By Phil Kreveld
“Depend on it, sir, when a man knows he is to be hanged in a fortnight, it concentrates the mind wonderfully.” — Samuel Johnson
Depend on it, the shareholders of Tomago are concentrating their collective minds on its future. Forty percent of the cost of aluminium smelting is electrical energy. Tomago’s problem is expensive energy. Other than mothballing, or passing the hat amongst the shareholders, only a long-term contract for cheaper electricity will assure Tomago’s future beyond 2028.
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The Commonwealth Government is plagued by the opposition. Its energy shadow says that it’s renewables that are driving Tomago out. Who knows—the claims and counter claims are based on beliefs. The transition to renewables, when, how, and at what cost is a fuzzball. And that is convenient because it allows for political posturing, gladly covered by the media—left wing pro, right wing contra. But politics and the media can be safely ignored.
The posed question is only answered by hard slog. The ready answer, as attributed to Dr Tim Nelson, ‘derivative energy contracts warehousing’ (by whom?) could provide certainty for the likes of Tomago, and investment in generating plant to assure economic electricity for the smelter.
Problem is how to refresh generation investment zeal because it has slowed to a crawl. This lull is due to the absence of a single authority, not subject to political interference, a central authority with a single mission. That mission would be the layout of the national grid, and the allocation of generating capacities at its various nodes (buses). It would call for tenders for all construction and equipment. Its plan would allocate the roles for gas, for wind, for solar, batteries, for coal all based on stability and security. It might well require refurbishment of plant about to be condemned to the scrap heap. Having that in place would make proposals like Nelson’s work, providing certainty to customer and supplier.
The present climate requires too much courage from investors. They face not only economic uncertainty, but worse, social licence and environmental approvals that seem to stretch out to infinity. These would have been covered off by the central authority, and not left to the vicissitudes of some future protest action.
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The comment to the above might well be, what about renewables? The answer: renewable energy has a role because it is viable technology but it does not have some special place simply by virtue of being solar or wind. It is about low-cost electricity by virtue of overall design—and not about renewable targets. The transition will be dictated by a consistent design plan and execution.
