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Andrews SEC plan is a mixed bag

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Latrobe Valley Express, 23 November 2022

When Daniel Andrews announced his plans to revive the State Electricity Commission (SEC), he said: “Unreliable, privatised coal will be replaced by clean, government-owned renewable energy.”

This is a distorted claim.

Brown coal power has become unreliable, but that has nothing to do with it being privatised, or the nature of the coal itself.

It is the forced penetration of renewables into the energy system that has made coal production more vulnerable – but more of that later.

The private operators have largely run the privatised power stations efficiently than the SEC and with a smaller staff.

However, Andrews’ plan to revive the SEC has struck a raw nerve in the Latrobe Valley, where privatisation in the 1990s created mass unemployment.

The Premier failed to mention that the Kennett government justified selling SEC assets to generate billions of dollars to help pay off Victoria’s then huge debt.

Victoria was seen as the ‘rust belt’ state, and fairly or not, the Labor Cain-Kirner government was blamed.

In fact, it was Labor that corporatised the SEC into separate units and thus made the sell-off easier.

Labor also cancelled the proposed Driffield power station that was to succeed Loy Yang A and B. This power station, also with advanced, efficient technology, would have allowed the SEC’s early planned retirement of the Hazelwood power station to go ahead. Hazelwood subsequently became the whipping boy of environmentalists as the ‘dirtiest’ power station.

However, Andrews’ plan to revive the SEC would create a body to put some order into the chaos of the privatised electricity market.

This weakness of privatisation was recognised by SEC engineers and executives in the ‘90s.

Their fears included: the lack of overall planning for expansion of the generating system and subsequent short-termism; the difficulty in maintaining satisfactory supply because the power system operation is critically dependent on central co-ordination; not one of the separate entities, generation or distribution, had “obligation to supply”, critical to a properly managed electricity system; and the long lead time and cost required to build new brown coal generation plants in the Latrobe Valley, thus turning investors towards more expensive and shorter lead time plants such as gas. This would mean the virtual abandonment of the Latrobe Valley coal resource.

“We believe many of the reform proposals are operationally and economically unsound and will inevitably lead to a significant lowering of operational reliability; increased cost to small domestic, commercial and industrial consumers; and a total absence of a properly co-ordinated expansion of the generating system,” the executives said.

These warning have been shown to be correct, particularly in the Latrobe Valley, where each power station was built to match the peculiarities of the brown coal in its locality, but all operated in a co-ordinated way.

After privatisation, each became a competitor, a co-ordinated approach to electricity supply was destroyed, research suffered, and economies of scale undermined.

Sir John Monash, who created the centralised state-owned and operated SEC, was no “socialist”. As an engineer, he believed in material progress through technological advance in a free enterprise system.

Moderate protectionism, and centralisation of essential industries like energy, was justifiable. The complexity and cost of building the first Yallourn power station meant private enterprise could not do the job.

Monash the engineer meticulously planned an electricity supply that was centrally controlled, cheap and efficient, with brown coal augmented by gas and hydro.

The SEC’s engineers ran the power stations, and the transmission and distribution system, creating virtually the cheapest energy in the world and a big comparative advantage for the Victorian economy.

The SEC’s outstanding technical expertise was compromised by an unnecessarily large staff, the source of the future unemployment driven by privatisation.

Now, the issue of global warming and greenhouse emissions has damaged brown coal’s reputation.

Its high moisture content means it creates a lot of carbon dioxide when burnt; thus brown coal is smeared as ‘dirty’ despite being a ‘clean’ coal with low sulphur, nitrogen and inorganics (ash).

The renewable ‘saviours’, heavily subsidised solar and wind, produce erratic power, as is well known, and have created wild fluctuations in electricity markets – unlike Monash’s controlled, cheap electricity production system.

This has had a toxic impact on the Valley’s 24-hour, base load power generators, pushed out of the market by renewables.

By no longer operating at near 100 per cent capacity, they have been damaged economically.

“Worse still, is the physical damage from trying to cycle them up and down, with expansion and contraction stresses on their massive steel structures causing cracking and other failures,” said Latrobe Valley power engineer, Ron Camier, in The Express several months ago.

This is the root cause of Mr Andrews’ accusation that the Valley’s power stations are unreliable.

Dr Camier also pointed to a fundamental problem with all renewables – a basic law of nature known as the ‘second law of thermodynamics’.

“Essentially it means that collecting low intensity energy from the sun or wind (albeit apparently ‘free’) requires vast areas of collectors (solar panels or wind turbines) and concentration to produce useful (transmissible) high voltage electricity,” he said.

“No matter how cheaply these components might be manufactured, the laws of nature cannot be changed, so this form of energy production will always be inherently expensive.

“To this must be added the costs of expanded transmission networks and environmental impacts of massively increased rare earth mining and refining necessary to support such expansion.

“Roughly quantifying this, by stripping away all subsidies and taxes, the basic cost of ‘deliverable’ electricity from renewables is around five times that of base load electricity (despite some claims that it is now cheaper).”

A sophisticated report by the Committee for Gippsland five years ago, prepared with help from Valley energy experts, urged the construction of ‘high-efficiency, low-emission’ (HELE) power technologies like those that have been developed and implemented in Germany.

These include pressurised pre-drying and combustion as well as supercritical steam cycle features that make them more compact. They can respond to fluctuations in renewables’ output within 15 minutes, negating the need for batteries or gas as back-up.

The Andrews government ignored the report.

Australia produces 1.3 per cent of the world’s emissions; Victoria, a quarter of the Australian economy, produces just above 0.3 per cent of emissions. With energy generation producing about one third of emissions, this puts the Latrobe Valley’s share of world emissions at about 0.1 per cent.

What is the rush? Why cannot Victoria take a more measured approach to lowering emissions, retain its comparative economic advantage, and save the Latrobe Valley from traumatic socio-economic change?

The proposed offshore wind farms have many issues to deal with.

German and Danish experience shows they only produce 30 per cent of their nominated output; they produce very few direct jobs; they are made of thousands of tonnes of concrete and steel, the most greenhouse-intensive building materials; they stand accused of killing birds; and must be replaced after 25 years, many of their parts non-recyclable.

Solar faces similar issues, its nominal output even lower than wind’s.

The vast infrastructure to support renewables – interstate connectors, major and minor regional connectors across farmland, batteries – will cost tens of billions of dollars.

How can these entities make money and still lower energy prices, which are already tipped to rise by 56 per cent next year?

If coal is finished, then the nuclear option, as suggested by Morwell businessman and former SEC scientist Ray Burgess, should be investigated.

The ban on nuclear power is obsolete.


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