Interview with Narelle Graham, ABC Radio South Australia

NARELLE GRAHAM: First this hour, Port Augusta, what seems to be on again off again, Solar Thermal Project is getting a $65 million taxpayer funded grant. It's awarded by the Federal Government. So, the Australian Renewable Energy Agency, that's ARENA, has announced its approved the money and that 65 million will go to Vast Solar to construct a VS1 first of a kind, 30 megawatt, 288 megawatt-concentrated solar power plant in Port Augusta in South Australia. If it doesn't mean much to you, don't worry, I know a guy who can probably explain it. Chris Bowen is the Federal Minister for Climate Change and Energy. Minister, good afternoon.

CHRIS BOWEN: Good day, Narelle. How are you?

NARELLE GRAHAM: I'm well, thank you. Conversations about solar thermal in Port Augusta have been going on for a long, long time. Details about this Vast project, please. Where is the concentrated solar power plant to be built?

CHRIS BOWEN: Well, in Port Augusta and, you're right, this site has been the subject of various plans over the years. But this Vast Solar plant is a new one and we are supporting it because green hydrogen has a big role to play in the future, both in terms of energy, electricity generation for our domestic grid and also export potential. So it's appropriate to Port Augusta to be right at the centre of that.

NARELLE GRAHAM: How much taxpayer money all up is going into this? So, ARENA says today it's a $203 million project. April last year, so that's before the change of government, Vast Solar was given or approved a $110 million concessional finance from the Australian Government to build this plant in Port Augusta. Now, I think that's a loan, is that right?

CHRIS BOWEN: That's right. That's concessional finance. So that's, if you like, a slightly reduced interest rate over above what would otherwise be paying. Yes.

NARELLE GRAHAM: So, 110 plus 65 is 175 million means 28 million from Vast goes into the project?

CHRIS BOWEN: Well, if you like, there's three different categories of funding. As you said, there's the concessional finance, which you can't really say is a total of 110 million in funding, because they've got to borrow that from somewhere. But it does, it does help them to get a reduced interest rate. The two grants are the $65 million that we've announced today. And the $20 million, in effect, which I announced last week in Germany, which is a joint funding program with the German Government, who are very interested in seeing this be developed because they want to buy the green hydrogen off Australia.

So, I would put those two together and say that's the funding. So, yes, you're right, it is a very substantial government investment. But Narelle, the point I'd make is that when you are starting out with a new industry, often you need strong government support to get it up and running and then it will become self-sufficient over the years, and many industries have started that way with some government support. It's particularly appropriate with an industry which is going to be very good for emissions reduction. Green hydrogen is very, very good in terms of emissions. It is taking renewable energy and turning into a form of storage. And this particular technology at Port Augusta, solar thermal is really quite unique and quite different to solar around the country, which is now obviously very sustainable and making a big difference. This is at a much earlier stage, has a lot of potential, but does need that government support.

NARELLE GRAHAM: Okay, so why can't the government do it then? If it needs government support, why isn't it an asset that the government then owns?

CHRIS BOWEN: Well, I mean, governments support things in different ways. So the South Australian Government, Malinauskas' Government has got a very good hydrogen policy, of course, and they're doing their own thing in Whyalla, so that's appropriate. But the model that we have in this particular instance is working with the private sector with all their skills and expertise and there's a lot of private sector skin in the game as well. But government support, whether it be through ARENA, which is this investment here or CEFC concessional funding, can just make it easier for that private sector investment to get off the ground. It's horses for courses, Narelle.

NARELLE GRAHAM: Chris Bowen is my guest, he’s the Minister for Climate and Energy at the Federal Government level, of course. And that text line for you, 0467 922 783. So, what is in it for taxpayers? What do we get from this?

CHRIS BOWEN: Well, a lot of jobs for regional South Australia, 450 during construction, 70 ongoing. That's just direct. I think it has a lot more potential than that in the longer term once this technology is proven and up and running. And that's the main thing, I think, for South Australia. But also, green hydrogen is ultimately a form of storage. So, you can make hydrogen in any number of ways. As you know, the challenge with renewable energy is storing it and at the moment we store it through batteries. Batteries are great for the short term - few hours, but hydrogen holds a lot of potential to store it for a lot longer than that. And really there's two ways we can store it for longer than batteries; there's pumped hydro, which is important, that's where you create a scheme like Snowy 2.0 where you pump water up the hill and store it for when you need the energy, and you can let it out to create new electricity. Or there's hydrogen. Now, hydrogen is going to play a role.

The benefit of hydrogen is that it's storage for a long time and also it can be transported. You can put it in pipes, send it around the country, you will be able to eventually put it on ships and export it. That's the sort of potential and flexibility that green hydrogen has. And when you think about the export potential for Australia with all our renewable energy and what we can do for the rest of the world and exporting that sunshine to the rest of the world through green hydrogen. Enormous opportunities for Australia.

NARELLE GRAHAM: Will it lead to cheaper energy prices for households?

CHRIS BOWEN: Well, renewable energy is the cheapest form of energy, but I'm not here to make any particular sort of claims for this particular project that this is going to lead to cheaper bills in the short term. But over the medium term, more renewable energy in the system means lower bills, absolutely. The sun doesn't send a bill, the wind doesn't send an invoice. The facts are Narelle, renewable energy is by far the cheapest form of energy available.

NARELLE GRAHAM: This particular project, so I've been talking about it since at least 2017, probably even before then. And it was a proposal that at that time, I think it came from Aurora and there were some in 2017, I think Nick Xenophon, when he was a senator, did a deal with the then Federal Government and got the commitment for that $110 million cheaper loan. Then in 2019, Solar Reserve pulled out of the plans to build that thermal plant in Port Augusta. Couldn't get the finance for the project. There had been rallies on Parliament House to support it, support it here in South Australia Parliament House. What makes you think that now is the right time? Now is the time for $65 million to be put into this particular project and get it up and running.

