Interview with Ali Clarke, ABC Radio Adelaide

Transcript

14 August 2019

E&OE

ALI CLARKE: Minister, good morning. It's good to have you with us. You're actually visiting our beautiful Upper Spencer Gulf region today with $40 million you'd like to spend on South Australians. What's it for?

ANGUS TAYLOR: It is for South Australia - look, we've got record levels of renewable energy projects happening in South Australia, as well as very high levels of investment in household solar. That's great for reducing emissions, but it is impacting the security of the grid and it's driven up wholesale prices. South Australians expect when they flick the switch, the lights go on. What we are doing as part of our program right across Australia is assessing 12 projects that can help shore up the grid. They are dispatchable projects - that's projects where the power is available when you need it, and most importantly, they can firm up renewables. We've got three pumped hydro projects in South Australia - four projects in total - three pumped hydro, and I'm looking at two of those projects today. We've committed today $40 million to the first project that will proceed. We haven't decided which one of these projects it is yet, but it's $40 million available to kick-start this process of underwriting new dispatchable projects into the system to bring down prices, to keep the lights on, and to make sure we've got a secure affordable grid in South Australia.

ALI CLARKE: Now, $40 million will pay our power bills, you know, in our homes, no dramas, over and over again. But how far will $40 million really go in these projects, which I would imagine would be on a massive scale?

ANGUS TAYLOR: The four projects we're looking at in our underwriting program - of which four are in South Australia - what we're doing is putting as little in as we need to but as much as we have to, to ensure that projects get financed. These sort of projects - pumped hydro projects - are relatively new in the Australian market. Snowy has had pumped hydro for many, many years - since the 70s - but it's publicly owned by the Federal Government now. There haven't been the private sector projects of this nature. So we are stepping in, and we're stepping in not only to ensure that we've got enough supply in the market, but to bring new competitors in the market. So all of these projects in South Australia and across Australia are for small or new players into the market that we think will be more competitive, and therefore will play a bigger role in bringing down prices than if the projects were being driven by existing energy companies.

ALI CLARKE: Just for those that don't know, can you just talk to us about pumped hydro? I mean, you mentioned the Snowy one, but essentially it's trying to get water back up a hill?

ANGUS TAYLOR: The way to think about is it's a big battery.

ALI CLARKE: Yes.

ANGUS TAYLOR: You've got a pond at the bottom, a pond at the top, when the power prices are low, when there's a lot of power around, when the sun is shining and the wind is blowing hard, you pump the water up the hill, and that's storage. It's like a battery. Then when the prices get high and you've got less power available - particularly in South Australia now with the very high levels of renewables, at night or when the wind isn't blowing - then you use that energy stored in the water at the top of the hill, drop it down through a pipe and run a turbine. It's a very, very effective battery. To put it into perspective, the Snowy project is a fiftieth of the cost of batteries. So it's a very, very cheap way to store energy and to make sure that we have energy when we need it. You know, I say this again and again, but renewables of course are great, solar and wind are great for reducing emissions, but reliability can be a real issue because when the sun isn't shining and the wind isn't blowing, you don't necessarily have the power you need. That's why storage and backup is so crucial. We need that, most of all in South Australia, of all of the states in Australia, that's where it's most needed, and that's why we're working our way through these four projects in South Australia through pumped hydro. We've committed $40 million to accelerate the process to get it going. That won't obviously be the end of the commitment from the Federal Government, but it's the beginning of the commitment to this underwriting program.

ALI CLARKE: Energy is obviously important to us here in South Australia, but so too is water. The source of this water for the pumped hydro, is that straight out of the Gulf? And how much is taken and what environmental impacts does it have?

ANGUS TAYLOR: Different projects are different, but look, you don't need a lot of water. This is the point. It's recycled, you're using the same water over and over again. That's one of the great virtues of pumped hydro, is the water requirement is not significant. In fact, the only water you're using is in evaporation that might occur from the ponds. The requirement for water is relatively modest. Obviously, part of the assessment is making sure there is access to that water and that the environmental issues obviously have to be properly dealt with. As with any project, it will have to go through the state approvals and so on. The crucial point here is that we need to turn unreliable power into reliable power, and of course, in the process of doing that, we're driving down prices. We know when the Snowy pumped hydro project, we already have in place in the system, when it comes on, it pushes prices down. That's what we want much more of.

ALI CLARKE: But that's a huge project, Minister for Energy Angus Taylor, that's a huge project. In perspective, I mean, what are these projects like in size and what can they do? I mean, how much power would be generated in comparison to Snowy?

ANGUS TAYLOR: The pumped hydro that exists in Snowy is not huge. It's one small part of the overall scheme, which was built in the 1970s. But look, these can make a significant difference in the South Australian market. The South Australian market isn't huge, it's about 2,500 megawatts or so on average - it peaks at a higher number than that. These projects are 200 or 250 megawatts, so they're quite, you know, they're quite significant given the size of the market. We know quite small amounts of new capacity or excesses of generators for that matter can have a very big impact on the market at the moment. That's why we really need more supply coming into the market, particularly from new competitors.

ALI CLARKE: Well, Minister for Energy and Emissions Reduction Angus Taylor, enjoy our beautiful Port Augusta today. Thanks for your time.

ANGUS TAYLOR: Thank you for having me.

Minister for Energy and Emissions Reduction