A POWER industry analyst says he is confident that Tomago Aluminium will succeed in its plan to operate using renewably generated electricity, and that it will do so with lower production costs than Chinese coal-fired smelters.
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But it will take many years to get to that point, which would be when the National Electricity Market (NEM) had a lot more "firming" capacity in the form of grid-sized batteries and more Snowy 2.0-style pumped hydro.
In an article this week for the renewables news site Renew Economy, David Leitch of ITK Services said the "full benefits" of wind and solar would not be felt until "we get rid of gas".
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In the article and a subsequent interview with the Newcastle Herald, Mr Leitch said the grid was "a long way short" of having the capacity to do without gas.
Mr Leitch also told the Herald that he agreed with the proposition that the coal-based generating system was being pulled down before the renewable replacement had been built.
"Just building more wind and solar won't get rid of gas and make electricity prices go down," Mr Leitch said.
"Or not until lots more wind and solar are in the system, because more wind and solar tends to force down lunchtime prices. So, instead, it's coal generation that suffers and closes, creating a shortage of bulk energy.
"It's only when most of the coal is gone that building more wind and solar will lead to a permanent decline in average prices.
"But coal is still providing the largest share of bulk electricity in the NEM."
On the batteries and hydro facilities that would cut gas consumption, Mr Leitch said it would "take ages" to build sufficient hydro, and that any new dams would likely need major new transmission lines to connect to the grid.
"Batteries have higher capital costs but can usually be installed closer to demand to take advantage of existing infrastructure," Mr Leitch said.
Although former Tomago Aluminium head Matt Howell created controversy by saying that South Australia's "big battery" could only store enough power to run the smelter for about 10 minutes, both Tomago Aluminium and the Boyne Island smelter at Gladstone are investigating ways of running on renewables.
Tomago told the Herald in 2021 that it hoped to convert to renewables by 2029, with one think-tank, the Australian Industry Energy Transition Initiative chaired by banker Simon McKeon putting the price tag at $8 billion in generation and transmission costs.
Mr Leitch said the high up-front costs needed to be set against the subsequent savings of not having to pay for coal and gas to generate electricity, which was why the transition would be financially viable.
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Ian Kirkwood
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
