Estimates Committee A: Friday, June 30, 2023

Estimates Vote

Department for Energy and Mining, $174,870,000


Hon. A. Koutsantonis, Minister for Infrastructure and Transport, Minister for Energy and Mining.

Departmental Advisers:

Dr P. Heithersay, Chief Executive, Department for Energy and Mining.

Ms N. Johnston, Chief Financial Officer, Department for Energy and Mining.

Mr V. Duffy, Executive Director, Energy and Technical Regulation, Department for Energy and Mining.

Mr N. Panagopoulos, Acting Executive Director, Energy Resources Division, Department for Energy and Mining.

Mr B. Zammit, Acting Executive Director, Mineral Resources Division, Department for Energy and Mining.

Mr S. Crafter, Chief Executive Officer, Office of Hydrogen Power SA.

Mr D. Penov, Director, Commercial Projects, Office of Hydrogen Power SA.

Mr M. Reid, Director, Land, Environment and Approvals, Office of Hydrogen Power SA.

The CHAIR: Good morning and welcome to today's hearing for Estimates Committee A. I would like to welcome members of the committee. I would like to welcome the minister and his advisers. I respectfully acknowledge the traditional owners of this land upon which the committee meets today and pay our respects to them, and their cultures, and to their elders both past and present.

The estimates committees are a relatively informal procedure and, as such, there is no need to stand to ask or answer questions. I understand that the minister and the lead speaker for the opposition have agreed on an approximate time for the consideration of proposed payments, which will facilitate a change of departmental advisers; is that correct?



The CHAIR: Changes to committee membership will be notified as they occur. Members should ensure the Chair is provided with a completed request to be discharged form. If the minister undertakes to supply information at a later date, it must be submitted to the Clerk Assistant via the Answers to Questions mailbox no later than Friday 8 September 2023.

I propose to allow both the minister and the lead speaker for the opposition to make opening statements of about 10 minutes each, should they wish to do so. There will be a flexible approach to giving the call for asking questions. A member who is not a member of the committee may ask a question at the discretion of the Chair.

All questions are to be directed to the minister and not the minister's advisers. The minister may refer questions to advisers for a response. Questions must be based on lines of expenditure in the budget papers and must be identifiable or referenced. I just reaffirm that, as some people asking questions yesterday had difficulty in referencing particular budget papers and also lines. Members unable to complete their questions during the proceedings may submit them as questions on notice for inclusion in the assembly Notice Paper.

I remind members that the rules of debate in the house apply in committee. Consistent with the rules, photography by members from the chamber floor is not permitted while the committee is sitting. Ministers and members may not table documents before the committee; however, documents can be supplied to the Chair for distribution.

The incorporation of material in Hansard is permitted on the same basis as applies in the house; that is, it is purely statistical and limited to one page in length. The committee's examinations will be broadcast in the same manner as sittings of the house, through the IPTV system within Parliament House and online via the parliament website, so hopefully we can all be civil today and present to the committee.

I now proceed to open the following lines for examination: Department for Energy and Mining. The minister appearing is the Minister for Energy and Mining. I declare the proposed payments open for examination and call on the minister to make a statement, if he wishes, and to introduce his advisers, followed by the lead speaker, who can make a statement, and then move to questions.

The Hon. A. KOUTSANTONIS: To my left is Dr Paul Heithersay, the Chief Executive of the Department for Energy and Mining. To my far left is Natalie Johnston. To my right is Sam Crafter. Sitting directly behind me is Mr Vince Duffy, the deputy chief executive of the department; David Penov; Nick Panagopoulos; Martin Reid; and Ben Zammit.

The CHAIR: Minister, the floor is yours.

The Hon. A. KOUTSANTONIS: I do not wish to make an opening statement. I will give the opposition every opportunity to ask as many questions as they like.

The CHAIR: Lead speaker, member for Morphett?

Mr PATTERSON: Thank you. I will get straight into questions, Chair. We turn to Budget Paper 4, Volume 2, page 106, objective. Can the minister advise if South Australians are paying more or less for their energy bills than at this time last year and the reasons for it?

The Hon. A. KOUTSANTONIS: They are, and that is why it is fraught for people to make irresponsible promises to the public that they can lower their power prices, as members to my right did in 2018. They promised that they would lower power prices by over $300, yet at the end of their four-year term prices had increased by $65. In fact, I think that during the entire time that they were in office power prices were cheaper under the previous four years of the Weatherill Labor government, despite the promises and protestations they had made.

You might remember, at the last election, the then Leader of the Opposition Peter Malinauskas was at a SACOME event, and someone in the audience had taped his remarks and they were published. His remarks were, to paraphrase: 'People are sick of politicians standing up and promising a dollar figure on how much they will save on their power bills, only to be disappointed later.' South Australia, like every other jurisdiction in the world, has been exposed to international price shocks.

If you can bear with me, and I do not mean to take up too much time of the committee, I thought I would give a brief explanation of what I think is occurring. South Australia has been a beneficiary of massive international investment in the oil and gas sector—massive investment. That investment has led to the development of lots and lots of gas that has been exported, not only out of South Australia to New South Wales and Queensland but internationally. The result of those export facilities has internationalised the price in South Australia.

The South Australian gas market is relatively small, and the Australian gas market, on an international level, is relatively small. For those investments to have made any sense they needed to be export. I think it is fair to say that was bipartisan, creating an export industry within Australia for LNG. Gladstone was developed, and those export facilities, not only off the North West Shelf but out of Queensland, are powering the world.

Last year, Western Europe, which was largely reliant on Russian gas, for the first time since World War II faced war on continental European soil. What that meant was an international price shock and shortages. Two things occurred: immediately, Europeans started burning a lot more coal because of the gas shortages they had.

That caused an international price shock for coal and shortages of coal, which impacted the Australian market and led to considerably higher prices on the eastern seaboard for coal-fired generation. Simultaneously, all of a sudden, 360 million people who had relied entirely on Russian gas now had to find other sources of gas, which created a dramatic spike in prices. Australia is not isolated from that dramatic spike in prices; of course we are subject to it.

The question that faces this government, the commonwealth government and future governments is: how do we decouple domestic gas from international price shocks? How do we decouple domestic energy prices from what is occurring in Ukraine, what is occurring in China and what is occurring around the world?

There are two ways of doing that: one is more gas, more domestic gas, but we attempted that previously and members opposite opposed that and brought in the moratorium on the exploration for gas in the South-East of this state and in fact legislated it for 10 years; the other way, of course, is to find an alternative energy source like renewable energy and make it dispatchable. That is what this government is attempting to do with a $593 million facility in Whyalla, which is out to tender now. That tender process is ongoing.

What we are attempting to do is build a long-duration form of renewable energy—long duration as in building a capacity to make renewable energy at a time when prices are cheap because of an overabundance of renewable energy. I might add that the policy at the last election of members opposite was to turn that power off. Our policy is to try to use that power to create a form of storage and then to provide that energy and decouple ourselves from international price shocks.

Simultaneously, the commonwealth government has capped domestic gas prices and is introducing a code of conduct for oil and gas companies for the way they market, sell and conduct themselves in the Australian market. To deal with the increased prices across the world, jurisdictions around the world are offering subsidies, subsidies that are unaffordable and dramatic.

I remind members to my right that as of Saturday 1 July people who are pensioners in South Australia will be receiving over $700 worth of subsidies for their power bills. They will be getting a $240 payment, I think, from our Cost of Living Concession. That is paid directly into their bank accounts, and $500 will be taken off their bills over a 12-month period in increments of $125 per quarter.

