Analysis

NSW only just escaped blackouts last week as a result of coal-fired power stations being offline for scheduled and unscheduled maintenance, wind speeds being low to non-existent, and cloud cover.

This situation will become increasingly common as intermittent electricity generation replaces baseload fossil-fuel electricity generation.

According to AEMO, wind and solar power are 95% unlikely to be available at times of peak demand, and, unlike fossil-fuel generators, fail unpredictably, as well as cyclically, in the case of solar.

Queensland has surplus generation capacity of 500 to 2500 MWs, but the interconnector to NSW has a maximum transfer capacity of 1200 MW.

500 MWs of capacity could be added at a cost of approximately $700m, according to Transgrid. This would be enough to ensure supply to NSW in the short term.

Last year we reported that under an AEMO scenario the Queensland government would need to close a number of power stations, starting with Tarong in 2018/19.

This was disputed by the Energy Minister at the time. The only way the government can economically justify retaining these power stations is if they are able to find additional demand.

If the state government wishes to retain those stations, despite internal state generation moving towards renewables, then they need to ensure that the interconnector is expanded.

As most of the power generators are government-owned, this would be good for the budget, and would compensate for the risks from more variable income, such as mineral royalties and stamp duty.

Comment

“Queensland is in the fortunate situation of having excess power generation capacity. Expanding the interconnector will make it available for NSW when needed, and profitable for the state of Queensland, at the same time as bringing competitive pressure to bear on other power generators.”