A NSW power trip

One of the firm rules of electricity supply is that interconnection equals controversy. Always has been and always will be.

The past decade or so on the east coast has seen blazing rows over linking Queensland and New South Wales power – a change of government had the line shifted kilometres to avoid the Lockyer Valley – and over constructing Basslink between Tasmania and Victoria – a stoush the Greens keep stirring years after the undersea cable was commissioned and saved the island from a major problem in the most recent drought.

Just how vexing the network issue can be is currently being brought home to the members of the NSW Legislative Assembly public accounts committee, chaired by Sydney North Shore MP Jonathan O'Dea, which has been given the task by the O'Farrell government of examining the economics of power generation.

Submissions to the committee run the gamut from warnings that the current interconnection arrangements, on which NSW relies on for a critical 11 per cent of its power supply, may be unstable, to claims that there is no need to expand the network, to wind power arguments that the state should rely on developments inside its borders for its future needs.

What you think depends on where you stand.

At present NSW obtains some 8,000 gigawatt hours a year of its power needs from interstate, mostly from Queensland but also from Victoria and the Snowy Hydro scheme.

The amber light argument is based in part on Queensland's own electricity demand continuing to grow apace – at a forecast 3.5 per cent a year, double the growth in NSW – with more of its supply needed at home, not least because of the requirements of new LNG and mining developments.

Even if more capacity is available north of the Tweed, this case argues, the interconnectors between the two states need expansion – and there is nothing quick or easy about getting a new transmission line through the east coast regulatory and environmental planning jungle.

What's more, needing extra electrons from Queensland when demand there is high will ensure that consumer power bills go up too, the argument goes.

NSW can, at this point in time, import a maximum load from Queensland of about 1,300 megawatts and from Victoria (via the Snowy Hydro interconnector) of about 1,100MW.

TRUenergy has told the committee that the impact of the federal carbon price and the Gillard government's ‘clean energy future' plans are going to be a factor in what is available from Victoria in future.

“The transition away from brown coal may reduce the amount of low-cost energy that could be exported to NSW,” it warns.

If you are a local generator like taxpayer-owned Delta Electricity (whose Mt Piper power station output is now the property of TRUenergy under the Keneally government's ‘gen-trader' deals) on the other hand, you don't know what the fuss is about.

“There is no evidence to suggest there is a case for increasing the capacity of interconnections in to New South Wales,” it says in its submission.

The real issue, says Delta, is a different form of energy transport – gas pipelines – because new power stations in NSW are going to be gas-fired and the state at present meets 99 per cent of gas supply from interstate.

If you are on the green side of the fence, the situation is different again.

Wind farm developer Infigen Energy says the lesson to be drawn from interconnection constraints is to ensure new supply is obtained within the NSW borders.

If the state follows through with a plan to have 20 per cent of its electricity coming from renewable resources (including the Snowy), “there should be little need to import additional electricity from interstate in the short to medium term.”

The green generators reckon there is 3,000 MW of wind capacity readily available to be developed in NSW – but, as with the coal seam gas developers, investors have a certain amount of community angst to overcome plus a state premier who has made it clear he is no fan of windmills.

Another would-be wind developer, Germany's Epuron, which wants to build Australia's biggest wind farm near Broken Hill, raises an issue that may seem a bit out there as we wrestle with flooding rains at present: the impact of drought.

Few things, of course, are more certain than another east coast Big Dry lying in wait for us and Epuron's point is that, as in 2007-08, black coal-fired generators in NSW and southern Queensland are up the creek when they can't access cooling waters.

When they can't operate, east coast wholesale energy prices head north.

In the event of another long drought, the company points out, NSW would have a bigger reliance on interstate imports to meet rising demand – assuming the power is available and the interconnectors have the capacity to carry it.

Better by far, then, to build some big wind farms – which, by the way, will then need some more gas plants to come on line when the wind's not blowing, which is not all that unusual on hot, still days.

There's a lot of peaking gas plants waiting to be built in NSW – about 4,920MW of it in 10 projects at the latest count. 

But there is the issue of gas supply – which all looked so simple when the big coal seam gas resources in northern NSW were the apple of politicians' eyes, but now is a tad bedevilled by the ‘NIMBY' issue.

One answer, says the Australian Nuclear Science & Technology Organisation in a submission to the parliamentary committee, is to consider diversifying the NSW power system, adding renewables, fossil-fuelled plants with carbon capture and storage and reactors to the mix.

Energy security for NSW, says ANSTO, will be at risk without active consideration of nuclear energy, given that the future cost of carbon isn't known and wind and what-not is intermittent.

Given the availability and price challenges gas generation faces, it suggests the stability of nuclear power pricing should make it attractive.

Is this the point that Jonathan O'Dea and his fellow MPs on the committee feel a sudden need for a Bex and a good lie-down?

Keith Orchison, director of consultancy Coolibah Pty Ltd and editor of Powering Australia yearbook, was chief executive of two national energy associations from 1980 to 2003. He was made a Member of the Order of Australia for services to the energy industry in 2004.