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House of Assembly - Fifty-Third Parliament, First Session (53-1)
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Parliamentary Committees

Select Committee on the Port Augusta Power Stations

Mr VAN HOLST PELLEKAAN (Stuart) (11:02): I move:

That the interim report of the committee be noted.

This was a report that was received and authorised for distribution in accordance with standing order 204 after session papers by you on 17 December. The reason I mention that straight-up is to highlight the fact that the select committee that was established to look into this issue would have liked more time, and it would have liked the opportunity to do more work on this. Of course, however, parliament was finishing for the year, and in fact finishing for the session, so we put in an interim report. Having said that, though, we are very satisfied with the work we did, and I think it was very important work.

This work came about because Beyond Zero Emissions came to Port Augusta about three years ago now and gave a community presentation in regard to the possibility of the development of a stand-alone solar thermal power station at Port Augusta to replace the existing coal power station. Shortly after that, they gathered together and helped to form a local group of people from Port Augusta and the surrounding area, called Repower Port Augusta.

Beyond Zero Emissions actually came back to Port Augusta a few times to raise this issue with locals. In fact, I invited them to come and present to MPs in Parliament House because I thought what they had to offer was very much worth considering. I proposed that we establish a select committee in this house, and the government agreed to that. That is how we got to where we were. The terms of reference for this committee were important, and I hope everybody does read the report but, in case they are not able to, they were:

To investigate and report upon the effects of the proposal by national group ‘Beyond Zero Emissions’ and local group ‘Repowering Port Augusta’, that the Northern and the Playford coal-fired power stations at Port Augusta (which are owned and operated by Alinta Energy) be replaced by a concentrated solar thermal power station when the coal supply from the Leigh Creek mine is no longer viable.

It included looking into:

(a) the full cost of implementation of this proposal and how it may be met;

(b) the impact on household and business electricity prices;

(c) the impact on employment in the region;

(d) the ability of solar thermal technology to provide a reliable power supply comparable to other mainstream technologies; and

(e) any other relevant matters.

The 'other relevant matters' were also exceptionally important and the committee decided that they were:

i. health considerations for the Port Augusta community;

ii. lifespan of the Leigh Creek mine and therefore the power stations;

iii. environmental issues;

iv. strategic context ie the need for policy direction in terms of:

energy policy and CST research and development for SA, and

the future of the city of Port Augusta and Leigh Creek township, and therefore the communities that they serve; and

v. the approval mechanism for implementing the proposal to develop CST power plant at Port Augusta.

I consider those other relevant matters to be equally and in some cases more important than some of the key issues in the terms of reference. Nonetheless, the committee looked at all those very importantly and thoroughly.

I do thank my colleagues, the members for Little Para, Ramsay, Port Adelaide and Flinders, and the staff who supported us in this, including a contract officer, Mrs Anne Strong. We put a lot of work into this, and I really do commend this report to the house. This is an exceptionally important issue. This is not just a Port Augusta issue. This obviously affects Port Augusta and Leigh Creek. Without coal mining at Leigh Creek, there is no Leigh Creek township. Without a Leigh Creek township, there is no service centre for the entire north-east part of northern South Australia. In exactly the same way as Coober Pedy services the northern north-west, Leigh Creek is equally important, so there are an enormous number of important social issues that extend far beyond Port Augusta itself.

I know that the Repower Port Augusta group were primarily focused on Port Augusta and primarily focused on health and the environment, but I think it is fair to say that they did have understanding and gave credence to some of these important broader issues as well. While, of course, it is never possible to mention everybody—and a large number of people, many of whom I know well (and some are friends from Port Augusta), contributed to this effort—I would like to single out Mr Daniel Spencer, who is actually not a Port Augusta person but did spend a lot of time in Port Augusta, Ms Elizabeth Zyla and Ms Lisa Lumsden as key people who really drove this process locally. I commend them for the work they did.

This is an exceptionally important issue. As I mentioned, in terms of health impacts Port Augusta has a higher than state average incidence of smoking but a much higher again than state average incidence of lung cancer and other related illnesses. There is a strong belief throughout the community that that may well be linked to emissions from the power station over many decades.

It also must be pointed out that the production of electricity is very important. We need electricity, and the electricity produced at Port Augusta goes into the grid and supports many other parts of our state, so it really is a statewide issue. Employment is incredibly important as well. The Port Augusta power stations—one that operates and one that does not—and the Leigh Creek coalmine are by far the single biggest employers, I suspect, in the north of the state. No, sorry, BHP would exceed that, but certainly there are about 500 jobs between those two places and, within Port Augusta, Alinta's power station is the single largest employer and incredibly important.

