Ross Greenwood speaks to Energy Australia’s managing director Catherine Tanna who says Australia’s three main aims of future energy policy should be reliable, affordable, and a shift to a cleaner energy future
Ross Greenwood: The Managing Director of one of Australia’s big energy providers EnergyAustralia has effectively come out and not only apologized for the power blackouts, but then also said that there is clearly been a fundamental problem with energy policy in this country. We’ve got her on the line right now, many thanks for your time, Managing Director of EnergyAustralia Catherine Tanna.
Interview with: Catherine Tanna, Managing Director, Energy Australia
Catherine Tanna: Thank you, Ross.
Ross Greenwood: Okay, so let’s go back Thursday last week when there were the power outages. In this particular case, you had two of Yallourn’s power stations, four generators out of service at that time. Now, some people say well, you should have known when your servicing of these power plants was taking place, is it as easy as that when you’re running big power plants such as those at Yallourn?
Catherine Tanna: It’s not as easy as that Ross. Look I would like to repeat that all of us here at EnergyAustralia are sorry that for some customers in Victoria the lights did go out on Friday, January 25 and it’s not what we meant to happen. We have 2,500 great people who come to work everyday at EnergyAustralia doing their best to keep the lights on. It was a very very unexpected set of circumstances.
Ross, you do know that we had one unit that has been out for some months. We work very closely with the team at AEMO to try to schedule maintenance so that it fits in to ensure that we have the maximum chance of keeping the lights on, but unfortunately, on Friday it was just not possible. We nursed unit three Yallourn through all Thursday and all through the extreme heat of Thursday, but unfortunately, we had to bring it off at midnight.
Ross Greenwood: Just explain to me, I would have imagined that a power station, I know it’s complex behind the scenes, but it’s relatively simple and that is you burn coal in the coal-fired power stations to create steam to turn the turbines that create the electricity. It’s pretty straightforward. Explain where the fundamental pressures are inside these aging power stations, what goes wrong?
Catherine Tanna: A number of things can go wrong Ross and you’re absolutely right that they are relatively straightforward and we have operating procedures where they operate best if they are operated for a certain number of hours. Then what happened in that week in January is that unit four had already been run longer than we would ordinarily like and the reason for that was because we’d been talking to AEMO about the weather forecast, about the demand forecast and we’d kept it on as long as we possibly could but they do get fouled and they need to be cleaned.
That’s why unit four had to come off, it needed to be cleaned. The problem with unit three, there is a lot of pipework it these units and there was a leak. We know when the leaks happen and we do everything that we can to nurse the units through high demand, hot temperature days but ultimately at some point, for safety reasons, we just have to bring the unit off.
Ross Greenwood: Isn’t one of the issues in Australia right now, the so-called the spatial powers. In other words, if those power stations or those generators go down, to find replacement power for that instantly is sometimes difficult because we have not invested in the generation that we previously had that– The Hazelwood Power Station has closed now and possibly earlier than expected, the Northern Power Station in South Australia was also closed down. If you had circumstances where the wind is not blowing in South Australia, if they were short of water in the hydro in Tasmania, the problem is there’s just not enough electricity to replace it when these big power stations do suddenly go offline.
Catherine Tanna: You are 100% correct Ross and what I love about what you are saying is you are describing the problem. What we see in a lot of the public commentary is people jumping to solutions without first understanding what the problem is or playing the blame game. You are absolutely right we got ourselves into this state of affairs because big base-load generation closed on really short notice, led by Hazelwood in the Latrobe valley closing on just five months notice.
Something so big and fundamental to the system as that closes on just five months notice. Then, of course, it’s not possible to replace it overnight.
Northern was closed in South Australia, so we have a whole lot of renewables coming into the system which is great and that’s all coming in because it’s the only thing that’s underpinned by policy certainty. What we need to do is make the investments to smooth it out to make that more firm and there is the sort of projects that at EnergyAustralia we are working on.
