This story was originally published in The West Australian on 5 June 2018 with the headline "Gas giants look to renewables to cut energy expenses." © Peter Milne.
Ten years after the Varanus Island gas explosion caused an energy crisis, there is plenty of change in the future mix of WA’s power generation.
Two of the biggest players in WA’s gas-propelled economy, Woodside Petroleum and Alcoa, are starting to look to renewables to slash their gas use as doubts rise about how big a role the fossil fuel will play in the transition to clean energy.
The Woodside-operated Karratha Gas Plant consumes 7 per cent of the gas it gets from offshore to generate power to run itself, and this creates about 70 per cent of the plant’s carbon emissions.
Chief executive Peter Coleman told the oil and gas industry last month that cutting the amount of gas used for fuel by combining solar panels and batteries with gas generation would increase LNG exports and made environmental and economic sense.
Mr Coleman expects power generation at the North West Shelf Venture’s KGP and Woodside’s Pluto to be significantly different by the mid-2020s.
Concentrating solar thermal (CST) generation, where mirrors allow the sun to heat a liquid that produces steam 24 hours a day to generate power, could eventually also be used.
Alcoa, the State’s biggest gas consumer, is a partner in a $15 million research effort at the University of Adelaide into the use of CST in alumina production. The first stage is looking to use waste heat from the CST steam turbine for the required heating that currently comes from burning gas.
University of Adelaide Centre for Energy Technology director Professor Gus Nathan, who is leading the research, said the team would have a good understanding of the preferred technology to use for the first stage and its economic and technical feasibility by the end of this year.
If successful, the full three stages of the research program could cut Alcoa’s gas use by up to 45 per cent.
Meanwhile, the backers of the Asian Renewable Energy Hub in the East Pilbara, who aim to send power to Indonesia, have added 1.2 gigawatts of capacity for the Pilbara market to their plans at the cost of $5 billion.
The hub would generate power constantly from solar panels by day and wind turbines that are most productive at night.
As big industrial users work to lessen their dependence on gas, the Public Utilities Office is considering the best fuel mix for the State’s power grid.
Sustainable Energy Now chairman Ian Porter said the State should take care not to sign long-term contracts for power it may not need.
The group’s analysis showed that 85 per cent of the South West grid could be supplied with renewable energy by 2030 at a similar cost to maintaining the current mix of coal, gas and renewables.
The change would reduce the power generated by gas to one-third of current levels.
Climate Analytics director Bill Hare said gas turbines would be used to back up power supplies for some time, but not to the degree that has been predicted.
“What is changing the equation. . . is the rapid price reductions for renewable energy and storage, so the combination is already beginning to compete effectively with natural gas backup and peaking capacity,” he said.
Despite question marks over gas demand in WA, Woodside is optimistic about demand for its LNG. A Woodside presentation to analysts last month predicted annual LNG demand would grow 4 per cent a year until 2035.
Dr Hare said forecasts of gas demand soaring until the mid-2030s had to assume the Paris Agreement to limit the average temperature rise to 1.5C was breached and substantial use of carbon capture and storage.
He said investors in carbon capture and storage faced not just technical risks, but the prospect that their investment would be underutilised.
Dr Hare, who heads the Berlin-based climate institute from Perth, said it was important for WA to embrace change and a strategy for the State’s industry to transition to a renewable base was critical.
“Western Australia could use its vast renewable energy potential to transition from a natural gas giant to a renewable energy superpower, generating significant wealth and employment for the State,” he said.
In the meantime, gas producers will be gambling that the high gas prices required to bring new resources to market do not make their product uncompetitive against renewable energy.