People would really understand that very difficult issue that communities have dealt with for over 100 years throughout the world: how do you balance these differing demands? There are people who have done work that they know was not necessarily good for their health or good for their community, but they needed the income. And that was going on 100 years ago in coalmines in the north of England.

The world has improved significantly since then, and I do not suggest that the health impacts in Port Augusta are anything other than a fraction of the example I just gave, but some of the difficulties that the people face in trying to weigh up these things exist both from the employees', the employers' and the local community's perspective.

I am sure every person in this house would prefer not to have coal burnt to produce electricity. It is a pretty straightforward thing because it creates pollution, but, at present, our community as we know it cannot survive without it. There is a very important focus in saying, 'How can we move on? How can we move forward?' If you never start to consider these things seriously, you never get to the end point that you want. Of course, a very sensible end point for us all would be completely renewable energy production for our whole state and our whole nation. We are not there yet and we are not even close to being there, but we have to start trying to look at these things.

Alinta has been very responsible. They have responsibilities to shareholders; they need to earn a buck. They run a power station that has lost a lot of money over a few decades now and they are turning that around. They have responsibility to their shareholders, but they have a responsibility to their employees and a responsibility to the community and they are doing the very best that they can and they participated proactively with our committee in terms of saying, 'Look, this is what we do, we actually foresee a life for the coalmine and the power station for probably up until around about 2032 at the moment. Nonetheless we are more than happy to participate in trying to look at how we could move forward and how we could do what we do better.'

To that end, Alinta is a key contributor financially to the feasibility study that is being done at the moment to look into this exact issue, as is the state government and the federal government. One of the key recommendations from the select committee was that this proposal for a feasibility study gets real traction from both state and federal governments and also industry, and we are very pleased that that has happened.

A key issue that needs to be considered at the moment by the steering committee for the feasibility study which will run over the next two years (and I believe a decision is imminent) is whether they look into stand-alone solar thermal power production or hybrid solar thermal power production which would almost certainly just be solar power production hybridly produced with the coal-fired power station. They are looking at that and they have an announcement which they will make very shortly.

My strong preference is that they look into stand-alone solar thermal power technology with storage because, if the feasibility study is favourable, if it looks like it can proceed, then the life of any potential renewable development would not end when the coal-fired power station life ends, which would be the case if it was hybrid. I think it is important to look at stand-alone technology in the feasibility study but, as I said, Alinta and ARENA and PIRSA will make a joint announcement on that very soon I hope.

It is also important to point to ARENA's involvement in all of this. The Australian Renewable Energy Association is a federal government body that was established by the former federal Labor government. It has been announced in the recent federal Liberal government budget that it will be disbanded. No doubt it has been one of the very difficult decisions that the federal government has had to make. It does not cause me any difficulty at all to say very publicly that I wish they had not made that decision because I think that is an organisation that has done—and has the capacity to continue to do—extremely good work. I can only imagine the difficult decisions that have to be made when you make any budget and I guess it was a decision that the government decided they had to make.

The reason I mention that is that, while ARENA has contributed significant funding to this joint feasibility study, it was also a potential funding source that may have been accessed if the feasibility study had been favourable and if a development was to proceed. That opportunity today is not there, but let me be very genuinely optimistic and say that it will take two years for the feasibility study to be completed. It would be two years before recommendations and findings from that study could be considered, so it will probably be two to three years before anybody is seriously out there looking for funding to develop solar thermal technology in Port Augusta if the feasibility study recommends that. Let us hope that by that stage there are other funding sources available. I would be very optimistic that that would be the case.

Regarding the recommendations from the select committee, I will not go through the whole report, but I do encourage all members who have an interest in energy production and/or local communities and/or the environment to consider it. Recommendation 1 states:

That in the event that ARENA contributes funding towards a feasibility study into the development of concentrated solar thermal power (CST) generation at Port Augusta, as requested by Alinta Energy, that government works jointly with Alinta Energy to achieve an outcome which provides a thorough and rigorous analysis of the capital and other costs of building a commercially viable CST operation in SA. As a minimum, outcomes sought by government should include:

(a) cost/benefit analyses of available zero-carbon power generation technologies including renewable energy, and hybrid options with the capacity to match the nature and extent of supply from the existing Port Augusta power stations,

(b) where possible, the identification of the financial value of externalities associated with available power generation technologies including, but not limited to, health, social, and environmental impacts

That is something that our committee considered extremely seriously, because there is a lot more to this issue than just the cost of electricity, although that is incredibly important. It continues:

(c) the most appropriate methods to fund such major infrastructure development should be identified, and

(d) suitability of Port Augusta as the appropriate location for such infrastructure development should be considered, in a strategic context, in the interests of SA as a whole.

Of course, that is an exceptionally important issue for me as the local member. Recommendation 2 states:

That state and local government work together towards a cohesive strategy for the future of the City and community of Port Augusta, and of the surrounding region, in relation to the anticipated life expectancy of the Port Augusta power stations.

