The Northern Territory is four years out from a decision that could see more than half the capacity at its largest power station shut off.
- Stakeholders will decide in four years whether to retire or replace 190MW of gas turbines
- It is hoped the 190MW will be filled with renewables
- Export opportunities may provide incentives to invest in renewables
Although it would put the region on track to meet its clean energy targets, it would also force stakeholders to hedge their bets on a renewables sector that sits well behind the rest of the nation.
Only four per cent of the Top End’s energy usage came from renewables last year, despite it being Australia’s sunniest jurisdiction.
By 2030 it aims to increase that to 50 per cent.
But recent comments from the Prime Minister and Chief Scientist could add further incentives — as they saw a chance for the Territory to secure pole position in a global race to export solar-generated hydrogen to Asia.
Renewables could take 190MW supply
The juncture comes as turbines generating more than half the capacity at Territory Generation’s Channel Island Power Station are due to retire in 2027.
By 2022, Roadmap to Renewables report author Alan Langworthy said the NT Government will have to decide if it will invest millions in replacing them, or commit to filling the vacant 190MW of capacity with renewables.
Yet currently NT solar farms generate less than 18MW.
Two solar projects — at Alice Springs and Yulara — generate 4MW and 1.8MW respectively.
Small-scale solar farms in remote NT communities have a total of 12MW solar capacity.
Other businesses like NT Airports have solar farms, but use the energy themselves rather than exporting to the grid.
But big investments are in the pipeline, with the NT Government approving the $40 million 25MW Katherine Solar Farm earlier this year, and Rimfire Energy planning to build a solar farm at Batchelor by 2020.
Mr Langworthy believed the scheduled retirement of the turbines provided a perfect opportunity for renewables.
“It’s a very big expenditure if that was to be replaced with gas turbines,” he said.
“And so there’s a fantastic opportunity for renewables to increase its contribution using private investment funds to build up the capacity to be able to overcome that loss of 200MW [sic] of plant.”
Territory Generation suffers $144m ‘impairment’
Territory Generation’s chief executive Tim Duignan believed the supply would indeed be switched to renewables in 2027 following the retirement of the turbines, providing there was sufficient renewable technology in place to do so.
But this push was already having major impacts on the government-owned generator, with it suffering a $144 million asset impairment last financial year.
A Review of Territory Generation’s Financial Performance report last year said: “T-Gen’s existing business model will not survive the transition to a 50 per cent renewables market”.
It saw two options for its future — to become a major player in the provision of renewables or become a base-load and capacity provider with a much smaller footprint.
The NT Government went with the latter.
The blow to Territory Generation was consistent with global trends, said Minister for Renewables Dale Wakefield.
“The incredible pace of technological progress in renewable generation means that the value of traditional generation assets around the world is falling; the Territory is no exception,” she said
The NT Department of Treasury and Finance is currently developing an NT Electricity Market — a competitive wholesale power market to govern the trading of electricity.
This is to encourage private companies to invest in renewables and to create a fair playing field for the additional generators.
Power and Water are also transitioning to the National Electricity Rules, which governs electricity network regulation, for example of poles and wires.
Mr Langworthy said as the transition will not be complete until July 1 next year, it gives the NT an opportunity to only apply rules and regulations that will support the integration of renewables.
‘It’s effectively a race’: chief scientist
Recent comments from the nation’s chief scientist added weight to the existing pressure for the Northern Territory to expand its fleet of solar resources.
Dr Alan Finkel said as Australia’s sunniest jurisdiction, the NT has “enormous potential” to produce hydrogen and fill a growing quote from Japan and South Korea.
With the right policy settings, he said Australian hydrogen exports could contribute $1.7 billion and provide 2,800 jobs by 2030.
Prime Minister Scott Morrison even told Japan’s Prime Minister Shinzo Abe that “Australia hopes to power the 2020 Tokyo Olympics with hydrogen” during the Inpex Gala Dinner in Darwin last week.
Hydrogen is a “close to a zero emissions fuel” which can be produced using water and solar power, and omits only vapour and heat when burned.
While Dr Finkel said the previous cost of hydrogen made it unviable, he said it was now forecast to be competitive with the landed price of LNG by the 2040s.
When asked over the phone if anyone in the NT was looking into its potential, Dr Finkel referred it to the mini-bus “filled with experts” with whom he had just visited a wind farm.
“Sadly they are shaking their heads horizontally,” he reported back.
But he said that will have to change quickly if the NT wants a slice of the action.
Dr Finkel will start that ball rolling next month, when he brings a proposal for the development of a national hydrogen strategy to a COAG meeting.
“It’s effectively a race, [and] we’re not alone in this race. Norway, Brunei and Saudi Arabia are all boosting their credentials as future hydrogen suppliers,” he said.
“This is the time for Australia to stake its claim as supplier of choice not just to Japan, but to other nations like South Korea, hungry for a 21st century fuel.”
While hydrogen was a strong export option, Dr Finkel said it made little sense to use it for domestic power supply, given Australia’s wealth of other energy options.
Meanwhile, Beyond Zero Emissions and the Environment Centre NT are working on a plan to see the Northern Territory generate enough renewable energy to fuel export industries.
This is part two of ABC Darwin’s two-part series on renewable energy. View part one, where we look into why the Northern Territory uses only four per cent renewable energy.