Dismay in Australia as A$600m fossil fuel spike is backed instead of ‘more viable’ battery storage

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CEP Renewable Energy Fund. Energy has proposed a battery system with up to 1,200 MW in the area to facilitate the retirement of the Liddell coal plant. Image: CEP. Energy.

Multi-party support for a new fossil-fuel power plant in Australia has been criticized by experts and voices from the clean energy industry, who said battery storage would be a more viable option for providing energy. peak capacity.

The plan to build a 660MW peaking gas and diesel-fired power station in the Hunter Valley, New South Wales (NSW) had been strongly backed by the country’s federal government, led by the Liberal Party and Prime Minister Scott Morrison.

The project, the Kurri Kurri Power Station, was described as a “government-built white elephant” by Bruce Mountain, director of the Victoria Energy Policy Center at the University of Victoria, in a recent article contributed to The conversation.

However, in December 2021, the NSW State Government granted conditional approval for the power station to receive Significant State Infrastructure (CSSI) status. A few days ago, Australia’s main national opposition party, Labour, also backed a plan it had previously opposed.

Labor had backed the government’s plan, on condition that the project owner, utility company Snowy Hydro, adapt the Kurri Kurri power station to run on 30% green hydrogen from start-up in 2023 and 100% by 2030.

However, Bruce Mountain of the University of Victoria both debunked the need for the (mostly) fossil fuel plant in the first place, and strongly questioned the benefits of Labor’s green hydrogen bet.

Mountain argued that not only is the power plant a totally wasteful project, but that hydrogen retrofitting would be “so expensive it would be unrealistic” and called burning hydrogen for electricity “the thing.” least useful you can make of it”.

Professor Mountain, along with colleague Dr Steven Percy and independent engineer Ted Woodley, wrote an article analyzing the original plan for the project, published in June 2021.

Although flexible dispatchable generation has historically been provided by a combination of pumped hydropower and open cycle gas turbines (OCGTs), lithium-ion batteries have come down in cost and advanced in their technology development to date to become an alternative source of distributable production, they wrote.

In addition, the continued increase in renewable energy generation in Australia is already advancing the development of various flexibility assets for the power grid, from large-scale transmission interconnectors to other gas projects, new pumped hydro large-scale and batteries – lots of batteries, and mostly offered by private developers.

The authors disputed a government claim that Australia’s Energy Market Operator (AEMO) modeled a need for 1,000MW of new resources to come online to replace capacity at Liddell, a coal-fired power plant called into retirement. The AEMO had not forecast any shortages of dispatchable generation and, in fact, more battery and renewable generation projects have been announced since the AEMO studies have even fewer.

A claim that Kurri Kurri would cut electricity prices was “tiny”, they argued, given that the peaking plant would have a slow and inflexible 30-minute response time, while the national electricity market electricity (NEM) introduced a 5-minute regulation for electricity. prices since October 2021 – making fast response batteries much more competitive.

While it is sometimes assumed that more renewables equates to more gas-fired power plants to fill the gaps in variable wind and solar power generation, according to AEMO’s Integrated System Plan (ISP), power plants NSW’s gas peak would operate and produce electricity between just four and 13 hours a year until 2030.

The authors strongly questioned the A$600 million (US$425 million) price quoted for the project, saying the cost would exceed several hundred dollars, even before the party’s hydrogen retrofit proposal Labor is introduced.

There is at best “a small market for the type of service KPPS can provide and so it has no prospect of earning near the revenue needed to recoup its expenses,” Mountain, Percy and Woodley wrote in their study.

Peaker factory project ‘undermines’ Australia’s energy transition

This morning the Clean Energy Council, a national trade organization for industry, said final approval of the state-of-the-art plant project ‘undermines’ Australia’s efforts to build a reliable, low-cost energy system and low emissions.

“A full-scale battery for this site was the smartest choice, both economically and environmentally,” said Council Chief Executive Kane Thornton.

The Clean Energy Council published its own article last year, “Battery storage – the new, clean peaker”, which offered a technical-economic analysis of the battery versus peaking power debate. Thornton today pointed out that, as discussed in this article, batteries can provide peak power at a lower cost than the OCGT plants planned for the Kurri Kurri Power Station.

“The Kurri Kurri plant should only operate for about one week per year. When battery storage can save 30% while providing greater flexibility and dramatically reducing emissions intensity, it makes no sense to spend taxpayer dollars on this fossil fuel project,” Thornton said.

Not only did the study model that a 250 MW/1,000 MWh battery peaking plant in New South Wales would be considerably cheaper than gas, but the Clean Energy Council also pointed out that the Battery storage is a multi-application asset class.

The services it can provide, coupled with the ongoing reconfiguration of energy market rules to adapt to it and other clean energy technologies, strongly imply that the value of batteries will increase.

Since the publication of the Council document last year, the AEMO has introduced new regulations to encourage investment in battery storage and seeks to create battery-friendly market structures for fast frequency response, while the Frequency Control Auxiliary Services (FCAS) market is already a major revenue stream for large-scale battery projects.

Conversely, new fossil fuel projects not only entail diminishing economic momentum from a technological perspective, but also carry political and economic risks; for example if international carbon pricing markets are likely to affect the cost of Australian exports.

Lillian Patterson, an energy conservation expert working for the Clean Energy Council at the time the study was published, said Energy-Storage.news in an interview that there is no longer any economic justification for building fossil fuel peaks in Australia.

Finally, converting Kurri Kurri to run on hydrogen will be a costly and significant undertaking, not just for the plant itself, but for its pipeline and storage infrastructure, wrote Bruce Mountain of the University of Victoria. .

While utility Snowy Hydro said its turbines could expand to a maximum 30% hydrogen blend, the pipelines and storage are only built to accommodate 10% hydrogen in the blend and will require rebuilding. subsequent total.

Green hydrogen will likely have a major role to play in decarbonizing hard-to-reduce emissions in industries such as fertilizer production and various heavy industrial processes, or even long-distance export.

However, burning it in Australian power stations to generate electricity is an inefficient use because much of the energy will be removed as heat and wasted. The fact that batteries represent a better alternative, and are already here today, means that there is “absolutely no need to bother” about burning green hydrogen at Kurri Kurri and on other sites, argued Bruce Mountain and engineer Ted Woodley.

Indeed, around this time last year, Australian renewable energy fund company CEP.Energy proposed the construction of a battery storage plant with a maximum capacity of 1,200 MW in Kurri. Kurri, to help replace the coal-fired power station at Liddell. It would be the nation’s largest battery energy storage system (BESS) to date, should it go ahead.

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