LAUNCESTON, Australia (Reuters) - (The opinions expressed here are those of the author, a columnist for Reuters.)
There is a lot more riding on Tesla Inc’s deal to install the world’s largest grid-scale electric battery in Australia than whether Elon Musk can meet his bold commitment to finish within the 100-day deadline.
Under an agreement made public on July 7, Tesla must deliver the 100 megawatt (MW) battery within 100 days of the contract being signed, or the government of South Australia state won’t have to pay the electric car, clean energy and space exploration company.
On the surface, this is a deal aimed at providing back-up electricity to South Australia, a state that has been plagued by blackouts since it closed coal-fired power plants and moved to being powered mainly by renewables such as wind, and to a grid connection to neighboring Victoria state.
Certainly, if successful, the 100 MW of Tesla lithium-ion batteries will be able to provide power to some 30,000 homes in South Australia, which is home to about 1.7 million people and ranks fifth by population of Australia’s six states.
But the significance of the deal goes way beyond the mere provision of emergency power, and it is likely to become a political football in Australia’s wider energy debate.
Broadly speaking, Australia’s energy debate is becoming polarized into two factions, one in favor of using the nation’s abundant coal as the main fuel, and the other committed to switching to mainly renewable sources of power as part of efforts to limit global climate change.
While there are moderate voices in both camps urging a gradual and planned switch from the current situation where about 80 percent of the nation’s power comes from ageing, polluting coal-fired plants, the more radical voices tend to grab the media headlines.
Barnaby Joyce, the deputy prime minister and leader of the National Party, poured scorn on the Tesla battery plan, saying it wouldn’t make much difference.
“You know, a grain of sugar is an advantage to a teaspoon, but it doesn’t make a hell of a lot of difference,” Joyce, whose party is the junior partner in the ruling Liberal-led federal government, said in a television interview on Sunday.
The problem for the federal government, and indeed the state governments as well, is that electricity prices, and public anger, are soaring.
Consumers in the main population states of New South Wales and Victoria face increases of as much as 20 percent this year in electricity bills, caused by rising generation costs amid the closure of several old coal-fired power plants.
The question is what will replace these polluting plants as they reach the end of their useful lifespans.
The mining lobby, and elements within the ruling coalition, want to build new generation coal-fired plants, claiming these will be cheaper and less polluting.
The so-called high-efficiency, low emissions (HELE) coal plants would be less polluting than Australia’s current fleet, but even these are still far more carbon-intensive than natural-gas plants, not to mention renewables.
The Minerals Council of Australia released a report on July 3 in which it claimed a “clean coal” HELE plant would provide cheaper electricity than renewables.
While the costings in the report are open to challenge, what was potentially misleading was the claim that HELE plants are “clean coal”.
They are about 14 percent more efficient than older technology coal plants, but aren’t clean insofar as they don’t capture and store carbon emissions.
This sort of claim certainly undermines the mining sector’s credibility and helps boost the cause of the environmentalists.
Sitting somewhere in the middle of the debate is Australia’s petroleum industry, which has the dual aim of protecting its $200 billion of investments in liquefied natural gas (LNG) export plants and promoting the use of the cleaner-burning fuel domestically.
The industry wants both federal and state governments to facilitate more onshore gas exploration and production, arguing that this will boost supply and lower costs.
The environmental lobby, ignoring peer-reviewed science that fracking is largely safe if well regulated, wants an end to all unconventional and conventional natural gas exploration and production.
At the very least, the environmentalists want restrictions on LNG exports in order to make natural gas cheaper and more available to the domestic market.
Again, there is possibly misleading information and claims on both sides, with the industry stating that Australia’s wholesale natural gas price is competitive in Asia (it is), but ignoring that retail prices have surged.
For its part the environmental lobby, with the support of farming groups, is running a scare campaign on natural gas, using the typical bogeyman of greedy corporations sucking up and exporting resources, but ignoring that only one of the seven LNG plants actually buys gas that could be supplied domestically instead.
Into this situation comes Tesla and its battery farm for South Australia.
If the project does work, and more importantly is viewed by politicians and the public as a cost-effective success, then Barnaby Joyce may find that his one grain of sugar rapidly becomes many more.
However, if the batteries don’t prove effective in smoothing out South Australia’s intermittent wind-powered electricity, then the move toward more renewables will take a blow, perhaps even big enough to allow the promoters of new coal plants an opportunity.
Editing by Joseph Radford