Thursday, 7 April 2011

Batteries included - Towns on power trial

Daily Telegraph
31 March 2011, Page: 15

IT'S the energiser town that keeps going and going. In an Australian first, the rural town of Scone will have batteries fitted to up to 20 homes, creating its own "micro grid". Fridge size 5 kW zinc bromine batteries will be installed outside houses to store energy as part of a three year trial that would not only power neighbourhoods during blackouts but also allow relief from soaring power prices.

As part of the experiment, up to 40 households in the Newcastle suburb of Elermore Vale will use the batteries to store power from the grid in cheap times and then use the battery storage to run the house during peak times. "We're testing whether energy storage technology can make the electricity supply more reliable and give customers greater control over their household energy use", Ausgrid energy efficiency expert Paul Myors said. "We will create a microgrid in Scone, making part of the area self sufficient during outage trials and any unplanned interruptions caused by storms or other events".

Cattle farmer Charles Cooke, among the first householders to be fitted with the technology, said the batteries would be useful in storms when the power goes out. "I see this as an insurance if you like, we all need that", Mr Cooke said. "I have been a great one for grabbing on to new technology. I can go back to the days of the old home generators when houses were wired to a 32 volt battery. wind turbines charged a battery system that ran the house".

Mr Myors said reducing the demand for power during peak could prevent the need to build costly infrastructure and would make the electricity network more efficient. Contracts were signed last night allowing Ausgrid (formerly EnergyAustralia) to roll out the mini power stations to 60 homes, including 40 in Elermore Vale. The trial, funded as part of the $100 million Smart Grid Smart City project, hopes to transform the way energy is used.

Reforming electricity market 'matter of urgency' to reduce bills

Canberra Times
30 March 2011, Page: 4

Australia must urgently reform its electricity market and infrastructure to curb rising prices driven by demand for peak power, federal climate change adviser Professor Ross Garnaut says. "It is peak rather than total demand that drives most of the need for [electricity] network investment", Professor Garnaut said in the final paper of his updated climate change review, published yesterday. He said unlike other developed countries, Australia had made "little effort to discourage peak usage of power through variable pricing, smart meters and smart grids".

Professor Garnaut called for urgent reforms to the National Electricity Market Management Company which covers Queensland, NSW, Victoria, South Australia, Tasmania and the ACT to remove barriers to energy efficiency and smaller scale electricity distribution systems. "In some ways it is the most advanced electricity market in the world", he said. "But these strengths persist alongside a few weaknesses that are at once significant in their effects on the price of electricity, on energy security and the capacity to adjust to the imperative to reduce emissions".

Professor Garnaut said further reform of the National Electricity Market Management Company was "a matter of urgency, since it would affect adjustment to a carbon price and the movement to a low emissions economy". Electricity network costs had risen dramatically in the past four years and the high cost of investment required for electricity networks was "the single largest cause of recent electricity price rises". Professor Garnaut said the cost of new transmission networks was forecast to top $7 billion over the next five years, with $32 billion required for new power stations. This was an 84% increase for transmissions and a 54% increase for energy distribution.

Climate Institute deputy chief executive Erwin Jackson said Professor Garnaut's update helped to "set the record straight" on factors currently driving an increase in Australia's electricity prices. "A massive investment in network infrastructure, including poles and wires, which Gamma puts at $39 billion, but others put at $46 billion between 2010 and 2015, accounts for 68% of the current total price increase", Mr Jackson said.

Professor Garnaut has also warned the impact of Australia's resources boom on coal and gas prices, as well as construction costs, will substantially increase electricity costs. He said the introduction of a carbon price would also lower profitability of brown coal electricity because of its emissions intensity. But industry analysts suggested there was evidence some brown coal generators were already "in precarious financial positions even before the introduction of a carbon price".

Professor Garnaut said over the next five years, an estimated $9.4 billion in debt on electricity generation assets would need to be refinanced. He has also suggested the creation of a new energy security council to prevent instability in the energy sector following the introduction of a carbon price next year.

Wednesday, 6 April 2011

Power-cost surge fear

Hobart Mercury
29 March 2011, Page: 5

TASMANIA will be without one of its major power stations this winter, increasing the likelihood of more imports than usual over Basslink to make up for any shortfall. Hydro Tasmania plans to close the Poatina power station for up to five months from April 1 while it paints the inside of the pipeline, which runs down the face of the Western Tiers from Great Lake to the power station. The refurbishment project has a budget of about $15 million and will employ up to 30 workers.

When Tasmanians wind up their heaters to full, peak winter consumption can be up to to 1900 MWs a day compared with the average demand over the year of 1300. Spot prices on the National Electricity Market Management Company can vary widely, as they did in May 2006 when Hydro was forced to pay $10,000 a MW when the electricity system crashed. This compares with the usual price of $30 to $70 a MW.

In preparation for the shutdown, Hydro Tasmania has been running the Poatina power station at higher than usual generation loads for the past 12 months and preserving water in Lake Gordon. Great Lake is 31% full compared with 47.4% in Lake Gordon. The Gordon power station has the capacity to generate 432 MWs compared with the 342 MWs at Poatina. The refurbishment work had originally been planned to be completed last summer but was postponed until after the farm irrigation season in the Cressy Longford area However, delaying the paintwork until the cooler months could mean that paint in the pipe takes longer to dry.

A spokeswoman said the problem was being addressed by heating the pipeline to reduce the drying time. "Recent inspections have revealed that most of the original anti corrosion paintwork inside the 46 year old [pipeline] is in poor condition", she said. The project also aims to reduce the friction in the pipeline to allow it to generate more electricity. Using a low friction paint, the water will travel quicker and turn turbines faster. Great Lake holds about 45% of the state's energy storage capacity and the Poatina station produces about 12% of the state's energy output.

The French public says no to 'Le Fracking'

www.businessweek.com
March 31, 2011

Natural gas may be poised for a post Fukushima boom, but even it faces hurdles. In the U.S, and Europe, concerns have been growing about the environmental impact of drilling for gas trapped in shale formations. And in France, Jose Bove the French environmental activist, farmer, McDonald's (MCD) antagonist, and onetime Presidential candidate has brought the nascent search for shale gas and oil to a halt.

As Total (TOT) and other energy companies readied rigs outside Paris and started to plan for drilling in southern France, local environmental groups began raising concerns about damage to water tables from the hunt for hydrocarbons locked in shale rock. On Jan. 22, Bove started a petition that now has about 100,000 signatures; within weeks the government ordered an exploration moratorium. On Mar. 11, Prime Minister Francois Fillon extended the ban until June, when parliamentary and ministry reports on the environmental and economic effects are due.