That is important with regard to employment, the environment and health, of course. Recommendation 3 states:

That state and local governments work together with the Outback Communities Authority towards a cohesive strategy for the future of the Leigh Creek township, and in particular for the ongoing provision of essential services to the community of the Far North Pastoral Area, in relation to the anticipated life expectancy of the Leigh Creek mine.

I really do urge all members to consider this report very seriously. Our findings included that in some ways solar thermal was better than expected. In some ways it was not quite as good as expected or put forward by proponents, but it deserves very serious and thorough consideration.

Mr ODENWALDER (Little Para) (11:17): I wish to speak very briefly on the motion brought forward by the member for Stuart. I thank him for bringing this forward today. I had the pleasure and the fascinating experience of chairing this committee, but I want to state from the outset that the idea and the driving force for this committee came from the work and the interest of the member for Stuart, in response to his own constituents, and indeed grew out of his own private member's motion.

As a result, I am not going to go over all the issues mentioned by the member for Stuart, other than to agree that the motivation behind this committee, regardless of whether the ultimate solution for that area is CST technology, is that Port Augusta and the surrounding area (and I use the term surrounding area advisedly, because I understand it is a large area we are talking about) are almost completely reliant on the generation of power. In other words, if that industry was taken away it would leave an enormous hole in that loosely defined area.

The community out there is understandably anxious about the future. It is also anxious about the health consequences of the current arrangements in Port Augusta. Broadly speaking, the interim conclusions of the committee were that CST technology, as the member for Stuart just said, is a workable technology. It is a proven technology; it is technically feasible; it is a technically feasible way of generating baseload power. We have seen it work, but the main sticking point, of course, was whether it stacked up economically, and as the member for Stuart said again, the committee ran short of time, and probably expertise and resources, to make a real assessment of the economics of that technology. I am obviously pleased that the feasibility study is going ahead and that the study will be able to make these economic determinations that we could not, due to time, resources and expertise.

In passing, I also want to join with the member for Stuart in his disappointment at the scrapping of ARENA. I think this was a short-sighted measure. I am not going to bang on about the budget but, along with a lot of other measures, I think it was short-sighted. I sincerely hope that similar schemes fill that gap because it is such an important area for all of our futures. Finally, as per the final recommendations of the committee report, I hope that, whatever the outcome of this feasibility study, the future of Port Augusta, Leigh Creek and that surrounding area I was talking about stays firmly on our agenda for all of the reasons the member for Stuart outlined.

I want to thank all of the members of the committee, particularly the member for Stuart, obviously, the secretariat David Pegram and our researcher Anne Strong. It was a fascinating experience. It was the first experience I have had of that kind in this place and I enjoyed it. I hope that members find the report interesting, and I hope it brings some benefit to the constituents of the member for Stuart.

Mr TRELOAR (Flinders) (11:20): I too rise today to speak on this particular motion and make a contribution as a member of the committee that investigated the solar power thermal generation options and possibilities for Port Augusta. I congratulate the member for Stuart on bringing an issue to the parliament which is, I know, dear to his heart and crucially important, particularly to the people in Port Augusta but also those in Leigh Creek and, of course, the broader electorate of Stuart, and not just to them but to the state as a whole because the Port Augusta power station, as it exists at the moment, is a significant contributor to electricity generation for much of the state.

I congratulate and compliment the member for Little Para on the way he chaired the select committee. Like himself, it was the first opportunity I had had to be involved with a committee such as this. It was ably chaired and we were joined by the member for Ramsay and the member for Port Adelaide. We were all relatively new members of this place at that time, I must say, and we threw ourselves wholeheartedly into the brief that was given us. I will also say thank you to staffers David Pegram and Ms Anne Strong, who provided support to our committee.

It was an extensive brief. We started from scratch, essentially, although we did consult widely and many, many submissions were received, both written and in person. These were driven particularly strongly by the group known as Repower Port Augusta which, of course, really came out of their concerns about the health aspects and environmental aspects that were imposed on the people of Port Augusta, in particular, with regard to a coal-burning power station. I admire their tenacity and contribution.

No doubt, there will be a suite of solutions for our energy in the future. Solar thermal may well be one of those. The presiding member (the member for Little Para) and I decided to take the opportunity and make use of our travel allowance to travel, on behalf of the committee, to Spain. Spain is the largest generator of solar thermal power in the world and we thought, 'Where better to go than southern Europe to look at this?'

