnector between SA and New South Wales (NSW) to create a power exchange. This would allow solar and wind farms to be built in SA’s north-east, giving them the means to export surplus energy and start to displace coal in NSW, the country’s most populous state.

NSW Energy Minister, Matt Kean, also wants to increase the capacity of renewable energy generation across the country. In June 2019, he told the Committee for Economic Development of Australia that a national framework that properly integrates climate and energy policy is needed, called for NEG to be reinstated and criticised ‘ideological indulgences’ in the political discussions of climate change and future energy policy.

Joint efforts like van Holst Pellekaan’s proposals are an example of Australia’s states showing that energy security can be achieved through collaborating together.

Pursuing coal

The politics of energy policy has been raised in discussions about the Carmichael coal mine in QLD’s Galilee Basin, run by Indian mining company Adani. The proposed open-cut coal mine in central QLD, around 400km inland from the east coast, will be connected by a rail line to the port at Abbot Point, near the Great Barrier Reef. The mine was proposed 10 years ago and has attracted opposition from the start.

Prime Minister Morrison supports the project, which the company claims will create 1,500 direct and 6,750 indirect jobs. Carmichael would produce around 27.5 million tonnes (Mt) of thermal coal, ramping up to 60Mt at full operation, if it receives the necessary additional approvals. Opposition has focused on the possible impact on the Great Barrier Reef’s ecosystem and local wildlife, that it will would to six other mines being approved in the area, and the difficulty of building a new coal mine while meeting Australia’s commitment to emission reductions.

‘Foreign ownership of natural resources without adequate taxation is the biggest hindrance to more renewal or transitional energy investment,’ Simonelli said. ‘The independent Australia Institute in 2017 found that 86% of Australia’s mining industry is foreign owned and these firms pay 13% tax on their revenues.

‘Mining can be more easily taxed at a higher rate because there are only so many places where resource abundances exist – you pay to mine or pay the fees after someone else does. It is money walking out of your country for a valuable item the other party needs and has no other way to acquire. Taxing foreign mining at a much higher rate could help towards more renewable investments at home and in the region.’

Joint efforts

More than 50% of SA’s electricity currently comes from renewable sources and the state expects that to reach more than 70% in the next few years, without additional policies. SA’s energy mix demonstrates reliance on electricity from fellow states, and problems arising from insufficient backup generation.

The state also shows initiative in moving towards independent supply. The issue of sustainable and reliable power supply from across state borders hit SA hard in September 2016 when there was a statewide blackout after a huge storm damaged transmission lines and caused several wind farms to unexpectedly switch off.

This left SA reliant on power from neighbouring state, Victoria, eventually causing the interconnector to overload and break down. Around 900,000 customers were without power for hours. In some country towns, it took days for supplies to be repaired. Five months later, 90,000 customers in SA had their power cut in a heatwave as power supply within the state could not meet demand. A combination of changing climate, higher demands and insufficient infrastructure have led to increasingly regular blackouts.

This prompted Tesla CEO, Elon Musk, to propose the company build a 100MW lithium-ion battery – the world’s biggest – near Jamestown, SA, for AUS$90mln. The battery receives power via two interconnectors from Victoria, of which brown coal is the main energy source.

Musk committed to building the battery within 100 days of the contracts being signed. It was given its first major test on 18 December, 2017, when a coal generator in NSW shut down, cutting SA’s cross-state supply. 689MW of power needed to be covered, and the battery did so within a fraction of a second – much faster than alternatives, according to the report Initial operation of the Hornsdale power reserve battery energy storage system, by Australian Energy Market Operator (AEMO), April 2018.

Given its effectiveness, and the recent history of power shortages in the state, such batteries seem likely to be part of the country’s future energy policy. van Holst Pellekaan said an interconnector with NSW, new generation and the co-ordination of distributed resources such as batteries were ‘critical to arrest the decline and restore the strength of our power system’.

In another display of electricity supply independence, power producer AGL Energy is planning to transform former copper mine Kanmantoo into a pumped hydropower energy storage (PHES) facility to provide additional back-up to SA’s electricity supply.

Kanmantoo mine operated from 1970–1976 and was reopened during 2016–2019 after additional indicated and inferred mineral resources were found. Now deplete, Kanmantoo owner, Hillgrove Resources, identified the site’s potential to be converted to hydropower, 250MW energy storage potential of the site in 2017 as the share of intermittent renewables in the state’s electricity supply rose. Able to store eight hours of energy, the facility would have the largest capacity in SA.

Pending approvals, the project is expected to start in 2024. PHES facilities require an upper and lower pool and, in this case, AGL Energy would use the mine’s giant pit as the lower pond. Hillgrove has agreed to sell the land identified for the upper pond to AGL on a freehold basis, retaining the rest of the site, the Kanmantoo processing plant area, the administration area and the tailings dam.

The mine site will, therefore, be able to continue processing ore in the event of future exploration projects. Responsibility for the environmental and closure liabilities associated with the mining activities at the Kanmantoo mine will remain with Hillgrove.

‘If we proceed and the project is approved, it would be an important addition to our technology mix in SA, where we have significant wind and thermal generation,’ AGL Executive General Manager of Wholesale Markets, Richard Wrightson, said. ‘It would help us to meet the changing needs of the South Australian energy market, in which energy storage assets are likely to be needed to provide dispatchable capacity as renewables generation increases over coming years.’

If approved, the Kanmantoo project could offer a solution that works for both parties and the state’s energy needs. ‘The [Highgrove] Board determined the AGL PHES offer represented a lower risk and higher value proposition to shareholders,’ Hillgrove Managing Director, Steve McLare, said.

Simonelli noted that Australia has long been resourceful with energy production and is no stranger to renewables, though on a smaller scale. For example, Northern Queensland grows, processes and exports sugar. ‘In small growing towns, the bagass, or leftover fibre after the sugar juices have been processed, gets burnt for electricity and has often seasonally powered these entire towns. Most of the towns have grown now and the electricity does not go as far as it used to, but Australians are not new to renewables. Australia also takes advantage of landfill and sewage methane.’

On a local and state level, the demand for clean energy is there and the states are increasingly willing to incentivise it and the storage necessary to back it up. But without a joined up national energy policy, the future is unclear for Australia’s power.