23 February, 2017
Matt Chambers & Andrew White
Courtesy of Australian
The heads of some of the nation’s biggest companies have blasted the chaotic state of the power grid with one, BHP Billiton chief executive Andrew Mackenzie, warning the nation’s renewable energy schemes could raise costs and reduce power security while having no impact on emissions.
The head of the world’s biggest miner has warned that a long-term expansion of Olympic Dam may not go ahead if power security and costs are not addressed and this will probably need carbon capture and storage if emissions cuts are also wanted.
BHP Billiton took a $US105 million ($137m) cost hit at the Olympic Dam copper and uranium mine in South Australia after recent blackouts.
“Let’s talk about affordability, reliability and emissions reduction, as opposed to having some secondary target about just having more renewables, which might deny you all three,” Mr Mackenzie said in London last night after releasing a first-half profit of $US3.2 billion ($4.15bn).
“We have lost $US100m in this period because of the intermittency of power in South Australia, and also we are facing more expensive electricity, frankly, than we budgeted for at this time last year.”
Mr Mackenzie warned that the nation’s unreliable power infrastructure could stop a planned expansion of Olympic Dam.
Mr Mackenzie told investors that a proposed future doubling of the size of Olympic Dam to produce 450,000 tonnes of copper a year would not go ahead in the current situation.
“We would not look at a major expansion of Olympic Dam unless we can be confident we have a reliable, affordable source of power within South Australia,” he said.
Chief Scientist Alan Finkel is reviewing the nation’s energy security following blackouts in South Australia and Victoria last year and as states embark on their own renewable energy targets. The federal government’s renewable energy target was also attacked because it discouraged cleaner coal and gas plants.
Mick McCormack, the chief executive of the country’s biggest pipeline operator, APA, said the gas to improve the capacity and reliability of the grid was available but it needed governments in Victoria and the Northern Territory to end moratoriums on conventional and coal-steam gas.
“This is an issue about getting more gas to market,’’ Mr McCormack said.
He said he was “gobsmacked” that the energy debate had returned to coal-fired power when there was an estimated 600 megawatts of gas-fired generation capacity sitting idle while limited supplies of the fuel were sucked up for export markets out of Gladstone in Queensland.
“There has been no energy policy co-ordination between the states and the feds,’’ he said.
“The states have pursued energy policy on their own without regard for the overall system, and without having a discussion about what is good for Australia and what we expect from our energy policy.’’
Caltex chief executive Julian Segal said the nation needed to decide whether it wanted heavy industry, or that industry would decline.
“If you say we want to have heavy industry in this country, there needs to be a recognition that energy is the most important ingredient of that and, therefore, reliable and low-cost energy is absolutely essential for that type of industry,” Mr Segal said.
“The alternative is that whatever we have left will be diminished even more.”
BHP’s head of Australian mining, Mike Henry, said short-term measures were required, on top of longer-term ones being looked at by Professor Finkel’s review. “The things that need to be considered are things like interconnected capacity,” Mr Henry said.