The array at Harts Range.
By ERWIN CHLANDA
Sun worshippers, break out the champagne: An investigation by the Alice Springs News has shown that the cost of a megawatt hour (MWh) of electricity produced form sun power is well under half of what you pay when you use diesel: $213 versus $557.
It’s a useful calculation because it is a large undertaking, displacing a proportion of diesel consumption with solar power in 25 bush communities across the Territory, involved in a project called SETuP, running for 25 years and costing $59m.
The visionary project falls into Dale Wakefield’s portfolio as the Minister for Renewables, Energy and Essential Services.
It is an interesting experiment because it allows to study the variables which can skew the result, as a local expert makes clear.
In the NT’s 72 bush communities the government owned Power Water Corporation (PWC), through its Indigenous Essential Services (IES), spent $77m in 2017/18 on diesel generation – big dollars. We took into account the marginal costs (such as fuel) and fixed costs (such as maintenance).
PWC played hard to get for several months, declining to provide specific information to the News, but Independent Member for Araluen Robyn Lambley asked questions in Parliament and these have to be answered in 30 days. Bravo Ms Lambley.
Minister Wakefield, in a media release on April 9, said the primary goal of SETuP was to reduce diesel consumption by 15% in the target communities (including Areyonga, Arlparra, Hart’s Range, Kintore, Mt Liebig, Nyirripi, Titjikala and Yuendumu in The Centre).
That 15% will now come from solar.
The total power consumption in the 25 communities in 2017/18 was 73,868 MWh. 15% of that is 11,080 MWh or 277,005 MWh over 25 years.
Divide the SETuP $59m by 277,005 and you get $213 per MWh.
Now try the same for diesel. IES produced 137,688 MWh in 2017/18 and spent $77m doing it: That’s $557 per MWh.
Bingo – more than two and a half times as much as solar.
The SETuP experiment creates a situation which will occur millions of times around the world as it switches from fossil fuels to renewables: Communities with two perfectly functional generators running side-by-side, together capable of producing much more electricity than required.
How quickly should the fossil fuel generators in a community be relegated as a Stranded Asset? (Stick these words on your fridge door, you’ll be hearing them a lot.)
Bean counters will no doubt be wringing their hands and say: “We’re depreciating this diesel plant over 20 years. We need to keep it going.”
Will climate change be managed in boardrooms and on spreadsheets, or at the ballot box? That is emerging as the question.
Lyndon Frearson, from the Alice Springs think tank Ekistica, whom we asked for advice, has pointed out that marginal costs are proportionate to the electricity produced, while the fixed costs don’t vary a great deal, no matter how much electricity is produced. (Mr Frearson’s full text is here.)
He makes the point that in the SETuP experiment a solar component of 15% (or so) is straightforward. Beyond that it gets tricky: For the project to make sense, the fossil fuel component needs to be reduced further, beyond simply running the fossil fuel plants less.
Some of that hardware would need to be junked, with the resulting drop not only of marginal costs but also of the fixed ones.
This may send on stress leave the bean counters looking after the 10 gas fired generators which Adam Giles bought for $75m and which are still not fully installed at Brewer Estate south of Alice Springs.
Trouble is, use of solar beyond 15% means batteries need to be phased in.
They are not only expensive, they are a “sunk cost” – they don’t produce electricity. That narrows the margin between solar and diesel quite a bit.