A 150-megawatt solar thermal power plant has been secured for Port Augusta in South Australia, State Premier Jay Weatherill has announced.Construction of the $650 million plant will start in 2018. Mr Weatherill said the Aurora Solar Energy Project would be ready to go in 2020 and would supply 100 per cent of the State Government’s needs.
That amounts to USD 6 cents per kilowatt-hour — a price lower than SolarReserve’splanned project in Copiapó, Chile, which was bid at USD 6.3 cents per kilowatt-hour earlier this year.
The Government will pay a maximum of $78 per megawatt hour.
Mr Weatherill said the solar thermal plant was “the biggest of its kind in the world”.
“Importantly, this project will deliver more than 700 jobs, with requirements for local workers,” he said.
In September 2016, the Government launched a tender process to procure 75 per cent of its long-term power supply.
It said it wanted to attract a new competitor onto the market and put downward pressure on electricity prices.
The Government contract with operator Solar Reserve will last for 20 years, and was the “lowest cost option” of shortlisted bids for the project.
The maximum Government load is 125MW, meaning the plant will be able to supply other customers.
“This, in addition to our state-owned gas plant,and the world’s largest lithium ion battery, will help to make our energy grid more secure,” Mr Weatherill said.
Project built on $110 million federal loan
Solar Reserve chief executive officer Kevin Smith toured the region in September last year, and said at the time it would need at least $100 million in federal grants or loans to proceed.
Earlier this year, the Federal Government confirmed it would grant $110 million in a concessional equity loan to support a solar thermal project at Port Augusta.
The loan — first flagged in the lead-up to the federal election — was guaranteed in a deal struck between the Government and independent senator Nick Xenophon to get his support for company tax cuts legislation.
Senator Xenophon said the project would transform the energy market in SA and be a “flagship project for the entire nation”.
“This will make a difference in the South Australia energy market. It will secure the grid and mean more baseload power than intermittent power,” he said.
He said it would lead to more stable energy in the market, which would lead to lower power prices.
“It’s just an outstanding result and the amount of people that should be thanked, I mean, I could be here for hours thanking them all,” he said.
Solar Reserve said the plant will be able to provide between eight and 10 hours of storage and had no requirement for gas or oil generated electricity as a backup.
It is expected to employ 50 full-time workers on an ongoing basis once it is operational.
The company said the power station will operate in a similar fashion to a coal or gas station, meaning many of the jobs would “require the same skill sets”.
Mr Smith said he looked forward to supporting “federal and state renewable energy targets”.
What about the expert’s attitude towards this project?
Wasim Saman is a Professor of Sustainable Energy Engineering at the University of South Australia
This is first large scale application of solar thermal generation in Australia which has been operating successfully in Europe, USA and Africa. The significance of solar thermal generation lies in its ability to provide energy virtually on demand through the use of thermal energy storage to store heat for running the power turbines.
This is a substantially more economical way of storing energy than using batteries. While this technology is perhaps a decade behind solar PV generation, many future world energy forecasts include a considerable proportion of this technology in tomorrow’s energy mix.
Dr Matthew Stocks is a Research Fellow in the Research School of Engineering at The Australian National University
We have lots to learn about how solar thermal can contribute to a stable, low cost, low emission electrical system, and the announced system will be an important step in understanding the potential of solar thermal.
One of the big challenges for solar thermal as a storage tool is that it can only store heat. If there is an excess of electricity in the system because the wind is blowing strong, it cannot efficiently use it to store electrical power to shift the energy to times of shortage, unlike batteries and pumped hydro.
It is not yet clear whether it will deliver a better outcome than wind and solar with electrical storage.
Honorary Associate Professor Hugh Saddler is a Research Associate at the Centre for Climate Economy and Policy, at The Australian National University
The storage will allow the power station to keep supplying electricity at full capacity for some hours after the sun has set and peak evening demand for electricity has passed. It will thus combine both generation and storage in the one plant, greatly enhancing the reliability and security of the electricity grid in SA.
At a reported 125 MW it will be large enough to supply 5 per cent of the state’s current total daily electricity consumption.