"Opposition is building because people are shocked by the way the state pushed through drilling permits without any debate", says Bove, a Green party deputy with the European Parliament. "It shows disdain for the population and elected representatives". On Mar. 23, French Environment Minister Nathalie Kosciusko Morizet briefed Parliament on plans to modify rules and allow public consultation when awarding permits for oil and gas exploration.

Total and Dallas based Schuepbach Energy were awarded permits a year ago to explore for shale gas, which is produced in the U.S, using hydraulic fracturing, or "fracking", to shoot water, sand, and chemicals into the ground and extract oil or natural gas. Opponents of fracking fear harmful chemicals could seep into groundwater.

Toreador Resources and Canada's Vermilion Energy also received permits to drill in the Paris Basin outside the capital. The geology of the saucer shaped rock formation, which extends more than 140,000 square kilometers, is similar to the Bakken Shale formation in North America, where oil production has surged with the increased use of hydraulic fracturing, the companies say. In a Radio Monte Carlo interview on Mar. 16, French Industry Minister Eric Besson said that while chemicals used in fracturing "have caused considerable damage in the U.S, and Canada,.. some industry representatives say that there may be clean technology that would permit production of shale gas without causing what we have seen in the U.S".

Riding out the political storm will be easier for diversified global producer and refiner Total than for Toreador, which moved its headquarters from Dallas to Paris in 2009 and partnered with New York based Hess (HES). Toreador had planned to start drilling a series of wells this month. It won't proceed until the government studies are done. Vermilion will also hold off on hydraulic fracturing in three existing Paris Basin wells. It's already carried out fracturing at two wells.

France produces about 1% of its crude oil needs from wells near Paris and Bordeaux. The areas stirred excitement in the '80s when finds by Total and Exxon-Mobil spurred a rush that slowed after dry wells and a drop in oil prices. While the Paris Basin may hold 100 billion barrels, it's unclear how much is recoverable using new techniques. Toreador Chief Executive Officer Craig McKenzie puts the number at about 300 million barrels. "If the geological potential is there, it would be a shame for France to pass up this source of energy", says Jean Louis Schilansky, head of the Union Francaise des Industries Petrolieres, an association of oil companies operating in France.

Bove doesn't agree and is taking his battle to the European Parliament. Even exploration shouldn't be allowed, he says. "The best solution would be for [Total CEO Christophe] de Margerie to cancel his permit". Says de Margerie: "We are going to wait until things calm down. I'm not in a hurry".

Merkel loses key German state on nuclear fears

www.nytimes.com
27 March 2011

BERLIN Chancellor Angela Merkel's conservative Christian Democrats on Sunday suffered a major defeat in a historic stronghold in southwestern Germany, where the Green Party appeared poised to head a state government for the first time, according to official preliminary results. The nuclear calamity in Japan and Mrs. Merkel's subsequent reversal on nuclear power played a key role in the elections in the southwest state of Baden Wuerttemberg, where the Christian Democrats have governed since 1953, before Mrs. Merkel, 56, was born.

Most Germans have a deep seated aversion to nuclear power, and the damage at the Fukushima Daiichi nuclear power station in Japan has galvanized opposition. On Saturday, more than 200,000 people took to the streets of four big German cities to protest nuclear power. The news from Japan of soaring radiation levels led the major radio and television newscasts on Sunday. After the catastrophe in Japan, Mrs. Merkel reversed a pro nuclear policy that she adopted just last year and temporarily shut down seven of Germany's 17 nuclear plants. She apparently did not convince voters that her change of policy was sincere.

At Christian Democrat headquarters in Berlin, there was shock as the preliminary results were announced. "This is very painful for us", said Annette Schavan, federal education and science minister. At their headquarters across town, the Greens were jubilant over their projected 25% of the vote. Winfried Kretschmann, 62, who stands to head a Green led coalition in Baden Wuerttemberg, spoke of "a historic change". According to the preliminary results, the Christian Democrats won the most votes, about 39%, down from 44.2% in 2006. Yet the weak showing of the Free Democrats, the pro business party with which Mrs. Merkel governs nationally, left the conservatives no hope of forming the next state government.

The Free Democrats looked likely to squeak into the state Legislature with just 5.3% of the vote, the minimum required. In 2006, they got 10.7%. If the polls are confirmed, the Greens are in a comfortable position to head a coalition with the Social Democrats in Baden Wuerttemberg, which has some 11 million residents and is among the most prosperous and successful of Germany's 16 states. The Greens were projected to win 24.2% of the vote, compared with 11.7% in 2006. The Social Democrats were forecast to take 23.5% of the votes, little changed from 2006.

"If the results are confirmed, then this is a major breakthrough for the Greens", said Nils Diederich, a political science professor at the Free University in Berlin. "And it is a huge blow to the chancellor", he added. "For the Greens, the big question is whether such success can be sustained on the federal level. Its opposition to nuclear power and its environmental policies really did galvanize its support". In neighboring Rhineland Palatinate, where the Social Democrat premier Kurt Beck has governed with an absolute majority since 2006, the Social Democrats suffered sizable losses. Their share of the vote fell to 38% on Sunday, from 45.6% in 2006.

The Green Party, which failed to get elected to the regional parliament in 2006, won 16.8% of the vote. Mr. Beck is expected to ask the Greens to join a coalition with the Social Democrats. The Free Democrats were voted out of the regional parliament in Rhineland Palatinate, and, in a sign that Mrs. Merkel's party is likely to see as hopeful, the Christian Democrats increased their share of the Rhineland Palatinate vote to 36% from 32.8% five years ago. Political analysts credited a good campaign by the regional party leader Julia Kloeckner, 38.

In Baden Wuerttemberg, by contrast, the Christian Democrats suffered not only from Mrs. Merkel's reversal on nuclear power in a state with four nuclear plants but also "from a lackluster and unfocused campaign". The regional party leader and premier, Stefan Mappus, 44, was an unknown local politician until Mrs. Merkel chose him to replace Guenther Oettinger, who went to Brussels as European Union commissioner for energy. Last year, Mr. Mappus was slow to react to a groundswell of opposition to Stuttgart 21, a planned new railway station complex in the state capital that was billed as vital to speed up links between Germany and the rest of Europe.

The Greens led part of the opposition to the project, gaining a larger profile while Mr. Mappus floundered. But it was the combination of the crisis in Japan, and Mrs. Merkel's reaction, that swung opinion polls from the conservatives who three weeks ago looked set to eke out a victory to the Greens and the Social Democrats. That decision was a U turn for Mrs. Merkel. Last year she decided to overturn a decision and a relevant law by a former government of Social Democrats and Greens that aimed to close all nuclear power plants by 2022. Mrs. Merkel prolonged the plants' scheduled lifespan by an average of 12 years.

