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Port Augusta power stations, Leigh Creek coal mine closures set to drive up electricity prices, economist says

2015-06-16 08:23:28

A closure of Port Augusta's coal-fired power stations by early 2018 could drive up electricity prices in South Australia, an economic forecaster says.

Alinta Energy told its workforce yesterday the twin power stations, one of them already mothballed, and an associated coal mine at Leigh Creek would close by March 2018 but possibly as soon as next April.

The jobs of 438 workers are to go across the Port Augusta and Leigh Creek operations, with Alinta saying the operations are not viable.

Danny Price from Frontier Economics said Alinta was providing 16 per cent of SA's power generation and the shutdown would leave the state short of cheap, baseload electricity supply.

"There's no doubt in my mind that the closure of Alinta's plant will drive up prices," he said.

"I don't think the sky's going to fall [economically] unless of course you don't like high electricity prices, and South Australians have probably suffered more than most in that regard."

Mr Price watched SA's electricity privatisation push in the 1990s and said there was a direct link between Alinta's recent woes and the efforts of past and present governments, including former premier Mike Rann's, to promote and subsidise wind-generated power.

"There's no doubt at all that subsidised wind generation in particular has had a very significant effect on Alinta's decision," he said.

Mr Price said that since 2009, electricity demand had fallen 10 per cent across eastern Australia, as households and some industry embraced renewable energy options.

He argued the cheapest solution for SA as the shortage of baseload power loomed would be to enlarge the interconnector between SA, New South Wales and Victoria, because the state could tap into the excess national supply of power.

Workforce analyst says jobs outlook grim

Workforce analyst Associate Professor John Spoehr of Adelaide University said the current mining industry downturn generally, coupled with the looming job losses when Alinta withdraws, made for a grim outlook.

"There's a real problem in the north of South Australia. Unemployment will rise well in excess of 10 per cent in the region if we don't do anything," he said.

He said the northern region would need major investments if there were to be jobs available, and the Alinta announcement was dire for a state already set to lose carmaker Holden.

"This is really bad news going into the prospect of the closure of the auto industry," he said.

Representatives of five unions met Alinta Energy management on Friday morning to discuss the future now facing its workforce.

John Adley from the Electrical Trades Union said unions were keen to see a closure agreement drawn up as soon as possible to clarify issues such as payment of redundancy entitlements, which would give a small assurance to the current workforce as people planned their futures.

Advocates for solar and nuclear power generation are pushing their cases to occupy the vacuum which will be left after the Playford B and Northern power stations close.

Alinta Energy said the rising use of renewable power had forced its hand after a drop in demand for its coal-fired electricity.

"There's been a rapid rollout and uptake of rooftop solar and then you do have the large-scale renewable energy target that has been driving the development of wind farms," Alinta chief executive Jeff Dimery said.

Repower Port Augusta Coalition spokesman Dan Spencer is an advocate for solar-thermal electricity and says regional cities such as Port Augusta need economic support to make the transition from coal to the cleaner alternative.

Coal communities should have the opportunity to be at the forefront of the transition to renewable energy. We know we need clean energy. Port Augusta could be at the forefront of it.

Dan Spencer, Repower

"Solar-thermal can store energy in molten salt, which allows it to provide on-demand renewable power," he said.

"Coal communities should have the opportunity to be at the forefront of the transition to renewable energy. We know we need clean energy. Port Augusta could be at the forefront of it."

Mr Spencer said it was clear any solar-thermal plant would cost hundreds of millions of dollars.

"But if the State Government actually steps up to make it happen, they can work with private industry and the Federal Government to make this investment," he said.

"We already know international investors are circling Port Augusta."

Nuclear power future under scrutiny

South Australia is holding a royal commission into the nuclear fuel cycle to consider whether nuclear power generation has a future in SA.

History of coal-fired power in SA

  • 1943 Coal mining began at Leigh Creek
  • 1954 Port Augusta power station commissioned to provide baseload power for SA
  • 1960 Power station renamed Playford
  • 1985 Northern power station commissioned
  • 1999 Power firm ETSA privatised, along with power stations
  • 2012 Playford B station mothballed
  • 2015 Alinta announces mine and power station closures by 2018

Adelaide University PhD candidate Ben Heard has been examining the potential for nuclear power use by Australia's energy market.

"We need a replacement that secures jobs and employment in the long run and secures electricity supply," he said.

"The best option to deliver that would be a nuclear option."

Mr Heard doubted solar-thermal could meet demand as effectively as nuclear energy.

Russell Marsh from the Clean Energy Council said South Australia led the nation in renewable energy uptake and a focus was needed on how to move existing workers into that sector.

He said in the past eight years or so, SA had moved to more than 40 per cent of its electricity coming from solar and wind.

"That's showing that actually you can generate significant amounts of electricity without the need for fossil fuels," he said.

"A South Australian factory that was involved in the automotive sector is now being effectively retooled to supply components to the solar sector.

"That's another good indication of actually how you can transition away from, I guess, the more traditional industries."

Port Augusta has had economic near-death experiences before.

In the early 1990s, Australian National Railways was privatised and more than 1,000 jobs went, then the power station shed another 500 workers.

It meant 20 per cent of the regional city's jobs vanished swiftly.

Associate Professor Spoehr said the city needed to brace for the same thing to happen again.

"This is of similar magnitude in lots of ways and it comes at time when mining activity is very slow and commodity prices are not driving mining, there's a real problem in the north of South Australia in terms of where will the jobs come from over the next few years," he said.

Original Article:
http://www.abc.net.au/news/2015-06-12/port-augusta-renewable-energy-nuclear-power-jobs-outlook/6540200

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