Tomago Smelter and analyst Tim Buckley go head to head on power

Mr Howell was responding to comments made by Mr Buckley in Monday’s Newcastle Herald. He said 95 per cent of South Australia’s power was coming from gas and Victorian brown coal on Monday morning despite SA’s reputation for advanced renewable power. The wholesale price was $320 a megawatt-hour, a cost no industry could afford on a spot-price basis.

Buckley says renewables will ‘gut coal’

To show the scale of power needed for industry, he said the Tesla battery in South Australia held enough electricity to run Tomago for just eight minutes.

“If we contracted with a wind supplier to get hundreds of megawatts they could say ‘here it is but it’s not firmed [guaranteed]’ so we’d have to contract with someone else to provide that power when the wind isn’t blowing,” Mr Howell said. The wind provider can contract themselves to get conventional power to firm up the supply but the cost of that is horrendously expensive, it’s not a viable proposition, price-wise, at the moment.”

Mr Howell said aluminium companies were price-takers not price-setters: the aluminium price was set internationally each day in London, meaning the smelter could not simply lift their prices to accommodate increases in one of their biggest costs, electricity.

But Mr Buckley, director of the Institute for Energy Economics and Financial Analysis, said Mr Howell was distorting the real picture.

He said no-one had ever suggested running a smelter on batteries. But the SA battery was so successful as a grid stabiliser that Victoria was looking at installing two and more would follow.

On big industry needing coal or nuclear baseload supply, Mr Buckley pointed to Korea Zinc’s Sun Metals smelter at Townsville, which has almost finished a 124-megawatt solar farm designed to provide one-third of its electricity needs.

Mr Howell said a zinc smelter could cut demand if needed but an aluminium smelter required constant power to keep its pots molten.

He said he had spent more than 25 years in the zinc industry and there were fundamental differences between the two types of process when it came to power consumption.

“Zinc electrolysis can reduce power to essentially a 'holding pattern' with no deleterious impact on the process,” Mr Howell said.

“Aluminium on the other hand, has to maintain a high rate to keep the cells molten. If Korea Zinc opt for solar and a cloud passes overhead, their process won't be interrupted (apart from the opportunity loss). In our case, we need instantaneous access to replacement power.

“This can come from the grid, supplied by coal fired generators, as it currently is. Or it could come from gas peaking plants, but at what cost?

“This morning when South Australia had no wind, no solar and was supplied mostly by gas, the wholesale price was over $300/MWh; that's a recipe for bankruptcy.”

With AGL reportedly investigating a pumped hydro plant at the former Muswellbrook colliery, Mr Buckley said Japan already had 25,000 megawatts of pumped hydro, and China 30,000.

He said Australia was lagging behind, but an Australian company, Genex, was proposing a 250-megawatt pumped hydro system at the former Kidston gold mine near Townsville, to complement a 270-megawatt solar plant being built nearby.

Mr Buckley said major industrial users who were sceptical about a renewables future needed to look at what was happening around the world and also look at their own businesses, which had a history of passing on a number of their costs – including the greenhouse gases and nitrous oxides and sulphur dioxide emissions from the coal-fired generators running them – by passing them on to the taxpayer and the environment.

“Sun Metals is not just giving excuses, it is looking for a viable solution has commissioned its solar project and is willing to engage and discuss to build a viable future,” Mr Buckley said.