Wow. Wait til word gets out. This is dynamite.
Chinese Bitcoin miners are reopening the Hunter Valley coal power station called Redbank in NSW. They have a deal that gets around our gargantuan, mismanaged grid by buying coal power direct for 8c/kWh, while Australians in the same place pay 28c/kWh.
This is exactly the nightmare the head of the Australian Energy Management Organisation (AEMO) spoke of just last week — that “big players could abandon the grid”. That’s a degenerate spiral leaving a shrinking pool of suckers to pay for the inefficient, bird-killing, blackout prone, witchdoctor grid.
Bitcoin mining’s growing demand for cheap energy revived a shuttered coal mine
Ashat Rathi, Quartz
Consumers there pay, on average, $A0.28 ($0.22) per kilowatt-hour (kWh) for electricity. But Hunter Energy, which owns Redbank, are offering the crypto miners electricity at a fraction of the cost. The “first-of-its-kind” deal, as the Age puts it, will see the crypto miners pay only A$0.08 per kWh in the day and A$0.05 per kWh at night. Hunter Energy told the Age that the price is feasible because the electricity produced at the coal power plant would go straight to the crypto miners, bypassing—and thus, presumably, avoiding the costs of using—the grid. (Quartz has reached out to Hunter Energy for a comment.)
This tells everyone all they need to know about “cheap” renewables. Eight cents is the big-commercial retail rate of coal powered reliable electricity in Australia, and anything else is nuts.
The cheap deal will mainly apply to those close to the plant (near Singleton) because building long transmission lines is too expensive. Any day now, the large smelters in NSW will start adding up the cost of either relocating or building a transmission line.
It’s not surprising that this comes from crypto industry first. It must be one of the most transportable high-electricity-need industries there is.
Three messages here:
- The free market can solve Australian electricity price hell in a flash.
- Coal power is cheap, cheap, cheap, and even small coal plants are viable and valuable. (This one is only 150MW)
- Wind and solar are not competitive. Subsidized renewables are the major thing making our grid expensive.
We could run again as a nation using coal for our entire baseload — with some gas to power the peaks. The only thing stopping us is our desire to change the global climate.
Please, someone add up the total octopus-costs of bizarre weather-changing policies.
The Turnbull government will surely try to ban this or tax it to oblivion.
Big implications – 130MW of cheap electricity suddenly available in the Hunter Valley
Here’s a “disrupter” Audrey Zibelman (the AEMO head) didn’t see coming. The Australian market is begging for cheap electricity and right now one place, ONE, can offer it at a third of the price that everyone else pays:
Hunter Energy says cryptocurrency mining will only consume, at most 20 megawatts (MW) of the coal plant’s 150MW capacity. The region “needs more baseload power,” Hunter Energy’s CEO Jim Myatt told the Age. Baseload power is industry jargon for the ability to provide power on demand, which is something solar and wind power cannot do because they are beholden to the vagaries of nature.
Suddenly the land and buildings near Redbank just stepped up in valuation. If you run a small business (or big one) where electricity is a large part of your costs, and you can move to tap into that, why not?
How about our other recently closed coal plants in Australia? What other towns and areas would be reincarnated as cheap manufacturing or “mining” zones? Imagine what this could do for the LaTrobe Valley? Collie in WA? Liddell?
h/t to Peter Rees for this list. Which of these can be reopened, and which have been blown up.?
|CLOSED COAL PLANTS|
I’ve suggested this scenario on the blog before — in a free market people would band together to fund their own coal power. I wondered if large miners could do it, but I assumed it would be illegal.
Redbank, small, “carbon polluting” and newish coal plant
According to Wikipedia — Redbank is a small coal plant commissioned in 2001. It used coal tailings, was theoretically the least efficient most greenhouse gas generating plant in Australia, was (maybe) hurt by carbon taxing policies, closed in 2014 and will be reopened in early 2019.
Redbank was fuelled by beneficiated, dewatered tailings from the Mount Thorley Warkworth mine at Warkworth, delivered by conveyor. In lay terms this is the part of the coal waste which would otherwise not be utilised, and simply buried as the mines progress.
According to Carbon Monitoring for Action (CARMA), in 2007 Redbank emitted more climate change and global warming causing greenhouse gases per unit of electricity generated than any other power station in Australia. CARMA estimates this power station emits 1.06 million tonnes of greenhouse gases each year as a result of burning coal.
(Note that no data from the actual plant, operator or Australian Government is actually used to base these approximate assumptions on. CARMA uses a statistical model that predicts CO2 emissions given the size, age, fuel type, estimated capacity utilization, and engineering specifications of individual plants.)
Like all NSW coal plants Redback was hard hit by the carbon tax:
17 April 2012: The Age: Brian Robins: Biggest carbon emitter slashes asset value as tax looms
The state-owned power generator has cut asset values by more than a third, to $1.1 billion from $1.86 billion, by booking a heavy $700 million write-off in the first such big financial hit due to the looming carbon tax introduction. As the nation’s largest emitter of carbon dioxide, Macquarie Generation faces a direct annual tax of $460 million, which will flow into the government’s coffers, if it maintains electricity output at present levels….
Victoria has dirtier coal-fired power stations as they use brown coal, which emits more carbon dioxide. As a result, its generators will receive hundreds of millions of dollars in compensation from the federal government, which will allow them to continue polluting.
The only NSW power station to receive support from the federal government is a small producer, Redbank, which is to receive just $8.8 million. ”This loss of value is a direct hit to New South Wales as a result of federal Labor’s carbon tax,” said NSW Finance Minister and Acting Treasurer Greg Pearce.
Victorian brown coal plants received $2b in compensation for the carbon tax. Many of these were owned by foreign companies. The NSW government owned Macquarie and got almost nothing.
In any case, why give compensation for a tax designed to put the same businesses out of business? Insanity.