The change did not help Mr. Mappus, who was a staunch defender of nuclear power. He again seemed to flounder, saying at one point that one of the four nuclear plants in his state would be closed permanently. When that did not reverse the drifting polls, he reverted to support of nuclear power. As soon as Mrs. Merkel shifted her stance, the Greens pounced on the change as a move to win votes, and late last week, her economics minister, a Free Democrat, confirmed to a gathering of industry leaders that it was a tactical shift. That reinforced the impression of disarray in the national government.

Sh50 billion wind power project gets green light

www.nation.co.ke
27 March 2011

The government has signed a deal with Lake Turkana Wind Power Ltd for a Sh50 billion wind power project. This ends months of anxiety over the largest such project on the African continent. This follows Treasury permanent secretary Joseph Kinyua and the company's chairman Carlo Van Wageningen signing an agreement on the 300 MWs initiative.

Mr Kinyua said the deal is a culmination of a long process that has taken over a year in an effort to safeguard the taxpayers' interests. "There has been erroneous impression given in some sections of the media that the government was not willing to support investors in the energy sector", he said at Treasury building on Saturday. The agreement, otherwise known as a Letter of Support, provides two components.

The first is an assurance to the firm's lenders that the government will step in and help in case Kenya Power and Lighting Company is unable to buy the power generated. The other is that Independent Power Producers (IPPs) will obtain liquidity support through the International Development Association Partial Risk Guarantees while the termination and political risks will be covered by Multilateral Insurance Agency. Mr Kinyua said since the letter is not an explicit guarantee, the country's public debt statistics are not adversely impacted upon.

The PS said that the agreement is part of the government's commitment to attract private investment as well as a basis with which five other IPPs letters will be signed, soon. "It is not possible to meet the needs of the development agenda without looking for other innovative requirements from the private sector", he said. Mr Wageningen said they have raised Sh20 billion, representing 30% of the estimated project cost, arguing that lenders have shown positive response to support the project.

The project involves the construction of 365 wind turbines, each with a capacity to generate 850 kWs. "The ground breaking work is expected to start in October this year and the first generation of 50 MWs in September 2013", said Wageningen. By the end of 2014, the projected will provide an additional 300 MWs to the national grid. Part of the infrastructure development involves internal construction of the road network and internal transmission, within an area of 25,000 acres of land.

Energy permanent secretary Mr Patrick Nyoike said that unlike geothermal, wind power is reliable and continuous. "This is part of the transition expected and in 10 years, the private sector will not need the letters of support but come and invest", Mr Nyoike noted. He said investors would assess market macroeconomic dynamics before they invest, through a competitive market forces.

Tuesday, 5 April 2011

Ice-cream boss Mackie slams government for handing wind-power development to foreigners

www.heraldscotland.com
27 March 2011

The head of one of Scotland's best known family food businesses has accused the Forestry Commission and the Scottish Government of "dereliction of duty". Maitland Mackie, chairman of the ice cream and crisp manufacturer Mackie's of Scotland, and a pioneer of wind power at the company's farm in Aberdeenshire, says they are "giving away Scotland's heritage to foreign companies" for failing to secure a potential £300 million in annual revenue for Scotland's communities.

He has written to outgoing Environment Minister Roseanna Cunningham, protesting at the "laziness" of the Forestry Commission Scotland (FCS) for focusing on a relatively small income from wind turbines while neglecting the larger development revenue potential of its publicly owned land. Mackie's protest follows the Scottish Government's announcement in February that energy companies can explore FCS land for renewable energy projects, prompting moves by foreign owned ScottishPower, E.ON, Vattenfall and Fred Olsen Renewables.

In his letter, seen by the Sunday Herald, Mackie writes: "The FCS manages 660,000 hectares, including many of the best wind turbine sites in Scotland,.. [but] wind power development rights have been signed over to Spanish, German and Norwegian companies. "Certainly the FCS will have secured substantive rental agreements,.. [but] these foreign companies will take home at least £30m annual income for every 100 2.5 MW turbines installed. The commission must have more than 1000 good sites available, a potential annual income of at least £300m.

"[As around] £290m of that income comes directly from renewables obligation certificate payments funded by Scotland's electricity consumers, it is extraordinary that a government is comfortable allowing these consumer charges to land directly into the hands of foreign companies". He continued: "This does not need to happen. The FC are big boys, with a £1 billion asset base, and a built in business arm. There is no reason whatsoever for not creating a wind power sector within it, capable of developing and owning their own wind power potential, and doing so with full involvement of the communities local to potential sites. Why they have chickened out beggars belief.

"The chief executive of the Forestry Commission informs me that a principal reason is they are not allowed to borrow. If true, then for goodness sake, change the rules, or encourage the commission to set up subsidiary company structures that circumnavigate them". A spokesman for FCS said: "We firmly believe that the current arrangement we have for wind power development allows us, as the land manager, to use private developers' expertise and capital, while generating market leading returns for the taxpayer and local communities. "Although we have explained this to Mr Mackie we are meeting him to explain this in detail".

80% of Thai people oppose nuclear power plants

news.asiaone.com
27 March 2011

Abac Poll director Noppadon Kannika said the poll about people's views on nuclear plants was conducted on 3,807 peopled aged 18 to 60 in Bangkok and 16 other provinces from March 1 25. The poll found 83% of respondents disagreed with the plan to build nuclear plants in Thailand and only 16.6% backed the move. When asked about construction of a nuclear plant in their respective provinces, 89.5% of respondents objected it while only 10.5 agreed. Bangkok had the largest number of nay sayers to the plan at 95% followed by those living in Southern Thailand at 91.5%, those living in Central region at 91%, those living in the North at 90% and those living in the Northeast at 85.8%.

Turkana wind power project to benefit from carbon credits sale

www.coastweek.com
25 March 2011

NAIROBI (Xinhua) The Lake Turkana wind power project will generate 25 million U.S, dollars every year from the sale of carbon credits, Kenya government announced on Saturday. The wind power generation project planned to start being constructed by December this year is expected to generate 300 MW of electricity, becoming the largest wind power farm in Africa. "The company had said that this money comes to the government as revenue, but we agreed that it should be used to finance social projects in Turkana", Treasury Permanent Secretary Joseph Kinyua told journalists on Saturday.

Kenya recently announced the formation of the first carbon credits exchange market, the Africa Carbon Exchange to be run by a private company. The country has announced its intention to set another carbon exchange platform to tap into the growing opportunities of carbon credit market in both the government and private sector projects that are using clean energy and investing in afforestation projects. Kenya has also rolled out investments in geothermal energy as part of the grand plan to exploit the renewable energy resources in the country. Geothermal will also earn carbon credits.

The wind power project is expected to open up Turkana region, a dry land located in northern Kenya and inhabited by pastoralists. The area is among the poorest in Kenya but this new deal will mean adequate resources for development will be available. The company will transmit it to the national grid through a 428 km overhead line that is to be constructed by the Kenya Electricity Transmission Company (KETRACO). KETRACO announced earlier plans to build transmission lines dedicated to the green energy generation belt, stretching from Turkana, Marsabit through Rift Valley to Ngong Hills near the capital Nairobi.