It was interesting. We had excellent support from minister Koutsantonis and also his department. Austrade also helped us out with our agenda and visits. The initial motion with regard to this select committee was:

…to investigate into and report upon the effects of the proposal by national group Beyond Zero Emissions and local group Repowering Port Augusta [who I have already mentioned] that the Northern and the Playford coal-fired power stations at Port Augusta (which are owned and operated by Alinta Energy) be replaced by a concentrated solar thermal power station when the coal supply from the Leigh Creek mine is no longer viable…

Of course, this was a pet project of the former mayor of Port Augusta, Joy Baluch, who, of course, is no longer with us. She was really quite passionate about this.

As well as visiting Spain, the committee as a whole visited Port Augusta and took evidence. We also visited the Leigh Creek coal mine, which was interesting for me; it was my first opportunity. Of course, part of the presumption of the select committee was that eventually that coal supply would run out. Mines have a tendency to go on for longer than what is predicted. Certainly, the suggestion was that about 10 years of coal supply remains in the mine at Leigh Creek, but that has been the situation for many years. What I am saying is that there is 10 years' supply left, and there may be—

Ms Redmond: Perpetually.

Mr TRELOAR: Perpetually—'infinitely finite', I think is a term I have heard with reference to natural resources, and that appears to be the case with the coal supply in the area of Leigh Creek and surrounds. So, with that consideration, I suspect that there will be coal-fired power stations for a long time.

One of the sites we visited in Spain actually had a solar thermal power generation, but it was in conjunction with the burning of wood. It was a hybrid situation, and is known as a hybrid. That is not something that we were really charged with as a committee, but it is certainly a possibility with regard to these projects in the future. In Spain, they regarded the burning of wood from a local forest as a renewable resource, and carbon neutral, which the presiding member and I found rather interesting.

As the members for Stuart and Little Para have said, we were probably restricted by the amount of time we had available. In the end, a committee has to come to a close, come to a conclusion and make a recommendation, but this particular topic was so vast and the submissions were so many that the time for consideration, and in fact the technical expertise, was difficult to access.

We came up with some recommendations in the end, and they have been alluded to. I do have a copy of the report here with me, and I will just very quickly mention the recommendations. I will not read them all, but recommendation 1 was:

That in the event that ARENA contributes funding towards a feasibility study into the development of concentrated solar thermal…generation at Port Augusta, as requested by Alinta Energy—

Of course, Alinta are a listed company; they need to make a profit. They are in the business of power generation, and it is a business—

that [the] government works jointly with Alinta Energy to achieve an outcome which provides a thorough and rigorous analysis of the capital and other costs of building a commercially viable CST [concentrated solar thermal] operation in [South Australia].

The capital costs were never really put to us in a definitive form, and in many ways the committee was struggling to get across the actual numbers involved with such a project. Interestingly, in Spain, the presiding member and I certainly got the impression that those particular power generation plants would not be operating at all without significant government support.

The Spanish government at the time (pre-global financial crisis, I must say) had made a concerted effort to support the renewable energy sector. There were many concentrated solar thermal plants right across the country, as there are across much of southern Europe—there seems to be a bit of a theme here—but we also saw many wind farms.

The suggestion was, at one point—we were never able to verify this, but it was suggested to us on a number of occasions that a significant proportion (up to 25 per cent) of Spain's not insignificant national debt was as a direct result of the government's support of renewable energy, and concentrated solar thermals in particular. So, that really gives a word of caution—

Ms Redmond interjecting:

Mr TRELOAR: That's right, member for Heysen: 25 per cent of the Spanish national debt was attributable to their government's support of renewable energy, and that puts some perspective, I think, into these sorts of projects and how governments can sometimes get things so wrong with their economic settings. We are going to hear more about that yet today, I am sure. The second recommendation was:

That state and local government work together towards a cohesive strategy for the future of the City and community of Port Augusta—

That was one of the primary intentions of the member for Stuart, as it should be—

and of the surrounding region, in relation to the anticipated life…of the Port Augusta power stations.

Recommendation 3 states:

That state and local governments work together with the Outback Communities Authority towards a cohesive strategy for the future of the Leigh Creek township, and in particular for the ongoing provision of essential services…

Of course, Leigh Creek is a mining town. Almost everybody there is involved, in some way or another, with the coal mine there, but it also provides a really important service centre for the surrounding pastoral district. If Leigh Creek, for some reason or at some time in the future, were to change its nature then those pastoral communities would have to look further afield for their services and support.

I congratulate the member for Stuart on bringing this issue to the house's attention. I thank the other members of the committee who worked diligently, and the staff members. As I said, we were all relatively new members at the time and enjoyed the experience very much. I think it is a useful report. I would urge all members to read it and get themselves across this brief, because there is no doubt that the generation of electricity will be a contentious issue and a challenge for us in the future. My suspicion is that, in the end, we will end up with a whole range or a whole suite of solutions with regard to power generation.

Motion carried.

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