Those people will be paying less next financial year than they did this financial year for their power bills. That gives the commonwealth government time to come up with and implement their policies. It hopefully gives the international community time to find a settlement for what is occurring in Ukraine. It is unacceptable, I agree, but to try to lay the blame on a subnational jurisdiction of 1.6 million people for what is occurring and impacting billions of people around the world because of war in Europe I think is a long bow, even for the member for Morphett.

Mr PATTERSON: I refer to the same page and volume. You did mention, minister—to my job first—that the default market offer will take effect. The next determination of it sees household bills go up by between $439 and $512, which is nearly 24 per cent. Of course, not everyone is on that, as they are on standing offers as well, but those who do have contracts with their electricity providers are also starting to receive notices saying that their bills are going up in a commensurate fashion. What is the government doing to help struggling South Australian households on a broad-based basis?

The Hon. A. KOUTSANTONIS: I can refer you back to my initial answer. The first thing we are doing is offering an unprecedented level of subsidy. We are spending a quarter of a billion dollars, combined with the commonwealth government, on South Australian families: nearly one in two South Australian households will be receiving a minimum of $500 and we are offering small businesses $650, which is covering a large part of the increase.

As I said, a lot of those households will actually be paying less next financial year than they have this financial year for their bills. I also remind members to my right that only about 6 per cent of South Australians are on a default market offer. I am very concerned about the default market offer. I am concerned about its accuracy. I have noted some of the retail offers being made by AGL and Origin. I am not sure what EnergyAustralia is doing. Alinta have certainly put out theirs. Some are below the default market offer and some are above it, and it is very difficult for consumers to navigate this.

It is very, very confusing. People are being offered discounts, but they are not sure what the base they are being offered a discount on is. It is very confusing, but as a rough guide and estimate you can look at your power bill and say, 'Right, half of this bill is infrastructure.' It is poles and wires, regulated assets—basically half. It could be 48 per cent or 45 per cent. I am not quite sure of the exact numbers. I can see my officers looking just as confused as I am about this, but roughly one out of every $2 that you pay in your bill is to poles and wires. They are regulated assets that we have no control over at all.

The part that we are talking about is about 25 per cent to 30 per cent of the bill, which is the retail aspect. Then there is the wholesale aspect and then there are the green schemes. For us to effect major change in the retail offerings of a bill, 75 per cent of our bill before we start doing a thing is already factored in. To impact the retail offerings, to make a substantial difference to a bill, there needs to be considerable change, and it is very difficult. It is difficult because gas prices are higher, coal prices are higher, and the only thing bringing prices down is renewable energy.

The unfortunate part about renewable energy—and the only unfortunate part about it—is that technology has not yet given us long-duration storage, which is what we are investing in. So when you ask what we are broadly doing, when we invested in grid-scale battery storage we were mocked: it was called experimental and they said it would not work. It is now the template for every jurisdiction around the world on what they should do. People are looking at grid-scale storage; indeed, I note that members to my right, when they entered office after having ridiculed the large battery at Hornsdale, sang its praises.

We were then investing in a solar thermal plant, which members to my right promised they would deliver while they were in office. They abandoned that and did not deliver the solar thermal plant in Port Augusta, which probably explains the appalling results they received in the seat of Stuart in the last election.

The third thing we are doing is again we are investing in new technology to try to take advantage of our abundant renewable resources through hydrogen. To capture the abundant natural resources we have through wind and solar that members opposite would simply turn off at times of overproduction, we are going to use that to make hydrogen relatively cheaply in comparison to other jurisdictions because we have an oversupply. We could also give some benefit to the grid by turning demand on at that time—like a sponge, as it were. Then we can use that hydrogen to operate a generator.

Broadly, given the nature of the grid, given the nature of our renewable resources and given the nature of the dispatch system within AEMO, it is always that last bid that sets the price. But if we have a generator that is operating in the grid that is not attempting to capitalise on high prices but is attempting to just get a rate of return to make sure it covers its cost of production, we can put downward pressure on wholesale prices. That is the aim.

All the commentary, all the criticisms we had about the big battery at Hornsdale—how it is a tourist attraction, how it is experimental—are the same things we are hearing now about hydrogen production. I point out, for people who call this experimental, which is a direct jibe at members to my right, that the Inflation Reduction Act, which was passed in the United States, incentivises and subsidises this very type of activity. China, Europe, Korea and Japan are all accelerating and subsidising investments in electrolysers and hydrogen-powered generators. There has been no criticism, bipartisan criticism, in any of those jurisdictions on any major scale opposing hydrogen production.

The only place where there is a criticism about using hydrogen to power generators is here in South Australia—the only place. There is not in New South Wales, not in Queensland, not in Victoria, not in Western Australia, not in the United States, not in Europe, not in China, not in Japan, not in Korea—only here. I think that is symptomatic of a fear of what is coming next, which is that we are going to decouple ourselves from fossil fuels and move to a fossil-free future.

Mr PATTERSON: On the same budget line, we talked about the dollar increase in the default market offer, in dollar terms up to $512. This default market offer also covers other states—south-eastern Queensland and New South Wales, and Victoria does its own thing as well. Of all those states, South Australia had the highest dollar increase for households, so why is it that South Australian prices have gone up more than other states?

The Hon. A. KOUTSANTONIS: You might remember an event that occurred in 1999 in South Australia with the sale of ETSA. South Australia, of all those jurisdictions, has the longest and skinniest grid of any jurisdiction. We have fewer customers and the longest grid—it is possibly the least populated grid anywhere in the world, but I stand to be corrected on that—so it is the most expensive grid in the world because we have only about 860,000 to 900,000 customers on a grid that goes basically from Ceduna up to the New South Wales border and right down to the Victorian border. We are talking about a large, long, skinny grid.

New South Wales, Queensland and especially Victoria have much more density around their grids, so there is a lot less cost and a lot more customers per kilometre than we have, and a lot of their grids are broken up into two jurisdictions, two regulated regions. We have not done that. That was done deliberately by then Treasurer Lucas to maximise the sale price of the assets and to cross-subsidise regional communities.

South Australia cross-subsidises regional communities on average between $200 million and $250 million per year on transmission costs. If you broke up the grid between metropolitan Adelaide and regional South Australia, like they have in Victoria, for example—they have two grids—you would get a much lower price in Adelaide because you would have more density.

The default market offer looks at the level of competition we have, the level of contracts being signed, the privatisation of ETSA locked in monopolistic behaviour amongst generators. We are entirely a gas market and gas prices are expensive, but we have had lower increases previously and higher increases, so there might have been a lower increase in a previous year and a higher increase in a later year, but by and large none of the results in any of the states are any good. They are all terrible. They are all over 20 per cent, from my memory of it, and I think it is unacceptable.

Again, it goes back to this core principle. Is it a policy decision that we have made in South Australia that has caused this massive increase in power prices or is it an international factor? If you answer that question honestly, there is no policy that this government has implemented in 14 months that could have possibly increased power prices by the level we are seeing now in the market. It is not us, it was not the Perrottet government, it was not the Morrison government: it was Vladimir Putin—and that is the honest answer.

Mr PATTERSON: Same budget line: we have talked about households but, of course, businesses have also experienced skyrocketing prices, so the default market offer for a business will see their bills go up by an average of $1,310. What is the government doing to help struggling South Australian businesses?