Kenya government on Saturday gave a Letter of Support of the Lake Turkana wind power, enabling the company to source for financing and ending a financing deadlock of three years. "This is not a letter of guarantee, but an indication of support showing Kenya government is very much willing to have this project", said Kinyua. He said since the letter was not a credit guarantee, Kenya's debt position will not be affected adversely. "We now look up to breaking ground by December and have the initial 50 MW running on the national grid by September 2013 and at full capacity by mid 2014", said the chairman of Lake Turkana wind power Carlo Van Wageningen. "The letter of support from the government of Kenya will heavily boost our applications to our financiers", he said.

The company also signed a power purchase agreement with Kenya's sole electricity distributor, Kenya Power and Lighting Company. The 600 million Euro project is among the single largest investment in Kenya history. It is expected to generate 50 MW within the two years and to be in full capacity in two years. Demand for electricity in Kenya is expected to increase as the country implements projects to enable the country achieve middle income status by 2030. The bulk of Kenya's electricity estimated at 1,140 MW currently comes from the rainfall vulnerable hydropower sources 67%, 32% from thermal sources and only 5% from geothermal. Kenya is estimated to have geothermal capacity of 2,000 MW.

Ground right for solar power

Sunday Times
27 March 2011, Page: 26

MORE than half the wheat belt could be used to generate concentrated solar power, which can be stored to provide electricity after dark, scientists say. A UWA study has uncovered big swaths of the wheat belt that are flat and get enough sunshine to be able to house WA's first thermal solar power station. It is the first step towards generating green energy for thousands of WA homes and businesses, mine sites and eventually other parts of the nation.

Concentrated solar power, or thermal solar technology, requires direct sunlight and level terrain to focus sunlight with mirrors on to a heat retaining, molten salt solution. The stored heat is then converted to steam, which drives a turbine or engine to produce electricity without the intermittent power problems plaguing photovoltaic systems used on homes. But despite its flat, sunny landscapes, WA lags behind other states and the rest of the world when it comes to investing in thermal solar. WA is also the most polluting, energy guzzling, waste producer in the nation.

Monday, 4 April 2011

Renewables are the way ahead, nobody can deny

Sunday Age
27 March 2011, Page: 4

CARBON tax and the global warming debate aside, the world is running out of energy resources. If we continue using coal at present levels, we only have 176 years left of the stuff, according to a recent report by HSBC. But there may only be 49 years left of oil that's proven resources, not potential and that's assuming demand doesn't increase. In comparison, the number of years left of coal may seem significant but it is also one of the biggest polluters and, therefore, contributors to global warming.

Events at Fukushima in Japan are not only tragic because of the radiation consequences but Japan also now needs to find alternative energy sources. Before the quake, the country relied on nuclear power for more than 20% of its energy usage. This is nowhere near France's reliance it uses nuclear power for more than 75% of total production yet it is a significant amount that needs to be supplied in a country with limited land available.

More efficient usage of energy goes some way to fixing the problem and concerted efforts by manyJapanese to cut back their use meant that not as many rolling blackouts have been required in Tokyo. But, ultimately, new sources will have to be found. Renewable solar, wind and hydropower provide the long term solution but not all countries will be able to produce them. Those that have large land masses and are close to the equator such as Africa, South America andAsia are best placed to produce solar power.

Those with large river systems that can be dammed can rely on hydroelectricity. But while hydropower is renewable, most feasible hydropower sources are already being used to capacity. Biofuels producing fuel from food crops such as grains, sugar and oilseeds are an alternative but they can result in food shortages instead and they may not necessarily be better for the environment.

Also, the production of many renewable energy sources at the moment is quite expensive compared with more conventional sources. Geothermal energy harnessing the energy of the earth is the only renewable energy that has a cost efficiency comparable with coal and gas. But those costs are coming down. In the early 1990s, solar power cost $US1.40 a kW, when coal cost about US 10 a kW. It is now closer to US200 a kW, while wind, which was also very expensive in the 1980s, is now much closer to the cost of coal as well.

Regardless of whether or not you believe in climate change, we will need to rely more on renewable sources for our energy. Investing in companies that are developing these types of energy makes good sense. Not only are you supporting something that will stop taxing the Earth, you should expect to make significant financial gains as well when the rest of the investing world wakes up to their necessity.

Price of failure too high for us to use nuclear energy

Adelaide Advertiser
28 March 2011, Page: 16

Safety issues
ALL raw materials are governed by world market pricing that inevitably rise nothing to do with how much we have in the ground. We will inevitably over time pay higher prices for uranium powered electricity. How many studies of nuclear power have conveniently "forgotten" that? When it comes to safety issues, there are many industries dealing with hazardous and toxic substances, but it would appear that none of these would compare to nuclear for ongoing genetic damage to all types of life, and associated suffering. This is the real danger: choose between preserving the life's hereditary gold for all time versus the very short term gain of toxic gold in the current nuclear systems.

What of new developments in the nuclear industry? What about thorium and/or fast-breeder reactors? They are not developed yet. How many billions of dollars would be required to develop these? (On this see R. Eastman's typical nuclear industry costings in yesterday's letters). Why not spend just some billions on commercialising Australian National University's Closed Loop Thermochemical Energy Storage System using ammonia? This could take care of all Australia's baseload requirements.

For example, a pilot plant at Whyalla only received $7.4 million in 2009. This is Australian renewable base load technology that is working now, yet there is this touted dream of spending billions for who knows what legacy? The price of failure is irremediably high for nuclear. Why go long term hazardous and runaway expensive when you don't have to?

C. Hart, Edwardstown.


Uranium not limitless
IT strikes me as rather odd that Japan's ongoing nuclear crisis actually seems to have perversely emboldened proponents of all things nuclear. Disregarding all of the obvious (and serious) risks with safety, waste storage and nuclear weapons proliferation, my simple question to the nuclear cheer squad is how will we generate electricity once the world has run out of uranium (and coal, oil and gas)?

Consider the ever increasing demand for energy from a global population juggernaut that shows no signs of abating, as well as the revelation from nuclear advocate Barry Brook (The Advertiser, 23/3/11) that, "Globally, to service such power demands will need current levels of nuclear power supply to increase 21 fold around the world", it becomes clear that if the pronuclear lobby gets its way, the Earth's finite supply of uranium (and other fossil fuels) will be devoured with increasingly rapacious haste.

No matter what answer may be given to my simple question, the next obvious question is: Wouldn't it be better to do those things now, through enlightened choice, rather than leave them to future generations to sort out as a matter of desperate necessity?

