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Could WA lead the way to a brighter energy future?

We all know how Western Australia has become one of the safest places to live and best performing economies in the world because of our competent handling of the pandemic and being able to keep our resources production going.

But we now have the chance to move from being predominantly a mining and resource state – at the mercy of volatile commodity prices – to becoming an advanced manufacturing centre, and even key decision makers in government are seeing this as our once in a generation opportunity.

Yes, the way we have managed the pandemic is certainly a plus when global manufacturing companies and investors look for places to locate or relocate. And we certainly have the raw elements needed to produce the in-demand materials of the moment – iron ore, lithium, bauxite, rare earths, vanadium, copper, zinc, and many more.

We also have ample industrial land, good infrastructure, excellent ports with rail and road connections, a skilled workforce with good training, and a stable political system.

But until recently, a key ingredient that we did not have was a low cost, abundant energy supply.

We do now. And importantly, it is an energy supply that is heading in the right direction – to lower greenhouse emissions.

To establish a vibrant manufacturing sector, not only do we need an abundant and competitive energy supply, but we need the infrastructure and regulatory framework to ensure it is delivered reliably, and importantly that it takes us down the path of achieving net zero emissions within a couple of decades.

What does the future look like for WA?

Thanks to the State Government’s Energy Transformation Taskforce – supported by industry – WA now has a robust framework that can keep the lights on while absorbing more and more renewable energy, with most of that coming from roof top solar.

Last year alone, 300MW of solar generation was added to the grid – all from rooftops of homes and businesses. That is approximately the size of our largest stand-alone conventional power station.

Without the changes to the market structure, WA would not be able to absorb that much solar without putting the grid at risk.

Now, because of the changes, the future market in WA will be made up of predominantly wind and solar power (small and large-scale) with battery storage, plus gas-fired generation to provide flexible rolling back-up. What’s more, these cleaner technologies are now cheaper than conventional, fossil- fuel-based generation.

That is the first part of our competitive advantage, because no other jurisdiction has yet put the regulatory changes in place to accommodate the new cleaner technologies. While other states in Australia and other countries have built large renewable projects, their grids and market regulations are designed for the old school coal-fired power generation, and they are struggling to cope.

Gas and the potential to move to large-scale hydrogen production

The other part of the energy equation that can deliver us an advanced manufacturing sector is our large supply of low-cost gas and our potential to move to large-scale hydrogen production. The first part is thanks to our domestic gas reservation policy, which is envied by our eastern states cousins.

While gas is still a fossil-fuel, it produces half the emissions of coal-fired generation and is critical in the transition to a cleaner energy system. Even with low-cost renewables and battery storage, power consumers – industry and homes – need reliable supply, especially when there is no wind or sun, and gas-fired generation is the only current technology that can deliver that at an acceptable economic cost.

Particularly in WA, gas is also used as a feedstock in minerals processing – making alumina, fertilisers, explosives for the mines, and other chemicals including lithium hydroxide. These are vital value-add industries that take us further down the manufacturing path.

Gas can also be used to create hydrogen, perhaps the cleanest fuel of all, with zero greenhouse emissions when it is burnt. WA is at the forefront of the emerging hydrogen industry, with projects in Perth and the Mid West aiming to blend hydrogen with gas in the Dampier to Bunbury Pipeline and in the gas networks around Perth and other towns.

Ultimately, those gas pipelines and networks will move to 100 per cent hydrogen, and we will be leading the way in how that is done.

“Green hydrogen” is the aim – that is hydrogen produced by renewable energy used to power electrolysers that split water into hydrogen and oxygen. The Mid West project, supported by a $29 million grant from ARENA, is a joint venture between Australian Gas Infrastructure Group (AGIG) and ATCO which will use power from Synergy’s Warradarge wind farm to produce green hydrogen.

Other green hydrogen projects are also on the drawing board, taking advantage of our world-class solar and wind resources, and our robust electricity system.

Getting the cost of hydrogen down to $2 per kg – which is the aim of the AGIG/ATCO joint venture – will make it a very low-cost fuel and provide industry with an almost unlimited supply of clean energy.

All these factors combined present WA with a unique opportunity to lead the world in having a manufacturing sector powered by low cost, clean energy. This is surely something we should seek to achieve as our legacy for future generations.

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Richard has several decades of experience in WA’s energy and resources sectors at strategic project and policy development level, in both the private and public sectors. From government approvals and policy development, to corporate profile-raising and fund identification, Richard and the rest of the Cannings Purple Government Relations team have the relationships and insights to support clients in their government discussions. Contact Richard here.

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