Joint doorstop interview with South Australian Minister for Energy and Mining

  • Transcript, E&OE
Topics: Advanced compressed air energy storage facility; renewable energy.
Location
‘Hydrostor’ Adelaide Headquarters
08 February 2019

Simon Birmingham: Thanks so much for coming along to the Terramin mine site here just outside Strathalbyn today. And it's wonderful to be here with Dan van Holst Pellekaan, the South Australian Energy Minister, together with Adrian Pederick the state member for Hammond, and those who are making a substantial investment in South Australia's energy future. We've got Curtis here from Hydrostor and what we're seeing with the Hydrostor team is they are backing an investment in new technology that is part of the revolution we're seeing in terms of energy markets and energy supply around Australia. Federal and State governments are committed to seeing renewable energy continue to be deployed, but we know that the downside of renewable energy is that it doesn't always provide the reliability when you need it. That's why energy storage is so critical and this type of project which is going to see advanced compressed air energy storage occur here at this site, is a new technology that runs in a way not dissimilar to the way in which pumped hydro works providing clean, reliable, storage that can go into the grid when required.

It's a perfect complement to wind and solar because you can store the energy and then pump it back out and use it when required. That's why it's being supported as a great example of this new technology by the state and federal governments. We as a government are proud at a federal level to be providing around six million dollars in support through the Australian Renewable Energy Agency and to do that alongside our friends at the state level. This is the type of cooperation in practical terms that is making South Australia's energy grid more reliable, cleaner, and in future, cheaper for South Australians. And that's what everybody wants to see cheaper, greener, reliable energy projects like this, are going to help deliver it. Dan, thank you for working of course hand in glove with the federal government, with investors. Can I say as the federal investment minister, how much we welcome this commitment by Hydrostor, a Canadian-based company, to invest significantly in Australia's energy markets, it's a vote of confidence in the opportunities that are here, and it's going to make a tangible difference in terms of this mine site, the Strathalbyn community but most importantly, the reliability of energy security and supply here in South Australia. Dan?

Dan van Holst Pellekaan: The Marshall Liberal Government is fully committed to making electricity in South Australia cheaper, more reliable, and cleaner. All three of them are high priorities for us and it's a huge pleasure to be partnering with the federal government, and with Hydrostor and arena to get this project off the ground. Nine million dollars of combined investment from the state and federal governments, with investment for a 30 million dollar combined project from Hydrostor, a Canadian company, coming to South Australia to create jobs and contribute to improving our energy system into the future. Renewable energy is absolutely outstanding. We are wonderful in South Australia generating electricity from sun and wind, but storage has been the missing piece of the puzzle and the Marshall Liberal Government is determined to insert into our energy system and I'm thrilled to be partnering with Hydrostor in this project. Combining renewable energy and storage in a very innovative way and also making use of this mine here that is currently in care and maintenance so that it could also contribute to a cleaner future for all South Australians. Curtis?

Curtis VanWalleghem: Very well, thank you everyone. We're extremely excited to be here today. As mentioned by the Senator and Minister we're based in Toronto Canada, but we've now established an office here in Australia. I am grateful for the funding from the Renewable Technology Fund as well as Arena to allow us to bring our advanced compressed air energy storage technology to Australia and it will be the first compressed air project in the country. The way our technology works is it's not dissimilar from pumped hydro but instead of lifting water, what we do is we push air down to lift water up and we also store some heat and the main advantage of this is we're not reliant on the the hills or the right sites for pumping hydro. So we can go really anywhere and it's a much cheaper alternative to batteries. So we think it's a great complement to the existing technologies and suite that exists on the electrical grid here in Australia. So again just really excited. I want to thank everyone for coming out and we're excited to take this mine that was in care and maintenance and give it a second life and we're looking at many other projects across the country and the state. Can't wait to grow further in the country and make even further investments. So thank you very much.

Simon Birmingham: Thanks Curtis. Matt from Arena.