Guy Barnwell, West Croydon.


Forgotten victims
ON the one hand the Government is advising caution in visiting Japan for fear of radiation health issues and on the other it ignores the primary needs of the Australian victims of the UK nuclear tests in South Australia. It appears that the Australian Government is far more interested in protecting the interests of our political and colonial masters (UK Government) than Australian citizens harmed by the UK nuclear tests. In 2009, SA Premier Mike Rann expressed concern that compensation has not been provided to those Australian victims of these tests, and also SA has not been properly cleaned up.

Mr Rann's position is correct, yet there is a lack of resolve by the Australian Government to facilitate any assistance to victims of the nuclear tests on Australian soil beyond some half baked financial contributions of a few million dollars for some questionable support services. This support does not address compensation for the injuries sustained as a result of the UK nuclear tests on Australian soil. If only we had a government that put the interests of Australian citizens ahead of those of our political and colonial masters.

Neil E. Gillespie, Flagstaff Hill.

Real stimulus should be in new technology

Sydney Morning Herald
26 March 2011, Page: 14

PERHAPS in Australia we tend to assume every other country wasted their stimulus money during the depths of the financial crisis on stuff such as cash splashes, covered outdoor learning areas and badly installed, smouldering insulation materials. OK, that's harsh but let's just say they didn't, as the government's chief climate change adviser, Ross Garnaut, reminded us in his latest update this week.

Citing International Energy Agency figures, Garnaut wrote: "the injection of substantial 'green' stimulus spending by governments,.. reversed the 35 year decline in real terms in low emissions energy research, development and demonstration and raises the prospect of significant breakthroughs". That stimulus investment, he told a Sydney lunch on Wednesday, was "starting to pay off". The worry for Australia is that we will fall behind in the race to develop clean technologies that will reduce the cost of mitigating climate change.

This month the US company Clean Edge, reviewing trends over the last decade, noted how clean technology investment had raced ahead of projections that were originally deemed optimistic. The solar PV market grew from $US2.5 billion in 2000 to $US71.2 billion last year or 40% a year, compounded. Sectors such as wind, hybrid electric vehicles, green buildings and smart grid also enjoyed spectacular growth rates.

Not here. HSBC recently scored Australia the lowest compared with the European Union, the US, Japan and Russian climate investment. Of eight key areas, we rated positive in just one (modal shift, because we are doing feasibility on very fast rail) and negative in two (carbon markets and climate strategy, based on political uncertainty). On one area we went backwards:" [EISBC] have downgraded our momentum score for renewables from positive to neutral, as we do not expect any new additional incentives". So investors move on.

Paddy Manning Twitter: @gpaddymanning

Sunday, 3 April 2011

Turbines take their turn

Sydney Morning Herald
25 March 2011, Page: 2

AUSTRALIA is poised for a boom in wind power, with the sight of turbines on hilltops set to become standard for huge tracts of the rural landscape. About 187 MWs of power for NSW comes from wind farms, with turbines that will generate a further 138 MWs being built and the Planning Department assessing an additional 3057 MWs enough to power half a million houses. fossil fuels, mainly black coal, brown coal and gas, still generate more than 90% of Australia's electricity, according to last year's Clean Energy Council report.

Most renewable energy is still hydroelectric, enough to power about 09 million households annually. Wind power comes next, with enough electricity to run about 700,000 households, followed by bioenergy (about 350,000) and solar panels (65,000). Renewable energy production will have to double in the next nine years if Australia is to meet its national target of 20% by 2020. But two main hurdles are stopping wind turbines from taking a bigger slice of the energy pie.

The first is cost. The value of Renewable Energy Certificates is about $30 a MW but the Clean Energy Council says a price of $50 is needed to offer useful returns to largescale investors. The big investors, AGL Energy and EPURON, which are planning some of the world's largest wind farms in outback NSW, say they are reconsidering the scale of their projects because of the certificate price.

The second hurdle is local opposition to wind farms. Anti turbine campaigns have formed in all six designated "wind corridors" in NSW the New England Tablelands, the Upper Hunter, the Central Tablelands, NSW/ACT borders, South Coast and Cooma Monaro.

To measure public concern, the state government surveyed 2000 people and 300 businesses in rural NSW late last year. About 80% said they would strongly support wind farms in their region. Support dropped off somewhat if a wind farm was proposed closer to a person's house but 60% still supported the idea within two kilometres of their house. About 13%, many aged over 65, said they did not support wind power.

Solar firm sees both sides of tax

Courier Mail
25 March 2011, Page: 44

FOR Sunshine Coast solar systems company Auzion, a carbon price would be welcome but also something of a worry. Auzion managing director Mark Leckenby said he hoped the carbon price policy would be designed so that domestic production of inputs for the solar industry, chiefly aluminium, wasn't disrupted.

His almost three year old company, which has 50 staff plus 30 full time sales consultants, previously focused on supplying solar panels but has just expanded its range to include an aluminium solar panel rooftop mounting system that Auzion designed and is manufacturing in Brisbane.

"A lot of the current product in Australia is imported. Ours is locally designed and made", Mr Leckenby said. "A carbon price will definitely be a boost for us because it further helps the economics of renewable energy. "But every one tonne of aluminium roughly equals a tonne of CO₂. It's important that local aluminium supply isn't impacted so its a matter of managing that".

A federal multi party committee is working out details of a carbon price, to be launched in July next year. Steel and aluminium companies want free permits to emit CO₂ so that offshore rivals without similar carbon costs aren't advantaged. The Gillard Government wants the bulk of revenue raised to go to households. Its climate change adviser, Ross Garnaut, says trade exposed polluters included in the scheme could receive assistance for three years to cover any sales price disadvantage.

And from 2015, any assistance would be determined by an independent regulator. Mr Leckenby said he expected solar panel demand to stay strong despite a federal rebate dropping, initially by 20%, from this July. Although the rebate is falling, the Greens are looking at how the carbon price scheme can reward those who make household energy savings.

"We've been installing about 60 systems a week and I think demand is going to be strong right through that 20% rebate drop", Mr Leckenby said. Auzion is also eyeing a role in a plan by Energy Parks Australia to develop a 10 MW solar farm on 20ha of land on the Sunshine Coast. Currently Australia's largest solar facility is a 4 MW solar thermal plant built by NSW Government owned utility Macquarie Generation in the Hunter Valley.

Solar's true potential

Age
25 March 2011, Page: 18

IT MAKES me angry when I keep coming across the old crock that solar can't provide baseload 24 hour a day power (Letters, 24/3). This line is so simplistic it is almost beyond belief. The only reason solar is not used more widely is because of vested political and corporate interests.

Molten salt storage, hydrogen fuel-cells and pumped water storage are but three methods that are being used or could be used to extend the power of solar beyond the fall of darkness. Oil and gas will eventually run out, coal will never be clean, but energy will keep falling out of the sky, and that's before you even start looking at geothermal, wind or wave/tide power.

