top of page
  • Writer's pictureTeam Triangle

5 perspectives on electrification of Curtis Island

The economics of energy supply are subject to a host of variable factors — including steady reductions over time in the costs of solar, wind and battery technology. Last week Rystad Energy published analysis of the proposed electrification of Curtis Island LNG plants and government assertions that such an energy swap would release substantial gas supplies for domestic use, lower gas prices and reduce carbon emissions…

On February 8 Australia’s Federal Minister for Energy and Emissions Reduction, Angus Taylor announced grant funding for three feasibility studies into energy projects for Queensland, with up to $1.5 million allocated for a study into electrification of LNG production on Curtis Island off Gladstone in Queensland. Taylor’s announcement said the Curtis Island project would free “up to 12 petajoules of natural gas for use in the domestic market, which will reduce emissions and lower gas prices”.

pv magazine spoke with Rystad Energy’s, Daniel Levy, Senior Analyst for Australasia in Exploration & Production Research, and David Dixon, Senior Analyst Australia Renewables Research, to disentangle what Curtis Island electrification could mean for Queensland, for lowering emissions and for the cost of east-coast gas supply.

1. The joules in this crown

Curtis Island is home to three energy consortiums, GLNG, APLNG and QCLNG, which have a combined total of around 25 million tonnes of LNG capacity. Rystad analysis estimates that “these facilities use approximately 8% of their gas throughput for power generation”. If all that gas could be saved through electrification, it would amount to some 100 petajoules a year — which roughly equates to the annual gas demand of greater Sydney. But technicalities relating to the engines used to provide energy for LNG processing on Curtis Island mean that probably only 9 to 12 petajoules a year could be saved by electrification of those processes that are able to be converted.

The electrical generation capacity required to replace that gas is, calculates Rystad, around 95 MW at the outside. Allowing for the curve of solar generation throughout the day, that might be equivalent to 150 MW of installed PV; plus night-time wind generation or battery firming, or coal-fired generation as occurs in Queensland’s current mix, to maintain 24/7 supply.

2. Applying the carbon filter

“The burden of powering these facilities does not disappear, it simply shifts to the grid and inevitably in part to coal-fired generation,” writes Levy in his analysis. Unless Curtis Island demand is met by sources of energy with lower carbon emissions than those of gas, electrification could easily bring about a net increase in carbon emissions.

Levy points out that Queensland’s target of having a grid powered 50% by renewables by 2030, could “result in net reduction in carbon emissions from electrification” of Curtis Island.

Dixon, however, adds that although Queensland’s renewable energy target (RET) is laudable, the state is still playing catch up on its intention, in comparison to, say Victoria, which set the same 2030 target, but is also working towards interim targets —25% by 2020 and 40% by 2025 — which it looks set to meet.

“Government intervention hasn’t moved the needle so much in Queensland,” says Dixon. The state is at just over 15% renewable penetration (9% from utility-scale solar; 6% from rooftop solar).

Queensland’s ambitions have been hampered in part by the pace of administration of its RE400 reverse auction scheme, designed to deliver 400 MW of large-scale wind and solar and 100 MW of storage to state generation. But the scheme, which was announced in 2017, and saw 10 renewable generators offering a total of 2000 MW shortlisted in July 2019, has not yet awarded contracts; it missed its own Q4 2019 deadline, and successful tenders are now expected to be announced in the first half of this year.

Energy prices affected by Queensland’s peak day-time solar output and investor retreat have other other commentators, including Tristan Edis from Green Energy Markets estimating that Queensland is on track to deliver only 30% renewables in its energy supply by its 2030 deadline.

3. New-coal factor zero?

Commonwealth funding of the feasibility study into electrifying Curtis Island was announced at the same time as $4 million in funding to assess the feasibility of a new high-efficiency, low-emissions (HELE) 1 GW coal-fired plant for Collinsville in Central Queensland.

Were such a project to proceed, it would change the Queensland mix, and the carbon-emissions reductions gained by electrifying Curtis Island.

Funding of the Collinsville study is widely considered a sop to Liberal National Party Ministers occupying marginal seats in regions where coal provides a high proportion of employment. Economically, the project is widely considered to be a proposition without legs.