Matt Walden: Thanks very much Matt Walden I'm an investment director at Arena. Thank you for the warm welcome. As mentioned my name is Matt Walden, I'm an investment director at the Australian Renewable Energy Agency with a responsibility in our work in storage technologies. And I'm here today on behalf of Darren Miller the Arena CEO. On behalf Arena, I'd like to acknowledge our excitement in working with the South Australian Government on this very exciting project and with Hydrostor to bring to fruition Australia's first large-scale compressed air, energy storage project. I'd like to congratulate the minister and his team for the excellent work they've done and the leadership they've shown in getting this project to where it is today and I personally have had the benefit of working with that with that team. Arena, as everyone would know has a unique role in funding the building blocks for Australia's future energy system. And projects like this are exactly what we're looking at. Dispatchable forms of generation have a crucial role to play and as the minister mentioned, complements the role that wind and solar and other renewable generation technologies bring to the energy mix. With that, ensuring the quality of supply being the critical element. This project in particular utilises the existing mine infrastructure in a way that's able to deliver power, that's reliable, and affordable, and injected into the local grid as and when is needed. It should be noted that compressed air energy storage, the technology, complements existing forms of storage technologies including pumped hydro and battery, and has the benefit of bringing flexible siting opportunities, both utilising existing infrastructure and new greenfield developments with a targeted deployment cost that's not dissimilar to pump hydro energy storage technologies. So, just in conclusion once again I'd like to thank the minister for his work and Hydrostorl for their leadership and I look forward to working with all involved delivering this project.

Journalist: Curtis, is the sky the limit with this sort of energy? How big could it go? And in terms of how much power can it generate, in its final conclusion?

Curtis VanWalleghem: So the projects that we've built to date have been in five megawatt, two megawatt range but we're developing projects up to 500 megawatts. So again, very similar to pumped hydro in terms of scale. There is no real upper limit. We could be doing gigawatt size projects. So we find the right size for the grid tends to be in that kind of 100 to 500 megawatt and so we're developing sites across North America and Australia around that size.

Journalist: Chris what are some of those issues yet with scalability? If you are talking about a 5 megawatt project that is ultimately quite small when it comes to grid self-storage. What are your problems going up to 100 and 500?

Curtis VanWalleghem: There's not really a problem, it's a matter of cost for the economics because we effectively go down about 400 meters and hollow out a drift. And if you're mobilising mining equipment for a small couple of megawatt project it doesn't make sense which is why we like to use mines like the Terramin mine here for those smaller projects. But for a greenfield, we mobilise mining we do a decline or a shaft down to that depth but that really requires kind of 50 hundred megawatt and up for us, to do what we call our Greenfield project.

Journalist: There's been a lot of praise for the Tesla, the giant Tesla battery this summer, is your technology as good as that?

Curtis VanWalleghem: Batteries and pumped hydro or compressed air are really providing different purposes to the grid. They're providing more rapid response, frequency, regulation, whereas we're really shifting big blocks of power from off-peak to peak, and providing stability and in terms of inertia and real power through our synchronous generation that helps the reliability of the grid. So they really are complementary and really they're not cost effective doing what we do and we're not very effective doing what they do. So they're really different solutions.

Journalist: Curtis, just talk us through how this site will change over the coming months?

Curtis VanWalleghem: Sure. So starting roughly in April we'll begin watering the decline so the start of the decline comes right through this box cut behind us. We'll then remove the water out, reinjecting it through different wells. Once it's been done we will mobilize mining, we'll seal the cavern, build some bulkheads and pull up a couple of pipes. And then just behind the roadway there, we'll be building our facility that will hold an air compressor, sucks atmospheric air and pressurises it, some heat exchangers, as well as a tank to store effectively hot water which is our proprietary thermal store. And so there'll be a little building there and this will be de watered, work will happen and then roughly end of 2019 early 2020 we expect to be done construction, the water will fill backup. You won't notice anything different here and they'll just be a building over there.