M Lowick, Emerald

Panax in new green Indo deal

Courier Mail
24 March 2011, Page: 55

SHARES in Brisbane based geothermal energy developer Panax Geothermal have rallied 22% since Monday, bolstered by a new agreement to start exploration on its third geothermal project in Indonesia. Panax Geothermal has signed an initial deal with an Indonesian government owned power company to start exploration on project areas on the east coast of central Sumatra, with the aim of developing geothermal resources of up to 80 MWs per project.

As part of Indonesia's plan to slash its greenhouse gas emissions, the government plans to add more than 4000 MW in electricity generation capacity from geothermal energy in the next four years, or the equivalent of about 12 power stations. In order to encourage zero emission power plants, the Indonesian government has announced a guaranteed feed in tariff of $US97 ($96.15) per MW, plus carbon credits, to geothermal energy generators. Panax Geothermal said Indonesia's policies were providing investment certainty for renewable energy projects, noting this was in stark contrast to Australia where such incentives and investment certainty were not available.

Analysts say a major roll out in Australia of new power stations with zero greenhouse gas emissions, such as from wind, solar and geothermal sources, would require a carbon price, national feed in tariffs and improved incentives for research and development. "There is enormous potential for geothermal development in the Asia Pacific Region. Indonesia has commercially attractive tariffs, abundant geothermal resources and incentives for geothermal energy generators", Palm managing director Kerry Parker said. Panax Geothermal shares closed up 0.54¢ or 9.8% at 5.6¢ yesterday.

Tuesday, 29 March 2011

Our new neighbours - twin turbines move in next door

www.abc.net.au
24 March, 2011

Dianne and George Watson have been sitting and watching excitedly as piece by piece two wind turbines are built on their doorstep. The second turbine of Hepburn Wind, Australia's first community wind farm, is near completion at Leonard's Hill near Daylesford.

While wind farms have divided communities with complaints about ill health effects, noise and their appearance Dianne and George are excited at the prospect of turbines generating power from a paddock next to their property. "We've experienced the whole project going up and just seeing the parts coming up the driveway and everything, it was just unbelievable".

George says he's been living there since 1985 and it's the best thing that he's seen happen in Leonard's Hill. He says the Japan crisis has only reinforced his view that he'd rather live next to two wind towers than a nuclear power plant. The two turbines are expected to be generating power within the next four months.

Hepburn Wind chairman Simon Holmes a Court says once the lifting team have finished constructing the turbines, an electrical team will commence connecting them to the grid. "It will take them a good two months to connect up all the electricals and start to test it and in the June time frame, we'll be energising the wind farm and will start generating clean, safe energy into the local distribution network". Several residents in the local community are opposed to the project.

Simon says they've been communicating with residents as much as possible to try and "bust through some of those myths and misinformation about wind farms". "There are still a few people who are suspicious and not quite happy and we continue to work with those people to allay their fears", he says. The wind farm is expected to power more than 2,000 homes when it's operational. Simon says there will be a surplus of power and Hepburn Wind will be a net exporter of renewable energy within a year.

"We monitored the wind at the site, we had a monitoring tower up for three years, and we analysed that data at the end of that period with an independent wind engineering firm and they've predicted that the wind farm will power 2,300 homes. So generate as much power as 2,300 homes use in an average year, and in Daylesford in there are 2,000 homes". It's an interesting time for wind power and the renewable energy sector.

The emissions trading scheme debate is again dominating federal politics, a public hearing is being held in Ballarat next week as part of a Senate inquiry into wind farms and there are fears that the Victorian Government's wind farm proximity restrictions will push wind companies such as Keppel Prince and Pacific Hydro interstate.

Simon says while the project was never meant to be a political statement, he is hoping it provides a good example to the State Government as it rolls out its new wind policy about the positives of wind power. "It's been driven by local concern about climate change.

"We just sat down and thought, we're going to get on with it. So it is nice to be able to show a wide range of stakeholders in the community that a community can benefit from a wind farm and show our leaders that there is a positive role that renewable energy can play in communities".

Vineyard harvests the sun

Adelaide Advertiser
22 March 2011, Page: 35

THE Clare Valley's Mt Surmon Wines has adopted renewable energy to protect itself against rising electricity prices and declining grape sales. Owner Burt Surmon has installed a $73,000 10 kW solar power system on his 35ha property, 20ha of which is under vines. With government rebates, the system cost almost $50,000, but it's the long term value that encouraged the switch.

"As vineyard owners, we have been conscious of our environmental needs and the solar installation was an extension of that thinking", Mr Surmon said. "But the other reality is that the wine industry isn't travelling all that well,.. So we put some money on the roof to help us generate passive income (through the feed in tariff)". The system, which can generate up to 45 kW a day, will be paid back over seven years with a 16% return on investment, he said.

Wind farm wins WA nod

Summaries - Australian Financial Review
22 March 2011, Page: 11

The Mumbida wind farm, a joint business between Verve Energy and Macquarie Group is expected to commence working in 2012, after the Western Australian Economic Regulation Authority approved its licence. Complaints about the new farm were rejected, including that from Griffin Power (formerly Ric Stowe's company) which owns Emu Downs wind farm. The Emu Downs wind farm is presently up for sale by RBC Capital Markets and Royal Bank of Scotland after being muddled up in the Stowe empire.

Monday, 28 March 2011

Chilly reception for wind farm changes

Summaries - Australian Financial ReviewI
21 March 2011

The Victorian state government's change to planning regulations for wind farms, whereby it has handed much of the control over to local councils, could spell the end for a number of proposed projects, according to the renewable energy industry. Andrew Richards from Pacific Hydro said his company was not taking on any new projects and the fact that wind farms were now subject to stricter regulations than coal fired or gas fired power stations was 'unbelievable.'

Shaq Mohajerani from Union Femosa Wind Australia said he was in favour of community consultation. But uncertainty over legislation would make it difficult to attract investment, while Origin Energy, which was granted approval by John Brumby's Labor government for the Stockyard Hill wind farm, would not comment. Matthew Guy, Victorian Planning Minister, said the National Party had nothing to do with the decisions, president of the Municipal Association of Victoria, Bill McArthur conceded some projects may be blocked for political reasons, and Chris Schulz from Allens Arthur Robinson said projects would be abandoned or head to the Victorian Civil and Administrative Tribunal.

Community readies to flick the switch

Sydney Morning Herald
19 March 2011, Page: 14

WE'D better be getting serious about massive wind and solar, because the alternatives are narrowing. Forget nuclear here, anywhere near anybody. Carbon capture and storage? Yeah, sure. Coal seam gas? Highly problematic. Geothermal? Hmm.