Says Dixon, “The draft CSIRO Gencost Report for 2019-2020 that came out in December last year, showed black coal generation to be twice the cost of wind and PV.” The decision not to proceed with the Collinsville HELE coal plant is “a no-brainer”, on a cost-to-consumer basis alone, he says, never mind the flight of finance from new coal-fired power stations and the subsequent difficulty of funding such a venture.

The CSIRO GenCost 2019-20 draft report released in December shows the levelised cost of energy generated by solar and wind backed by storage to be catching up to that of fossil fuels without a carbon price or premium. By 2030 (below) they’re comparable.

Graph: CSIRO

4. Reckoning with gas

A shortfall in global natural gas supplies, as is forecast from around 2025, is most likely to increase the market price of gas. In order for Curtis Island electrification to “lower gas prices”, as stated in Minister Taylor’s announcement of the feasibility study, the government would have to regulate for any preserved gas to be offered to the domestic market at a capped price or a lower-than-market price on a long-term basis.

Rystad Energy forecasts a shortfall in Australian East Coast energy supply relative to demand commencing around 2025.

Graph: Rystad Energy

“Rystad expects a regulation of this nature to be implemented if the government subsidises the capital cost of electrifying the facilities,” writes Levy.

In discussions with pv magazine, he added that, “Industry is struggling for long-term reasonably priced gas, so I think there would be some larger industry deals earmarked for that preserved gas.”

Overall, however, he says there’s a real prospect that Australia will get a better gas price by importing gas when the shortfall hits. “It sounds crazy, but if you look at the demand centre as being, say, in Sydney, it’s very expensive to send gas from Queensland to Sydney. It’s cheaper to sail a vessel from Tokyo than it would be to move that gas via pipeline.”

According to the CSIRO GenCost 2019-20 report, firmed renewables (wind or solar with two hours of battery storage or six hours of pumped-hydro storage) have already reached a comparable levelised-cost-of-energy range with gas-generated electricity, and by around 2030 firmed renewables will be cheaper even when a carbon price or risk premium is added to the price of gas.

Minister Taylor’s announcement of the feasibility studies under the $10 million Supporting Reliable Energy Infrastructure program stated that, “The Australian Government is focused on supporting new electricity generation projects in central and north Queensland that will drive down power prices, improve reliability and support a stronger economy.

Electrification of a fraction of Curtis Island’s LNG processing is not new generation, in fact it imposes a load on the Queensland grid. The benefits of gas released for domestic sale will be realised if price can be set at a rate competitive not only with imports but with the potential of renewables to meet the same demand; and if the carbon impacts of the supply chain are taken into consideration.

That said commentators including Dixon agree to some extent with Prime Minister Scott Morrison’s assertion in a recent National Press Club address and that of Australia’s Chief Scientist Alan Finkel in his National Press Club address last week, that gas will support Australia’s energy transition: “It’s a case of reaching the most economic solution at the time. In South Australia, renewables have been firmed by gas turbines, and we know that the variable output of solar and wind needs something flexible and relatively fast to back it up, but that doesn’t always have to be gas.”

Most likely, says Dixon, growth in renewable capacity will be firmed by a range of technologies, including, gas turbines, batteries, pumped hydro and improved interconnection between states, as well as by demand management.

5. The balance of power

On the political front, Queensland’s Labor Government and the Federal LNP coalition seem somewhat at odds.

In response to pv magazine’s questions about the nature of the agreement between state and federal governments to electrify Curtis Island, Minister Taylor replied: “The Department of Industry, Science, Energy and Resources has engaged with the Queensland Department of Mines and Energy on the opportunity for electrifying Curtis island… The precise scope of work will be determined in consultation with the Queensland Government and industry stakeholders.

From up north, Dr Anthony Lynham, Minister for Natural Resources, Mines and Energy quipped, “I’m always happy to see Federal money coming to Queensland.”

He adds, “I raised the issue of funds for electrification of LNG processing plants on Curtis Island at a meeting of state, territory and Federal energy ministers in Perth in December … But we’ve had no advice from the Morrison Government as to exactly what these funds are for.”

29 views0 comments

Recent Posts

See All


bottom of page