The Hon. A. KOUTSANTONIS: We are offering them a $650 rebate, which should halve that increase and that goes a long way to helping them. Again, I refer you back to my original answer: there is not a single South Australian solution for this. This seems to be a national problem. This is a national problem and it is an international problem. What the government is doing is racing at speed to decouple ourselves from international price commodity prices—the shocks—by using what we have most of: our renewable energy.

The department is working at speed to create the world's first hydrogen renewable energy act to try to get as much renewable energy built behind the meter to incentivise as much hydrogen production as possible. We are working to make sure that wind farms and solar farms have a speedy approval process to get built. I also note that, from my memory, from my recollection, not a single new wind farm was opened in the four years of the Marshall government.

Mr PATTERSON: What about Goyder South?

The Hon. A. KOUTSANTONIS: I stand to be corrected on that. If you have evidence that I am wrong, I am happy to accept that.

Mr PATTERSON: Goyder South got started.

The Hon. A. KOUTSANTONIS: Opened? No.

Mr PATTERSON: Lincoln Gap, Port Augusta Renewable Energy Park.

The Hon. A. KOUTSANTONIS: They were opened, were they?

Mr PEDERICK: Operating.

Mr PATTERSON: I went past the blades going up.

The Hon. A. KOUTSANTONIS: My point is: we are attempting to, again, decouple ourselves from international price shocks as much as we possibly can because we cannot continue to have an international commodity do this damage to South Australian businesses and households.

I do point out that in jurisdictions where they own their resources, when I say 'own' I am talking about the generators and distribution lines, these impacts are a lot less. I just wonder whether members to my right take any responsibility at all for privatising those assets and putting them in the hands of foreign owners, multinationals and shareholders who are simply looking at making a return on an investment on an essential service. I am happy to take criticism on our policies, but I do not think there is a single policy we introduced that has done anything to increase power prices over the last 14 months.

Mr PATTERSON: On the same budget line, we talked about households and businesses, but of course then there are sporting clubs and recreation centres as well. They are also struggling, and I have been contacted by a number. One of them in Clare said their electricity provider said prices are set to increase by 35 per cent for them. What is the government doing to help struggling sporting and recreation organisations?

The Hon. A. KOUTSANTONIS: I would refer that to the Minister for Recreation, Sport and Racing, who I think is on later today or later on during the week.

The CHAIR: It is actually in Estimates Committee B at 9.30.

The Hon. A. KOUTSANTONIS: I am not trying to dodge the question; it is just that sport and recreation clubs are in the direct purview of the minister for sport and recreation, so I would ask you to refer that question to her.

Mr PATTERSON: I can do that. On the same budget line, ESCOSA have their energy retail offer prices, basing up to June, and they put reports out. You mentioned before that the ESCOSA report in June 2018 showed that the average power price for families was $2,244, and then by September 2021 it had reduced down to $1,823. There was $421 worth of energy bill reductions.

The Hon. A. KOUTSANTONIS: But you are talking about the lower base in 2016-17.

Mr PATTERSON: In June 2022, the average power bill had increased $2,041, and of course quite shortly ESCOSA will release their prices for this year. Are you expecting that figure to be similar to the default market offer increase for households of up to $512?

The Hon. A. KOUTSANTONIS: If I can give the committee some background, in the last full year of the Weatherill Labor government power prices on average, according to ESCOSA, were $1,976. Every year up until 2021—so the next year went up to $2,244, so that is first year you were in office; then in 2018-19 it went up to $2,182, still $206 higher than it was under a Labor government. In 2019-20, it was $2,086. In 2020-21, you were able to decrease power prices by $35. Then in your last year they increased again to $2,041. The base you talk about there, you take an unfair base and then pretend that there is a decrease the last full year that we were in office. I will leave that to one side.

I do not know what ESCOSA are going to find. They are an independent agency. I expect them to do their work diligently, and they do. I will not be doing what the previous government did and ask them to give us July to October, or June to October. For some reason, the previous government changed the methodology that ESCOSA always use, which was year on year, and then when asked for this very strange outlier between July and October, or June to October, to try to show a lower power price—we do not interfere with the work ESCOSA do—they will come out with an average price. I expect it to be bad.

I agree with the shadow minister: power prices are too high. But I also ask: if we are going to have an honest debate about this, what is the policy measure that this government has implemented since March 2022 that has caused this price increase?

Mr PATTERSON: On the same budget line, talking about last year's federal budget (this is in November 2022) it forecast power bills to rise by 56 per cent over two years, so it was 30 per cent in the first year, followed by 20 per cent, so the cumulative goes up 50 per cent. We have seen price increases roughly in line with that: between 24 per cent for households and 29 per cent for businesses. Where does the minister forecast power prices to go over the next 12 months and then, after that, over the longer term?

The Hon. A. KOUTSANTONIS: It is fair to say that the terrible forecast we saw on Mr Chalmers' first budget has not been met, that the interventions the commonwealth government have made have had an impact and that prices would have been a lot worse had they not made those interventions. I think the subsidies I have spoken about at length will go a long way to helping people get through it.

In terms of forecasts, we are seeing prices come down. I am loath to make forecasts. I think the path to hell is paved with politicians making promises about lowering power prices. As you saw—

Mr PEDERICK: Albo did.

The Hon. A. KOUTSANTONIS: So did Steven Marshall, and it did not work. I think no-one saw the war in Ukraine coming—no-one. That has had a dramatic impact. There is no policy measure that the opposition can point to and say, 'This is the reason why prices have gone up and it is a direct result of the election of the Malinauskas Labor government.'

I think if we are going to make these criticisms, if we are going to have an honest, intellectual debate about power prices—which I am up for because I also think they are unacceptably high—I am prepared to say what I think has caused it. I know what it is; it is what every international expert says it is: it is the war in Ukraine. The war in Ukraine has created a massive demand for gas because one of the largest suppliers of that gas is now no longer able to sell it. The question then becomes: if coal prices and gas prices have increased and we have internationalised those prices in Australia, why would we be immune?

The government's policy is to move to a form of generation that is not linked to those commodity prices. We are investing our money, taxpayers' money, into that endeavour to prove up this technology, to get it operating and to create an industry around it. There is cause and effect and we are doing it. We have not caused the increase; we are simply attempting to manage it. The way we are managing it is to make sure that the most vulnerable in South Australia are not impacted. If you are on a Family Tax Benefit Part A or Part B, or a concession cardholder or a pensioner—there is a whole long list, and the Department of Human Services has that comprehensive list—we are going to make sure that those people are no worse off.

Then there is small business, where we are also offering a $650 rebate, but then there is the other one in two households in South Australia, people like the member for Morphett and myself, who are not eligible, and the thousands and thousands of people in our electorates who are not eligible for these concessions. They are doing it tough and we accept that. That is why we have given the commonwealth government 12 months to try to find a solution and implement their policies.

I do not know what impact the code of conduct is going to have; I suspect it will lower prices. I did not think that the price cap would have the impact it has. It has lowered prices. Getting more gas out of the ground and more renewable energy, the commonwealth government has also announced the Capacity Investment Scheme. I have also seen their discussion that South Australia and Victoria will be the first two jurisdictions to participate in that auction scheme, which will see the underwriting of more renewable energy in the form of storage to backup and firm renewable energy.

Our generator is being built. It would be nice to have the two gas-fired generators the previous Weatherill government bought that members opposite privatised as soon as they got into office. It would be good to have those right now to be operating in the state's interest. Instead, they are operating in the interests of private shareholders, and that is disappointing.