On Thursday, the German Chancellor, Angela Merkel, said she was looking at whether the "renewables age" could be brought on sooner and in Australia, the Greens leader, Bob Brown, pounced. "We need to, sensibly, go straight to renewables", he said. "They're safe, they're great job creators, and the power source is free".

Everyone seems down on wind farms at the moment, they're not powerful enough, they're unsightly, they're even unhealthy! (Caution: excessive anxiety about the value of your property is bad for you.) The failing renewable energy target regime and a Victorian government elected on an anti wind platform are not helping, but weather permitting, today the first of a pair of two MW turbines in the community funded Hepburn Wind project is being raised at Leonard's Hill, near Daylesford and Hepburn Springs, in central Victoria.

The 1600 members of Hepburn Wind are expecting commercial returns on their collective $8.7 million investment, but a director, Simon Holmes a Court, says the primary drivers are reducing the town's carbon footprint and "making the statement that we're impatient and are just getting on with it".

"We're not cutting cable to the network", he says. "But when it's up and going we'll be a net exporter to the grid. On a windy day we'll be putting out far more power than our community uses". A non profit group, Embark, is extending the Hepburn model, working with more than 40 communities for small wind, solar or micro hydropower projects. Armidale, in the NSW northern tablelands, is next. "There's no reason why we couldn't have them in cities", Holmes a Court says.

Twitter:@gpaddymanning

Sunday, 27 March 2011

The reactor that saves itself: China leads the way with thorium

www.smh.com.au
23 March 2011

A few weeks before the tsunami struck Fukushima's uranium reactors and shattered public faith in nuclear power, China revealed that it was launching a rival technology to build a safer, cleaner, and ultimately cheaper network of reactors based on thorium. This passed unnoticed – except by a small of band of thorium enthusiasts – but it may mark the passage of strategic leadership in energy policy from an inert and status-quo West to a rising technological power willing to break the mould. If China's dash for thorium power succeeds, it will vastly alter the global energy landscape and may avert a calamitous conflict over resources as Asia's industrial revolutions clash head-on with the West's entrenched consumption.

China's Academy of Sciences said it had chosen a "thorium-based molten salt reactor system". The liquid fuel idea was pioneered by US physicists at Oak Ridge National Lab in the 1960s, but the US has long since dropped the ball. Further evidence of Barack Obama's "Sputnik moment", you could say. Chinese scientists claim that hazardous waste will be a thousand times less than with uranium. The system is inherently less prone to disaster.

"The reactor has an amazing safety feature," said Kirk Sorensen, a former NASA engineer at Teledyne Brown and a thorium expert. "If it begins to overheat, a little plug melts and the salts drain into a pan. There is no need for computers, or the sort of electrical pumps that were crippled by the tsunami. The reactor saves itself," he said. "They operate at atmospheric pressure so you don't have the sort of hydrogen explosions we've seen in Japan. One of these reactors would have come through the tsunami just fine. There would have been no radiation release."

Thorium is a silvery metal named after the Norse god of thunder. The metal has its own "issues" but no thorium reactor could easily spin out of control in the manner of Three Mile Island, Chernobyl, or now Fukushima. Professor Robert Cywinksi from Huddersfield University said thorium must be bombarded with neutrons to drive the fission process. "There is no chain reaction. Fission dies the moment you switch off the photon beam. There are not enough neutrons for it continue of its own accord," he said. Dr Cywinski, who anchors a UK-wide thorium team, said the residual heat left behind in a crisis would be "orders of magnitude less" than in a uranium reactor.

The earth's crust holds 80 years of uranium at expected usage rates, he said. Thorium is as common as lead. America has buried tons as a by-product of rare earth metals mining. Norway has so much that Oslo is planning a post-oil era where thorium might drive the country's next great phase of wealth. Even Britain has seams in Wales and in the granite cliffs of Cornwall. Almost all the mineral is usable as fuel, compared to 0.7% of uranium. There is enough to power civilization for thousands of years.

I write before knowing the outcome of the Fukushima drama, but as yet none of 15,000 deaths are linked to nuclear failure. Indeed, there has never been a verified death from nuclear power in the West in half a century. Perspective is in order. We cannot avoid the fact that two to three billion extra people now expect – and will obtain – a western lifestyle. China alone plans to produce 100m cars and buses every year by 2020.

The International Atomic Energy Agency said the world currently has 442 nuclear reactors. They generate 372 GWs of power, providing 14% of global electricity. Nuclear output must double over twenty years just to keep pace with the rise of the China and India. If a string of countries cancel or cut back future reactors, let alone follow Germany's Angela Merkel in shutting some down, they shift the strain onto gas, oil, and coal. Since the West is also cuttingsolar subsidies, they can hardly expect the solar industry to plug the gap.

BP's disaster at Macondo should teach us not to expect too much from oil reserves deep below the oceans, beneath layers of blinding salt. Meanwhile, we rely uneasily on Wahabi repression to crush dissent in the Gulf and keep Arabian crude flowing our way. So where can we turn, unless we revert to coal and give up on the ice caps altogether? That would be courting fate.

US physicists in the late 1940s explored thorium fuel for power. It has a higher neutron yield than uranium, a better fission rating, longer fuel cycles, and does not require the extra cost of isotope separation. The plans were shelved because thorium does not produce plutonium for bombs. As a happy bonus, it can burn up plutonium and toxic waste from old reactors, reducing radio-toxicity and acting as an eco-cleaner. Dr Cywinski is developing an accelerator driven sub-critical reactor for thorium, a cutting-edge project worldwide. It needs to £300m of public money for the next phase, and £1.5bn of commercial investment to produce the first working plant. Thereafter, economies of scale kick in fast. The idea is to make pint-size 600MW reactors.

Yet any hope of state support seems to have died with the Coalition budget cuts, and with it hopes that Britain could take a lead in the energy revolution. It is understandable, of course. Funds are scarce. The UK has already put its efforts into the next generation of uranium reactors. Yet critics say vested interests with sunk costs in uranium technology succeeded in chilling enthusiasm. The same happened a decade ago to a parallel project by Nobel laureate Carlo Rubbia at CERN (European Organization for Nuclear Research). France's nuclear industry killed proposals for funding from Brussels, though a French group is now working on thorium in Grenoble.

Norway's Aker Solution has bought Professor Rubbia's patent. It had hoped to build the first sub-critical reactor in the UK, but seems to be giving up on Britain and locking up a deal to build it in China instead, where minds and wallets are more open. So the Chinese will soon lead on this thorium technology as well as molten-salts. Good luck to them. They are doing Mankind a favour. We may get through the century without tearing each other apart over scarce energy and wrecking the planet.

