The hungriest energy users can play a big role in balancing tomorrow’s grid – if they are prepared to be flexible.
The many renewable energy zones on the east coast will be humming with construction activity over the next 10 years as more wind, solar, storage and pumped hydro are added to the NEM and coal power plants near retirement. Looking at it that way, it’s tempting to think new generation alone will take full credit for decarbonising the grid. It won’t.
The proximity of enormous loads to some REZs provides a prime opportunity for industry to take part in the energy transition. For an example, take a look at Germany. “It’s conventional wisdom that smelters have zero flexibility,” said Simon Holmes à Court, senior adviser at Melbourne University’s Energy Transition Hub, speaking at the Smart Energy Conference in Sydney in May. But times have changed and Holmes à Court told of a visit to a smelter in Essen where flexible operation has seen it transition from a commodity company to an energy company.
“They now make more money from managing the grid by flexing their load than they do from the production of the metals,” he said. The smelter has participated in more than 400 load-shedding events since 2013, “and they see every one of those as an opportunity to make money rather than an opportunity to whinge about the energy transition.”
Energy prices in Australia are falling, driven lower by investor appetite to build new generation along with regulatory and political pressure on polluters. Rio Tinto, for example, is feeling the heat to cut emissions by 30% before 2030, where two of its aluminium smelters account for that much on their own. All energy-hungry industrial processes have a part to play, so long as they are flexible.
“It is now very feasible to put together energy solutions for heavy industry at $50/MWh,” Holmes à Court said. “But if your industry has any flexibility in its demand, that can drop significantly [by $10/MWh or more].”
Holmes à Court touted the concept of low-carbon industrial zones, clusters of energy-intensive industries located within or strongly connected to renewable energy zones “with globally competitive energy that is low cost and low emissions”. Such zones, he says, allow jobs to be retained in industries that are under pressure and would attract new industries and new jobs to underwrite the transition from a carbon-based economy to a clean energy economy. “We want to fight for these.”
Collated demand would allow industries with flexible load to respond to market signals and supply constraints, so the cost of energy is managed for all of them. Aluminium smelters around the world – British Columbia, Siberia, Iceland, Australia – take advantage of “stranded energy”, he said, where there is an enormous surplus of energy with limited ability to send it anywhere. “One of the best ways to send [clean energy] overseas is to put it into energy-intensive products. These renewable energy precincts allow us to put Australia’s stranded energy into products to be shipped around the world.”
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The Hunter Valley in NSW would be a fantastic place to start an alignment of load with clean energy supply, he said, where the Tomago aluminium smelter accounts for 12% of NSW power. It would mean adding flexibility at Tomago so the smelter can act as a battery in the network. An electrolyser in the same part of the network could play a similar role. “Each plant would operate within its operating envelope,” he said. “They would get all the reliability they wanted but the more flexible they are the more ability they would have to have competitive energy prices.”
SunShot Industries is looking at seven renewable energy industrial precincts around Australia. At Barcaldine in Queensland seven companies have committed to building a renewable energy precinct. Other than good rail and road connections, “pretty good” transmission, good wind and great solar, there is also lots of prickly acacia in the area with which to make charcoal and bio oil to feed hydrogen ammonia processes to make green urea.
“If this project goes ahead Queensland farmers could be accessing urea made in Queensland with fully renewable supply chain and much, much lower carbon emissions intensity than their existing fertiliser production usage.”