The reported contract price to the state government of $78 per MWh is not much higher than recent contract wind generation prices and at or below prices for electricity from current solar photovoltaic power stations, neither of which include energy storage. It is also well below the estimated cost of any new coal fired power station in Australia, and well below the spot wholesale price of electricity in the SA market region, which has averaged between $110 and $120 per MWh since March this year.
Dr Ariel Liebman is the Deputy Director for Monash Energy Materials and Systems Institute (MEMSI), at Monash University
The Port Augusta Solar Thermal plant will be a great complement to the range of new technologies now in South Australia and the rest of the nation such as wind, solar PV and electric battery such as the Neoen/Tesla battery announced last month. Solar thermal with storage is an ideal partner to the other new technologies whose growing deployment is now unstoppable. Being able to store its own energy output in a thermal way (not electrically such as in the case of lithium ion) makes this a truly dispatchable renewable technology.
While this particular project appears to be uneconomic without the state government subsidy, de-risking early stage investment is the government’s role and as more deployment of new technologies will bring the cost down as industry learns how to manufacture and deploy at scale. We need the most diverse mix of technologies possible if we are to ensure we limit climate change based temperature rises to two degrees if not 1.5 degrees.
It will add to the downward pressure on wholesale energy prices although at the size of 150 MW, the impact will be quite small and it is unlikely to be felt in the end-consumer bill, particularly as the majority of the retail electricity price rises seen over the past ten years have little to do with the cost of energy generation but more to do with failures in retail competition as well and wholesale market ownership concentration and insufficient transmission inter-connector capacity in the National Electricity Market.
Dr Mark Diesendorf is Associate Professor and Deputy Director of the Institute of Environmental Studies at the University of New South Wales
An excellent decision! Port Augusta’s concentrated solar thermal power station with thermal storage will be a dispatchable source of renewable power.
In other words, it will supply power on demand. Along with the Tesla battery and open-cycle gas turbines, it will balance the fluctuations of the variable renewable energy sources, wind and solar PV.
Dr John Pye is a Senior Lecturer in the Solar Thermal Group at the Australian National University
I’m very excited about this new announcement. I visited the SolarReserve system at Crescent Dunes, near Tonopah, Nevada, back in September 2013 when it was nearing the end of its construction process. That plant started up in Nov 2015 and SolarReserve has meanwhile been pursuing other projects in South Africa, Chile and many other places. One of our own ANU PhD students, Rebecca Dunn, took a job with them after leaving the university. It’s very exciting to see large-scale CSP finally coming to Australia.
Previous efforts under the Solar Flagships program looked very promising but ultimately it appears that the financing mechanisms weren’t right and the projects were allowed to fall through without completion. I very much hope that this time around a good solid deal has been done and that we will see a world-class CSP plant delivering dispatchable power into the Australian Grid. This project, like all large projects in the ~5 GW global CSP market, are critically important in helping CSP to ‘come down the cost curve’ and allowing CSP to take up a role in the wide range of technologies that needed for around-the-clock fossil-free power for Australia any anywhere else where the sun shines brightly!
Beyond CSP for electricity, at ANU we think that CSP will one day be the answer to decarbonising a wide range of industrial heat applications, and maybe even a way for Australia to export higher-value renewably-processed metals, instead of raw materials like ore.
Professor Samantha Hepburn is the Research Director of the Law School at Deakin University in Melbourne and is also the Director of the Centre for Energy and Natural Resource Law (CENRL).
Drawing upon similar technology from projects that have been developed in Nevada in the United States, the project will be developed using $110 million of concessional loan from the government. The government will grant a 20 year contract to buy 125MW of the power generated by the plant. This provides price stability and means there is capacity for the plant to also supply elsewhere.
One of the biggest regulatory issues for CSP is licensing and siting as a large plant requires both land as well as access to transmission lines. The proposed plant is set to be built 30km out of town on state owned land so this will resolve many of these concerns.
Longer term it will be necessary to monitor the effectiveness of production given the financial subsidies provided by the state and to evaluate the power project agreement between Solar Reserve and the South Australian government given that it is a key financial instrument for the project.
In the current phase of renewable transition however, with higher cost pressure, steady industry development and stronger government support, the project looks positive.