Australian Economy

Why Australia’s biggest gas kettle never stood a chance against wind and solar

It was always a question of when, not if. The Torrens Island B gas plant, part of what was once the biggest gas generator in the country, had been scheduled for closure in 2035. But no one in the energy industry, least of all its owners at AGL, ever believed it would last that long.

The last of its elder siblings, the Torrens A gas units totalling 480MW, closed in 2021 because they were ten years older, and – not to put too fine a point on it – pretty crap.

The 800MW Torrens B facility was built in 1976, based on steam turbine technology that might have seemed new and exciting half a century ago. But it was really just a giant kettle, the gas equivalent of the dirty Latrobe Valley coal burners, and equally useless to a grid in rapid transition to wind, solar and inverter technologies, where flexibility is king.

South Australia is already meeting two thirds of its annual electricity demand from its wind and solar resources, the highest level for any grid of its size in the world, and exports much of its excess production to Victoria.

Wind and solar dominate the grid

Even in the week when its main link to the outside world was down, it still managed the same percentage. And when the state is not isolated, and desperately trying to switch off as much rooftop solar as it can, the power generated by the modules owned households and businesses can match all local demand on occasions.

That leaves little room in the market for big old clunkers like Torrens Island. The official line is that the technology doesn’t like the look of the new demand curve, which rooftop solar has turned into the shape of a duck.

The grim reality is that, like most of the coal plants still running in the eastern states, it is incapable of responding to big changes in output from wind and solar.

According to AGL, Torrens Island B takes around 16 hours to start from cold – compared to the five minutes for the 12 smaller units at the new Barker Inlet peaking gas generator built next door. Or the milliseconds it will take for the Torrens Island big battery to respond when it is complete next year.

Not very versatile

So, despite the comments on Thursday by state energy minister Tom Koutsantonis that Torrens Island B is the state’s “most versatile generator”, that isn’t the case at all.

What is is good at doing – and what Koutsantonis probably means by his remarks – is operating at very low levels of baseload output, around one fifth of the nominated capacity, or 40MW on each of its units.

This just happens to be very useful for the Australian Energy Market Operator right now, because it reckons it needs around 80MW of “thermal” generation to maintain grid security – in this case “system strength.

That’s why you will often see that requirement is being met by two of Torrens Island’s units running at those low levels while wind and solar are in full production, and exports are spilling over into Victoria.

The problem for Torrens Island is that even this niche importance in the market will be redundant within a few years.

Synchronous condensers – spinning machines that do not burn fuel – have already reduced the need for most of the gas generation to run for grid security reasons, and battery storage and advanced inverters will do the same in coming years.

The end of baseload fossils

The final blow will come from the new transmission link to NSW, known as Project EnergyConnect, which will dramatically increase the state’s options for grid security and sharing power, and spell the end to the last of the state’s “baseload” fossil fuel assets, when in full operation in 2026.

The first of Torrens B’ four 200MW units – B1 – was mothballed in 2021 because it was coming up for its scheduled major overhaul, and AGL couldn’t see the point in spending the $20 million or so on what was already a loss making venture.

The crunch came this year when AGL was faced with the scheduled major overhaul of another unit, B2 – due early next year – and deciding how to respond to the changing market dynamics.

Under current rules, it needs 42 months to flag such a closure, and the looming arrival of Project EnergyConnect in 2026 meant the time had come to make a decision.

Discussions were held with both AEMO and the South Australian government about what to do. It is understood all parties knew Torrens B had no long term future, and that it would be 50 years old in 2026. But AEMO saw a use for it in providing that minimum output until then.

Deals with state governments

So a deal was struck with the state government to get electricity consumers to fund the upgrade of the B2 unit – at a total cost of $19.5 million, or $2.70 a year for each customer out to 2026.

That price doesn’t add up to much more than a hill of beans, or two small lattes a year, but it does highlight the problem the country – and the individual states – finds themselves in with a National Electricity Market without the rules in place to guide them.

Victoria found itself in a similar position last year when EnergyAustralia came to talk to them and AEMO about the future of the Yallourn brown coal generator in the Latrobe Valley.

Shamefully, no details of that agreement have been released by either the state government or the listed owner of EnergyAustralia, but it’s a fair bet it is centred around the same idea: Stick around for just a few more years while convenient, and we’ll fund the maintenance bill in between. And we’ll paint it as a fast-tracked closure.

Similar discussions have been held between Origin and the NSW government over the closure of Eraring, the country’s biggest coal generator.

A question of timing

The outcome of that was a 2025 closure date, an acceleration of the state’s renewable infrastructure plans, the new Waratah “super battery” to act as a giant shock absorber – as the South Australian batteries have done for the last five years – and a call out for another 380MW of dispatchable capacity.

The problem is, that may not be enough. Origin has been hinting this week, in no uncertain terms, that the shortened timetable for coal closures may not be able to be met. You can bet the hand will be out to help meet the cost of maintenance, coal supplies, and labour, if the closure dates have to be deferred.

In the meantime, the strategy of the new Labor government in South Australia remains something of a mystery. Koutsantonis has long been a supporter of gas, and a vocal opponent of the new interconnector, so for whom this is the worst of both worlds.

Green hydrogen plans

The reality is that without the interconnector, many of the huge wind, solar and battery storage projects – such as the full extension of the massive Goyder South facility owned by Neoen – would not go ahead.

Koutsantonis has big green hydrogen plans, but even here he appears to be heading on a tangent, insisting on a green hydrogen power generator as the centrepiece of the state’s hydrogen capacity.

No one will be complaining too loudly if it is government funded, and sucking up the output of big wind and solar farms, but most experts expect hydrogen storage for the grid to be a useful bi-product of broader hydrogen plans. So, for that technology, it’s not a question of if, but how.

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