• Ilan Salbe

05 March 2010The process of extending NSW's Mt Piper power station seems to be driven by a pro-coal mindset, argues Ilan Salbe

THIS WEEK the NSW government approved the Mt Piper Extension Concept Plan, which clears the way for the construction of a new 2000 Megawatt power station 150 km west-north-west of Sydney. Although the plan has been developed by Delta Electricity, which is fully owned by the NSW government, the private sector will ultimately build and run the station. Environmentalists are aghast at the prospect of an additional fossil fuel powered station – whether it’s coal or gas – but the thrust of this article is to examine whether the planning reveals a simplistic underlying presumption that coal power is best and a mindset opposed to any alternative – including gas, which has clear greenhouse advantages.

The story begins with the 2007 Owen inquiry into the NSW electricity supply, which concluded that the state needed to plan for an expansion of the State’s baseload generating capacity to meet projected increases in electricity demand. The NSW government released its response to the Owen Inquiry in March 2009, in the form of the NSW Energy Reform Strategy, whose stated primary objective is to optimise conditions for private investment in the state’s generation capacity.
 
The Owen inquiry and the government’s strategy have been widely criticised, primarily for attempting to privatise the electricity industry by stealth and for not considering demand management alternatives. These matters aside, the Mt Piper Extension Environmental Assessment, undertaken for Delta Electricity to meet the requirements of NSW planning rules, puts into question whether the implementation of the Energy Reform Strategy is as problematic as the policy itself.

For starters, renewables are ruled out by the Environmental Assessment. This appears contradictory to the Energy Reform Strategy, which states that “the NSW government does not have a preferred option for the type of technology or fuel used by the next power station” and that the market and the federal government’s Carbon Pollution Reduction Scheme, the CPRS, would influence that decision. The environmental assessment seems to have concluded, however, that the CPRS’s precarious parliamentary prospects, weak target and likely compensation measures for future changes means that baseload renewable energies cannot compete.

Once renewables are sidelined, the assessment appears to conveniently ditch the “market decides policy.” The Mt Piper Extension is to be either a combined-cycle gas turbine (CCGT gas) or ultra-super critical coal (USC coal) power station. It has also been decided that air cooling rather than water cooling is to be used, which at least means no extra stress on the Upper Coxs River. Regardless of whether it is to be gas or coal, the site is to be “carbon capture and storage–ready” – but as the technology is yet to be commercially developed and with no prospect of a high enough price on carbon to make it economical, it could be a long time coming.

NSW Greens parliamentarian John Kaye has questioned the commercial viability of carbon capture and storage and Delta’s lack of consideration of renewables. He has also highlighted the unacceptable increase in greenhouse gases associated with the scheme. The NSW Department of Climate Change and Water has raised concerns about air pollution, greenhouse gas emissions and also pointed to an ACIL 2009 report showing that gas stations are less costly than coal stations for new entrants.

Aside from these important considerations, there were two aspects of the Environmental Assessment that deserved comment during the consultation but were overlooked.

The first is the Environmental Assessment’s questionable comparison of greenhouse gas emissions related to the coal and gas options for the Mt Piper Extension. The comparison showed that for the burning of the fuel at the power station, emissions from USC coal are 2.13 times greater than for CCGT gas. But when the extraction and transportation of the fuel to the Mt Piper Extension site were taken into account, USC coal emissions were only 1.55 times those of CCGT gas. This major whittling down of the emission advantage of gas has gone without comment and presented a mystery that required some detective work to untangle.

Delving deeply into the Environmental Assessment’s labyrinth of chapters, appendices and references led to an explanation. The assessment made use of the National Greenhouse Account Factors, which are used to estimate emissions in the absence of direct measurement. For a power station, the factors are selected by taking into account the on-site fuel and technology used, how the fuel is extracted and transported to the site and the state in which the station is located. The emissions of a power station are then estimated by multiplying the selected factors by the amount of energy produced by the station site.

The National Greenhouse Accounts have high gas extraction and transportation factors for New South Wales and South Australia and the high NSW factor was adopted in the environmental assessment’s emission calculation. A phone call to a Department of Climate Change officer elicited the reason why the NSW factor was so high. The state currently obtains much of its gas from the South Australian Cooper Basin gas field. This gas field has a high CO2 content and, as is the normal practice in gas production, the CO2 is removed and emitted into the atmosphere before the gas is transported. Thus the high CO2 removal at Cooper Basin explained the high NSW factor.

But further delving into the Environmental Assessment revealed that the Coopers Basin gas field is in decline and will not be able to meet the large demand of a Mt Piper Extension station. Therefore the gas would likely be sourced from Queensland or Victoria. Gas fields in Queensland and Victoria generally have lower CO2 content and hence have lower extraction and transportation emissions. If a Queensland or Victorian extraction and transportation factor had been used in the environmental assessment, as appears more appropriate, then the projected total emissions relating to USC coal at Mt Piper would be around 2.0 times that of CCGT gas, rather than 1.55 times.

A worrying lesson here is that greenhouse gas accounting shares many of the interpretation pitfalls of tax accounting, which does not augur well for insuring compliance with national emission reduction targets.

The other matter that deserved comment but was absent from the Environmental Assessment and the public submissions was a consideration of how the new power station would work with the renewable energy sources. These will make up at least 20 per cent percent of electricity supply by 2020 and, according to CPRS modelling, could reach 50 per cent by 2050.

Renewable energy – and especially wind, which on current projections will dominate the renewables part of the market – has large and frequent output fluctuations. For the Australian Energy Market Operator, who must ensure that supply is not disrupted, this means that fossil fuel backup power must be available whenever the renewables input drops. In order to minimise greenhouse gas emissions, the backup needs to maintain efficiency at less than full generation capacity. The greater the renewables’ market share, the greater the importance of efficient backup power.

There are ways to mitigate the need for fossil fuel backup. Incentives could be provided for further development of less fluctuating renewables and for technologies that allow for temporary storage of energy. Demand management initiatives, like smart networks, could also enable better matching of electricity demand with renewable power generation. But it seems reasonable to make the conservative assumption that sufficient mitigation isn’t possible in the near future and that the Mt Piper Extension will need to have in place technology that works efficiently with renewables.

Both CCGT gas and UCS coal power stations are capable of staying near peak efficiently at less than full generation capacity and both can increase the level of generation quickly (that is, they have efficient backup capacity). But just as all car models are not the same, there are differences in backup efficiency between and among different types of gas and coal power stations. In this regard, the Environmental Assessment did not provide any recommendations or guidelines. It ignored the need to work with renewables entirely, paving the way for a less expensive station and higher greenhouse gas emissions.

In summary, it seems reasonable to ask whether the lack of consideration of renewables compatibility in the Environmental Assessment reflects a mindset that is dismissive of renewables and their advocates. Similarly, the lack of rigour in calculating the greenhouse emissions that led to the whittling down of the advantage of gas over coal suggests a mindset that doesn’t take anything but coal seriously. The whole Mt Piper Extension exercise demonstrates the shortcomings of the NSW Energy Reform Strategy in a world facing the distinct possibility of greenhouse gas induced catastrophe. •

Ilan Salbe is an environmentalist living in the Blue Mountains.