A UK-based businessman vying for control of a stricken Australian steelworks plans to spend “hundreds of millions” of pounds building a green power facility.
The proposed energy fix, which is linked to Liberty House’s bid for Arrium — a steelmaker in administration that employs about 7,000 people — is the latest example of how companies are investing heavily in unconventional energy sources to manage soaring energy prices and power disruptions.
“One of the main issues for South Australia is power,” said Sanjeev Gupta, head of Liberty House, a metals firm. “Its two burning crises are Arrium and power supply. We can solve both”.
Liberty is one of two bidders for the Arrium business, which fell into administration last year following a dramatic collapse in steel prices due to global oversupply.
If it wins, the privately owned company plans to build water storage in abandoned mine pits. It would pump in seawater during low-demand periods when electricity is cheap, and then use that water to generate hydroelectric power during peak demand periods when electricity is expensive.
The unit would incorporate a solar power farm. It would also be able to tap the intermittent power supply produced from other solar and wind-driven electricity generators.
Combined, the facility would have peak power generation capacity of up to 1 gigawatt, enough to power about 750,000 homes.
“There’s a clear opportunity for renewables that can solve the [power] imbalance problem,” Mr Gupta said.
Korean-owned zinc refiner Sun Metals, which is based in Queensland, and telecoms provider Telstra are investing in solar farms to hedge their energy costs, following a doubling of electricity prices in parts of Australia over the past year. Many other companies are considering following suit, according to the Energy Users Association of Australia, a lobby group.
The shift to energy self-reliance is taking place against the backdrop of a decade of political wrangling over climate change, a looming gas shortage and the closure of coal plants, which provide the bulk of Australia’s power.
A bitter argument between the Liberal, National, Labor and Green parties over whether to put a price on carbon, speed the phasing out of coal power and switch to renewables has created uncertainty for investors and delayed investment in power producers, analysts say.
The crisis came to a head last year when South Australia — which is reliant on renewable energy for almost half its electricity — was plunged into darkness following a storm, after back-up gas generators failed to come online.