Mr PATTERSON: They were sitting idle for two years.

The Hon. A. KOUTSANTONIS: They were not sitting idle for two years; they were operating at a time when they were needed. The previous government ran them flat strap to try to keep the lights on in South Australia. Not once did they acknowledge how lucky they were that they had them, otherwise there would have been brownouts in South Australia—and you sold them anyway.

Mr PATTERSON: We did not sell them.

The Hon. A. KOUTSANTONIS: Do we own them? We own them, do we? They are controlled by the state government, are they? This is like saying we own our poles and wires because they are leased for 200 years. Come on, you are better than that.

Mr PATTERSON: Next question: what actions are the minister and your department undertaking to reduce the cost of power bills for South Australian families and business?

The Hon. A. KOUTSANTONIS: I just spent—

Mr PATTERSON: You talked about the Department of Human Services.

The Hon. A. KOUTSANTONIS: You might have heard me talking about a $593 million investment in Whyalla, where we are attempting to build the world's first electrolyser and hydrogen power plant working alongside each other as a unit at a scale that has not been seen anywhere in the world. It will be the largest electrolyser in the world. My understanding is it will be the largest generator, if the generator is the option chosen by the tender, to be operating at that scale.

We are reforming legislation by bringing in the Hydrogen and Renewable Energy Act to incentivise new renewable energy being put into the system. We have embarked on the largest ever subsidy in South Australian history to offset the costs. We were the only party at the last election to take any cost-of-living measure to the election.

It has now been 14 months, and in those 14 or 15 months we have been in office we have been blamed for a lot by members to my right. If we are to blame for all of this and we have done all this in 15 months, perhaps it is fair for me to say, 'Well, in the 15 months you have been sitting in opposition, where is the alternative policy? Where is the alternative plan?' We have been doing a lot, and I have been explaining a lot, and you know we have.

We have established the Office of Hydrogen Power SA almost immediately, we have employed a chief executive and we have begun the tender process. The government has been moving at pace since we came to office, and it is probably a good lesson for members to my right about how quickly you need to move when you enter office and the fierce urgency of getting things done quickly because there is no time to waste.

I note that the single energy policy members took to the 2018 election, Project EnergyConnect, was meant to be operational by now: it is not. It was meant to cost a lot less than it does now: it has blown out dramatically, it is behind schedule and we are connecting to a jurisdiction that is seeing power prices increase dramatically. So we need an alternative policy. We took one to the election, we were successful and we are implementing it at pace.

Mr PATTERSON: On the same budget paper, different page, page 121, objective, you talk about your hydrogen plan and its specifically targeting South Australian industry. Will the government's hydrogen power station lower energy bills for households?

The Hon. A. KOUTSANTONIS: As we promised, we are going to attempt to lower wholesale energy prices, which will have an impact on retail prices. I am not going to fall for the trap that the Marshall government fell for by making promises that they could not and did not keep on power prices. What good did that do anyone? What good did that do the then Liberal government making those promises? Look at you now; 16 members of parliament making promises that you knew you could not keep.

What we are doing is we know that the world is in a transition. What do we have an abundance of? We have an abundance of wind and solar that is coincident and it is consistent, and the quality of that wind and solar is better here than almost anywhere else in the world, especially in terms of haze and other pollutants that can stop sunlight hitting solar panels.

Nearly one in three households have solar panels on their roofs, if not a higher average, and as a jurisdiction we are reaching net negative demand of about 100 megawatts, which means that we are producing nearly all of our needs from renewable energy, and it is becoming quite challenging. The previous government put in what they thought was a prudent measure to curtail that renewable energy to stabilise the grid. That is a very good way of stabilising the grid, no doubt about it, but it also misses the opportunity you have to use all this free power that there is no demand for.

So we can either use that to charge batteries, pump water uphill, or invest in electrolysis and make green hydrogen. What are the applications of green hydrogen, other than replacing it as an energy source in generation? South Australia is unique in the world. Through the Australian Gas Infrastructure Group's investments over the last 15 years, most of the distribution network in South Australia is of a type of plastic that can take hydrogen. So, hypothetically, there is a feasibility that we could have 100 per cent of our gas network in South Australia operating using hydrogen. That is not proven yet, but hypothetically we can because it is the nature of the network that has been rebuilt over the last 15 years.

We chose Whyalla for a reason for our electrolysis plant, because alongside it are the world's best magnetite resources, and alongside those magnetite resources is a port, and alongside that port is a steelworks with a trained workforce, and alongside that steelworks with a trained workforce is a city that has a social licence and an acceptance of these industries. So, while we are decarbonising the electricity sector, we also had an eye to decarbonisation of the steel sector which makes up between 9 and 12 per cent of the world's emissions.

What Australia has done exceptionally well over the last 70 years is export our commodities to Japan, Korea, China, the United States and Europe, so they can add complexity to their economies and advanced manufacture their goods and we can buy it back off them. No doubt, that has given us an amazing standard of living. And look at Australia—our standard of living is just remarkable.

But we are now faced with an opportunity where Europe is decarbonising and there are active carbon prices in measure. Japan and Korea are decarbonising at pace and have set targets that are enforceable. China is looking to decarbonise to maintain civil order. The United States is decarbonising and heavily subsidising it. The question then becomes: can Japan make hydrogen cheaply, can Korea, can Europe? The answer to that question as to those three countries is, no, they cannot.

So the question for us is: do we make hydrogen here using our abundant renewable resources and export it to those countries, or do we use the hydrogen where we make it and decarbonise our products? Do we decarbonise iron and add complexity to our economy here and export that decarbonised base product to Nippon Steel, to POSCO, to Krupp? Or do we say to those companies and every other steel manufacturer in the world: you have to decarbonise. Steel is not going away any time soon and the only reductant and beneficiary you are going to have that you can use instead of coking coal is hydrogen, and it needs to be green and the best place to do that is here. It is expensive to move. We are going to value-add to our economy here.

That is the government's plan: create more demand, create storage, invest in generation, create an industry around it, invest in it, create a regulatory framework around it, create a government-owned company like ETSA that will own these assets—our generator and our electrolyser—and then firm renewable energy into the market to lower power prices. Will it reduce wholesale power prices? Yes. Will that have an impact on retail power prices? It will. It depends on how much of it there is, it depends on what is going on internationally, but I can tell you one thing is true: making promises you cannot keep gets you nowhere and we are not going to do that.

We are doing everything we can to lower household power prices, and those wholesale power prices should come down if we have a generator operating in the grid that is not bidding opportunistically at the current market bids but is bidding above its marginal cost of production and getting a legitimate and fair return but not super profits. That will have an impact. If every generator behaved that way in the market, our wholesale power prices would go down dramatically.

Mr PATTERSON: Referring to the same budget line, you said that the hydrogen power station is to target business by having contracts with large energy businesses rather than households, so when will these wholesale cost reductions occur?

The Hon. A. KOUTSANTONIS: We are in the middle of the tender process now for its construction. Its operational date is before the next election, so we are hoping that, once we establish the business, once the tender process is complete and we construct the infrastructure, they will turn their attention to contracting in the market, what the capacity is going to be and they will then start entering the market and making offers. So, hopefully it will be operational in 2025-26, offering those wholesale contracts into the market and firming capacity.

Mr PATTERSON: You said the target was to reduce wholesale prices by 8 per cent for industry. Is that the amount that you still believe will be the case?