Journalist: A mine site might have been re- vegetated and returned to the natural state as much as possible. Are you going to prevent that from happening?

Curtis VanWalleghem: No we are adhering to the mine care and maintenance plan and really all of the monitoring and rehabilitation work will continue really as planned.

Journalist: Can I ask both ministers. Perhaps Dan first? Whilst it's not actually in your patch, its not far off, were you aware of the problems that GFG, well suppliers to GFG were having in getting paid?

Dan van Holst Pellekaan: No GFG actually have a very good record with regard to to paying people, they have a positive reputation, sorry… have a positive reputation in that way. I was not aware of difficulties that were reported in the media but certainly the Marshall Liberal Government myself, all of my colleagues take it very seriously. We welcome the investment from GFG but of course they do need to pay all of our local South Australian and particularly in Whyalla, suppliers of goods and services in a very very prompt way. Now, supplies enter into contracts with companies to supply and they agreed to the upfront credit terms. That's their business what they agree to but of course it is incumbent upon GFG to adhere to those credit terms. Whatever is agreed is what GFG must deliver.

Journalist: When you say you hadn't heard, those rumors were circulating as far back as early December. It was reported on radio, I know that because I did it myself. You say you don't know, you didn't know, you must have contracts in your port Augusta area that are doing work for GFG, if you didn't know, you'd be about the only one in the iron triangle who didn't?

Dan van Holst Pellekaan: Well I don't accept that at all Mike. The reality is that people have actually said to me that they have found GFG to be a reliable payer. That's the reputation that's been shared with me around the place. So the revelations that that's not necessarily the case, I take seriously the Government takes seriously.

Journalist: You had no idea?

Dan van Holst Pellekaan: Now ultimately the agreement on credit terms between payment and delivery of goods and services is between GFG and their suppliers. But what's most important to me is that GFG adheres to the credit terms that they've actually entered into with those suppliers. That's what's most important to us. The Marshall Liberal Government has taken it upon itself to actually improve on the previous government's performance with regard to paying small businesses and we expect exactly the same from all of the other corporate citizens in our state.

Journalist: Could it be sign that Gupta is overstretched and actually doesn't have the money to pay his contractors?

Dan van Holst Pellekaan: Oh look that's a hypothetical question that you know I'm not privy to the internal finances of GFG. What I do know is that since they've taken over the Whyalla steelworks, from the outside it appears that they've been doing an outstanding job. The steelworks is operating, people are employed, businesses which were out of work under the previous owners of the steelworks, are now back in work. Now if there's a question as there seems to be about the timing of the payments from GFG to those businesses then that's something that we take very very seriously. We want to know that all corporate citizens in South Australia are treating their smaller suppliers in a very respectful, positive way and adhering to the credit terms that have been agreed upon.

Journalist: Minister we are here talking about one storage project. What's your latest advice on another storage project namely the Aurora solar thermal plant outside of Port Augusta in your patch?

Dan van Holst Pellekaan: Yeah terrific project. The previous government as everybody knows entered into agreement with Solar Reserve to build a solar thermal power plant at Port Augusta. It's something that from Opposition, myself and the current Premier both said was a very positive step forward but that hasn't changed. We've said before the election that we would not all of the commitments of the previous government with regard to this contract and we stand ready, willing and able to do so.

Journalist: Have they got the finance yet?

Dan van Holst Pellekaan: I don't think they have the finance yet but again that's a question directed to the company itself. These projects are all significant projects can be can be very difficult to put together. You need a resource. You need a plan. You need permissions, you need a willing community, you need customers, and you need finance. Now Solar Reserve is working for that succession of requirements to get this project up. But let me just reconfirm as I've done many times before the South Australian Government stands ready, willing, and able to honour the commitment that the previous government entered into with Solar Reserve.

Journalist: So has the Government received the CQ report into the state's electricity supply contract which is due to be delivered in December?