Novatec deal boosts solar power

Summaries - Australian Financial Review
17 March 2011, Page: 17

Renewable energy developer Novatec Solar yesterday agreed to sell a 35% stake in the business to power and automation technology firm ABB. The deal will give Novatec, a subsidiary of infrastructure investment firm Transfield Holdings, access to power plant projects in Europe and beyond. Chairman of Novatec Guido Belgiorno Nettis said, "ABB is at the forefront of renewable energy integration". ABB recently completed a communications system contract for the Water Corporation in Perth. Transfield Holdings, in a consortium with Transfield Services, is competing in the Federal Government'ssolar flagships project using Novatec's technology against companies including Parsons Brinckerhoff and Wind Prospect CWP.

Lack of green energy to 'hit' power bills

West Australian
16 March 2011, Page: 28

WA will face a costly "green skills shortage" when the Federal Government's proposed carbon tax is introduced, unless the State Government starts investing in green technology and offering more specialised university places now, a union of scientists and engineers has warned.

Association of Professional Engineers, Scientists and Managers Australia State president Zaneta Mascarenhas said many engineering graduates had specialist skills in green technology but there were not enough local jobs for them to enter when they finished their studies, meaning they could not "get their hands dirty" and further develop their skills.

Ms Mascarenhas said WA was better positioned to take advantage of natural resources like solar power than European countries that were investing in green technology. She said the State Government needed to start investing in renewable energy projects now to keep household energy bills low when the carbon tax was imposed. "Germany is at the forefront of solar technology and they don't get nearly as much sun as WA", she said. "Initially it will be expensive but it will be more expensive to make the transition later. At this stage WA is not ready".

Unions WA secretary Simone McGurk said WA's lack of investment in renewable energy infrastructure meant the State was already losing some of its brightest green industry engineers. A joint report Creating Jobs, Cutting Pollution developed between the Australian Conservation Foundation and the Australian Council of Trade Unions found taking "strong" action on climate change now would create 770,000 more Australian jobs by 2030 than "weak action" would.

ACF spokesman Simon O'Connor said while a Federal policy would be the most cost effective option, the States could still take independent action on climate change. Verve Energy announced last year it was planning a large scale solar farm near Greenough in the State's Mid West. Manager of corporate relations Peter Winner said the Greenough River solar farm "would happen" and the company was also working on its Mumbida wind farm near Geraldton and Albany wind farm extension.

Japan nuclear crisis no boost for local coal, gas

Courier Mail
16 March 2011, Page: 30

JAPAN'S crisis won't hurt the global economy's recovery this year and any step back from its nuclear program would mainly benefit oil producers rather than Australia's gas and coal sectors, a leading economic forecaster said. BIS Shrapnel chief economist Frank Gelber said even if the world's third largest economy fell back into recession, it would not upset global growth this year of about 4% as Japan was not a growth driver. He also questioned if Japan's nuclear plant crisis would result in increased sales of Australian coal and gas, given Australia's existing capacity constraints.

"We can't produce to meet demand anyway. Longer term, you might see a slight shift away from uranium in Japan but short term they're more likely to replace that with oil, which doesn't mean anything for us, and medium term it might be coal and gas but it's not going to make a huge difference to us", he said. 30% of Japan's electricity production comes from nuclear power. It has plans to expand this to 50% by 2030, reduce fossil fuel use and increase renewable energy as part of its efforts to slash greenhouse gases.

Gas producer Origin Energy's managing director Grant King yesterday said Japan's commitment to a nuclear fleet expansion might change given the partial meltdown at several plants after cooling systems were taken out by the tsunami. "There are (nuclear fleet) concerns being talked about,.. that may well lead to changes in targets that exist in the longterm fuel mix and that would clearly be advantageous to LNG", Mr King said.

Dr Gelber also said the Australian economy looked set for five strong years of growth, powered by the minerals and energy investment boom. But he said Australia will experience a "very distinct" two speed economy in that time. He warned that Australia's major medium term economic challenge was to ensure it could withstand the shock of a bust in minerals prices.

"The Australian economy is now all about satisfying minerals demand. We're not doing anything else. All other industry is running down. "Take Queensland agriculture's a mixed bag, tourism is stuffed, education services and non commodities related manufacturing are doing it very tough as we undergo a structural shift to make way for the minerals boom", Dr Gelber said. "Once we've changed our structure, we could be left high and dry if and when the minerals boom busts. I don't know when that is, but the shock to the economy will come not when minerals prices fall but when investment falls and (the lag effect) could be years.

"We should be thinking now about what to do, for example using (a minerals resource rent tax) to help set ourselves up to be as resilient as possible". BIS Shrapnel forecasts Australia's growth for the year to this June to be 2.6%, rising to 4.0% in 2012. It forecasts Queensland's economy to have strong growth this year and next, due largely to a construction sector boom that will be led by engineering construction related to the boom in investment in minerals and energy projects.

Energy giants punt on the future

Australian
16 March 2011, Page: 30

Origin Energy's $2.3 billion equity raising shows that big companies are still laying energy bets amid uncertain carbon policies, but their benefits are easily found. Grant King's empire is built on the foundation of a fully integrated business model that means he can manage wholesale energy market risk and indeed government policy risk with stable retail customers. The same applies to AGL Energy and TRUEnergy, with the latter showcasing the diversification benefits by diluting the Yallourn coal fired generator's share of its portfolio from 77% to 45%.

At the same time, the Victorian share of its retail network fell from 79% to 37% through the NSW purchase. Maybe that explains why incumbents were the only parties to bid in last year's privatisation. Others would argue that uncertainty over government policy was a more obvious reason, scaring off offshore investment, with the resources tax debacle and carbon price uncertainty the major factors.

Still, Hong Kong based CLP Group was prepared to back local boss Richard McIndoe on last year's $2bn NSW investment to establish TRUEnergy as a stand alone player. Origin Energy's King is pleased the government is open to discussion on the carbon tax, but like other producers he would prefer a well designed trading scheme that would provide incentives for new abatement investment while also creating a more stable investment environment to ensure supply continuation.

The idea being the trading system would work towards the right price and, in the process, obviate the need for artificial support for renewable energy. The problem with the present model is that the emphasis on the 20% mandated renewable target skews investment towards more expensive alternatives, away from cheaper base load supply. King has his bases well covered.

But he has long warned that the better Australia is at exporting coal seam gas and other gas, the higher the local gas prices will be. The pressure to increase renewable targets also raises domestic prices and negates some cost advantages enjoyed by base load power sources such as gas over high carbon sources like coal. In short, the more the government distorts the market, the more it will defeat its aim of reducing carbon emissions.

The concept of carbon taxes as setting a price to provide stability is laughed at by the energy industry, given the long lead times for investment. But at least it's a start. The government can now till in the details to fast track the move towards a market based system. That will necessarily involve politically difficult decisions but is preferable to leaving the market half pregnant.