The Hon. A. KOUTSANTONIS: That is what we are hoping it can achieve; I hope it can do more. Go back again to 2017. What would you pay to have Steven Marshall not make that promise of reducing power prices by $300 that he never had a chance of meeting and got nowhere near meeting? What I am doing is I am being honest with the people of South Australia. We can achieve building a power plant that can run cleanly without emitting carbon—or less carbon than a traditional generator; a lot less carbon than a traditional generator—and we can offer prices, because the idea is that the Office of Hydrogen Power SA will operate in the interests of not just itself but in the interests of taxpayers and consumers.

They are not motivated in the same way that AGL are or Origin are or Alinta are, or Energy Australia are. They are motivated to get a return for their shareholders. So if spot prices are very, very high, that is what they get paid. We will lead to the wholesale market at just above our cost of production, which is what generators in Western Australia do. Western Australia have some of the lowest prices in the country subsidised by the taxpayer through the operation of their generators in the interests of their taxpayers, not in the interests of foreign owners.

Mr PATTERSON: Can you explain to the committee where work elsewhere in the world has occurred around hydrogen, because it seems you are spending $600 million of taxpayer money on a hydrogen power station, but you have not been able to confirm what the impact will be on household bills. Will they actually even go down? Where else has it worked to reduce power prices?

The Hon. A. KOUTSANTONIS: First and foremost, I refer you to the Inflation Reduction Act in the United States, probably the most consequential piece of legislation in the early 21st century. That is going to change the nature of renewable energy. It does everything from incentivise and pay and subsidise the production of hydrogen. There are two ways you can do this. You can have the Liberal Party strategy, which is hope—'Let's hope someone builds something,' you can have a subsidy in place where you pay people to produce hydrogen, give them tax cuts for producing hydrogen, a direct subsidy, which is what the IRA is doing in the United States, or you can do what we doing which is a direct investment of a government-owned facility.

From my most recent visit to the Port of Rotterdam—which, to be fair to members opposite, they have signed a very good memorandum of understanding with the Port of Rotterdam, and a lot of other jurisdictions have as well—the Port of Rotterdam are looking around the world, casting their net far and wide.

So you are seeing an H2-Fifty project involving an energy company, BP—you may have heard of them—and green hydrogen solution provider HyCC in a planned 250-megawatt electrolyser. I am not going to pronounce this correctly, but the Uniper (and this sounds like a rude Greek word) Maasvlakte Energy Hub involves a 100-megawatt electrolyser in stage 1, with an additional 400-megawatt capacity planned as part of stage 2.

I understand that in Utah there is a 200-megawatt electrolyser being built. I understand in Texas there is a 240-megawatt electrolyser being planned. Ours is the largest. Like the Hornsdale battery, it was the largest grid-scale battery built in the world, and now it is a template. This is going on around the world; there is a race. Calling it experimental is, I think, short-term thinking. It is that sort of Marshall-esque short-term thinking that will get you into trouble.

Mr PATTERSON: Speaking of the short term, and we have talked about this, in terms of any hydrogen technologies that will be able to help out people's household and business power bills in the next 12 months, I could not see any new initiatives in the budget.

The Hon. A. KOUTSANTONIS: They take time to build. We announced our policy in 2017. We were elected in 2022, and we said that in four years we will build and construct this operation. That is record pace—record pace. Without being rude, we lost four years. We lost four years. What was the strategy on hydrogen from the Marshall government, other than hope?

Mr PATTERSON: The Port Bonython hydrogen hub, which we can—

The Hon. A. KOUTSANTONIS: That was a land sale that turned into a hydrogen—


The Hon. A. KOUTSANTONIS: I have seen the documents. It was a land sale. It was a land sale by the Treasury, but then they were embarrassed into making it into a hydrogen hub.

Mr Patterson interjecting:

The Hon. A. KOUTSANTONIS: I asked a question in the—sorry, the then shadow attorney-general asked a question, in the Budget and Finance Committee, in the Old Chamber, of the Department for Energy and Mining, and the chief executive at the time, who shall remain nameless, was asked: 'The tender is being issued by the Marshall government at Port Bonython. Do they require a hydrogen development?' Do you know what the answer to that was? It was no. It was a land sale, and it is this government that has made it about hydrogen. It is this government that is making sure that a hydrogen facility is being built in Whyalla.

Mr PATTERSON: I refer you, further down on the same page, to the $70 million for commonwealth funding for the hydrogen hub and the work that I did, as Minister for Trade and Investment, in attracting international companies here to invest in hydrogen, but we will get to that a bit later.

I turn to page 122 in the same budget paper, program summary. If we refer to the 2022-23 budget figures—so last year's budget—we sat here and it said that the new initiative of the Office for Hydrogen Power SA would be funded with $2 million and eight full-time equivalents. However, in these budget papers, for the same 2022-23 budget, it now says the cost was budgeted at $4 million and 23 full-time equivalents. Why is there a difference between what was published last year and published this year, for what should be the same figures?

The Hon. A. KOUTSANTONIS: I will take that on notice, but my understanding is that we brought the Port Bonython team from Treasury over into the unit, so that could account for the extra cost. But I will check and get you a thorough answer. Can I take that notice; would you mind?

Mr PATTERSON: Thank you. I refer to the same budget line. We will use those figures, the $4 million and 23 FTEs, and the estimated result then says that the cost has increased to 7.59—

The Hon. A. KOUTSANTONIS: Did you say $4 million?

Mr PATTERSON: Yes. I have a net cost of $4.012 million. So now that cost has increased to $7.59 million. Why has there been such a significant increase in the budget expenditure?

The Hon. A. KOUTSANTONIS: In the Mid-Year Budget Review, we got additional resources for the acceleration of the development of the Port Bonython hub. We brought the people over from the Port Bonython group into DEM, some additional promotion and industry development people over from DEM into the Office of Hydrogen Power SA, and additional resources. So, yes, we are gearing up. We are investing.

Mr PATTERSON: So the increase in spending is not because you are struggling to action the Hydrogen Jobs Plan?

The Hon. A. KOUTSANTONIS: Sorry, why would an increase in spending equate to us struggling?

Mr PATTERSON: You are just throwing more resources at it.

The Hon. A. KOUTSANTONIS: What is wrong with throwing more resources at it? We have just spent an hour talking about what we are doing to try to get people's power prices down, and now we are throwing more resources at it and you are criticising us.

Mr PATTERSON: Questioning.

The Hon. A. KOUTSANTONIS: Okay, so you are not criticising?

Mr PATTERSON: Going forward, as I said before, when it was budgeted at $2 million a year, indexed of course, it now seems the 2023-24 budget has gone up to $6.2 million. Are there expected to be commensurate costs in the next two years in the forwards?

The Hon. A. KOUTSANTONIS: We will wait to see those costs in the forward estimates.

Mr PATTERSON: Thank you. I refer to the same budget line: in terms of the new structure in the Department of Energy and Mining, you have the Office of Hydrogen. Does the CE for the Office of Hydrogen Power SA report to the Department for Energy and Mining CE?

The Hon. A. KOUTSANTONIS: He reports to me. The contract is with the Premier, of course.

Mr PATTERSON: Does the office interact with the Department of the Premier and Cabinet and, if so, how? You have said yes, but can you explain how?

The Hon. A. KOUTSANTONIS: I would expect every agency to interact with the Department of the Premier and Cabinet, including Energy and Mining, including the Office of Hydrogen Power SA, Treasury and Finance, Human Services, DEM, DEW, everyone. We are one government.

