Renewable energy transition: Australia's grid is in trouble – The Australian Financial Review

Opinion
There is serious and widespread disquiet across the operational end of the electricity industry about how long before something goes bang.
Decarbonising Australia’s economy was never going to be cheap or easy. That’s just something we wanted to believe, a positivity bias nourished by an ideological approach to a complex engineering problem.
Eliminating our emissions will require a complete rebuild of the nation’s energy systems. This will be an orchestrated industrial revolution: immense, expensive and risky. A great leap into the unknown, a gigantic space program where we are all on board for the ride.
“Energy industry leaders are trying to warn us there’s a shark in the water, while governments want us to go for a swim.” David Rowe
The risk comes from uncertainty. What we are doing – attempting to power the continent using only the energy supplied by renewables – has never been done before.
If we’re going to take such big risks, we need to mitigate them. Less virtue-signalling and more hard-headed contingency planning. We should assume this new grid will need to cope with renewable and conventional droughts, big storms knocking out transmission lines. And that’s just the stuff we can see.
The more immediate problem is the transition. Delays in new transmission, renewables and related storage projects are no surprise to anyone within the energy industry. Global resource constraints, skilled labour shortages and disgruntled local communities will not be resolved quickly.
The concern is how long some older coal generators can hang on while we wait for the green cavalry to arrive.
Since last winter, energy company CEOs and technocrats – the uncool parents at the teenage climate party – have been warning of a looming reliability problem. They are not known for their hyperbole. There is serious and widespread disquiet across the operational end of the electricity industry about how long before something goes bang.
In our renewables future, back-up generation will be needed like a fire brigade, ready to jump in when something goes wrong.
Running old generators hard is like driving to work every day in a 1975 Kingswood. It’s tough to keep it on the road. The two oldest power stations – Yallourn in Victoria and Gladstone in Queensland – are reporting increasing amounts of unscheduled time offline because of technical issues. They’re getting old.
Earlier this year EnergyAustralia announced it was spending $400 million on Yallourn, a huge investment in an ageing and increasingly unreliable generator scheduled to close in 2028.
Two years ago, the Victorian government inked a secret “commercial in confidence” deal with EnergyAustralia around the proposed closure of Yallourn.
The size of the refurbishment of Yallourn suggests it’s either seriously fragile, or they’re getting it ready to run beyond 2028. It’s a prudent spend, as it’s hard to see how Yallourn or any other Victorian coal generator could close because they are so critical to reliability and there is nothing planned to replace them. But why the secrecy?
AGL’s Liddell power station in NSW closed in April, but its capacity hasn’t been replaced. The market operator now throws out formal warnings like confetti at a wedding about how there isn’t enough generation available.
Two more NSW coal power stations are scheduled to close before Snowy 2.0 pumped hydro will be ready. Origin has been struggling to get enough coal to its Eraring power station, and it needs major works to continue operating past 2025. No one thinks it can close, but right now, that’s the plan.
A new gas generator near Wollongong should be online by this summer while construction is yet to begin on a second gas generator near Newcastle in the face of fierce opposition from activists. Together, they will cover about half the capacity of one of these stations. It’s not enough.
By contrast, the Queensland government got energy boffins to help draft its energy plan, which sensibly consists of building all the new renewable and firming capacity before dialling off the old kit.
They’re being transparent on cost too. The proposed Borumba pumped hydro storage will cost $14 billion, just to store the capacity of a single coal power station for 24 hours. This isn’t far away from the cost of a nuclear power station of the same size.
National energy agencies have already unsuccessfully proposed market reforms to fund these back-up generators, probably gas, maybe some batteries. State energy ministers rejected the reforms after activists described the measures as a “coalkeeper”. “Lightskeeper” might be more accurate.
In our renewables future, back-up generation will be needed like a fire brigade, ready to jump in when something goes wrong. Because the generators will run much less frequently, they need an additional revenue stream to be commercially viable.
Queensland generators are even looking at techniques to mothball coal generators, keeping them in reserve as giant back-up in case they are needed to help with unimaginable crises in the future.
Addressing climate change should be about reducing emissions while keeping the lights on. It’s unhelpful to portray it as an ideological contest between different technologies.
Energy industry leaders are trying to warn us there’s a shark in the water, while governments want us to believe everything is fine, to go for a swim.
Australia will contribute the most to this global challenge by demonstrating how to evolve to large-scale renewables safely and reliably, not by becoming a cautionary tale – a model of what not to do.
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