A price is paid as Queensland eyes energy transition
The top executive at Stanwell described the energy transition journey the coal-heavy Australian power generator was on midweek, but by the end of the week a different transition had the state of Queensland abuzz — that of the executive from his job.
Then CEO Richard Van Breda discussed renewable energy and hydrogen opportunities for Stanwell as well as the possibility that its two coal-fired plants may not operate as baseload generation facilities down the line, but that straight talk saw his long career at the company end instead.
Stanwell said 23 April the company had "reluctantly agreed" to accept Van Breda's resignation. The company had nothing but good words to say about Van Breda in a statement.
The company's board said it "thanks Richard for his leadership, hard work and great contribution to making Stanwell the successful business it is today." Van Breda became the state-controlled generator and coal miner's CEO in 2012.
So, with all that public goodwill, why did he transition out of the post? Stanwell would only refer IHS Markit to the statement, declining to offer any other comment.
But local media said Van Breda faced both internal criticism and pressure from state Minister for Energy, Renewables and Hydrogen Mick de Brenni, who is said to have felt blindsided by the speech.
The fear that the jobs of many more people than just Van Breda would be at risk should the energy transition see a shift away from fossil fuel-centric industries is seen around the globe. Governments assure voters they have their best interests at heart.
And there is significant political support in Australia for energy industries such as coal and natural gas -- it ranks in the top two exporting countries for both coal and LNG -- at both the state and federal government level.
But the shift toward renewables and future of the coal plants shouldn't have come as too much of a surprise to de Brenni.
Stanwell Chairman Paul Binstead said in the company's 2019-20 annual report the company was "actively seeking opportunities" for Stanwell in renewable energy and for its workforce to obtain skills in maintaining and operating renewable energy assets.
"Our corporate strategy, financial strength, the reliability of our plant and our pipeline of new energy projects, position our business to play an integral role in Queensland's future energy market," he added.
And whatever the pace of Stanwell's transition, it is something the company, politicians and their ambitions, plus the company's workforce, may have to come round to as more renewable generation comes online in Australia, according to observers.
"We expect the announcements for the early closure of coal-fired power plants to accelerate as low-cost renewables place downward pressure on wholesale prices and operating and maintenance cost continue to increase for the nation's aging coal fleet," IHS Markit Associate Director, Power, Logan Reese said.
Van Breda himself told the Central Queensland Energy Futures Summit in the 21 April speech that seemingly led to his departure that "Australia is undergoing a major energy transition and it's happening at a rapid pace."
But he seemed to couch its consequences by saying the 1.84-GW Tarong and 1.46-GW Stanwell power stations would continue to play an important role in Stanwell's portfolio. Stanwell owns 40% of Queensland's coal-fired generating capacity. The company's lone 34-MW gas-fired unit was placed in "cold storage" on 1 January, and its Mackay diesel unit was retired on 1 April.
However, Van Breda did say the coal-fired plants would operate more flexibly, up to and including possible seasonal mothballing of units, or placing units on standby mode based on market needs.
The jobs impact of any incremental shift away from coal would not be limited to the plants themselves though, as the fuel for the plants comes from Stanwell mines elsewhere in Queensland.
As a result, van Breda told the conference that Stanwell would work with various stakeholders on its role in Australia's energy transition and adding renewable generation to its portfolio
"We are taking early steps to bring our people, communities, unions and government together to put plans in place. These plans will help ensure that as we eventually retire our coal-fired assets from service, our people have choices in relation to retraining, redeployment and -- where it is their preference -- retirement," he said in the speech, according to details released by the company 21 April.
The company, he said, couldn't ignore the growing presence of renewable generation and the touted linchpin of Australia's energy future—hydrogen. Stanwell would respond to the renewable energy needs of its customers by introducing "new low- or zero-emission generation technologies," he said, and would "strive to play a central role in the emerging green hydrogen industry."
The push for a hydrogen-centric Australian energy sector isn't just coming from executives though, it is coming from the highest level of government.
Prime Minister Scott Morrison told the Leaders Summit on Climate convened by US President Joe Biden 22 April: "Mr. President, in the United States you have the Silicon Valley. Here in Australia, we are creating our own 'hydrogen valleys'. Where we will transform our transport industries, our mining and resource sectors, our manufacturing, our fuel and energy production. … In Australia, our ambition is to produce the cheapest clean hydrogen in the world, at A$2/kg ($1.55/kg)."
A day earlier, Morrison announced some A$275 million in investment to create four hydrogen hubs. "I want Australia and hydrogen technology to be synonymous around the world," he said at the time.
Morrison prefaced his summit speech by saying it was a point he would be making there, arguing he wanted Australia to be a world leader in hydrogen technology, with the gas to be burnt in "furnaces" that previously used other commodities and for long-distance transportation.
And Queensland's De Brenni has been playing up the state's hydrogen credentials too.
On 17 March, Japanese conglomerate Sumitomo formalized a "hydrogen ecosystem" partnership with Central Queensland entities including Gladstone Ports, Gladstone Regional Council, CQUniversity Australia, and Australian Gas Infrastructure Group.
"Gladstone's hydrogen ecosystem project will prove supply chains and grow a domestic hydrogen market, with the ultimate prize being more Queensland exports from right here in Gladstone," said de Brenni.
"With access to existing water and gas pipeline infrastructure and publicly-owned ports giving crucial access to domestic and international markets, Queensland is well placed to supply renewable hydrogen to the world, and Sumitomo recognizes this," he said following the announcement.
The partnership envisions a three-phase plan, commencing in 2021, with the end goal hydrogen being exported from Gladstone by 2030. Sumitomo said in January it was mulling building a green hydrogen production plant with a capacity of 250-300 mt/year in Gladstone. The company also has efforts involving hydrogen projects underway in Oman and Malaysia.
The main recommendation to come out of the Queensland summit that led quickly to Van Breda's exit was for the Queensland government to establish a regional development organization similar to the one in the Latrobe Valley in Victoria, according to local media, one of the four envisioned by Morrison.
The Hydrogen Energy Supply Chain pilot, an initiative of the Australian and Japanese governments, began operations in Victoria on 12 March. The pilot, launched in 2018, is part of plans to develop a complete hydrogen supply chain in the Latrobe Valley, with liquefied hydrogen then exported to Japan.
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