Mr PATTERSON: Does the office interact with the Premier's Delivery Unit?

The Hon. A. KOUTSANTONIS: Of course they do.

Mr PATTERSON: How do they do that?

The Hon. A. KOUTSANTONIS: By keeping the delivery unit up to speed on how they are going about delivering our key election commitments. It is important to keep your promises, as all 16 of you must realise by now.

Mr PATTERSON: How often is the CE of the Office of Hydrogen Power SA briefing the CE of the Premier's Delivery Unit?

The Hon. A. KOUTSANTONIS: I would imagine as he needs to. I hope all chief executives speak to each other on a regular basis. I know that they have regular scheduled meetings—SLC, senior leadership committee. They should absolutely be talking. You should try it sometime. You should all get together and talk to each other. It might work.

Mr PATTERSON: If we move to page 107 of the same budget paper, the workforce summary, does the department have a clear plan and time line in place for staff who are working from home to return to the office?

The Hon. A. KOUTSANTONIS: Say that again, sorry.

Mr PATTERSON: Does the department have a clear plan and time line in place for staff who are working from home to return to the office? If so, can you table that plan?

The Hon. A. KOUTSANTONIS: The department advise me that they think there are better productivity benefits in having people work from home a couple of days a week, and there would be an active policy in place to deal with that. I am comfortable with it; as long as the work is being done I think it is a good initiative.

Mr PATTERSON: So you are comfortable and confident that the department has the right balance between working from home and staff being in the office?

The Hon. A. KOUTSANTONIS: This is a chief executive your government appointed as chief executive of the department and I have full confidence in him.

Mr PATTERSON: What is the current proportion of staff working from home and staff working from the office in the department?

The Hon. A. KOUTSANTONIS: I will take that on notice.

Mr PATTERSON: On the same line, which you may take on notice as well, has the proportion of staff working from home and working from the office changed over the past year; if so, by how much?

The Hon. A. KOUTSANTONIS: The same. I was going to say they are probably more enthusiastic going back to work now that I am the minister again, but I do not think that is true.

Mr PATTERSON: Does the department measure staff in productivity and efficiency as it relates to remote working; if so, how?

The Hon. A. KOUTSANTONIS: Do we measure productivity?

Mr PATTERSON: Staff productivity and efficiency.

The Hon. A. KOUTSANTONIS: I have to say, and let's be clear here, that the KPIs I have and the KPIs the department have are not necessarily the same. The KPIs I have are on timely regulation and approvals, the work they do, the advice they provide, the regulation they provide to people they regulate, and from what I have seen the department is world class. In terms of their productivity, I have not seen any fall in productivity, and I know that Paul and his leadership team regularly monitor it. If there is a fall, they will address it.

Mr PATTERSON: Moving along to page 109, the same budget paper, investing expenditure, we talked about skyrocketing energy prices, and that is also inflation. We have seen that in Australia and worldwide it is at high levels, so this is obviously impacting construction costs not only in South Australia but across Australia. How much will the hydrogen power station cost?

The Hon. A. KOUTSANTONIS: It is budgeted for $593 million.

Mr PATTERSON: How much of that $593 million has been spent to date?

The Hon. A. KOUTSANTONIS: We have not spent any of the capital yet because we are out to the market. The first budget allocation of capital is the $118.6 million. As at May this year, OHPSA has an expenditure budget of $6.6 million and a capital budget of $0.9 million. The OHPSA capital budget in 2022-23 of $940,000 relates to the transfer of the Port Bonython hydrogen hub from DTF effective from 1 March 2023.

At the end of April, OHPSA forecast an overspend of $4 million due to some design work done at Port Bonython to try to accelerate some of that work and some advisory services and analysis in terms of the request for proposals process we had conducted. As of 30 June, they have not capitalised any expenditure towards the plant build.

Mr PATTERSON: Just to confirm, with the $118 million budgeted for capital there was $50 million budgeted last year. Was that in addition to the $50 million, or does that $118 million include rollover?

The Hon. A. KOUTSANTONIS: It was not spent.

Mr PATTERSON: So, effectively, that office has got budgeted up to $168 million to spend; is that right?

The Hon. A. KOUTSANTONIS: No, an authorisation of $118 million.

Mr PATTERSON: Is that $118 million new money, or is it $50 million from last year that is rolled in?

The Hon. A. KOUTSANTONIS: There has not been new money for capital put into the budget, so $593 million is the budget.

Mr PATTERSON: Is the office aware of any further cost escalations since your initial modelling?

The Hon. A. KOUTSANTONIS: Other than what has been published in the budgets across Australia. Cost escalation is everywhere and we are in the middle of a tender process, so we will have to wait and see what that tender process comes back with.

Mr PATTERSON: Does the $593 million cost include transmission lines or any upgrades to transmission lines to get power to the hydrogen power station and electrolyser?

The Hon. A. KOUTSANTONIS: We will have to wait and see when the tender process is complete.

Mr PATTERSON: In a similar vein, does the $593 million cost include water connection and dedicated pipelines into the hydrogen production facility?

The Hon. A. KOUTSANTONIS: Again, we will have to wait and see at the conclusion of the tender process. This is our signature energy policy—$593 million. The opposition signature policy was Project EnergyConnect. My understanding is the blowout is close to a billion dollars on your signature EnergyConnect policy. I will measure success or failure against that.

Mr PATTERSON: Project EnergyConnect has just had modelling released where it is going to reduce prices by $127 for households.

The Hon. A. KOUTSANTONIS: Has it really? Is that like the $301?

Mr PATTERSON: We will see, as you say. If we go to Budget Paper 4, Volume 2, page 121, the target around the water, we talked about water. You might not be certain about the costs, but do you have an estimate of how much water the proposed hydrogen production facility with acquire per year?

The Hon. A. KOUTSANTONIS: About 200 million litres.

Mr PATTERSON: Where will that water come from?


Mr PATTERSON: In terms of that water that will be supplied by SA Water, you are not certain how much the cost for the pipelines will be.

The Hon. A. KOUTSANTONIS: Can I interrupt you there for a moment, if I can. Is your proposition that no South Australian industry can have any other demand for water in this state at all? That what water we took from SA Water for industrial purposes as of March 2022 is fixed for the next four years; is that your proposition? You do not want any industrial growth, you do not want any new water allocations, you do not want anyone growing any industrial capability with water?

Mr PATTERSON: It was a question not a proposition, I think you will find.

The Hon. A. KOUTSANTONIS: The proposition here is that this water is somehow going to damage the River Murray, or it is going to damage our credentials. The logical conclusion to that argument by the opposition is that they want no further industrial activity of any kind that uses water. That means any mining operation that uses water for a slurry is out; is that the proposition? What is the proposition here? What is the problem with us using extra water? I am trying to understand what the concern here is.

Mr PEDERICK: We are just asking the questions.

The Hon. A. KOUTSANTONIS: You are not asking anything. You are just sitting there.

Mr PATTERSON: Is the office looking at constructing a desalination plant either now or in the future to provide water to the electrolysers?

The Hon. A. KOUTSANTONIS: Yes, you may have heard of it: it is called Northern Water. The Premier has announced an EIS and we are doing work; hopefully, in the future that supply can also supply the Office of Hydrogen Power SA.

Mr PATTERSON: Which of course we did the business—

The Hon. A. KOUTSANTONIS: So you want now more water? Right, okay, here we go. Our desalination plant is a white elephant. Northern Water is essential. Okay, I understand how it works now: if I float, I am a witch and you will hang me; if I drown, I was innocent. Is that how it works?