CHRIS BOWEN: Yeah, no fair question. And all that history is pretty accurate, but hydrogen is really the tipping point. As I said, I was in Europe the week before last, and particularly in Germany. It's all anybody wanted to talk to me about is how is Australia going with the green hydrogen? How much would be able to make when can we start buying it? I mean, Europe is energy hungry, right? They're going through this crisis at the moment. But more broadly, they know they have to move away from gas and they particularly have to move away from Russian gas and something's got to fill the void. And so there's only a few countries around the world that could make hydrogen to the levels that the world needs, particularly in places like Europe, also Japan and Korea. The heavy industrial users don't have as much renewable energy resource as we have. We can export it to them. So the world is at a tipping point. So that's what the difference is. I think, Narelle, this is the right time to make this sort of investment, to turn it into a reality.

NARELLE GRAHAM: Timing is everything. Probably a foolish question, but how do we get it to them? How do we get the green hydrogen to Europe?

CHRIS BOWEN: Well, ultimately, the plan is to get it on ships. Now, there's all sorts of technology about just how you sort of transport it and what form, and that work is still under development, but ultimately, we've got to develop the technology to put it on ships. And the good thing about hydrogen is actually the economics of the shipping stacks up. So just like it currently makes sense to send coal and gas around the world long distances, it will make equal sense to send hydrogen around the world quite long distances, including Australia to Europe.

NARELLE GRAHAM: So we will be talking about ships leaving from the port in Port Augusta to go overseas with this green hydrogen.

CHRIS BOWEN: Potentially in due course, we're not quite there yet. There's various hydrogen ports under development, but that's ultimately the aim, yes.

NARELLE GRAHAM: Minister, what's your understanding of the technology here? Solar thermal?

CHRIS BOWEN: Yes, great question. And what does it look like? It is a complicated piece of machinery, but I could just try and simplify it down. It's really taking the sun and reflecting it off thousands of mirrors. It's really quite impressive to sort of see the designs of this. So, if you think about the technology, when you're reflecting sun off a mirror, it concentrates it on one spot. Now, you times that by thousands and you concentrate all that solar energy just onto one spot and then that's where you use the heat to warm up your liquids, your liquid sodium in this case, and then store it and that stored energy is then able to generate electricity when you need it. And that's another great flexibility, here. Again, it's not just when the sun is shining, because we know that the sun doesn't always shine, we've all heard that sort of saying, but this enables you to store it. So first you concentrate it into one spot, you use that concentrated heat to heat up liquid sodium, and that stores then for when AEMO says 'right, we need the power turned on,' you can then turn it on at any time of the night and it's available. That's the real beauty of this technology.

NARELLE GRAHAM: 450 regional jobs during construction, as you've said, and 70 ongoing operational roles in the long term. If we're talking about getting people to Port Augusta for these jobs, we have an accommodation issue in regional South Australia, as you would be aware, across all of Australia. Whose responsibility is it to find a place to live for all of those workers?

CHRIS BOWEN: Well, that's a combination of - Vast Solar will have to play a role there. The employers, when they're attracting people in, they'll have to have conversations about accommodation. Obviously, State and Federal Governments and Local Government would be happy to be part of that conversation. But ultimately, with Vast Solar, the developer, they'll be having to attract those workers. And whether they provide the accommodation themselves or enter into arrangements with the private sector, that's something that they'll need to develop.

NARELLE GRAHAM: Mark has sent through a text message saying that the cost will blow out to $1 billion for South Australia. What is it, hydrogen plant will blow out to cost South Australian taxpayers a billion dollars. Now, there are a few different projects that are being discussed in the green hydrogen space, is the South Australian Government contributing to the solar thermal project at Port Augusta, Minister?

CHRIS BOWEN: No, not this particular. I'm not sure where Mark's coming from there or what he's basing that on, but that's not correct. And this is a Federal Government project, this one. The South Australia Government has got its own very good plans in Whyalla, quite separate to ours. I was pleased to be able to let the South Australian Premier know the other day and the Energy Minister know that this was coming. But this is a Federal Government initiative.

NARELLE GRAHAM: Robin Loxton says, where is the infrastructure being made and who will own it?

CHRIS BOWEN: Well, I mean, the infrastructure comes from all over, and what we want to do is make more and more of it here in Australia. That's what our National Reconstruction Plan is all about. We need to be making more renewable energy infrastructure in Australia, whether it's solar panels, batteries, inverters, electrolysers, you name it I want to see more of it made in Australia. That's why we have up to $3 billion from the National Reconstruction Fund set aside for that. This is a big problem around the world just taking solar panels. Currently, 85% of the world's solar panels are made in China. That will rise to 97% in the absence of more action around the world. But we can make solar panels in Australia. Indeed, the only place we currently make them is in South Australia, Tindo in South Australia I was recently there and opened the expansion of the factory, but I want to see much much more of that.

NARELLE GRAHAM: Is Vast Solar an Australian company?

CHRIS BOWEN: I'm not sure of their ownership structure, but certainly their Chief Executive and a big part of their company is Australian-owned. Absolutely.

NARELLE GRAHAM: All right, we'll chase that up with Vast. And Frosty says, 'just make sure you sign a contract to protect a portion for local supply.'

CHRIS BOWEN: Well, Frosty makes a good point. I think in due course, we are going to have to look at making sure that the green hydrogen gets shared between domestic uses and exports very fairly, but we're not quite there yet.

NARELLE GRAHAM: Chris Bowen, Minister for Climate and Energy. Thank you. Appreciate it. You're on ABC Radio, South Australia and Broken Hill.