Dan van Holst Pellekaan: That contract actually has nothing to do with Solar Reserve. That's actually an investigation into the bridging contracts. What the Treasurer did was engage CQ partners to look into the agreement that the previous government did into a bridging contract to supply electricity up until the Solar Reserve project comes online. So that investigation into that bridging contract has nothing to do with Solar Reserve other than it's looking into electricity supply up until Solar Reserve is ready to run.

Journalist: If I'm correct here, that contracts also gone to Mr Gupta's company?

Dan van Holst Pellekaan: The contract is really bridging the bridge to the contract that the previous company entered into is with Simec Zen Energy which is a company that so GFG Alliance is a majority shareholder of and that's a contract that the previous government entered into with Simec Zen Energy. That's a contract which that the new Marshall Liberal Government will honor, but of course we do want to just interrogate that contract and find out exactly how and why it was entered into. Just to to be absolutely sure that it's in the best interests of all South Australians.

Journalist: Will you release this report?

Dan van Holst Pellekaan: That's up to the Treasurer, the Treasurer actually contracted for that investigation to be undertaken. It'll be up to the Treasurer to decide whether he wants to make that public or not.

Journalist: Senator thanks Minister, Senator, can I ask you the same question? Were you aware preceding the last 24 hours, that there were issues with contractors with slow payments from GFG?

Simon Birmingham: Mike I think I can recall hearing earlier coverage. Obviously what we see today is the federal Small Business Commissioner in Kate Carnell taking the right action in terms of advocacy on behalf of small businesses. Our Federal Liberal National Government has taken very seriously the need to ensure as a government that we have hastened and fastened payments to small and medium businesses to make sure that the federal government pays on time. And just last December Scott Morrison, in addressing the Business Council of Australia made commitments to extend that even further and also to apply pressure to large businesses around Australia to make sure that they do more to pay small businesses faster and our message would be very clear whether it is the federal government state governments or big business everyone should pay small businesses on time and in a timely manner.

Journalist: So you're saying to the GFG and Sanjeey Gupta, lift your game?

Simon Birmingham: GFG are highly valued investors in South Australia, they are making an incredible job in terms of turning around the prospects and the fortunes in Whyalla but they like every large business ought to pay small businesses in a timely way.

Journalist: So it's not good enough what they're doing at the moment?

Simon Birmingham: Well I haven't had a personal scrutiny of exactly what's happening but I'm just giving a clear message…

Journalist: There are plenty of anecdotal stories.

Simon Birmingham: A clear message from the federal government that our expectation is every large entity government or private sector ought to pay small businesses on time in a quick and timely manner.

Journalist: Senator how are we going in terms of our climate change goals and is this the sort of project that could help?

Simon Birmingham:. Well this is absolutely the sort of project that helps with the transformation of our energy systems and transforming them to be cleaner and greener but does so in a reliable way. We have come to learn much over the last few years that you can't just put huge amounts of new renewable energy into the system without also having the guarantee that it's reliable and dispatchable when the system in the grid needs it. So these are the types of new modern breakthroughs that are allowing renewable energy to be more reliable more consistent to provide the power as and when consumers and businesses need it. Now we as a country are on track to exceed our 2020 targets and we're doing that without the need of carbon taxes or punitive measures in place because we've got the right range of incentives whether it's incentives such as the grant that Arena is making through the federal government to this project, other incentives that exist in terms of our emissions reduction fund and the likes of activities that we have pursued at the federal level and we'll make sure the same types of measures are there to give the same commitment for our 2030 targets. We'll meet them just as Australia has met and exceeded every commitment we've made internationally in terms of emissions reductions today.

Journalist: Curtis, how many jobs this is likely to create here for the Strath community?

Curtis VanWalleghem: For the couple of years during construction it'll be 30 direct jobs locally with a spin-off of about one hundred and fifty additional jobs. And then over the life which will be 30 plus years of this asset there will be roughly four or five full time jobs plus some spin off jobs as a result. Thank you.

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