Mr PATTERSON: I refer to page 121, objectives. Taking into account you have uncertainty about connections for the water and the transmission lines—

The Hon. A. KOUTSANTONIS: You say that; I do not.

Mr PATTERSON: —will the plant be completed by December 2025?

The Hon. A. KOUTSANTONIS: That is the plan.

Mr PATTERSON: Will it be operational by December 2025?

The Hon. A. KOUTSANTONIS: That is the plan.

Mr PATTERSON: When will construction start?

The Hon. A. KOUTSANTONIS: When the tender is finished.

Mr PATTERSON: When will the tender be finished?

The Hon. A. KOUTSANTONIS: When it is done.

Mr PATTERSON: Is that this year, next year?

The Hon. A. KOUTSANTONIS: We have set time lines. We have published them. We have made it clear we want this operational by December 2025. There have been other projects where we have changed scope, like the Aquatic Centre, and we come out and we talk about that. As of right now, December 2025 is what I am aiming for, what the Premier is aiming for, what the Office of Hydrogen Power SA is aiming for. We are in the middle of a tender process. We are doing everything we need to in sequential order to get this operational.

Mr PATTERSON: What stage of the process will the hydrogen plan be sent to Infrastructure SA for their scrutiny and their processes?

The Hon. A. KOUTSANTONIS: We have been through the initial gateway and we are going through all the gateways as required.

Mr PATTERSON: When are you anticipating the final contracts resulting from the request for proposal to be awarded?

The Hon. A. KOUTSANTONIS: That depends on the tender assessment. This is an independent process. We do not interfere in tenders. The tender process will be done independently by the Office of Hydrogen Power SA in conjunction with its advisers and Treasury, and they will make recommendations to us. There could be more questions asked, there could be some backwards and forwards, there could be some joint venture operations also included, so we just have to wait and see.

Mr PATTERSON: When the contracts are awarded, the proponents will put forward technology choices for this. Will those technology choices be locked in as of what is currently available this year?

The Hon. A. KOUTSANTONIS: I do not understand the question. I do not understand what you mean.

Mr PATTERSON: They have put in their proposal, what technology they are putting in as part of the proposal to supply the components of it, all with the technology at this point in time or what they can deliver. Does that contract have the ability to change the technology as you go along?

The Hon. A. KOUTSANTONIS: If we contract for a tunnel, we expect a tunnel not a bridge. If we contract for a gas-fired turbine that operates on hydrogen, we expect a gas-fired turbine that operates on hydrogen. If we contract for a fuel cell, we expect a fuel cell. If they ask for contract variations as the process goes on, we will consider that on its merits as it comes up.

Mr PATTERSON: Is there a risk that the technology relating to some of the elements, all of the elements—production, storage, generation. This technology is still in its infancy. There could be significant advancements coming along the way that South Australia could miss out on.

The Hon. A. KOUTSANTONIS: You mean like GlobeLink?

Mr PATTERSON: No, I am asking questions about this specific item.

The Hon. A. KOUTSANTONIS: No, I do not think it is experimental. I am overwhelmed and very happy with the level of interest. The Premier and I visited the Siemens factory in Berlin. Siemens are one of the premier manufacturers in Europe. They do not think this is experimental. Baker Hughes do not think this is experimental. General Electric do not think this is experimental. Kawasaki and Mitsubishi Heavy Industries do not think this is experimental. I have to say, if the opposition's tactic is to go down the experimental line path: good. Good, I am glad. Continue your questions.

Mr PATTERSON: On the same budget line, will the plant have 3,600 tonnes of liquefied storage for a cost of $31 million?

The Hon. A. KOUTSANTONIS: We will wait to see what the tenders give back to us.

Mr PATTERSON: So you are still confident of delivering that. Will the hydrogen plant have 250-megawatt electrolysers for a cost of $220 million?

The Hon. A. KOUTSANTONIS: That is the plan.

Mr PATTERSON: Will the hydrogen plant have a 200-megawatt combined cycle turbine power station for $342 million?

The Hon. A. KOUTSANTONIS: That is the plan. We are out to tender for these things now. The previous government claimed that they could build the north-south corridor for $9.9 billion. In my first briefing on entering office that was immediately questioned by the bureaucrats.

Mr PATTERSON: I think you have infrastructure and transport coming up.

The Hon. A. KOUTSANTONIS: Yes, I know.

Mr PATTERSON: So we can talk about it then, if you like.

The Hon. A. KOUTSANTONIS: Sure. What we have done is we set out before the election a plan to build a 200-megawatt generator, a 250-megawatt electrolyser and associated storage and infrastructure. We put a price on it. We are out to the market now to validate those prices. We got the very best independent advice leading up to the election as an opposition, the best we could.

We went to Frontier Economics, who I think are the premier modellers and energy advisers in the country. They advised the then Morrison government, they have advised the Gillard government, they have advised the Weatherill government, they have advised the Malinauskas government, they have advised the Perrottet government and the Berejiklian government. They have advised governments across the country, and a whole heap of private operators. The market will give us the prices and the market will tell us what it is we can build for the money we have put.

Mr PATTERSON: On the same budget line, how much hydrogen is expected to be produced by the hydrogen plant per annum?

The Hon. A. KOUTSANTONIS: That depends entirely on the nature of the electrolyser we build, which will be subject to the tender process.

Mr PATTERSON: Is it anticipated that there will be any excess hydrogen produced over and above what is required by the turbine?

The Hon. A. KOUTSANTONIS: It depends entirely on the cofactor the generator will operate within the market.

Mr PATTERSON: I turn to page 113 of Budget Paper 4, Volume 2, highlights. Was the Accelerated Discovery Initiative released in the 2022-23 budget year?

The Hon. A. KOUTSANTONIS: Sorry, I do not understand the question.

Mr PATTERSON: The round 4 of the Accelerated Discovery Initiative, was that released?

The Hon. A. KOUTSANTONIS: I do not have that detail here with me now. The Accelerated Discovery Initiative is still budgeted at 10.7 for this financial year.

Mr PATTERSON: But in terms of 2022-23, are you saying it was not released?


Mr PATTERSON: No worries. I refer the minister to Budget Paper 4, Volume 2, page 112, Agency Statements. In the line item, you have the FTEs as of 30 June at 297.6 within Mineral Resources and Energy that was budgeted in 2022-23. It was reduced down to 282 in the 2023-24 estimates. Where have these resourcing reductions come from?

The Hon. A. KOUTSANTONIS: Savings measures.

Mr PATTERSON: If we could move back to what we were talking about before, Budget Paper 4, Volume 2, page 121, targets, the hydrogen plan, we talked about storage, so you are still in the process of going through the tenders. Are any alternate forms of hydrogen storage being contemplated as part of the storage solution that is ultimately selected?

The Hon. A. KOUTSANTONIS: The tender process is independent of government, that is, the executive government. This is being conducted by the Office of Hydrogen Power SA. I am not in the data room, I am not opening up the tenders, I am not reading the tenders. They will do the assessments. This is at arm's length from me and it is inappropriate for me to ask my agency to comment on the tender process while it is active.

Mr PATTERSON: In terms of the RFP, we know that the Upper Spencer Gulf has peak temperatures up to about 50° Celsius. Were there any conditional measures required to ensure that the hydrogen storage facility can operate effectively?