Ross Greenwood: Here’s the fundamental problem as I see it and that is a coal-fired power station produces a lot of electricity all of the time except
obviously when it goes offline as they do the maintenance from time to time. Then you look for other forms of electricity. When you come to the gas-fired power stations, one of the problems can be the availability of gas and the price of that gas can have a significant influence.
Batteries I’m going to discount those for the time being because the technology might be there theoretically, but in scale, it’s not there to basically save and hold onto the electricity that’s coming from wind and solar. Then you go to hydro and okay this Snowy 2.0 coming on. There is the potential of putting in another inter-connector into Tasmania so that more electricity can come across by a stride. It doesn’t seem to me as though there is any answer for the number of power stations into the future coal-fired power stations that will come offline. I think that’s the problem that makes Australia’s electricity grid so precarious into the future.
Catherine Tanna: Well, I do think you’ve articulated the key solutions of the coming years that we can get on with and they are around storage and faster gas. You described two storage solutions, batteries and you are absolutely right, batteries are not yet economic at scale so we’re working on batteries at scale right now and practicing and learning so we can understand how batteries can be part of the solution.
The pumped hydro is a well known proven solution and that’s why at EnergyAustralia we are working on multiple pumped hydro possibilities because it’s that storage, so that the power is there as you described when the renewables aren’t available.
Ross Greenwood: We should just explain, just hold up for one moment because this almost like a lesson for our audience. The reason why hydro is so important is because you literally open the gates, the water flows, the electricity flows, it’s instant electricity. As a result, if you’ve got shortages anywhere in your system if you have enough hydro, you can power the electricity grid almost instantly, that’s the key of hydro.
Catherine Tanna: That’s correct and the other advantage of it is that when demand is low and renewables are available and the energy should be relatively cost-effective that’s when you can use that energy to save it being wasted to get the hydro ready for that immediate dispatch.
Ross Greenwood: In other words almost like an arbitrage, in that you actually use cheap electricity to push the water back upstream which is the idea of Snowy 2.0 and then when the electricity prices are very high you, let the water go you actually make the money at the higher prices and also put electricity into the system at the very time it needs it.
Catherine Tanna: Exactly right and what that is is that optimizing the energy system. The mistake that we’ve made is we haven’t had a national plan, so we haven’t been able to optimize where these things are built, we haven’t had rules when we submitted to The Finkel Review, for example. We suggested that base-load coal-fired power stations should give five years notice of closure. Now Dr. Finkel recommended three years, but again the answers to all of these problems exist in the expert work that’s being done by Dr. Finkel.
Ross Greenwood: Of course what the person at home or the person at industry simply wants to know is, “When I go to operate my machinery, my furnace, my oven whatever it might be or go home on the hottest day and turn on my air conditioner, I want it to be there. I want it to be on. I don’t want it to go off and I also want it to be affordable,” because these are the problems that we face without a reasonable energy policy. A bipartisan energy policy in this country because first and foremost it should be about making certain the electricity is secure for our population.
Catherine Tanna: You are absolutely right and I think Australians want all three things. I think they want the power to be reliable. They absolutely want it to be affordable. I think we also want to shift to the cleaner energy future. That transition is happening and we need to make sure it’s as smooth as possible. Where we seem to run into trouble is when the politicians focus on just one of those three things. That’s why we’re in the situation we’re in now.
Ross Greenwood: I’m talking with Catherine Tanna, who is the managing director of Energy Australia. One of Australia’s big energy producers and also, of course, the owner of those Yallourn Power Stations that went out last Friday week in Victoria that caused, of course, enormous controversy around the country.
We’ll talk again, Catherine, because this is a really good conversation to have so that people try and get it through their heads that this is not about supporting one side or the other; it’s trying to make certain there’s enough electricity for everybody, and all of the time as well. Many thanks for your time.
Catherine Tanna: Thank you, Ross.
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