Energy News from the Energy Action Group
Asbestos in gas plants
1. Asbestos has been found in the gas turbines intended for the Somerton
and La Trobe Valley. The age of the plant intended for the Geelong AES
station would also raise suspicion that it too will contain asbestos.
The importation of these turbines into Australia without prior removal of
the asbestos is in clear breach of the Victorian Government's prohibition
on the importation of asbestos.
The Energy Action Group is disturbed by the lack of accountability and
transparency in relation to these projects, of which the asbestos issue
appears to be the latest and most odious failure.
The need for demand management
2. EAG as argued for some years now that demand management (ie, action to
permanently reduce load, not interruptible load) is a key measure for
security of supply and consumer price benefits. The three gas fired plants
will initially run for around 5% of the time. This means that the
electricity price sought will be very high in order to recover costs.
Therefore it is difficult to argue that these plants represent value to the
end consumer. There is substantial capacity to undertake demand management
and this would be at lower cost (and greater economic, welfare and
environmental benefit). New investment in power stations does not go hand
in hand with lower tariffs.
Air-conditioning causing problems in winter too
3. NEMMCO reports on the rise in maximum winter demand as households shift
from gas space heating to electric space heating (the impact of reverse
cycle air-conditioning). Prior to the privatisation of the SECV and Gas
and Fuel Corporation, the policy of successive Victorian governments was to
ensure that there was no competition between gas and electricity ensuring
the appropriate fuel was used for the most efficient use. This prohibition
was removed by the Kennett Government. What we are now seeing is the result
of consumer ignorance in the absence of appropriate Government direction.
The failure to provide proper pricing signals for summer air-conditioning
is also distorting consumer perceptions regarding winter heating costs. It
may currently be reasonably cheap to run a reverse cycle air-conditioner in
the winter but as demand increases so will the price. As reverse cycle
air-conditioning involves a substantial investment by households it seems
clear that allowing the wrong message about running costs imposes undue
risk on households.
Two ramifications of unchecked investment in reverse cycle air-conditioning
are readily apparent. One is that gas-fired electricity generation will
increasingly supply power for electric heating in winter, which involves a
ludicrous waste of a finite gas resource. The second is that while summer
air-conditioning may not represent a large contribution to greenhouse
emissions (because peak load is supplied by gas turbines), the offset is
the uptake of electric space heating in winter which for some time will be
supplied by coal fired stations.
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