The Hon. A. KOUTSANTONIS: We are in the middle of a tender process. We have put out our RFP. People are coming back to us, they will assess them, and then we will release them.

Mr PATTERSON: Have you received any advice in relation to the potential hydrogen loss due to leakage and, if so, what percentage rates of hydrogen loss that could be?

The Hon. A. KOUTSANTONIS: We lose natural gas at 1 to 2 per cent in our distribution lines. I do not know how much we would lose in our distribution lines. I imagine it might be slightly higher for hydrogen, given the density of hydrogen, but I do not know. We will find out from the tender process when it comes back with the cost of the infrastructure and the rate of loss, but whatever it is, it is. It is the technology and the nature of the element.

Mr PATTERSON: On Budget Paper 4, Volume 2, page 121, targets, you have said, depending on what is submitted as part of the RFP—will it be a combined cycle turbine, will it be hydrogen fuel cells? Do you intend on the power station being a base load generator or a peaking station?

The Hon. A. KOUTSANTONIS: It will have the capability of being base load but its operation will be based on thermo-renewable energy, and how it contracts into the market will be a matter for the Office of Hydrogen Power SA.

Mr PATTERSON: Have you received advice around turbine technology that it can run on 100 per cent hydrogen?

The Hon. A. KOUTSANTONIS: Yes, I have received advice. There are options to blend hydrogen with gas, there are options to use gas at the start-up and then run on 100 per cent hydrogen, there are options to use 100 per cent hydrogen, so these are all options that are open to the government.

Mr PATTERSON: If the generator itself is running at nameplate capacity, so at 200 megawatts per hour, what is the quantity of hydrogen that is required to be supplied in an hour to produce that 200 megawatts?

The Hon. A. KOUTSANTONIS: It depends entirely on which generator is successful in the tender process. Are we talking about a Siemens generator, Baker Hughes, General Electric, Mitsubishi Heavy Industries? Who knows who has tendered, who knows who is involved? Is it a fuel cell? I do not know. It is a hypothetical question. I cannot answer it. You are asking me to measure a unicorn's horn.

Mr PATTERSON: So you have received no advice at this stage, even indicative amounts?

The Hon. A. KOUTSANTONIS: I have received advice in general about the efficacy and the appropriateness of what we are doing and the department is supportive. Can it be done? The department thinks it can be done. We are going out to tender. My instinct from what I have seen, the market thinks it can be done. The only doubters in this room are members to my right.

But then again we have faced this before. We faced it with the grid-scale battery at Hornsdale. We faced it with the solar thermal plant at Port Augusta, which members opposite ultimately killed. Every time we attempt to do a renewable piece of infrastructure, we are faced with roadblocks from the commonwealth LNP and the local Liberal Party, and that is fine, that is the nature of things. The only thing that frustrates me is we get in, we build this infrastructure, then they sell it, we get back in again, we build it again, then they sell it. This is a continuous revolving door. It would be nice to have some bipartisanship on energy.

So yesterday we released the energy green paper which looks at a long-term solution for energy solutions in Australia. Countries that are dealing with a challenge fight at the margins on this. We are here fighting the core principles. It would be nice for the country to move on and just accept the science and say that climate change is real, global warming is occurring, polar ice caps are melting, the weather is changing, fires and extreme events are happening more often, carbon is having an impact on the economy and the climate, and we need to decarbonise.

If we could just accept those principles, we can argue about health and education, but it has got to the point now where we are arguing about everything. It would be nice to have some bipartisan support here. It would be nice for the opposition to wish us well and say, 'I hope this works,' because imagine if it works. It means we can keep Pelican Point. Can we transition Pelican Point to hydrogen? Wouldn't that be great? Wouldn’t that save us a fortune? We can transition Osborne to hydrogen. Wouldn't that be great? We could save a fortune. Instead, you are hoping we fail.

Mr PATTERSON: Same budget line: in terms of the modelling that you have received in regard to the electrolysers, how much water—even a range—would be needed to produce one tonne of hydrogen?

The Hon. A. KOUTSANTONIS: About nine litres for one kilogram of hydrogen is a rough rule of thumb.

Mr PATTERSON: That is of course if the water itself is highly purified. At Tonsley, you have your electrolyser and then there is a purification there as well as part of the electrolyser equipment that you have put forward. Does that also include purification equipment?

The Hon. A. KOUTSANTONIS: This is a rough rule of thumb. Once the tenders are complete, at the next estimates you can go your hardest and ask me all these questions.

Mr PATTERSON: Same budget line: have you had discussions with ElectraNet, the transmission line provider, around connecting up the hydrogen power station?

The Hon. A. KOUTSANTONIS: I have not, no.

Mr PATTERSON: Has the department?

The Hon. A. KOUTSANTONIS: I am sure they have as part of the tender process, yes.

Mr PATTERSON: Can you give advice to the committee around what the process is for connecting up the power station to be able to supply and generate into the grid?

The Hon. A. KOUTSANTONIS: There is a regulated process in place. The Office of Hydrogen Power SA will make its normal application like any other generator in the NEM and go through the procedure.

Mr PATTERSON: As part of the power station, it requires construction. How many jobs are expected to be created as part of the construction phase?

The Hon. A. KOUTSANTONIS: It is a good question. It depends entirely on who the successful tenderer is.

Mr PATTERSON: Will there be any minimum percentage of South Australian workers?

The Hon. A. KOUTSANTONIS: We have an industry participation plan that must be enforced, yes.

Mr PATTERSON: Once the plan is in operation, it is claimed to unlock 10,000 jobs through a $20 billion pipeline for renewable energy projects. Does that include the $15 billion of renewable projects that were already in place?

The Hon. A. KOUTSANTONIS: Sorry, $50 million worth of?

Mr PATTERSON: $15 billion of pipeline.

The Hon. A. KOUTSANTONIS: $15 billion?

Mr PATTERSON: Sorry, did I say 'million'? Okay, apologies.

The Hon. A. KOUTSANTONIS: Could you rephrase that question, sorry.

Mr PATTERSON: Certainly. Your claims are that it will unlock jobs for a $20 billion pipeline of renewable energy projects, and when the former Liberal government left office there was already a $15 billion pipeline of projects. Is this $20 billion in addition to that $15 billion of projects?

The Hon. A. KOUTSANTONIS: I apologise to the committee. I am not following the member. Are you saying I have said that there is a $20 billion pipeline of renewable projects as a result of Project EnergyConnect? Or are you saying that there is a pipeline of projects because of—

Mr PATTERSON: That is what was proposed to occur.

The Hon. A. KOUTSANTONIS: If Project EnergyConnect was built? I proposed that?

Mr PATTERSON: No, for the Hydrogen Jobs Plan.

The Hon. A. KOUTSANTONIS: Obviously, as development occurs, pipelines grow. So, yes, there is a pipeline of jobs that will create a market that will feed itself obviously. We are putting up a hydrogen renewable energy act, which will incentivise renewable energy being built through an auction process on pastoral and Crown land and private land.

We will go out and people will build and they will build renewable energy to feed the hydrogen industry. It is very important that we do that on an orderly basis not an ad hoc basis so we can make sure that we are not having extraordinary prices being charged behind the meter. Yes, there is a very promising long list of projects that is growing as part of the government's exciting investment. We are hydrogen central again. We lost four years and now we are back.

The CHAIR: The allotted time having expired, I declare the examination of the Department for Energy and Mining complete and the further examination of proposed payments adjourned until Monday 30 July.

Sitting suspended from 10:31 to 10:45.